Khan Khasman Kasidi Mahmood v. Lucky Legend Industries Ltd and Others

HCMP 484/2021

[2021] HKCFI 2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 484 OF 2021

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Before: Madam Recorder Yvonne Cheng SC in Chambers

Date of Hearing: 7 May 2021

Date of Judgment: 7 May 2021

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JUDGMENT

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1.The Petitioner issued a petition seeking relief under (inter alia) s.724 of the Companies Ordinance (Cap.622) and s.177(1)(f) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.32). The 1^st and 2^nd Respondents are the companies which are the subject of the petition, the 2^nd Respondent being the wholly owned subsidiary of the 1^st Respondent. The Petitioner is a shareholder of the 1^st Respondent. The 3^rd Respondent is the majority shareholder in the 1^st Respondent; the 4^th Respondent is neither shareholder nor director of either company; the 5^th Respondent was appointed (improperly, it is alleged) as a director of the companies.

2.The petition was entered into the Miscellaneous Proceedings List.    The Petitioner now accepts that the petition should instead have been instituted under the companies winding up jurisdiction, and for this purpose has issued two summonses.  The first asks for an order to “transfer a winding-up number in the High Court in place of the present miscellaneous proceedings”.  The second asks for leave to amend the petition so as to change the title of the proceedings to “Companies (Winding-Up) Proceedings” instead of “Miscellaneous Proceedings”, and for orders to carry out various steps under the Companies (Winding-up) Rules (Cap.32H) (“the Rules”) which ought to have been carried out prior to the first hearing of the petition, such as the payment of the deposit with the Official Receiver pursuant to rule 22A, or advertisement of the petition pursuant to rule 24.

3.Although the 3^rd to 5^th Respondents have indicated that they do not object to the Petitioner withdrawing his petition, the Petitioner nevertheless pursues his summonses.

4.The applications are opposed by the 3^rd to 5^th Respondents, who submit, inter alia, that:

(1)  there should be a separate petition for each company, citing Active Team International Ltd [2005] 4 HKLRD 375;

(2)  the Petitioner has not identified the particular matters which he relies on to say that a winding-up order may be the appropriate or only practical relief: Re Sun Light Elastic Ltd [2013] 5 HKLRD 1;

(3)  given the omission to comply with the various procedural steps under the Rules, the petition ought to be dismissed, without prejudice to the Plaintiff issuing fresh, properly constituted proceedings in respect of the same subject matter; there will be no prejudice to the Petitioner.

5.In respect of the first point, the Petitioner submits that the court has a discretion to allow a petition to be presented in respect of more than one company, relying on the fact that Kwan J (as she then was) exercised such discretion in Active Team International.  However, as explained in [23] of the judgment, this was because a lot of steps had already been taken in the proceedings and trial dates had already been given.  Otherwise, for reasons of good administration and clarity, a separate petition should be presented for each company: see [17] to [20] of the judgment.

6.In respect of the second point, the Petitioner says that the 3^rd Respondent had placed the companies in a position where they might be wound up by reason of insolvency and that there had been a purported resolution of the shareholders of the 1^st Respondent that “The Company proceed with the liquidation process”.  However, the Petitioner has not in the petition set out the reasons why it is said the Petitioner has a particular interest in seeking the winding up of the companies.

7.In respect of the third point, the Petitioner relies on r.209(1) of the Rules, which provides that no proceedings shall be invalidated by any formal defect or any irregularity, unless the court is of opinion that substantial injustice has been caused by the defect or irregularity, and that the injustice cannot be remedied by any order of the court.  He also cites Wong Kam Chuen v Wing Hop Yuen Enterprises Ltd & Ors, unreported, CACV 153/1990, 3 May 1991, in which the Court of Appeal allowed an appeal against the dismissal of proceedings which had been wrongly instituted under the miscellaneous proceedings jurisdiction rather than the companies winding-up jurisdiction. In the present case, whilst I accept that the amendments sought by the Petitioner would enable retrospective compliance with the requirements of the Rules, they nevertheless do not address the concern that a separate petition should be issued in respect of each company, in the absence of which the Respondents will have difficulty in (for example) identifying the allegations of unfairly prejudicial conduct specific to each of the 1^st and 2^nd Respondents.

8.The Petitioner has not identified any matters which could not be addressed in fresh proceedings. The 3^rd to 5^th Respondents have confirmed that the 3 forms regarding the change of company secretary and director which are complained of in the Petition have been withdrawn and will not be re-submitted to the Companies Registry for filing.

9.In the circumstances, I dismiss the Petitioner’s summonses.  I also dismiss the Petition, without prejudice to the Petitioner instituting fresh proceedings in respect of the same subject matter.

Ms Kitty Tsang, instructed by M M Wong & Co, for the Petitioner 

The 1^st and 2^nd Respondents were absent

Mr Eugene Kwok, instructed by ONC Lawyers for the 3^rd, 4^th and 5^th Respondents

The attendance of the Official Receiver was excused