Chan Shing Lam and Others v. Winscore International Ltd and Others
Read the full judgment text of HCMP 1251/2020 on BabelCite. This High Court CFI judgment was delivered on 26 November 2021 before Victor Dawes SC.
Civil procedure – consolidation and hearing together – Order 4, rule 9 and Order 1B, rule 1 of the Rules of the High Court (Cap 4A) – Companies Ordinance (Cap 622) s.42 – removal of impugned documents from Companies Register – interim injunction – Companies Ordinance (Cap 622) s.566 – common questions of law and fact – beneficial ownership dispute – same transaction – two competing shareholder factions over control of Hong Kong company holding 75% of shares in Mainland joint ventures – 30% shareholding transferred from Longrigg to SL Chan in 2016 and partly to Smart Forever in 2017 – disputed directors' appointments at 28 October 2019 meeting – self-help resolutions – Disputed Documents filed at Companies Registry – whether 1251 Proceedings (section 42 application) and 787 Proceedings (beneficial ownership claim) should be heard together – court has wide and unfettered discretion – objective is to save time and costs and avoid piecemeal resolution – both proceedings relate to same fundamental dispute over ownership of Subject 30% Shareholding – common issues include validity of 2016 and 2017 Transfers and beneficial ownership of Daya Bay – identical legal representatives acting in same capacity – no added prejudice from hearing together – status quo maintained by undertakings from Daya Bay Camp not to act on behalf of Company – whether interim injunction should be granted to restrain exercise of shareholder rights and dealings with Joint Ventures – summons is otiose once proceedings are heard together – no risk of self-help resolutions being set aside before hearing – not appropriate to appoint interim receivers – Heard Together Summonses granted – HCMP 1251/2020 adjourned to be heard together with HCMP 787/2020 with one day reserved – Daya Bay to file affirmations in reply within 28 days and apply to join Longrigg and High Tower as respondents within 28 days – no order as to costs on nisi basis – Interim Injunction Summons dismissed
Legal issues: Whether HCMP 1251/2020 and HCMP 787/2020 should be heard together or consolidated · Whether the Interim Injunction Summons should be granted
Outcome: The Heard Together Summonses are granted; HCMP 1251/2020 is adjourned to be heard together with HCMP 787/2020. The Interim Injunction Summons is dismissed.
Cited by 5 cases · Cites 5 cases
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HCMP 1251/2020 [2021] HKCFI 3563 HCMP 1251/2020 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO 1251 OF 2020 ________________________
________________________ BETWEEN
________________________ AND HCMP 787/2020 MISCELLANEOUS PROCEEDINGS 787 OF 2020 ________________________
________________________ BETWEEN
________________________ (Heard Together) Before: Recorder Victor Dawes SC in Chambers Date of Hearing: 23 March 2021 Date of Decision: 26 November 2021 ________________________ D E C I S I O N ________________________ A. INTRODUCTION 1.Winscore International Limited (集盛國際有限公司) (“Company”) is a Hong Kong-incorporated company which holds 75% of the shares in two Mainland joint venture companies, namely永州盛湘電力開發有限公司(“Shengxiang”) and 湖南瀟湘綜合開發有限公司 (“Xiaoxiang”) (collectively, “Joint Ventures”). By way of context, the Joint Ventures are the respective owners of a power station in Hunan Province (“Power Station”) and the land on which the Power Station lies. 2.The present proceedings relate to an ongoing dispute over the ownership and control of the Company. There are now three applications before the Court:
B. BACKGROUND B1. Registered Shareholdings of the Company 3.As can be seen in the table of registered shareholders below, the majority of the Company’s shares are registered in the names of the Plaintiffs in HCMP 1251/2020 (whom I shall call the “Chan Camp” for convenience):
4.It is not disputed that Longrigg International Limited (“Longrigg”) once held 3,000 shares in the Company (“Subject 30% Shareholding”). On 22 February 2016, Longrigg’s shareholdings were transferred to SL Chan (“2016 Transfer”). Later on 7 September 2017, SL Chan transferred 1,300 of the said 3,000 shares to Smart Forever (“2017 Transfer”). B2. HCA 1251/2020 (Section 42 Proceedings) 5.Prior to November 2019, the Company’s directors were Wang Zhong Yue (王忠岳) (“ZY Wang”), SL Chan, and Lau Ka Ping (劉家平) (“KP Lau”). Between mid-November 2019 to late-March 2020, various documents were filed at the Companies Registry (“Disputed Documents”) which, amongst other things, purport to record the appointment of the 2nd to 4th Defendants as directors of the Company in place of ZY Wang, SL Chan and KP Lau. I understand the Disputed Documents in the Companies Registry are:
6.On 18 August 2020, the Chan Camp took out the 1251 Proceedings for an order declaring the Disputed Documents null and void and that they be removed from the Companies Register. This is the substantive hearing of the 1251 Proceedings. B3. HCA 787/2020 (Beneficial Ownership Proceedings) 7.Shortly before the Chan Camp began the 1251 Proceedings, 惠州市大亞灣A declaration of sole beneficial ownership over the Subject 30% Shareholding registered in the name of SL Chan and Smart Forever;
8.As set out in the skeleton of the 2nd to 4th Defendants in the 1251 Proceedings, Daya Bay’s case can be summarised as follows:
9.In the light of its alleged beneficial interest in the Subject 30% Shareholding, Daya Bay and various associated persons including HM Chim, LC Fong, and SX Hu (“Daya Bay Camp”) proceeded as follows:
C. THE APPLICATIONS C1. The Heard Together Summonses 10.I will now proceed to deal with the three applications, starting with the Heard Together Summonses. 11.Order 4, rule 9(1) of the Rules of the High Court (Cap. 4A) provides that:
12.The principles under this rule are trite:
13.In addition, the Court is expressly empowered pursuant to Order 1B, rule 1(2)(e) to order that the whole or part of any proceedings be stayed either generally or until a specified date or event. The correct approach in an application for a temporary stay of proceedings is to consider the balance of convenience and fairness between the parties: Chen Pao Tzu v Chen Sheng Kuei and Ors [2020] HKCFI 1518 at §§14-18, citing Re Chime Corporation Limited, HCMP 4146/2001 (8 March 2005). 14.The crux of the argument for the Chan Camp is that the 1251 and 787 Proceedings are unrelated and no common issue exists between them. Mr Anthony P.W. Cheung (for the Chan Camp), advances the following points:
15.It is further argued that consolidation would not assist the expeditious and fair disposal of the 1251 Proceedings as it would cause undue delay. It is also said that the 1251 and 787 Proceedings “arise out of entirely different transactions and the relief[s] sought are also entirely different.” 16.Purely insofar as Mr Cheung’s submission relate to the Heard Together Summons (as opposed to the merits of the 1251 Proceedings), I am unable to agree with them. All things considered, the reality is that the 1251 and 787 Proceedings relate to the same fundamental dispute over the ownership of the Subject 30% Shareholding. 17.First, it goes without saying that the Disputed Documents will almost certainly be removed if the Court later finds that Daya Bay has no interest in the Subject 30% Shareholding. 18.Second, one of the reliefs sought in the 787 Proceedings is a declaration that the 2016 and 2017 Transfers are null and void. As Mr Douglas Lam SC submits on behalf of the Daya Bay Camp, a consequence of such relief is that Daya Bay would also be entitled to an ancillary order to rectify the Company’s register of members so that it would show the Subject 30% Shareholding has always vested in Longrigg[1] 19.Putting things into context, it bears emphasis that the Disputed Documents are not the only documents lodged with the Companies Registry which are the subject of disagreement between the parties, irrespective of whether the 28 October 2019 Meeting was inquorate or not. If the Court proceeds to remove the Disputed Documents before the hearing of the 787 Proceedings, the Companies Register would simply be left with the documents filed by the Chan Camp containing information which is disputed by the Daya Bay Camp. There is no reason why these issues need to be determined in a piecemeal fashion rather than in one go. 20.Once it is appreciated that the disputes and uncertainties [2] regarding the information in the Companies Register will not cease overnight, it will become apparent that the expeditious removal of the Disputed Documents is unlikely to bring about any tangible benefit on its own right unless the validity of the 2016 Transfer and/or the purported beneficial interest of Daya Bay is also resolved. 21.In passing, I wish to note that Mr Cheung in his written submissions inexplicably refers to a number of points which are clearly intended to refute the allegations made by the Daya Bay Camp in the 787 Proceedings. These include contentions to the effect that:
22.Whilst I have given no weight to these points, the lengthy submissions on matters which go to the root of the 787 Proceedings in the present hearing is, with respect, perplexing, given that it is also the Chan Camp’s case that the 787 and 1251 Proceedings are capable of being treated independently. 23.Apart from the existence of common questions of law and fact in relation to the 1251 and 787 Proceedings and/or similar rights and relief claimed, there are various other reasons why I consider that it is both fair and logical for both proceedings to be heard together:
24.In light of the above, I will not deal with the merits of the 1251 Proceedings at this stage. C2. Interim Injunction Summons 25.Both shareholder factions accept that the Daya Bay Camp has taken effective control of the Company and appointed themselves as officers of the Joint Ventures. Mr Lam has set out a number of reasons to justify their request for injunctive relief. In gist:
26.Mr Cheung submits that the Interim Injunction Summons is “otiose”, and there is no urgency at all because the Daya Bay Camp is wholly in control of the board of the Company and it is not possible for the Chan Camp to do any act against which the proposed injunction is designed to guard. I agree with Mr Cheung. Indeed, the necessity of the Interim Injunction Summons falls away in view of my decision to order both proceedings to be heard together. As Mr Lam admits, the necessity of the Interim Injunction Summons would “to some extent, depend on the outcome of [the 1251 proceedings] and the Heard Together Summons.” In short, there is no risk that the Self-Help Resolutions will be set aside before the hearing of the 787 Proceedings. Still less is it appropriate for interim receivers to be appointed. 27.Given that the Interim Injunction Summons would only be relevant if I were to dispose of the 1251 Proceedings in favour of the Chan Camp at this hearing, I will dismiss the application for an interim application. D. DISPOSITION 28.In the light of the analysis set out above, I make the following orders in relation to the Heard Together Summons:
29.Mr Lam SC also proposed a number of directions in respect of filing pleadings in HCMP 787 if the Court is of the view that the proceedings ought to continue as if the cause or matter had been begun by writ in light of the factual dispute involved. In view of potential complications and expense, I believe the issue ought to be revisited when Longrigg and High Tower are joined to HCMP 787. The parties are also encouraged to consider whether any additional directions are required in good time before the hearing of the HCMP 1251/2020 and HCMP 787/2020 and apply in good time before the substantive hearing. 30.Looking at the applications before me in the round, I believe a fair order is that there be no order as to costs in respect of the Heard Together Summons and the Interim Injunction Summons. I make such order on a nisi basis. Any other costs incurred in respect of HCMP 1251/2020 be otherwise in the cause of the action.
Mr Anthony P.W. Cheung, instructed by Messrs Benjamin Au & Billy Chan, for the 1st to 5th Plaintiffs in HCMP 1251/2020 and the 2nd and 3rd Respondents in HCMP 787/2020 Mr Douglas Lam SC, Ms Sabrina Ho, and Ms Sakinah Sat, instructed by Messrs Li & Partners, for the 2nd to 4th Defendants in HCMP 1251/2020 and the Applicant in HCMP 787/2020 The attendance of the 5th Defendant in HCMP 1251/2020 was excused [1] This is confirmed by Mr Lam’s further assertion that:
[2] One of the factors for removing impugned documents under section 42(4) of the Companies Ordinance (Cap. 622) is that the continued existence of such documents would cause confusion to intended counterparties: see Wang Zhihua v Registrar of Companies [2020] HKCFI 2873 at §54. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment
Other judgments that cite this case
Further hearings and rulings under HCMP 1251/2020