Hsu Ching Fang v. Ng Chor Kuen and Others

HCMP 651/2014

[2023] HKCFI 1665

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 651 OF 2014

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DECISION

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1.I am refusing the 3^rd Defendant’s (“D3”) application by his summons dated 23 May 2023 for a stay of execution of the judgment of Recorder William Wong SC dated 15 March 2023 (“the Judgment”) pending the appeal by D3.

2.The Plaintiff (“P”) and D3 are brothers. By the Judgment, the learned Recorder held in favour of P’s case that there was an inter vivos gift of 55% and 45% of the Bestfibre Shares to P and D3 respectively and ordered the transfer forthwith of those Shares by the trustees, who are D1 and D2. Had D3’s case prevailed, D3 would have been entitled to 100% of the Bestfibre Shares.

3.D3 do not seek to argue that the merits of the appeal are so strong that the stay should be granted based on that alone. I consider the matter on the basis that D3’s appeal is arguable, which is common ground.

4.I do not dismiss the application based on P’s submission that this application should be dismissed simply because the transfer of the Bestfibre Shares has already been executed and completed days before the present summons was issued and there is now nothing to stay (citing Chen Jinhui v Huang Yuexia [2022] HKCFI 1829). I do not think Deputy High Court Judge Leung there held that there was a general proposition of law to that effect (and I understand Mr Wong does not seek to so argue). Without the benefit of further argument, I do not wish to express any view. Suffice it to say that such general proposition would mean that in many instances even though there are strong reasons to grant a stay, the appealing party would find himself helpless. I would tend to think that in such a case the court should be in a position (if appropriate) to grant some form of order with practical effect to preserve the status quo, and not let the ultimately successful appeal be later rendered nugatory simply because the other party was successfully in a race to have the judgment executed before an order to stay could be granted.

5.I would not give full weight to D3’s complaint of alleged dissipation of the USA Assets by P, as

a.  Behind it clearly was a substantial dispute as to the contents and effect of a family meeting held in mid 2011, probably among other things.

b.  According to D3, he knew through Tsang in as early as May to June 2012 that, contrary to what was agreed or said in the family meeting and through some “false representation” by P, certain shares were transferred to P giving him majority control over Belmont Fibres, Inc (“Belmont”).

c.  D3 said it was to his “utter shock and surprise”. Yet, D3 did nothing about it from mid 2012 until 2022 when, he said, he only then learned about the liquidation of the assets of Belmont in 2017.

d.  I find it inherently improbably and quite inexplicable why there was inaction for 10 years.

6.However, for argument’s sake I am prepared to accept, as Mr Yeung submits, that there is some evidence that P on this earlier occasion had not informed D3 (a minority shareholder) about the liquidation of Belmont’s assets and that there was apparently a suspicious sale of a piece of property belonging to Belmont at zero consideration. I said for argument’s sake because as Mr Wong explained, the properly affirmed version of the 4^th affirmation of D3 was only made available two days ago and that P did not see fit to file any affirmation to respond to what was but a draft.

7.In any case, I take note that, even without the stay now sought, as a 45% shareholder of Bestfibre, D3 would still be in a position to seek redress against any conducts of P as the majority shareholder in control that are unfairly prejudicial to D3’s interest as a minority shareholder.

8.What are presently at stake if the stay is refused are the dividends that Bestfibre might declare and then distribute to P under the 55% shareholding transferred to him pursuant to the Judgment. According to the audited accounts of Bestfibre, its accumulated profits amount to HK$27.8 million odd. If say HK$26 million out of the total accumulated profits of HK$27.8 odd million were to be so declared, the dividends P would receive would be about HK$14.3 million.

9.However, all the circumstances suggest that P is a man of substantial means such that he is good for that amount. Importantly, there is nothing said by D3 in his 4^th affirmation (or in his draft 5^th affirmation) that P is not so.

10.There is also no evidence that P has been or will be divesting his assets.

11.Also importantly, both P and D3 are Taiwan residents and D3 never said anything in his 4^th affirmation (or in his draft 5^th affirmation) about any difficulties in recovering such sum from P in Taiwan, in the event that the dividends would be so declared and distributed and his appeal is successful.

12.I am not convinced that the appeal would be rendered nugatory on the above evidence.

13.That said, Bestfibre owns a valuable piece of landed property that P might or could as a majority shareholder cum director caused to be sold or transferred away. In this regards, I record that in the course of the hearing upon the court’s enquiry P fairly offered through Mr Wong, and this court accepted, an undertaking by P to the effect that he would not cause to be declared any dividends over the amount of HK$8 million (as he indicated in correspondence) and that he would inform D3 forthwith in writing if any resolution for the purpose of sale or transfer of the said landed property is tabled before the directors or when an estate agent is appointed for the purpose of such sale or transfer.

14.Therefore, in the exercise of my discretion and for these reasons I dismiss D3’s application for stay. I will now hear parties on costs.

(Submissions on costs)

15.Having heard counsel for P and D3, I order costs of this application be to P with certificate for counsel summarily assessed at HK$110,000.

16.Having heard arguments made for D1/D2 and for D3, and with reasons given orally, I order D1/D2’s costs limited to certain items of work be paid by D3 on common fund basis summarily assessed at HK$5,000.

17.I thank both counsel and Mr Wong for their assistance.

Mr Damian WONG, instructed by Messrs. So, Lung & Associates, for the Plaintiff

Mr Tak WONG, instructed of Messrs. Lam, Lee & Lai, for the 1^st and 2^nd Defendants

Mr Joshua Yeung, instructed by Messrs. Fong’s, for the 3^rd Defendant

4^th Defendant, in person, absent