Lie Ming, The Committee of the Estate of Hjf v. Forever Team Corporation Ltd

HCMP 2074/2023

[2024] HKCFI 520

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2074 OF 2023

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REASONS FOR DECISION

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1.This was an application under section 570 of the Companies Ordinance Cap 622 (“the Ordinance”) for, inter alia, an order to convene an extraordinary general meeting of the Forever Team Corporation Limited (“the Company”). At the conclusion of the hearing the court granted the relief sought which is described in §§23-24 below.

Background

2.The Company runs a property investment business and holds 3 properties in Hong Kong, a house (“House 9”) and 2 car parks (collectively, “the Properties”).

3.The Company has 2 issued shares. One share is registered in the name of Goler Nominee Limited (“ Goler”) which holds it on trust for the late Lie Sen Nen (“the Deceased”) who died the 2022. The Deceased was the late husband of HJF who is currently the registered owner of the other share in the Company.

4.HJF was declared a mentally incapacitated person by a court order dated 23 August 2022. Lie Ming (the only daughter of the Deceased and HJF) was appointed as the Committee of the Estate of HJF (“Committee”).

5.The Committee is authorised by an order dated 5 October 2023 to take all necessary steps on behalf of HJF as a shareholder, inter alia, to commence section 570 proceedings for the calling of an EGM.

6.Since the death of the Deceased, the Company has had no director and no general meeting has been convened.

7.Between November 2022 and October 2023, the Company requested HJF to settle the outstanding rates, rent and management fees of the Properties. The Committee duly made those payments on the Company’s behalf.

8.Goler refused the Committee’s request that it be appointed the Company’s new director unless so instructed by the executors of the Deceased’s estate. Probate of the Deceased’s estate has not been granted. Although HJF was named as the sole executrix and beneficiary in the Deceased’s last will, a warning to the caveator was filed in January 2023 alleging the existence of another will.

9.In view of Goler’s stance and the impending probate dispute, the Company is unable to appoint a director.

10.Given the terms of the 5 October 2023 order, the applicant sought an order to convene an EGM for the purpose of considering and, if thought fit, passing, inter alia, a resolution appointing the Committee as a director.

Legal principles

11.Section 570 of the Ordinance provides as follows:

“570. Power of Court to order meeting

(1) This section applies if for any reason it is impracticable —

(a) to call a general meeting of a company in any manner in which general meetings of that company may be called; or

(b) to conduct the meeting in the manner prescribed by the company’s articles or this Ordinance.

(2) The Court may, either of its own motion or on application —

(a) by a director of the company; or

(b) by a member of the company who would be entitled to vote at the meeting,

(c) order a general meeting of the company to be called, held and conducted in any manner the Court thinks fit.

(3) If the order is made, the Court may give any ancillary or consequential directions that it thinks expedient.

…’

12.For an order to be made pursuant to section 570, the applicant has the burden of showing that it was impracticable to call a meeting and the court should exercise its discretion to convene: re Mandarin Capital Advisory Limited [2011] 2 HKLRD 1003 at §§5-6.

13.“Impracticable” does not mean “impossible”: Yeung Ka Lai v Mark Gain Investment Limited [2021] 4 HKC 406 at §10. A respondent’s refusal to cooperate by forming a quorum is a prime example of impracticability: Yut Yat Co Ltd v Wu Shaoning, unrep., HCMP 736/2016, (29 April 2016) at §§7, 12-13.

14.A person is regarded as “member” under section 570 (2) (b) if he can demonstrate it is probable that he will become a member of the company: Tsang (deceased) and Kloeden v Bancka Ltd [2017] 5 HKLRD 562 at §9.

15.Section 570 (3) authorises the granting of ancillary directions to the effect that (i) the attendance of 1 shareholder at the EGM shall constitute a quorum, (ii) a resolution be put at the EGM and if thought fit, be passed for the appointment of the applicant as a director: Gruter v Reign Digital Creatives Limited [2020] HKCFI 3137 at §14.

This application

16.It is quite clear that the only way in which the assets of the Company can be preserved for the benefit of those ultimately held entitled to the 2 shares is for a director to be appointed to run the business. The current situation is untenable and there is no reason why the Committee should continue to fund the outgoings for the Properties.

17.The applicant has obtained the necessary authority[1] to commence these proceedings on behalf HJF.

18.Under the Company’s articles, the minimum number is 1 and the quorum for any general meeting is 2 members present in person or by proxy. Currently, the Company has no director and given Goler’s stance, no general meeting can be convened.

19.A lack of quorum is a clear case for an order to be made pursuant to section 570: see the Yeung Ka Lai case at §§10 and 14.

20.A contention that a challenge to the grant of probate should be determined first before making a section 570 was rejected by the court in Clever Ocean Group Limited v Amylinear International Limited, unrep., HCMP 3596/2016, 12 July 2017 at §10.

21.As matters stand, HJF and hence the Committee has at the very least a 50% interest in the Company. HJF will also be entitled to the remaining 50% if the impending probate dispute is resolved in her favour.

22.Having regard to the matters set out in §§6-9 above, I am satisfied that this is an appropriate case for an order to be made pursuant to section 570 (1) to (3) of the Ordinance.

23.Accordingly, I ordered that

(a)  an EGM (“Meeting”) of the Company be convened for the purpose of considering and, if thought fit, passing the ordinary resolutions set forth in the Schedule to the draft order;

(b)  the attendance of the Committee at the Meeting be regarded as constituting a quorum;

(c)  notice of the Meeting signed by the Committee 14 days before the date of the Meeting (time and venue as determined by the Committee) be sufficient and lawful notice for the convening of the Meeting; and

(d)  costs of this application be paid by the Respondent to the Applicant to be taxed if not agreed.

24.The Schedule set out proposed resolutions to be considered and passed at the Meeting: that (a) the Committee be appointed as a new director of the Company; (b) the Committee as a new director of the Company be authorised to operate the Company’s bank accounts, to receive income and pay expenses in the course of the Company’s business; and (c) the quorum for a meeting of the directors shall be one.

Mr Anthony Chan SC, instructed by Messrs. D.S. Cheung & Co. for the Applicant

The Respondent was absent.