Chen Ming v. Chen Jiagan and Others

HCA 2553/2024

[2025] HKCFI 868

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2553 OF 2024

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REASONS FOR DECISION

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1.In this action the plaintiff (“Chen”), a director of Xin Yuan Enterprises Group Limited (“Company”), issued a writ with a general indorsement of claim dated 23 December 2024 (“Indorsement”) against 6 directors and the company secretary of the Company, who are named as the 1^st to 6^th defendants (“D1-D6”) and 7^th defendant (“D7”) respectively. In the Indorsement[1]:

(1)  The only cause of action pleaded is that the resolutions passed at the board of directors’ meeting held on 17 December 2024 (“17 Dec Board Meeting”) (a) removing Chen as chairman and appointing D7 as chairman of the Meeting; (b) removing Chen as chairman of the Company and the nomination committee; and (c) appointing D1 as chairman of the Company and the nomination committee (collectively “17 Dec Resolutions”) were passed in breach of articles 107 and 132 of the Articles of Association of the Company (“AA”); and

(2)  The only relief sought against D1-D7 are (a) declarations that the 17 Dec Resolutions are “void or invalid/ineffective” and Chen remains chairman of the Company; and (b) injunctions restraining D1-D7 from implementing or effecting the 17 Dec Resolutions.

2.The writ and the Indorsement are demurrable as Chen has no cause of action against D1-D7. It is well-established that a director is not a party to the AA and has no locus to complain about its breach.

3.Nevertheless, 2 weeks later, Chen issued a summons dated 10 January 2025 (“Summons”) under Order 20 rule 5, Order 29 rule 1 and inherent jurisdiction of the court to seek the following order:

(1)  An interim injunction to restrain D1-D6 from acting upon the 17 Dec Resolutions;

(2)  An interim injunction to restrain the 1^st, 2^nd, 3^rd, 4^th and 6^th defendants (“D1-D4 & D6”) from taking any further steps to (a) effect “the allotment of new shares or otherwise diluting the shareholding of existing shareholders” including but not limited to allotting new shares to TGG Ventures Limited (“TGG”) (and/or its associates) pursuant to the resolutions passed at the board meeting on 6 January 2025 (“Allotment”); and (b) change the composition of the board until the conclusion of the next Extraordinary General Meeting (“EGM”) of the Company (“Change of Directors”);

(3)  Leave to join (a) Universal International Technology (Hong Kong) Limited (“Universal”), (b) Well Grace Trading Co., Limited (“Well Grace”) and (c) HJ Technology Co., Limited (“HJ”) as the 2^nd, 3^rd, and 4^th plaintiffs respectively (collectively “Intended Ps”); and

(4)  Leave to discontinue the action against D7 with no order as to costs.

4.The Summons is misconceived and falls to be dismissed in limine for the following reasons:

(1)  Chen has no cause of action against D1-D7 (Section B below). Nor does he have locus to seek any injunction to restrain D1-D6 from acting on the 17 Dec Resolutions (Section C below);

(2)  Even if, contrary to my view, Chen has any cause of action against D1-D7, he cannot ask the court to grant any interim relief in relation to the Allotment or the Change of Directors when no relief is sought in respect of either matter in the writ and the Indorsement (Section D below);

(3)  The Intended Ps do not have any cause of action against D1-D7 (Section E below).

(4)  There is no basis to deprive D7 of costs when Chen seeks to discontinue the action against him (Section F below).

5.At the hearing, this Court struck out the writ and dismissed the Summons. The costs of and occasioned by the action was ordered to be paid by Chen to those defendants who had been served with the writ and the Summons namely, D1, the 3^rd Defendant (“D3”), the 5^th Defendant (“D5”), and D7. As for the costs of and occasioned by the Summons, it was ordered to be paid by Chen and the Intended Ps to D1, D3, D5, and D7. These are the reasons for my decision.

A.  BACKGROUND

A1.  Parties

6.The Company was incorporated in the Cayman Islands. Its shares have since 26 September 2018 been listed on the Main Board of The Stock Exchange of Hong Kong (stock code: 1748). The Company through its subsidiaries principally engages in the business of asphalt tanker chartering.

7.Chen is the son of Mr Chen Maochun (“Chen Snr”). Chen is not a shareholder of the Company. He has since 25 March 2021 been an executive director of the Company. He was appointed as Chairman of the Company on 20 December 2021.

8.Amongst the Intended Ps, Universal is a company wholly owned by Chen Snr and holds 26.36% shareholding in the Company; Well Grace holds 4.08% while HJ holds 8.18%.

9.At the time the 17 Dec Resolutions were passed, D7 was the company secretary and the board had:

(1)  5 executive directors who were Chen, Mr Lin Shifeng (“Lin”) and D1-D3. Amongst them, Chen was chairman of the board and the nomination committee; D1 was vice chairman; D2 was chief executive officer while Lin was financial officer; and

(2)  3 independent non-executive directors who were D4-D6.

10.Shortly after the commencement of the action, D5 resigned as director on 31 December 2024.

A2.  17 Dec Board Meeting

11.By notice dated 6 December 2024, D4-D6 convened the 17 Dec Board Meeting to discuss, inter alia, the re-election of chairman and reforming the structure of the board.

12.On 13 December 2024, the board received a requisition from Mr Huang Lingsheng, Mr Chen Guiren and Well Grace, requesting the board to convene an EGM for the purpose of considering inter alia resolutions to remove D1-D6 as directors (“1^st Requisition”). This was followed by Chen issuing a notice to convene a board meeting to be held at 3pm on the same day (“13 Dec Board Meeting”). No reason was given by Chen as to why a board meeting had to be held 30 minutes after the Company had received the 1^st Requisition.

13.The 13 Dec Board Meeting was only attended by Chen and Lin during which it was resolved inter alia that the board shall take all necessary actions to hold an EGM on or around 9 January 2025 for the purpose of passing resolutions in connection to the 1^st Requisition.

14.Lin did not attend the 17 Dec Board Meeting. The minutes of the 17 Dec Board Meeting recorded that:

(1)  On re-election of chairman of the Meeting, members of the board and the Company’s solicitors expressed concern that Chen was in a position of conflict. However, Chen refused to abstain from voting and maintained that under article 107 of the AA, he had unqualified power to decide whether he was required to abstain. The board resolved that the company secretary shall assist in the conduct of the 17 Dec Board Meeting.

(2)  On re-election of chairman, Chen said that D1-D6 had significant conflict (“重大利益衝突”) in the proposed resolutions relating to vice chairman and re-election of chairman, which should be resolved separately and he needed to take legal advice.

(3)  The board resolved, by a majority with Chen voted against the resolutions and D1 abstained, that (a) The office of vice-chairman of the board be revoked; and (b) D1 be elected as chairman in place of Chen.

(4)  No resolution was passed in respect of the proposed restructuring of the board or re-election of chairman of the nomination committee.

A3.  Events after 17 Dec Board Meeting

15.After the 17 Dec Board Meeting, Chen issued a letter to D1-D7, urging them to refrain from acting on the 17 Dec Resolutions which are “all illegal” given that:

(1)  The board had received the 1^st Requisition requiring an EGM to be convened for the purpose of removing D1-D6 as directors;

(2)  Chen had already declared at the 17 Dec Board Meeting that D1-D6 should be disqualified from voting and be counted as quorum under article 107(d)-(f) of the AA;

(3)  D7, not being a director, could not be appointed as chairman of the 17 Dec Board Meeting and the appointment was in breach of article 132 of the AA; and

(4)  the resolution to remove Chen as chairman and appoint D1 as chairman was passed under the purported chairmanship of D7 and against the “strenuous and repeated objection” of Chen.

16.On 24 December 2024, the writ was issued.

17.On 29 December 2024, the Company was advised by its Cayman lawyers, Messrs. Appleby, that the 1^st Requisition was not in compliance with article 64 of the AA as only Well Grace was a registered shareholder with 4.08% voting rights in the Company.

18.In reliance on Appleby’s advice, at the board meeting held on 2 January 2025 it was resolved by a majority (with Chen and Lin voted against) not to convene the EGM requested by the 1^st Requisition.

A4.  2^nd and 3^rd Requisitions

19.By letter dated 2 January 2025, the Intended Ps (holding 38.62% voting rights) alleged that the 17 Dec Resolutions were passed by D1-D6 in breach of the AA and their fiduciary duties owed to the Company, and requested the board to issue a notice by 3 January 2025 to convene an EGM to be held before 24 January 2025 for the purpose of passing ordinary resolutions to remove D1-D4 & D6 as directors and to appoint the 6 persons nominated by them as directors (“2^nd Requisition”).

20.By notice dated 3 January 2025, D1 convened a board meeting to be held on 6 January 2025 to discuss the proposed issuance of 88,000,000 new shares at HK$1.2 per share to TGG and the application of the funds raised as general working capital (HK$10.56 million) and payment for the 2 vessels purchased at US$42 million, of which US$25.5 million had already been paid, as announced by the Company on 5 August 2024 (i.e. the Allotment).

21.By another letter dated 5 January 2025, the Intended Ps together with 3 other persons/entity who claim to hold shares in the Company through HKSCC Nominees Limited, requested the board to convene an EGM to consider the proposed resolution stated in the 2^nd Requisition and a further resolution to revoke the general mandate given to the board at the last AGM to issue and allot new shares up to 20% of the issued share capital of the Company (“3^rd Requisition”).

A5.  Subscription Agreement

22.On 6 January 2025, the Company announced that it had entered into a Subscription Agreement with TGG pursuant to which the Company conditionally agreed to issue and allot 88,000,000 shares (representing 20% of the issued share capital of the Company) at HK$1.2 per share. The Company intended to use the net proceeds of HK$105 million to finance the remaining consideration of US$25.2 million for the 2 vessels purchased and as general working capital of the Group as to HK$10.5 million.

23.On 8 January 2025, the Company announced that a supplemental agreement to the Subscription Agreement had been entered into on the same day to, inter alia, adjust the subscription price from HK$1.20 to HK$1.215 per share.

24.On 10 January 2025, the Summons was issued and returnable before this Court on 14 February 2025, apparently because Chen’s solicitors did not consider the application to be sufficiently urgent as to warrant a hearing on the next Friday (i.e. 17 January 2025).

B.  NO CAUSE OF ACTION AGAINST D1-D7

25.The only cause of action pleaded in the Indorsement is that the 17 Dec Resolutions were passed in breach of AA and the relief sought only pertains to the same Resolutions. As Chen is not a shareholder of the Company, he has no cause of action against D1-D7 for breach of the AA, to which none of them are parties:

(1)  The articles of association is a statutory contract between the company and its members and it regulates the rights between the company and its members and the members inter se. The rights and liabilities of the members under the articles can only be enforced by or against the company or its members (London Sack & Bag Co Ltd v Dixon & Lugton Ltd [1943] 2 All ER 763 at 765F-H; Newmark Capital Corp Ltd v Coffee Partners Ltd [2007] 1 HKLRD 718 at §81(1) per Recorder Paul Shieh SC).[2]

(2)  This is confirmed in Ogier’s legal opinion dated 9 January 2025 adduced by Chen (“Ogier Opinion”), where Ogier opines that under Cayman law, a company’s articles of association constitute a multi-party, statutory contract between the company and its members and the members inter se.

(3)  Citing article 127 of the AA which provides that the board’s exercise of powers is “subject nevertheless to the provisions of … these Articles”, Ogier observes that the directors are obliged to act in accordance with a company’s articles of association. This is uncontroversial but it does not render the directors parties to the AA or provide them with the requisite standing or right to complain about any breach of the AA against the fellow directors in his own right (and Ogier does not say so).

26.Mr Tony Ko,[3] counsel for Chen and the Intended Ps, submits that Chen has locus to sue by virtue of being a director removed by the 17 Dec Resolutions. Quite apart from the fact that Chen has never been removed as a director, Mr Ko is unable to cite any authority in support of his proposition that the removal of Chen alone would confer a standing on him to sue, still less a cause of action which he can claim against his fellow directors.

27.Mr Ko also contends that the 17 Dec Resolutions are invalid for breach of fiduciary duties on the part of D1-D6. There is no such plea in the Indorsement. In any event, the contention is wholly misconceived:

(1)  It is an elementary principle of company law that save in exceptional circumstances, directors owe their fiduciary duties to the company alone. Where the company suffers loss as a result of an actionable wrong done to it, the cause of action is vested in the company and the company alone can sue. No action lies at the suit of a shareholder suing as such, unless he is permitted to bring a derivative action in right of the company (Waddington Ltd v Chan Chun Hoo (2008) 11 HKCFAR 370 at 390).

(2)  Even for a member, in order to bring a claim for breach of fiduciary duties against the directors, he/she has to commence a common law derivative action (in which the factual bases for coming within the exception in the rule in Foss v Harbottle must be pleaded) or to seek leave of the court to commence a statutory derivative action under ss.732-733 of the CO on behalf of the company in respect of the alleged breach.

(3)  As Chen is not a member of the Company, he has no right to commence any derivative action on behalf of the Company against the other directors.

28.Although Mr Ko tries to salvage the case by contending that the defects in the writ and the Indorsement can be cured by way of amendments on the basis that the Intended Ps are members of the Company, I do not think that the court should allow the action to continue in circumstances where counsel has not been able to articulate what amendments he has in mind or how such amendments, if made, can cure the defects.

29.For the above reasons, this is a clear case where the court should exercise the power under Order 18 rule 19(1) or its inherent jurisdiction to strike out the writ and the Indorsement on the ground that they are plainly demurrable and unsustainable.

30.For completeness, in case this matter goes further, I do not think that there is any merit in the alleged breaches of the AA:

(1)  In resolving that Chen should abstain from voting on the resolution for re-election of chairman, D1-D6 complied with article 107(f) of the AA, which provides as follows:

“If any question shall arise at any meeting of the Board as to the materiality of the interest of a Director (other than the chairman of the meeting) or his Close Associates or as to the entitlement of any Director (other than the chairman of the meeting) to vote or be counted in the quorum and such question is not resolved by his voluntarily agreeing to abstain from voting or not to be counted in the quorum, such question shall be referred to the chairman of the meeting and his ruling in relation to such other Director shall be final and conclusive except in a case where the nature or extent of the interest of the Director or his Close Associates concerned as known to such Director has not been fairly disclosed to the Board. If any question as aforesaid shall arise in respect of the chairman of the meeting or his Close Associates such question shall be decided by a resolution of the Board (for which purpose such chairman shall not be counted in the quorum and shall not vote thereon) and such resolution shall be final and conclusive except in a case where the nature or extent of the interest of such chairman or his Close Associates as known to him has not been fairly disclosed to the Board.” (underlined added)

(2)  Since the resolution concerns Chen’s entitlement to vote, it was properly decided by way of a resolution of the board, with Chen being excluded as the incumbent chairman.

(3)  Such a resolution is “final and conclusive” under article 107(f) of the AA and may only be challenged for bad faith or if it is exercised for an improper purpose (Kwok Hiu Kwan v Johnny Chen & Ors (No 2) [2021] 4 HKC 167 at §§6, 50 per Kwan VP). Mr Ko has not identified any basis for suggesting that the resolution was passed by D1-D6 in bad faith or for an improper purpose.

(4)  I am unable to discern any conflict of interest on the part of D1-D6 in passing the 17 Dec Resolutions:

(a)  At the time of the 17 Dec Board Meeting, there was no valid requisition to convene an EGM to vote on their removal. The 1^st Requisition was invalid for the reasons stated in §§17-18 above. Mr Ko accepts that Chen cannot rely on the 1^st Requisition.

(b)  Even assuming the 1^st Requisition were valid, just because there was a requisition from some shareholders to remove all the directors would not put D1-D6 in a position of conflict as the 17 Dec Board Meeting was convened to discuss the resolutions for re-election of chairman and reconstitution of the board.

(c)  Mr Ko relies heavily on the Ogier Opinion in support of the proposition that the 17 Dec Resolutions were invalid. However, far from concluding that a conflict of interest had arisen, the Ogier Opinion merely stated that:

“(b) assuming it can be established that: (i) [D1-D6] had a material interest with respect to [Chen]’s replacement as chairman of the board and [Chen] in turn also had a material interest with respect to his replacement … then a deadlock would arise as a result of articles 107(d) and 107(f), with none of the directors being present at the [17 Dec Board Meeting] being able to vote or being counted in the quorum. If no quantum could be established, then the resolution to replace [Chen] as chairman would not be valid;” (underlined added)

(d)  Nor did the Ogier Opinion opine that there was any breach of duties by D1-D6. Instead, it merely stated the proposition that “to the extent that there was an ulterior motive to replace [Chen] as chairman” there would be a breach of directors’ duties.

(5)  On the other hand, the resolution passed by D1-D6 to appoint D1 as chairman in place of Chen was in compliant with article 132 of the AA, which provides that:

“The Board may from time to time elect or otherwise appoint one of them to the office of chairman of the Company and another to be the vice chairman of the Company (or two or more vice chairmen) and determine the period for which each of them is to hold office. The chairman of the Company or, in his absence, the vice chairman of the Company shall preside as chairman at meetings of the Board, but if no such chairman or vice chairman be elected or appointed, or if at any meeting the chairman or vice chairman is not present within five minutes after the time appointed for holding the same and willing to act, the Directors present shall choose one of their number to be chairman of such meeting. All the provisions of Articles 103, 108, 123, 124 and 125 shall mutatis mutandis apply to any Directors elected or otherwise appointed to any office in accordance with the provisions of this Article.” (underlined added)

C.  NO LOCUS TO SEEK INJUNCTION AGAINST D1-D6

31.In trying to salvage Chen’s case, Mr Ko relies on s.729 of the CO as the basis for seeking injunctive relief against D1-D7 in the Summons. This is despite the fact that in the Summons, there is no reference to s.729 of the CO. Indeed, an application under ss.728-729 of the CO should be commenced by way of an originating summons, instead of a writ.

32.Sections 728 and 729 of the CO provide:

Section 728

“(1) Section 729 applies if, in relation to a company—

(a) a person has engaged, is engaging or is proposing to engage in conduct that constituted, constitutes or would constitute—

(i) a contravention of this Ordinance;

(ii) a default relating to a contravention of this Ordinance; or

(iii) a breach specified in subsection (4); or

(b) a person has refused or failed, is refusing or failing, or is proposing to refuse or fail, to do an act or thing that the person is required by this Ordinance to do.

…

(4) The breach specified for the purposes of subsection (1)(a)(iii) or (2)(a)(iii) is—

(a) a breach of the person’s fiduciary duties owed to the company in any capacity other than as a director of the company;

(b) a breach of the person’s fiduciary or other duties as a director of the company owed to the company; or

(c) a breach of the company’s articles.

…”

Section 729

“(1) The Court may, on application by a member or creditor of the company whose interests have been, are or would be affected by the conduct or by the refusal or failure, do any or all of the following—

(a) grant an injunction, on the terms that the Court thinks fit—

(i) in the case of section 728(1)(a) or (2), restraining the person from engaging in the conduct or requiring the person to do any act or thing; or

(ii) in the case of section 728(1)(b) or (3), requiring the person to do any act or thing;

(b) order the person to pay damages to any other person;

(c) declare any contract to be void or voidable to the extent specified in the order.

…

(5) To avoid doubt, a person is not entitled to recover, by way of damages under subsection (1)(b) or (2)(b), any loss that solely reflects the loss suffered by the company that only the company is entitled to recover under the common law.”

33.As is clear from s.729(1), the application can only be made by “a member or creditor of the company”. “Member” is defined in s.2 of the CO to mean “(a) a founder member of the company, or (b) a person who agrees to become a member of the company and whose name is entered, as a member, in the company’s register of members.”

34.Chen is not a member of the Company. He has no standing to pursue an application under ss.728-729 of the CO.

35.In any event, s.729 of the CO does not create a free-standing or independent cause of action which may be invoked by a member. It applies only if any of the enumerated circumstances in ss.728(1)(a) or 728(4) is engaged. For the reasons given in Section B above, Chen has no cause of action to ground a s.729 application.

D.  NO BASIS FOR INTERIM RELIEF

36.Even if, contrary to my view, Chen does have any cause of action against D1-D7, I do not consider that there is any basis to grant any “interim-interim” relief sought by him.

37.“Interim-interim” relief is meant to be an urgent and temporary stop-gap measure and would only be granted in circumstances where the court has to do practical justice when it does not have sufficient time to consider the matter fully; the court would take whichever course which appears to carry the lower risk of injustice if it should turn out that it is wrong (China Shanshui Cement Group Ltd v Zhang Caikui [2018] HKCA 409 at §§13, 18).

38.No interim relief (let alone “interim-interim” relief) should be granted for the following reasons.

39.First, for the reasons explained in Sections B and C above, there is no serious issue to be tried in respect of the alleged breach of the AA or the alleged (and unpleaded) breach of fiduciary duties in relation to the 17 Dec Resolutions (§1(a) of the Summons).

40.Second, as regards the injunctive relief sought in relation to the Allotment and the Change of Directors (§1(b) of the Summons), neither has been pleaded in the Indorsement. Nor can it be said to be ancillary and incidental to the pre-existing causes of action, which concern the validity of the 17 Dec Resolutions alone (Komal Patel v Chris Au & Ors [2015] 6 HKC 389 at §49). I am unable to see how the court can grant an interim relief which falls outside the scope of the writ.

41.Mr Ko submits that the writ and the Indorsement can be amended by adding the claims and relief in relation to the Allotment and the Change of Directors. However, no proposed amendments have been formulated or put forward. This is despite the fact that the Allotment and the 2^nd and 3^rd Requisitions took place more than a month before the hearing.

42.When asked by this Court to identify what cause(s) of action Chen and the Intended Ps propose to add by way of amendments, Mr Ko says that the cause of action is “unfair prejudice”, which is plainly not a cause of action. Then Mr Ko suggests that the cause of action is breach of the AA and breach of fiduciary duties, neither which can be advanced by Chen or the Intended Ps for the reasons explained in Section B above and Section E below.

43.Further and in any event, as submitted by Mr Justin Lam, counsel for D1 and D3, balance of convenience is clearly against the grant of any interim injunction in view of Chen’s conduct:

(1)  Chen disregarded proper corporate governance and is willing to use whatever means to protect his interests, including by convening the 13 Dec Board Meeting with only 30 minutes’ notice and wrongly asserting that he as chairman has the right to determine his own eligibility to vote.

(2)  Chen purported to exercise his powers as chairman without providing any justification and make decisions to advance his own course.

(3)  Chen acted on the 1^st Requisition without even doing the most basic check of whether the requisitionists were registered shareholders or whether the 1^st Requisition was valid.

44.There can be no unfairness to Chen if no interim relief is granted.

45.Nor is there any urgency which would justify the court granting a temporary stop-gap measure. In this regard, Mr Ko submits that:

(1)  It is important for third parties to have clarity as to who has the authority to act on the Company’s behalf, which is a listed company.

(2)  The present dispute should be resolved before the EGM is held within 2 months after the 3^rd Requisition.

(3)  It is uncertain whether the listing approval application for the Allotment will be submitted. There remains a real or imminent risk that the shareholding in the Company may be altered by any resolutions passed by the board controlled by D1-D7.

46.I am unable to agree with Mr Ko:

(1)  As to §45(1) above, the risk of confusion is illusory. Both Chen and D1 remain as directors despite the change in chairman. There is no evidence to suggest that D1-D6 have or will enter into unauthorised transactions which may adversely affect the Company.

(2)  As to §45(2) above, the mere fact that some shareholders have requested an EGM to be convened is neither here nor there. There is no basis for Chen to speculate in his affirmation that “there is a real risk that [D1] will make decisions in the EGM that is calculated to defeat the passing of the resolution against their removal.” Insofar as Chen takes issue with D1 chairing the EGM, the present action or the Summons is not the correct avenue. Article 64 of the AA states that if the board fails to convene an EGM within 21 days of the deposit of the requisition, the requisitionists may themselves convene the EGM. It has not been explained why the court should intervene when the recourse under the AA has not been utilized.

(3)  As to §45(3) above, I am unable to see how the shareholding in the Company may be “altered” by resolutions of the board. Nor is it understood what is meant by “the Board controlled by the Defendants.”

47.For the above reasons, I do not think that there is any proper basis for the court to grant any “interim interim” injunction or any interim injunction sought in §1 of the Summons.

E.  JOINDER OF INTENDED Ps

48.The Intended Ps do not have any cause of action against D1-D7. They were not privy to the 17 Dec Resolutions. Nor do they have any basis to complain about the validity of such Resolutions which only concerns the change of chairman of the board. Mr Ko has not identified what “common question of law or fact” which would arise as between Chen and the Intended Ps; or why their rights to relief claimed are “in respect of the same transaction or series of transaction”. As noted above, the 2^nd Requisition and the 3^rd Requisition had not been made at the time of the 17 Dec Board Meeting. I am unable to see, and Mr Ko has not articulated, any viable cause of action which the Intended Ps may make against D1-D7.

F.  LEAVE TO DISCONTINUE AGAINST D7

49.Lastly, Chen seeks leave to discontinue the action against D7 with no order as to costs (§3 of the Summons). This application is both unnecessary and without merit. Order 21 rule 2(1) and (3) provides that a plaintiff may discontinue an action against a defendant at any time not later than 14 days after service of the defence on him. As no defence has been filed by D7, all that Chen needs to do is to file a notice of discontinuance as against D7.

50.Had that been done, D7 may proceed to have his costs of the action be taxed under Order 62 rule 10(1). No reason has been articulated by Mr Ko as to why D7 should be deprived of his costs.

G.  COSTS

51.For the above reasons, the action and the Summons do not get off the ground. There is no reason why costs should not follow the event.

52.Although the Intended Ps have not been joined as parties, in applying for leave to be joined as additional plaintiffs to this action, they fall within the meaning of “plaintiff”, which is defined in s.2 of the High Court Ordinance (Cap. 4) as “includes every person asking any relief (otherwise than by way of counter-claim as a defendant) against any other person by any form of proceeding, whether the proceeding is by action, suit, motion, summons or otherwise”. Having decided to join as plaintiffs in the action and seek the relief in the Summons, which the court finds to be wholly without merit, there is no reason why the Intended Ps should not be required to bear the costs of the Summons jointly and severally with Chen.

Mr Tony Ko and Mr Kin Hung, instructed by Kingston Tong & Co., for the Plaintiff and the 2^nd, 3^rd and 4^th Intended Plaintiffs

Mr Justin Lam, instructed by Stephenson Harwood, for the 1^st and 3^rd Defendants

The 2^nd, 4^th, 6^th, and 7^th Defendants were unrepresented and did not appear

Attendance of the 5^th Defendant was excused