Ong Yip Chung, Henry v. Chou Tai Ting and Others

HCA009171/1998

HCA 9171/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 9171 OF 1998

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Coram : Hon Cheung J in Chambers

Date of hearing : 21 January 1999

Date of delivery of decision : 21 January 1999

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D E C I S I O N

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Application to strike out

1. The 6th Defendant, High & Mighty Co., Ltd. ("High & Mighty") applies to strike out the Plaintiff's Statement of Claim against it on the ground that it discloses no reasonable cause of action.

The Plaintiff's claim

2. The Plaintiff is claiming that the 1st and 2nd Defendants, who are the directors and shareholders of High & Mighty, are holding the shares in High & Mighty on trust for himself and his deceased wife, and that they should transfer the shares to him and the estate of his wife.

3. The Plaintiff accepts that the Statement of Claim contains no cause of action against High & Mighty. The relief that the Plaintiff seeks against High & Mighty are for :

a) an order that High & Mighty and its directors do register the transfer of shares from the 1st and 2nd Defendants to the Plaintiff and his wife's estate in the event that the Court grants the relief against the 1st and 2nd Defendants;

b) an injunction restraining High & Mighty from registering any transfer of such shares in the meantime; and

c) an order for discovery.

4. The reasons given by the Plaintiff in joining High & Mighty are that :

1) It was joined as a defendant so that any judgment and order made regarding the shares in question will be binding on it;

2) the relief sought is for the purpose of perfecting the transfer of shares in question and of preserving them in the interim; and

3) although the Plaintiff has no substantive claim against High & Mighty, it is a nominal yet necessary party of the action.

Action can be maintained

5. In my view, even though no specific cause of action is made against High & Mighty, the reasons given by the Plaintiff are sufficient reasons for having the case maintained against High & Mighty.

6. Mr Tang, Counsel for High & Mighty, accepts that there is no requirement that a plaintiff can only join a defendant if there is a cause of action against the defendant. The case of TSB Bank International v. Chabra [1992] 1 WLR 231 is clear authority that a defendant can be joined notwithstanding the absence of a cause of action against it. Mr Tang seeks to distinguish the case on the facts and submits that the decision was made in the context of a Mareva injunction application where the evidence showed that the 2nd Defendant was the owner of the assets that were being restrained. In my view, the situations where a defendant can be joined are not exhaustive.

Arguments on O.15, r.6(2)(b)

7. In my view, High & Mighty's argument on O.15, r.6(2)(b) is misconceived because the order deals with the joining of a defendant after the action has commenced. In this case, High & Mighty had already been joined at the commencement of the action and it had already given an undertaking on the Plaintiff's ex parte application (on notice) for a Stop Order on the shares that it would not register transfer of the shares registered in the names of the 1st and 2nd Defendants and pay dividends on the shares.

8. If an application is in fact made under O.15, r.6(2)(b), the Plaintiff has clearly satisfied the requirements, namely High & Mighty's presence is necessary for the disputes to be effectually and completely determined, alternatively, it is just and convenient for High & Mighty to be joined because the relief sought against it is connected with the relief against the 1st and 2nd Defendants. Clearly the presence of High & Mighty in this action will ensure that the same issues need not be litigated twice. A separate action against High & Mighty after the disputes between the Plaintiff and the 1st and 2nd Defendants have been resolved is just a waste of time and costs.

Other provisions not exclusive

9. Mr Tang argues that the relief sought by the Plaintiff, namely the Stop Order regarding the shares and the order directing High & Mighty to register the transfer of shares are all provided for by other means, namely, O.15, rr.11 - 15 of the Rules of High Court and ss.68 and 69 of the Companies Ordinance. I am not convinced that these provisions provide exclusive remedies that will preclude the Plaintiff from proceeding as it does against High & Mighty.

10. Whilst the Stop Order provisions under O.15, r.11 make no distinction between public and private companies, in the context of this case, where there is dispute on the ultimate control of High & Mighty, clearly the Plaintiff is justified and entitled to join High & Mighty as a party.

Stand of High & Mighty

11. Mr Tang also argues that there is no evidence that the 1st and 2nd Defendants had threatened to transfer the shares and High & Mighty had not indicated that it would refuse the transfer in the event the Plaintiff succeeds against the 1st and 2nd Defendants. All these are couched in negative terms. High & Mighty, despite being invited by the Plaintiff, has not indicated that it would take a neutral stand in this litigation.

Conclusion

12. I am satisfied that as a matter of law, the Plaintiff is entitled to join High & Mighty as a party to this action. High & Mighty's application to strike out the Plaintiff's Statement of Claim against it is dismissed.

Representation:

Mr Denis Chang, S.C., leading Mr Albert Xavier, inst'd by M/s Allen & Overy, for the Plaintiff

Mr Ronald Tang, inst'd by M/s Stevenson Wong & Lai, for the 6th Defendant