Re Hy & Ht Lee Brothers & Co. Ltd.

HCCW000275A/1998

HCCW275/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP NO.275 OF 1998

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Coram : The Hon Mrs Justice Le Pichon in Court

Dates of Hearing : 8-10, 13-15, 17, 20-24, 27-28 September 1999

Date of Judgment : 28 September 1999

Date of Reasons Handed Down : 13 October 1999

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R E A S O N S

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Introduction

1. Samuel Tak Lee ("the Petitioner") is a shareholder and director of HY & HT Lee Brothers & Company Limited ("the Company"), a family company. On 27 April 1998, he presented a petition to wind up the Company on the "just and equitable" ground pursuant to section 177(1)(f) of the Companies Ordinance. Although the Company is nominally a respondent, for practical purposes, the real respondents are his elder brother Lee Tak Yan ("TY Lee") and his uncle Lee Chai Cheong ("CC Lee"), (collectively "the Respondents") both of whom are also shareholders and directors of the Company. After a 14 day hearing, the petition was dismissed. The reasons appear below.

2. When the petition was first presented, the Petitioner had two complaints and two only. They concerned the convening of a board meeting for 7 March 1998 which, it was alleged, was a pivotal event in triggering a loss of trust and confidence between the Petitioner and the Respondents, and seven transfers made between March 1995 and February 1997 of dividends attributable to 2,750 shares of the Company registered in the name of Lee Cheong Yee to MW Lee & Sons Enterprises Limited ("MWLS") another family company. Those shares were appointed to the Petitioner under the will of his late mother Ng Chun Wah ("Madam Ng") exercising a special power of appointment conferred on her by the will of her deceased husband MW Lee. The dividends comprised those accumulated between the death of Madam Ng in May 1991 and February 1997.

3. The petition was amended on 23 July 1998 and re-amended on 22 December 1998. At the commencement of the hearing, the Petitioner was allowed to re-re-amend the petition. The complaints introduced by the various amendments relate to events that are entirely post-petition.

The witnesses

4. The Petitioner and the Respondents were the only witnesses. Although Raymond Lee, a son of TY Lee, was tendered for cross-examination by the Respondents, that offer was declined.

5. CC Lee and TY Lee are respectively 86 and 72 years of age. As is not surprising with witnesses of advanced years, they had some difficulty in recalling precisely when events occurred or their sequence. This was perhaps more marked in the case of TY Lee. Nevertheless both Respondents stood up to rigorous cross-examination. CC Lee has been a director of the Company for close to 60 years and TY Lee for some 40 years.

6. CC Lee was the main witness for the Respondents. At 86, he was impressively alert and full of stamina. The Respondents come from a traditional Chinese family whose values and code of behaviour permeate through to the way a Chinese family company is run. Honour and respect for the senior members of the family is much a way of life. The Respondents themselves belong to a generation where such traditions and values still tend to hold sway.

7. By way of contrast, the Petitioner who is considerably younger, is of a different mould and, it may fairly be said, generation. He was educated abroad and qualified as a chartered structural engineer and architect. He has since moved into the business and property development world and is the archetypal entrepreneur and deal-maker. He is energetic and, seemingly, very successful in his business endeavours. Temperamentally, he could not be more different from the Respondents, being highly excitable, aggressive and abrasive.

8. The Petitioner is a meticulous man. He is a keen and prolix letter writer and has a passion for keeping written records of conversations, meetings etc., all of which are then filed away for future use. He admitted to tape-recording telephone conversations and meetings even when the other party is a family member such as his elder brother. He is an avid maker of attendance notes and even informal tea meetings are recorded in that form. It was his wont to dictate lengthy attendance notes, recording what was said by each party on a particular topic in considerable detail. They were dictated the same day or by the following morning. The notes are invariably made in English although the discussion might have been in Cantonese. This accounts for the unusually large number of letters, tapes, transcriptions of tapes and attendance notes that are in evidence. From these it emerged that for years his elder brother had counselled and entreated him "to reduce conflict rather than blow it up in a big fight", to avoid "hard confrontation", "not to press people too much or to corner them to a dead end" and "to let sleeping dogs lie" when dealing with members of the extended family.

The Company

9. The Company was incorporated in 1929 by two brothers, namely HY Lee and HT Lee. They were the two original shareholders and permanent managing directors. The Company carried on the business that had previously been carried on by the two brothers in partnership. From inception, the bulk of the issued shares of the Company has been held by the original founders and their respective descendants. In broad terms, the size of the shareholdings of the two branches, i.e. HY Lee and his descendants and HT Lee and his descendants, have been more or less comparable. HY Lee's branch holds 41.17% of the issued shares whilst HT Lee's branch holds 38.37%. Since 1968, Prudential Enterprises Limited ("PEL"), another family company established by MW Lee and CC Lee in 1958, has held 2,500 shares in the Company or 7.8%. The remaining shares (a minority holding) have been and continue to be held by third parties who are either employees of the Company or distant relatives of the founders.

10. HY Lee had a son, namely MW Lee. MW Lee in turn had six children, the eldest and youngest of whom (i.e. TY Lee and the Petitioner respectively) were sons. HT Lee had six sons and four daughters. CC Lee is the eldest son.

Directorship structure

11. As noted above, HY Lee and HT Lee were permanent managing directors from inception. Between 1936 and 1941, HY Lee and his only son MW Lee (the father of TY Lee and the Petitioner) were the directors representing shareholders who belonged to the HY Lee side of the family, HT Lee was the director representing shareholders who were members of his side of the family whilst Lee Pak Wu acted as a representative director on behalf of third party shareholders.

12. When Lee Pak Wu ceased to be a director of the Company in April 1941, CC Lee, the eldest son of HT Lee, was appointed an additional director representing shareholders who belonged to the HT Lee side of the family. CC Lee was then in his late twenties. For a few months, namely between April and December 1941, each branch had two directors. When HT Lee died in December 1941, no new director was appointed. HY Lee and his son MW Lee represented the HY Lee side and CC Lee represented the HT Lee side of the family. HY Lee died in 1952, leaving his son MW Lee and his nephew CC Lee as the only directors. Seven years later, in 1959, TY Lee (then in his early thirties) was appointed an additional director. At this point, the HY Lee side of the family had two directors, namely, MW Lee and TY Lee whilst the HT Lee side of the family had only one director, i.e. CC Lee.

13. In September 1966, two additional directors were appointed : they were the Petitioner (a grandson of HY Lee) and Lee Chai Yen (or Yan) (a son of HT Lee and younger brother of CC Lee). Lee Chai Yen died in December 1978, followed by MW Lee several months later. CC Lee, TY Lee and the Petitioner continued as directors. That has been the position for two decades until recent events. The following table summarizes the position.

Directors of the Company

It is apparent from the table that since April 1941, only the founders and their direct male descendants have been appointed directors. Apart from the seven years immediately following the death of HY Lee in 1952 when each branch had one director, since December 1941, the HY Lee branch has always had one director more than the HT Lee branch. The evidence of CC Lee supports this analysis.

14. The last occasion prior to 1998 when new directors were appointed was in 1966, some 32 years ago. At that time the Company's premises in Des Voeux Road Central were being redeveloped. The Petitioner, having then just qualified as a chartered structural engineer and architect, was involved in that redevelopment. MW Lee wished to make the Petitioner a director and approached CC Lee about it. It is not disputed that CC Lee was consulted by MW Lee and agreed on condition that his younger brother Lee Chai Yen would also be made a director so that there would be five directors in all and the balance maintained.

Other family companies

15. To complete the picture, it is necessary to mention other family companies.

PEL

16. As noted above, PEL was established by MW Lee and CC Lee in 1958. Prior to a settlement reached on 26 September 1995 (referred to below as "the 1995 Settlement") the Petitioner and his family (including a nominee company) held approximately 5.8% of its issued shares. TY Lee and his sisters held 21.2%, CC Lee and his family held 38.24% and the Company held 9.54%. Although the Petitioner was excluded from PEL's board between 1969 and 1978, a period during which the Petitioner regarded himself as being "out in the wilderness" due to family disapproval of matters concerning his private life, he rejoined PEL's board in 1978. He became substitute permanent managing director in the early eighties and the reason appears from extracts of a 60 minute cassette tape made by Madam Ng in 1981/82 for the Petitioner and transcribed by him. At that time Madam Ng was so upset by the Petitioner's conduct that she could not bear to speak to him directly. It would appear that MW Lee gave the Petitioner control over PEL because he was an architect and the property held by PEL was being redeveloped at the time. Nevertheless this was subject to three conditions, one of which was that in the redevelopment project and its related matters the Petitioner needed the unanimous agreement of TY Lee and CC Lee.

17. TY Lee and CC Lee resigned as directors of PEL sometime around the mid-eighties. After Madam Ng's death in 1991, the Petitioner became its permanent managing director. He controls PEL's board.

18. As at September 1995, there were some 16 actions then ongoing to which the Petitioner and/or his children and/or PEL was party on the one hand and various family members (in the extended family sense) on the other. By the 1995 Settlement, those actions were globally settled and as a consequence, the Petitioner and his family increased their shareholding in PEL from just under 6% to approximately 27%.

19. This came about through the settlement, inter alia, of the dispute over the Blue Pool Road properties. No.5 was owned by MWLS and No.7 by Greenhill, a company owned by the CC Lee side of the family. Greenhill had wanted the properties jointly redeveloped or partitioned and brought an action alleging that there was an agreement to that effect. This was settled through PEL purchasing both properties from MWLS and Greenhill. The consideration paid to MWLS was HK$60.48 million in cash plus 1,357 PEL shares if (which was the case) PEL's board approved it. 1,800 shares in MWLS had been appointed to the Petitioner by Clause 7 of Madam Ng's will and 480 shares in total in Madam Ng's own name had been bequeathed by Madam Ng to two of the Petitioner's sons. Notwithstanding the then unresolved estate duty problem concerning property bequeathed to Madam Ng by her late husband and over which she had a special power of appointment and the fact that the Petitioner had entered a caveat which effectively blocked any grant of probate to Madam Ng's will, the PEL shares were taken by the Petitioner and his sons. This resulted in an increase in the holding of PEL shares over which the Petitioner had control to approximately 27%. It is the Respondents' contention that the allotment to the Petitioner of those shares was based on an oral agreement between TY Lee and the Petitioner on which the Petitioner has reneged. It is alleged that that involved giving the 1,800 MWLS shares bequeathed to May Lee by Madam Ng to the Petitioner on condition that the caveat would be vacated. This is an issue that arises in a separate petition concerning PEL which is pending. For present purposes, it is unnecessary for me to go into it.

MWLS

20. MWLS was established by MW Lee for his own family members. The registered shareholders are none other than the Petitioner, TY Lee and the estates of MW Lee and Madam Ng. TY Lee and the Petitioner are its only directors.

The Petition

21. The crux of the petition is that the breakdown in trust and confidence between the Petitioner and the Respondents brought about by the latter's conduct. To put matters in their proper context, it is necessary to consider the Company's management since the Petitioner became a director in 1966 before considering each of the grounds relied on by the Petitioner.

Management of the Company since 1966

22. As noted earlier, the Petitioner was made a director in 1966 at about the time the Company's premises were being redeveloped. It is the Petitioner's own evidence that for about 10 years from the late 60s to 1978, he was "in the wilderness" as regards the family businesses. In other words, he was not involved. MW Lee died in 1979. During his lifetime, MW Lee and CC Lee being the senior generation ran the Company.

23. It is a fact that for over 14 years, as from February 1985 until after the presentation of the Petition, the Petitioner did not attend any board meetings or general meetings. The Petitioner's attitude towards and involvement in the management of the Company emerge from the following passages of the transcript :

"Q: ...... Page 132, the last page of the letter, the second paragraph:

'As I described in my previous correspondence, for the past 12 years or so, I never set foot into General Commercial Building, with the exception of several meetings which took place only in room 1202 on the 12th floor below (i.e. the three-day meeting I had with you and your brother in 1981 and a casual discussion with your brothers some years ago).'

Correct?

A: I already answered yes. Yes.

Q: You made that plain in your previous correspondence as well; that must be so?

A: If it is in the record, yes.

Q: You accept that. You also accepted that your uncle would co-sign virtually on a daily basis all the cheques of the companies, all the minutes of board meetings, all the minutes of shareholders meetings, all accounts and important documents such as leases; correct?

A: Yes.

Q: That was both the practice as well as something which all of you accepted as the manner in which the company was run?

A: Yes.

Q: Your duties, if any, in relation to the company were for the maintenance of that part of General Commercial Building owned by HY & HT Lee; correct?

A: And other properties in the company's portfolio.

Q: That is because you are a property man; correct?

A: Yes.

Q: You are regarded in the family as a property expert; correct?

A: Yes.

Q: All other expenses and outgoings were taken care of by CC Lee and TY Lee?

A: Yes.

Q: At the same time, I think you have told us, you have many other business interests and deals; correct?

A: Yes." (Day2, 41:7 - 42:20)

"Q: ...Would you also confirm, please, that you attended no board or general meetings of the company from the mid-1980s right through until the spring of 1998 when this unpleasantness erupted between you and your elder brother?

A: There was no board called, no meeting called, no nothing.

Q: You were not bothered? You were not particularly concerned or upset?

A: No." (Day 2, 39:10 - 19)

"Q: But after 1985, you attended not a single meeting, either board or general?

A: But as I just replied, I failed and I was frustrated. I had to fall back and rely on my brother running it." (Day 3,.147:2 - 5)

The Petitioner in fact expressed "more than irritation" with having to discharge any administrative or managerial duties other than in relation to the maintenance of General Commercial Building as a property manager. He never signed any of the Company's accounts. In 1992, he refused to sign cheques or take up extra duties.

24. It is clear from the evidence that until 18 months ago, the Petitioner trusted his brother and left TY Lee to act as the representative of the HY Lee branch.

"Q: You confirmed in the same tea meeting with your brother - I am referring to the Red Ruby Restaurant meeting on 29th June 1992 - that you would leave it to your elder brother to carry on with the day-to-day running of HY & HT Lee; correct?

A: Yes.

Q: It is fair to say that right up until you fell out with your elder brother, you trusted him to look after MW Lee's branch's interest in this company; correct?

A: Except from time to time also, Mr Fung, when there was trouble, there were major policies, like the idle cash, what could have been done with it, or the cheque incidents that we talked about before lunch, or the property problem.

Q: But generally it is fair to say that you were happy to leave this to your elder brother to deal with the day-to-day running of the company?

A: True, true.

Q: Alongside CC Lee, and he appeared to get along with him, did he not?

A: Yes." (Day 2, 107: 5 - 25)

"Q: I will not go through this page by page with you, but you have that record in front of you. If you want to verify, you can verify after the break. This record is consistent with what you divulged in confidence several times to your brother TY Lee, that you just do not want to be bothered with the management of HY & HT Lee; that is so?

A: Yes, yes." (Day 3, 145: 3 - 10)

Insofar as the 'exceptions' mentioned by the Petitioner in the passage above are concerned, they are unsubstantiated. The memoranda upon which the Petitioner placed reliance do not in fact support his case :

(i) On 7 October 1983, the Petitioner sent a memorandum to Lee Hon Fai, a son of CC Lee's regarding general letting policy. This was copied to the Respondents. In fact, it is apparent from a handwritten note he sent to TY Lee on 18 October 1983 that he was not interested in getting involved with the "works" in the Company and that he had sent the memorandum to Lee Hon Fai, (for whom the Petitioner evidently had little regard) to shake him up.

(ii) On 4 February 1985, the Petitioner wrote to CC Lee and TY Lee referring to an "event of importance" which was not specified. He then requested that he be included in the Company's management, stating that he wished "to be consulted and invited to participate in the executive duty of [the] Company" He also reminded the Respondents that the Company had not responded to his request that the Company's excess cash be loaned to PEL in order for PEL to reduce its borrowings of $100 million from the bank. The Respondents made no answer to his request for inclusion in the Company's management. They turned down his request for a loan to PEL. It is apparent from the further memorandum from the Petitioner dated 19 February 1985 that the main point of the 4 February memorandum related to the request for a loan at interest to PEL : the Petitioner never pursued his request for participation in management.

(iii) In 1992, the Petitioner raised the 'head count' issue when CC Lee sought to register as shareholders the beneficiaries to whom his late mother had bequeathed her shares. The matter was resolved without having to hold a board meeting which the Petitioner had requested.

25. The Petitioner's lack of involvement in the management of the Company is patently clear : he simply left it to his elder brother to look after the interest of the HY Lee branch.

26. I now turn to consider the grounds for the Petition.

The board meeting of 7 March 1998 ("the March board meeting")

27. On 5 March 1998, CC Lee sent to each of the other two directors a notice of meeting of directors to be held on 7 March at the Company's registered office at 11 a.m. for the following purposes :

"1. To consider an act upon the appointment of additional directors.

2. To discuss and consider any other matters that may arise."

The notice was received by the Petitioner's Hong Kong office and forwarded to him in London. The Petitioner wrote to CC Lee on 6 March suggesting that he might not be able to return to Hong Kong in time for the meeting and requesting that it be postponed. He also expressed objection to the proposed agenda and sought details of the proposed person(s) in advance. In the event, the Petitioner did arrive in Hong Kong in time for the meeting.

28. At the outset, it has to be borne in mind that the notice given to the Petitioner complied with Article 144 of the Company's Articles pursuant to which 24 hours notice was sufficient. This is irrespective of the question whether or not the Petitioner was entitled to notice. Under Article 141, a director who is out of Hong Kong is not entitled to notice. More importantly, six months later, as of 26 September 1998, the Petitioner withdrew any objection he had to the appointment of Raymond and Kenneth as additional directors. In other words, the merits of what was proposed ceased to be an issue. Nevertheless, the Petitioner maintained that he had a right to be consulted about any proposed appointment of new directors; and further, that no new director could be appointed without his consent. The Petitioner's case is that the manner in which the Respondents sought to have additional directors appointed, as it were, behind the Petitioner's back, was to achieve the desired result without his participation and that was contrary to the basis upon which the Company had been run and caused a breakdown in trust and confidence.

Events leading up to the March board meeting

29. The evidence showed that TY Lee consulted CC Lee about appointing their respective sons Raymond and Kenneth as additional directors. On 2 February 1998, TY Lee wrote to his uncle to the effect that as he and CC Lee were getting on in years, it was time to let the younger generation, namely CC Lee's son Kenneth and TY Lee's son Raymond, succeed them in the Company. He mentioned appointing Raymond as his substitute director. He informed his uncle that he had urged Raymond to call on him (i.e. CC Lee) on Raymond's forthcoming visit to Hong Kong in early March.

30. When this letter was written, TY Lee was in the United States where he had been since mid-March 1997. There is a letter dated 15 December 1997 from TY Lee to the Company appointing Raymond as his substitute director. It is not entirely clear whether this was sent to the Company at about the time it was written or whether it was brought to Hong Kong by Raymond in late February 1998. CC Lee's evidence was that the subject of succession was first raised with him in the letter of 2 February. He did not reply. Sometime later, he received a telephone call from TY Lee and agreed to the suggestion raised by TY Lee in his letter of 2 February that both Raymond and Kenneth should be appointed additional directors of the Company. He could not pinpoint the exact date.

31. On 16 February 1998, TY Lee transferred 100 of his shares in the Company to Raymond. On 20 February 1998, TY Lee advised the Company of his having transferred 100 shares in the Company, that Raymond had been dispatched to be his substitute director and that Raymond would visit CC Lee at his home on 3 March if that was convenient. On 3 March CC Lee received a visit from Raymond who brought with him a number of documents including the instrument of transfer.

32. It is the Petitioner's case that this move (to appoint additional directors) had been under consideration by the Respondents for a long period and relied on the fact that in cross-examination TY Lee said that the idea occurred to him probably in mid-1997.

33. But to conceive of the idea is one thing; for it to take root and be acted upon is another. On the evidence, it is more likely than not that it was only in February 1998 and not earlier that TY Lee first raised the subject of appointing successor directors with CC Lee. Although there is the 15 December 1997 letter appointing Raymond as substitute director, that appointment was revocable. It is different from and should not be elided with the proposal that Raymond be appointed an additional director.

The meeting itself

34. The Petitioner arrived 10 minutes before the meeting with two of his staff to act as witnesses. The Petitioner brought along a tape recorder as a result of which there is both a recording and transcript of what transpired. Apart from the Petitioner and his two staff, also present were CC Lee, Raymond, Raymond's solicitor Mr Benjamin Choi of Messrs Liu, Choi & Chan and Miss Fung, the company secretary.

35. The recording which was played in court gave a vivid and faithful rendering of what happened during the 25 minutes the Petitioner spent at the Company's office. That the Petitioner had not the slightest intention of attending a board meeting or of engaging in any discussion or consideration of the merits of the issue of appointing additional directors was only too evident. He hardly allowed anyone else present to speak. The Petitioner's conduct at that meeting was quite extraordinary. It was the very antithesis of civilized behaviour : he sounded like a fishwife.

36. After the Petitioner left, the board meeting commenced. The Respondents now accept that the meeting was inquorate : as substitute director under the articles, Raymond needed to hold 10 qualification shares. The transfer of the 100 shares to him had not then been approved and registered by the board. Accordingly, the resolution which sought to appoint him and Kenneth as additional directors was invalid.

37. Raymond obtained his qualification shares on 26 September 1998. A board meeting was held on that day and Raymond and Kenneth were appointed additional directors. The Petitioner accepts that as from 26 September 1998, both Raymond and Kenneth were validly appointed. Indeed, at the Annual General Meeting held on 14 November 1998, the Petitioner voted in favour of Raymond's appointment as director.

Unanimous consent

38. Although the requirement of unanimous consent formed part of the Petitioner's submissions, it was not seriously argued. Under the Articles, the board may act by majority. See Article 145. Accordingly, the Petitioner had no right of veto. In any case, the point has become academic because the Petitioner no longer objects to Raymond and Kenneth being appointed additional directors.

The right to be consulted

39. The Petitioner's case is that as a director of the Company he had a right to be consulted on all important matters affecting the Company and the appointment of new directors, an event which had not taken place for some 30 odd years, was plainly such a matter. In his letter dated 6 March 1998, the Petitioner referred to the -

"Company's long established practice of seeking general consensus between directors by lengthy unanimous consultation before any formal board resolution is passed".

40. But is that assertion substantiated?

41. The Petitioner placed reliance on a passage from the transcript of the tape recording made by Madam Ng in 1981 or 1982 referred to earlier. The passage reads :

"Your father has been unanimously talking with Chai Chong and everybody and seeks their unanimous agreement before doing anything."

Taken at face value, this statement might be thought to support the Petitioner's case. But when seen in context, it is plain that the context was PEL and not the Company. The admonition of Madam Ng was referable to the second of the three conditions imposed by MW Lee when he handed control of PEL to the Petitioner referred to earlier to the effect that for the project and related matters, the Petitioner had to seek the unanimous consent of both CC Lee and TY Lee. Madam Ng was at the time upset at the Petitioner's proposal to float PEL. It cannot fairly be read as having any application beyond the affairs of PEL.

42. The Petitioner also sought to derive support from the circumstances of his own appointment as an additional director in 1966. But, as noted earlier, the appointments made in 1966 came about through consultation between MW Lee and CC Lee, the respective senior members of the two branches. There is no evidence of the third director TY Lee having been consulted. The circumstances of the 1996 appointments do not assist the Petitioner.

43. Perhaps it was with a view to overcoming this difficulty that the Petitioner came up with the "three camps" theory. It is the Petitioner's case that there are three Family Interests, namely CC Lee's Family Interests, TY Lee's Family Interests and the Petitioner's Family Interests and that the board structure reflected this.

44. The proposition is not borne out by either the history of the Company or its directorship structure. A glance at the table summarizing directorships shows there were but two, and not three, branches or interests. The proposition now advanced is also contrary to the Petitioner's own stance as regards the "head count" issue he raised following the death of CC Lee's mother. In June 1992, the Petitioner wrote to CC Lee complaining about the changes of shareholders in the Company following CC Lee's attempt to transfer his late mother's shares in the Company to the beneficiaries under her will. The premise underlying the complaint was that a balance in the number of shareholders had to be maintained between the two sides, i.e. the HY Lee branch and the HT Lee branch. There was never any suggestion of there being "three camps" as is now alleged. That theory is a recent invention.

45. An important fact to be borne in mind is that the Petitioner and the Respondents did not form the Company. Rather, they inherited their respective interests and positions in the Company by virtue of their being the male descendants of the founders with all the ramifications that it entailed. At the time of his appointment as a director in 1966, the Petitioner was a young man at the threshold of his career. There could not have been any question of his representing a separate "Family Interest" that was different from that of his father or elder brother. How the Company has been run since 1966 and the extent of the Petitioner's involvement considered above are also relevant. Plainly there has been no cataclysmic change in the structure or management of the Company since 1966 that could have brought about the existence of an additional "camp".

46. In my judgment, the Petitioner has not made out any "right" to be consulted. That is not to be confused with the Petitioner's right as a director to receive notice of the board meeting pursuant to the Company's articles. Whether the Respondents ought to have consulted the Petitioner before convening the board meeting is a different question to which there is no absolute answer. It must depend on the circumstances of each case. Given the Petitioner's lack of involvement in the affairs of the Company, the nature of the business in hand and the relationship then existing between the Petitioner and TY Lee considered in detail below, it is not at all obvious that prior consultation would have served any useful purpose. Even if I were wrong about this, the real point is the effect of non-consultation. Did it cause a breakdown in trust and confidence?

Breakdown of trust and confidence

47. Notwithstanding that the merits of the appointment of Raymond and Kenneth are no longer in issue, the Petitioner maintained that the Respondents' conduct in relation to the March board meeting destroyed the relationship of trust and confidence and that that relationship once destroyed cannot be recreated. Leading counsel for the Petitioner sought to illustrate the point by taking an extreme example of someone improperly taking money out of a company and then returning it. It was submitted that that would not, as it were, wipe the slate clean. With the greatest respect, that example is inapposite. In the present case, the Respondents have not perpetrated any illegal or criminal act. What was actually being proposed has to be kept in perspective. Each of the Respondents being advanced in years not unnaturally wished to prepare for his own succession as director by selecting a successor amongst his own sons. That was entirely in line with the family's tradition and practice since the Company's incorporation in 1929. Moreover, it stands to reason that the choice must lie with the Respondents rather than with the Petitioner. It was not as if the Respondents were proposing to introduce strangers (or female members of the family) onto the board.

48. That there is a breakdown in trust and confidence between the Petitioner and TY Lee is common ground. Was this brought about by the Respondents? The cause of that breakdown is a hotly disputed issue. The Petitioner's case is that the breakdown was caused by the Respondent's conduct in relation to the March board meeting. The Respondents contended that the board meeting did not cause the breakdown : rather, it was TY Lee's decision to side with his sister May Lee to strike out the Petitioner's caveat entered in Madam Ng's estate that ruptured the bond that had hitherto existed between TY Lee and the Petitioner, that it occurred much earlier and certainly well before the March board meeting.

49. The Petitioner entered the caveat on 13 January 1992 and renewed it at six-monthly intervals. Since 1992 the Petitioner had been putting pressure on the executors to seek a declaration that the 100 shares in the Company registered in the name of their sister Lee Jin who died in 1970 belonged to Madam Ng's estate (the Lee Jin matter). Another major bone of contention were the bequests of 1,800 MWLS shares and 200 PEL shares registered in the names of Lee Cheong Yee and Lee Wai Loy respectively made by Madam Ng to May Lee. By her codicil, Madam Ng imposed a secret trust. She directed that those bequests were to be decided "in the full power of May Lee as to how and when to distribute to any of the children of [TY Lee and the Petitioner]". The Petitioner claimed to be the beneficial owner of those shares on the ground that Lee Cheong Yee and Lee Wai Loy were his aliases. TY Lee sought to act as honest broker to resolve the difficulties and differences that arose between the Petitioner and other members of the family, in particular his sister May Lee.

50. The 1995 Settlement settled disputes concerning PEL but did not impinge upon the trust and probate matters. Despite TY Lee's efforts, the wrangling continued. When TY Lee left for the United States in mid-March 1997, the probate issue remained unresolved. His ill health detained him there and it would appear that there was no communication between him and the Petitioner after he left. On 1 December 1997, Messrs Liu, Choi and Chan gave notice to the Petitioner through his solicitors that unless the caveat was withdrawn within seven days, they had standing instructions from the joint executors to apply to strike out the caveat and/or the appearance. On 13 December 1997, the Petitioner's solicitor, Denton Hall, requested confirmation from Liu, Choi & Chan that they had indeed been instructed by TY Lee and expressed surprise by that development. On the same day, a summons to strike out the Petitioner's caveat was taken out by TY Lee and May Lee jointly.

51. How the Petitioner saw matters appears from the following passage from his cross-examination :

"Q: You regarded this hostile action by your brother in siding with May Lee as the irreparable damage to your mutual trust and confidence as between you and your brother; correct?

A: It was a broken bond, more than trust and confidence.

Q: More than trust and confidence?

A: Yes.

Q: And that break stemmed from his siding with May Lee; correct?

A: As one of the last straws.

Q: As one of the last straws?

A: Yes." (Day 3, 102: 25 - 103: 11)

The Petitioner accepted that he regarded the summons to strike out the caveat as the "irreparable break". The Petitioner agreed that he regarded TY Lee as having "crossed the line of no return" by his "firing the first shot", i.e. through taking the caveat proceedings. On 16 December, Liu, Choi & Chan confirmed that they had instructions from the joint executors. In the Petitioner's own words, he was "shocked, shocked" that the last member of the family with whom he was on speaking terms had turned against him.

52. Since 1992 when TY Lee began to spend more and more time in the United States where his children lived, the Petitioner had become increasingly obsessed with the question whether TY Lee wanted to be buried in the family plot next to their parents in Pokfulam. He raised the subject at frequent intervals with TY Lee intimating that if TY Lee did not intend to be buried there, he should forfeit his right as the eldest son to the plot next to their parents. He even pestered Raymond about it. On 22 December 1997, the Petitioner caused Denton Hall to write in the following terms :

"...If mutual trust and confidence is damaged irreparably, Mr Samuel Lee, and his children, will consider carefully whether such a priceless symbolic asset of the whole Lee family, or at least the burial space reserved for Mr Lee Tak Yan, should be surrendered by your client, being part of the estate assets, unless Mr Lee Tak Yan assures our clients that the plot will indeed be utilised by himself."

53. Throughout January and February 1998, Denton Hall repeatedly queried and questioned Liu, Choi & Chan's authority to act for TY Lee. They even made specific reference to proceedings that their clients (the Petitioner's children) had taken against Messrs Foo & Li claiming $83 million by way of damages for professional negligence in allowing Madam Ng to make a codicil. The objective, no doubt, was to make Liu, Choi & Chan think twice about 'taking on' the Petitioner. Pausing here, I would make one observation. To my mind the Denton Hall letters were unnecessarily tiresome and oppressive. They do not reflect well on the legal profession.

54. It was submitted that the Petitioner's trust and confidence in his brother remained intact during this period because the Petitioner even took out a summons as late as 22 January for an order that probate of Madam Ng's will be granted to TY Lee. I do not agree. It does not necessarily follow that there had been no breakdown in trust and confidence. In my judgment, it was all part of the strategy deployed to "persuade" TY Lee not to side with May Lee and so abandon the "masculine side of the family". It was a last ditch effort to swing TY Lee round.

55. On the evidence, I have no doubt whatsoever that the bond between the Petitioner and TY Lee effectively ruptured at the end of 1997 and the early part of 1998. I reach this conclusion because it is abundantly clear from the seven days the Petitioner gave evidence what really mattered to him. Indeed, this emerges from Denton Hall's letter of 2 January :

"...Indeed, the point is of such importance that your response to this letter will determine whether the masculine side of the Lee family, namely Lee Tak Yan and Samuel Tak Lee, which, following generations of tradition, controls the family business and assets and, above all, its destiny, will remain one near harmonious unit or will enter the new millennium as increasingly bitter and litigious factions."

56. Accordingly, even if (contrary to my view) the Petitioner ought to have been consulted prior to the March board meeting, non-consultation was not the cause of the breakdown in trust and confidence so as to entitle the Petitioner to the relief sought.

The Lee Cheong Yee dividends transferred to MWLS

57. The dividends in question are attributable to 2,750 shares in the Company registered under the name of Lee Cheong Yee. There is a dispute between the parties as to whether Lee Cheong Yee was the alias of MW Lee so that those shares formed part of his estate upon his death in 1979 or, as is the Petitioner's stance, he was made the owner of those shares when his late father gave him the "Lee Cheong Yee" chop. It is to be noted that such a claim was never asserted against MW Lee's estate during the twelve years or so by which his mother survived MW Lee. During this period of 12 years Madam Ng as beneficiary under MW Lee's will received the dividends from those shares.

58. It appears to be common ground that the Petitioner is the beneficial owner of the dividends accruing on those shares as from the date of his mother's death. This is because even if the Petitioner were not to succeed in his claim to there having been a gift to him during his father's lifetime and the shares had formed part of MW Lee's residuary estate, Madam Ng exercised the special power of appointment conferred on her by MW Lee's will by Clause 5 of her will over those shares in favour of the Petitioner. It is to be noted that Madam Ng in her own right also owned shares in the Company which were bequeathed to her grandsons.

59. TY Lee and May Lee are the surviving executors of MW Lee's will and the executors named in Madam Ng's will. As noted above, eight months after Madam Ng's death, the Petitioner entered a caveat. Probate of Madam Ng's will cannot be granted unless and until the caveat is cleared off. Proceedings to strike out the caveat are due to be heard in January 2000.

60. The complaint appears to be that TY Lee and CC Lee were in breach of their fiduciary duties to the Company in having caused or procured the Company to transfer, inter alia, dividends attributable to the Lee Cheong Yee shares. It is common ground that seven transfers to MWLS were effected between 25 March 1995 and February 1997 of the dividends pertaining to 1991 through February 1997.

61. The complaint was only made by the Petitioner in 1998. It is incontrovertible and indeed was acknowledged by him that he knew or ought to have known of the transfer of the dividends to MWLS in August 1996. There is a memorandum dated 2 August 1996 prepared by a member of the Petitioner's staff and initialled by the Petitioner which reads as follows :

"MESSAGE	[Uncle Ox said]：
	per T.Y. Lee's instruction, starting from March 1995 all the withheld dividend of Lee Ng Chun Wa and Lee Cheong Yee have been paid to M.W. Lee & Sons Enterprises Ltd. It was because the withheld dividend could not generated (sic) interest income for the shareholders.
ACTION	The amount had been paid for :-
NEEDED	Lee Ng Chun Wa 22/5/91 - 5/3/96 $ 2,740,710.-
	Lee Cheong Yee 22/5/91 - 5/3/96 $11,577,500.-"

Two weeks later the same employee made a further memorandum addressed to the Petitioner :

"MESSAGE	[Uncle Ox] informed that
	(1)	all withhold dividend (since the death of Ng Chan Wa) of Ng Chan Wa and Lee Cheong Yee had been paid to M.W. Lee & Sons Ent. Ltd.
	(2)	part of Lee Man Wa's dividend also paid to M.W. Lee & Sons Ent. Ltd. and a small part remain in H.Y. & H.T. Lee to pay expenses for 157 Argyle St."

62. It was not till almost two years later that the Petitioner and his son Christopher Lee to whom Madam Ng had bequeathed some of the Company's shares which she owned outright commenced proceedings (HCA10000/98) to recover the dividends paid over to MWLS. They obtained an injunction against TY Lee restraining him from continuing to allow MWLS to hold the dividends attributable to the Lee Cheong Yee shares and those bequeathed to Christopher (collectively "the specified sums") and paid over to MWLS. They also obtained an order from Findlay J against TY Lee ordering him "to cause the specified sums plus all accrued interest to be paid into a trust account with a licensed bank in the names of TY Lee and May Lee as fiduciaries and executors of the estate[s] of [MW Lee] and [Madam Ng]". Thereafter a section 182 application came before me. See Re MW Lee & Sons Enterprises Ltd. [1999] 2 HKC 686, affirmed in CACV 118/99, (unreported) 18 August 1999.

63. Both before me and it would appear from the judgment of Rogers JA (at page 4) on appeal, the Petitioner raised no objection to the fact that Findlay J had proceeded on the basis that even accepting that the Petitioner would be entitled to receive the Lee Cheong Yee shares and dividends, that would only be payable when the administration of Madam Ng's was complete : rightly or wrongly it had been implicitly accepted by the parties in the section 182 proceedings that the caveat effectively blocked any distribution of the Lee Cheong Yee dividends to the Petitioner. It is therefore surprising for Mr Richards QC now to characterize the Respondent's reliance on the caveat as a reason for not paying over the dividends to the Petitioner as a red herring. He submitted that the Lee Cheong Yee shares form part of MW Lee's estate and have nothing to do with the administration of Madam Ng's estate.

64. Quite apart from how the parties have hitherto viewed the matter, there are valid reasons why the dividends could not have been distributed to the Petitioner. The evidence showed that the Estate Duty Office had until recently taken the view that duty was exigible on,inter alia, the Lee Cheong Yee shares on the ground that under MW Lee's will, Madam Ng was absolutely entitled to his residuary estate rather than being entitled to a life interest only. So long as that stance was maintained, there was the possibility that that analysis was correct. If so, the caveat would have extended to those shares quite apart from the fact that estate duty potentially exigible was a valid reason for withholding distribution.

65. Further there is the evidence of TY Lee to the effect that during MW Lee's lifetime, MWLS was a de facto banker for holding monies belonging to members of the family. In cross-examination, the Petitioner accepted that this was the case and TY Lee was not cross-examined on this topic.

66. Was TY Lee in breach of his fiduciary duties as a director by causing the dividends in question to be paid over to MWLS? In addition to the matters considered above, the generation of interest was the reason stated in the August 1996 memoranda. Under Article 177, declared but unpaid dividends do not attract interest. It is a fact that although the money was not put into a segregated interest bearing account, they were paid into MWLS's savings account (which did attract interest) out of which sums were subsequently placed on fixed deposits which attracted an even higher rate of interest. In my judgment, I have no reason to doubt that the reason stated in the August 1996 memoranda, given as it was during the period when the transfers were actually taking place, and by a long-standing employee of the Company who himself had no axe to grind is at a minimum one of the reasons for the transfers. TY Lee's evidence in cross-examination is totally consistent with this explanation. Accordingly, I reject the Petitioner's attempt to attribute a nefarious intent to TY Lee.

67. As far as CC Lee was concerned, Lee Cheong Yee was an alias of MW Lee. He knew that TY Lee was an executor of the estates of both his parents and, as such, understood TY Lee to have the authority to give directions as to the payment of those dividends. Moreover, he also knew MWLS to be a company owned by MW Lee's descendants, with TY Lee and the Petitioner as its only directors. In my judgment, CC Lee's concurrence in making the payments by co-signing the cheques presented for his signature on the instructions of TY Lee who, as executor of both estates, had authority to give a good receipt was not in breach of his fiduciary duties as director and cannot be impugned.

68. For all these reasons, the Petitioner's complaint concerning the transfer of dividends is misconceived.

69. In passing, there is one further matter that ought to be mentioned. The dividends in question include a dividend declared for 1991 but which was paid after Madam Ng's death. Although the parties appear to have assumed that the Petitioner is entitled to the entirety of the 1991 dividends, it is not clear that the question of apportionment has ever been addressed. Prima facie, such dividends for the year 1991 would be subject to apportionment. See section 2 of the Apportionment Ordinance, Cap.18 and generally, Williams Mortimer and Sunnucks on Executors, Administrators and Probate, 1993 Edn at 534-5 and Snell's Equity, 29th Edn at 376-7. If the rule applies, such dividends as have accrued up to the date of death of Madam Ng would form part of her residuary estate over which the executors have a power of appointment in favour of Madam Ng's children and grandchildren and to which the Petitioner would not be entitled unless that power were to be exercised in his favour.

Raymond acting as director

70. The complaint here is that the Respondents allowed Raymond to act as a director at a time when he had not been properly appointed. Two instances are relied on by the Petitioner. First, Raymond instructed the company secretary to cause 500 name cards describing him as 'managing director' to be printed for him. Second, Raymond gave instructions to Miss Fung relating to the redecoration of the Company's premises.

The name cards

71. It appears from the letter dated 6 August 1998 from Messrs Liu, Choi & Chan that the name cards came to be printed in anticipation of a possible settlement between the parties. Those cards, though printed, have not been used or distributed because the negotiations fell through. That evidence was never challenged and there is no evidence that prior to 26 September 1998 (when Raymond's appointment ceased to be an issue) the cards were ever used. In the circumstances, the complaint made cannot be taken seriously.

Decoration of the Company's premises

72. The redecoration related not, as the Petitioner thought, to the room to be used by Raymond. In fact, as is apparent from the invoice dated 18 March 1998, the work involved (changing windows, rewiring, repainting, changing and reinstalling air-conditioning and laying new carpets) was for the whole office. The fact that the instructions to Miss Fung were written by Raymond is not a matter that can cause any excitement : it is equally consistent with his acting on behalf of his father.

The Lee Chung Oi dividends

73. Lee Chung Oi ("Madam Lee") who is now in her 90s is MW Lee's younger sister. She suffered a serious illness in childhood. For some 40 to 50 years, dividends from her shares have been kept with the Company. $10,000 was paid to her as living expenses per month and from time to time large lump sum payments were made over to her children from the accumulated dividends. This practice started during the lifetime of MW Lee and was continued by Madam Ng, and after her death, by TY Lee. All payments and receipts are fully recorded in the accounts kept by the Company. Those matters were disclosed by the Respondents by CC Lee's affidavit of 22 July 1998 when they sought a validation order so that, inter alia, they could continue to make payments to Madam Lee.

74. The Petitioner's complaint (made not in the original petition but some five months later and after the Respondents' application for a validation order), is that the dividends to which Madam Lee was entitled were wrongfully withheld from her and that CC Lee and TY Lee as directors have dealt with the matter without consulting the Petitioner. It is difficult to conceive how such a complaint could seriously have been advanced in the face of the long-standing family practice and Madam Lee's disability : neither of those matters were challenged.

75. As at August 1998, dividends amounting to approximately $600,000 had been accumulated. On 28 August 1998, Madam Lee's children wrote to the Petitioner as well as to the board of directors alleging that they had "repeatedly requested the Company not to withhold their dividend", accusing the Company of "unreasonable suppression" of their shareholder rights. They sought payment of the accrued dividends due to Madam Lee. On 1 September 1998, the Petitioner's solicitors wrote to the Respondents, seeking their acknowledgement of Madam Lee's entitlement. Madam Lee's children received a prompt reply from Messrs Liu, Choi & Chan. Having ascertained and verified the children's authority to receive the same, a validation order was obtained from the court for the entire outstanding dividend to be paid to Madam Lee. No criticism can properly be levied against the Respondents on this score.

76. The Petitioner sought to suggest that prior to 28 August, there had been repeated requests on the part of Madam Lee's children which had been ignored by the Company. He said he was informed prior to 21 July 1998 by Lee Qun Sun of those oral requests. Lee Qun Sun did not give evidence and there is nothing to corroborate the Petitioner's allegation save for the assertion made in the letter of 28 August. But if the Petitioner's allegation is true, it is surprising that the 'cause' was not taken up any earlier. Moreover, in cross-examination, the Petitioner admitted that prior to 28 August 1998, he was not aware of any complaint from Madam Lee's children to the Company. It is not suggested that prior to 28 August 1998, any written complaint had been made by Madam Lee or on her behalf. That fact is telling.

77. It would appear that on 21 July 1998, there was a conversation between one of Madam Lee's sons and Christopher Lee. This is a note of the conversation to the effect that Madam Lee's family wished "to join with [the Petitioner] to complain". One may speculate why a complaint suddenly came to be made as to the practice regarding Madam Lee's dividends, a practice which had been longstanding and accepted. The timing was impeccable. No member of Madam Lee's family gave any evidence regarding the alleged suppression of shareholder's rights and could not be cross-examined as to when their complaints were first made and how they came to be made. In these circumstances, I infer from the purport of the note, the tenor of the letter of 28 August and the timing of events that the Petitioner, under the guise of being "the champion of the underdog", was seeking to capitalize on anything that would remotely assist his efforts to wind up the Company.

78. The complaint made as to Madam Lee's dividends is, frankly, absurd. I reject any suggestion of impropriety on the part of the Respondents in this regard.

The secret cash fund

79. This fund is nothing more than the Company's petty cash fund which has been kept for over 60 years by Lee Qun Sun, an old and trusted employee.

80. When the petition came on for hearing, leading counsel for the Petitioner applied to amend the petition by adding this complaint. It was described in his opening as "a cash fund maintained by an employee of the Company after the presentation of the petition, without any knowledge on the part of the Petitioner as the director, and without any disclosure to the board of the existence of this fund." The suggestion was that since the date of the petition the Company's cash income had been siphoned off into this secret fund. Indeed, in cross-examination the Petitioner labelled this a "slush" fund with all the connotations that the term carries.

81. Far from being a "secret" fund, the Petitioner acknowledged that he knew that a petty cash fund had always been kept by Lee Qun Sun. However, he insisted that he did not know that historically, the maximum amount allowed to be kept as petty cash was $50,000. Certainly had he bothered to involve himself in the management of the Company, the Petitioner would have known about this fund. There are full and detailed records of all payments into and disbursements from the cash account. These were exhibited to CC Lee's affirmation made on 8 February 1999. In fact, the documents inspected and copied by the Petitioner on 28 July 1998 included the Lee Qun Sun ledgers. It would appear that having obtained them, the Petitioner did not bother to read their contents and saw them for the first time at the trial.

82. Altogether payments totalling $242,000 were paid to Mr Lee between May and December 1998, that is to say, after the presentation of the petition. This amount included two transfers made in May and July 1998 totalling $150,000. These were loans made to the Company : they were not income of the Company that had been channelled into the cash fund. So altogether a sum of $92,000 was paid to Mr Lee during the eight months. It is unclear whether the historical cap of $50,000 was ever exceeded and, if so, by how much. Be that as it may, the complaint now appears to be that the cash fund was a means adopted by the Respondents to circumvent section 182 and that the existence of this cash fund was not disclosed in those proceedings.

83. The so-called breach was technical in that the validation order obtained in September was (erroneously) construed as allowing expenditure by way of cash as well as cheque so long as the monthly amount was agreed by the parties. A full explanation is contained in the letter dated 7 December 1998 from the Company's solicitors and the 8th Affirmation of CC Lee which culminated in a further validation order (made on 11 February 1999) by consent to deal with the payments made.

84. The Petitioner sought to suggest but was unable to establish either that the records kept were inaccurate in any respect or that the Company's monies have gone astray or been misapplied. In those circumstances and having regard to the consent order of February 1999, only the most tenacious of litigants could have persisted in seeking to extract some mileage out of what was nothing more than a technical breach. In my judgment, it was a fuss about nothing.

Access to books and records

85. Another ground of complaint by the Petitioner was that he was denied access to the Company's books and records, contrary to his rights as director and shareholder of the Company. The relevant events, in chronological order, are set out below :

(i) On 7 March 1998 when the Petitioner accompanied by Miss Yip and Miss Lam arrived at the Company's registered office, he had the Company's material brought down from the 13th Floor to his office on the 12th Floor so that he could study the statutory records. They were given to him by Miss Fung, the company secretary.

(ii) Four days later, on 11 March 1998, he requested access to certain company documents and was given access not only to the documents sought but also other documents that same afternoon.

(iii) On 13 March 1998, he conducted the same exercise in relation to MWLS and was given similar access.

(iv) On 27 April 1998, the Petitioner presented the petition which did not contain any complaint about denial of access.

(v) Some two months later, there followed a trilogy of requests : on 30 June 1998, the Petitioner wrote to CC Lee stating that he wished to obtain copies of the Company's bank statements and cheques from 1993 onwards with the Hang Seng Bank and requested CC Lee to sign the letter of instruction to the Bank. Two days later, he made a similar request in relation to the Company's bank accounts with the Hongkong and Shanghai Bank. Then on 6 July, the Petitioner requested inspection of the Company's books and records itemizing the documents that he was particularly interested in inspecting. There was no reply to these letters.

(vi) On 22 July 1998, he repeated his request for inspection and gave notice of his proposed inspection on 28 July.

(vii) On 28 July, the Petitioner attended the Company's registered office with six staff. The inspection lasted the entire day from shortly after 10 in the morning to 5 p.m. A list of the documents inspected and copied was, after considerable delay, provided on 19 September 1998. It is apparent from the list eventually provided that a massive amount of material was inspected and copied.

(viii) Not being satisfied with his inspection the previous day, the Petitioner requested for discovery of further documents the following day. The Petitioner complained about not having had access to the registers of directors, shareholders and share transfers kept in the Company's safe, the 1997 accounting documents which were with the auditors as well as pre-1973 minute books.

(ix) On 13 August 1998, the Petitioner issued a writ seeking access to the Company's books and records against TY Lee, CC Lee and the Company. A similar writ was issued the same day against TY Lee and MWLS for seeking the same relief.

(x) On 23 October 1998, the Petitioner was offered free access to the safe including documents returned from the auditors.

(xi) On 12 November 1998, the Petitioner carried out an inspection of the documents in the safe, having on 23 October chosen to focus attention on the tapes of the meeting held on 26 September rather than to avail himself of the invitation to inspect the documents in the safe.

(xii) On 31 December 1998, the Petitioner carried out yet another inspection of documents and was given full access.

86. The Petitioner has been given access to all the documents that he has requested. Pared to its essentials, the complaint comes down to this : first, a delay of several weeks between the return of the accounting documents from the auditors in early September 1998 and the giving of access on 23 October; second, a delay of several months (in fact no more than three and a half months if as is not unreasonable this were to be reckoned form July 1998) in giving access to the documents kept in the safe. As regards the latter, although the initial request for access had been made in March 1998, it is to be noted that the petition in its original form made no complaint about non-access to documents at all. The request for these particular documents was only renewed in July and the petition was amended on 23 July 1998 to add this complaint. This was re-amended on 27 December 1998.

87. It is not disputed that TY Lee, CC Lee and Raymond knew the combination to the safe. CC Lee who had known the combination at one stage no longer remembered it. TY Lee was himself throughout this period in the United States. Whilst it is true that TY Lee could have communicated the code to his staff so as to facilitate inspection of the documents kept in the safe, war had broken out : no less than six actions were brought between April and August 1998 by the Petitioner against TY Lee :

(1)	27.4.98	The presentation of this petition.
(2)	11.5.98	TY Lee joined as a defendant in the proceedings to remove the executors of Madam Ng's will (HCA9522 of 1997).
(3)	18.6.98	Proceedings brought by the Petitioner against TY Lee to recover the Lee Cheong Yee dividends transferred from the Company to MWLS (HCA10000 of 1998).
(4)	10.7.98	The petition to wind up MWLS (HCCW467 of 1998).
(5)	13.8.98	Discovery action against the Respondents and the Company (HCA13601 of 1998).
(6)	13.8.98	Discovery action against TY Lee and MWLS (HCA13602 of 1998).

The ill-will that must have been generated is evident. Anyone at the receiving end of this series of proceedings may perhaps be forgiven for not going out of his way to be obliging particularly when the pursuer is his younger brother.

88. The delay in giving access affects only the documents kept in the safe which form only a tiny fraction of the documents to which access was sought and given. On the evidence, the Petitioner was not remotely interested in looking at the documents when access was eventually offered in October. Whilst delay in responding to requests for discovery by a director and shareholder is not to be condoned, there is no evidence of prejudice to the Petitioner.

89. The Petitioner relied on McGuinness & Another, Petitioners (1988) 4 BCC 161 for the proposition that the denial to a shareholder of a simple statutory right over a long period is itself a prejudicial act. In McGuinness there was a delay of seven months in convening an EGM requisitioned by minority shareholders. Here it was said there was also a delay of seven months. However it is to be noted that the proposition in McGuinness was not stated as an absolute : it was qualified by the words "prima facie". Second, the right of minority shareholders to requisition an EGM is "one of the most valuable remedies which minority shareholders enjoy" (per Lord Davidson at 167). Here we are concerned with a different type of right which is not on a par with the right to requisition a meeting. Moreover, in McGuinness a critical decision in terms of the company's business was at stake. That was not the case here. Had it been crucial as the Petitioner sought to make out, he would not have let almost four months go by before renewing his request for access and would have complained about it in his petition. Third, for reasons already stated, the delay was three and a half months rather than seven months. Given the circumstances, McGuinness is distinguishable and the Petitioner's complaint of delay in providing access to Company documents is not one which, by any stretch of the imagination, would entitle him to a winding-up order.

Approval of accounts for the year ended December 1997

90. The nub of the Petitioner's complaint is that he was excluded from the process for approval of accounts. It is accepted by the Petitioner that until he fell out with his elder brother, he had never complained about not being sent the accounts. He never signed any of the paper resolutions sent to him for approving audited accounts for the years 1988, 1989 and 1991 through 1996. This is consistent with the fact that he had not wanted to be involved with the management of the Company. In 1985 when he was sent a copy of the audited accounts, he declined to sign them, complaining that he had received no prior notice and had not participated in any board meeting to consider them. Notwithstanding that complaint, the matter was never pursued by the Petitioner. Throughout the years, the practice had always been that TY Lee and CC Lee would approve the accounts on behalf of the two branches of the family. In fact, CC Lee was adamant that the same process of approval was adopted for 1998.

91. Draft audited accounts for the year ended 1997 were exhibited to CC Lee's affirmation and served on the Petitioner on 22 July 1998. As the auditors had advised that these accounts had to be submitted to the Revenue by July 1998, CC Lee signed the accounts at the request of the Company's auditors and then sent them to TY Lee for his signature. The signed accounts went to the auditors who returned them to the Company by the beginning of September.

92. A board meeting was convened for 10 October 1998 to consider and pass the accounts and to fix a date for the AGM. At the October meeting, it was agreed that the Petitioner could have 14 days within which to inspect the Company's books and in the event of his having any objection after the inspection, a further board meeting would be convened to consider his objections. In the event, he had none.

93. In reality, the Petitioner is seeking to make an issue of a practice that he accepted or acquiesced in for almost 15 years. In my judgment, it is not a matter about which he now has any legitimate complaint.

Proposed resolution for the Respondents' costs in resisting the petition to be paid by the Company

94. One of the resolutions proposed in the notice of meeting of directors dated 8 October 1998 was to consider and to propose for the consideration of the AGM, inter alia, the following resolution :

"That subject to compliance with Section 182 of the Companies Ordinance, the company do reimburse and pay out of the company's fund to Mr. C.C. Lee and Mr. T.Y. Lee for all legal expenses incurred and to be incurred by them and each of them in opposing the relief for the winding up in Companies winding Up Proceedings No.HCCW275 of 1998."

95. Was the proposed resolution improper?

96. Even if the shareholders were to approve the expenditure, the approval of the court is still required. The merits remain subject to consideration and approval by the court. In those circumstances, I fail to see the impropriety of the proposed resolution.

97. Again, although in cross-examination the Petitioner accepted that he should no longer complain about this issue, it has not been jettisoned by his legal advisers. It is a remarkable feature of this litigation that matters about which the Petitioner no longer complains should continue to be relentlessly pursued by his over-zealous legal advisers.

Attempt to remove the Petitioner as director

98. At the board meeting held on 10 October 1998, a resolution was passed to the effect that the AGM be asked to consider and if thought fit to pass an ordinary resolution that the number of directors for the ensuing year shall be not less than two or more than four. The Petitioner takes exception to the resolution inasmuch as he sees it as a circuitous means of engineering his removal from office. That resolution, although passed, has not been implemented pending this petition. Undertakings to that effect were given to the court and the parties consented to an order in those terms on 12 November 1998.

99. Unless the Petitioner does have legitimate expectations that he must remain on the board, it is a matter for the Company whether or not to pass that resolution. The fact that it may achieve the same result as a special resolution required by section 157B of the Ordinance or an extraordinary resolution required by Article 139 to remove the Petitioner directly from office as director is not, of itself, a reason for rendering such a resolution.

100. The fact that none of the grounds (some of them frivolous) advanced by the Petitioner has merit is sufficient to dispose of the petition. However, as a great deal of evidence was adduced relevant to the issues of abuse of process and availability of equitable relief, I propose to deal with this briefly below.

Abuse of process and availability of equitable relief

101. It is the Respondents' case that the Petitioner harboured a "grand design" to aggregate power by pressurizing members of his extended family to sell various family-controlled properties to PEL, namely (1) the Blue Pool Road properties; (2) 157 Argyle Street which is part of Madam Ng's estate bequeathed to TY Lee, May Lee and the Petitioner in equal shares; and (3) Prat Avenue which is owned by a wholly-owned subsidiary of MWLS and sought to implement it by :

(a) pressurizing the executors of Madam Ng's estate to sell the Argyle Street property at undervalue, on pain of facing threatened legal action for failure to maximize the estate;

(b) taking steps to constantly increase the Petitioner and his family's shareholdings in PEL through causing the distribution of the PEL shares to him and his family of the Blue Pool Road proceeds, entering a caveat and commencing removal proceedings against May Lee to whom Madam Ng had bequeathed 200 PEL shares and 1,800 MWLS shares;

(c) "intimidating" TY Lee when he joined May Lee in applying to strike out the caveat, making him a party in six sets of proceedings between 27 April and 13 August 1998; and

(d) using the legal process as an instrument of oppression against other family members.

102. The Petitioner accepted that he wished to acquire the Argyle Street property for PEL in 1992. It is the Respondents' case that the Petitioner sought to acquire the property at an undervalue. On 10 June 1991, the property was valued by Chesterton Petty at $20 million. This valuation was commissioned by the Petitioner and PEL. Nine months later, on 9 March 1992, PEL offered to purchase the property for $21 million. A second Chesterton Petty valuation was obtained by the Petitioner on 27 April 1992 which valued the property at $31 million. At this point he had also commissioned a valuation from Brook Hillier Parker which valued it at $38 million as at 15 May 1992. On the same day the Petitioner increased his offer to $34 million.

103. There would appear to be some basis for the Respondents' contention. The first offer though in line with the Chesterton Petty valuation was made nine months after the valuation. In the volatile Hong Kong property market, that is a long time. Clearly land prices had been rising as is evident from the 1992 valuations. The second offer was plainly below market and the Petitioner knew it given that it was he who had commissioned the Brook Hillier Parker valuation. The fact that PEL was to be the purchaser is neither an excuse nor a reason for making an offer that was below market.

104. It is an undeniable fact that the Petitioner and/or his children and/or PEL which he controls are or have been parties to litigation involving members of the extended family since 1990. Whilst some of the actions have been initiated by members of the extended family rather than the Petitioner, his children or PEL, they are the result of the position taken on issues which form the subject matter of the actions. A summary of the various actions appear below :

To this list must be added the six sets of proceedings brought against, inter alia, TY Lee between April and August 1998 already referred to.

105. As regards the Lee Jin action, it is to be noted that whilst TY Lee is the 1st Plaintiff, it is clear from the correspondence that since February 1992 considerable pressure was exerted on him as executor by the Petitioner to bring the action. In fact, all necessary legal advice was obtained by the Petitioner who offered "to liaise with lawyers and to carry out the necessary work". The Petitioner further agreed to fund the action by indemnifying the executors as to costs. Eventually May Lee was also persuaded to join as plaintiff whereupon the Petitioner and his children ceased to be parties. On 3 March 1998, after he had fallen out with his brother, the Petitioner informed the executors that he had decided against continuing as their agents and also refused to indemnify them as to costs. Those manoeuvres were presumably taken on advice from what the Petitioner described as his "high-tech" trust and probate lawyers.

106. The Petitioner obviously thrives on litigation, no doubt to the delight of his lawyers. The sheer number of actions in which he is involved either personally or via his family or PEL is witness to his litigiousness. It is a luxury that few can afford. Because some of those proceedings are still pending, it would not be appropriate for me to comment on their merits and I do not propose to do so.

107. However, certain matters arising from the evidence trouble me and deserve comment :

(i) Several months after the issue of the petition, on 5 November 1998, Denton Hall made an offer on behalf of Christopher Lee to take over CC Lee and his family's equity in the Company. Similar offers were also made to Lee Chai Hong, CC Lee's brother and Lee Chee Ngor as well as other family members in Canada. Whilst the Petitioner sought to distance himself from the actions of his son, it is a fact that Denton Hall acted as solicitor and prepared the detailed terms of the takeover letter. It is also a fact that no offer was made to buy up the Petitioner's own shares. In those circumstances, no meaningful distinction can be made between the Petitioner's acts and Christopher's acts : it strikes me that the demarcation line is so fine as to be non-existent.

(ii) In February 1999, Raymond received an anonymous letter including torn up copies of photographs which showed properties owned by companies belonging to TY Lee's family members in the United States. Also enclosed was a torn up copy of business particulars of three companies owned by TY Lee's family members in the United States. A similar anonymous letter was also received by TY Lee. The envelopes bear a Macau postmark. The overtones are obvious and sinister. In cross-examination, the Petitioner denied having anything to do with this. He further stated that he had interrogated his son Christopher who had denied responsibility. However, the photographs and the particulars emanate from a two-inch thick report compiled by lawyers in Boston that the Petitioner had retained. The Boston lawyers in turn had instructed private investigators to look into the affairs of TY Lee in the United States. The Petitioner's solicitors in England, his solicitors in Hong Kong, as well as the fraud unit of Ernest & Young whom he had retained had access to this report. Quite who else had access is unclear from the evidence. What is abundantly clear is that the letters emanated from the Petitioner's side, i.e. someone close to him and/or under his control. The suggestion that a 'lower echelon' staff member could have done this on his own initiative simply defies belief. This episode is both distasteful and troubling.

(iii) On 1 April 1999, Christopher sent a circular letter to those to whom he had made the takeover offer and threatened a "bloodbath" were they to side with Raymond.

108. The dispute with the Respondents is not about fraud. Yet, the fraud unit of one of the 'big five' was brought in after a 'beauty contest' and private investigators retained, undoubtedly in the expectation that some unsavory fact would come to light and so assist the Petitioner's cause which was to acquire control of the family assets. That is readily apparent from his own evidence that he sees himself as holding "the torch of the family's businesses", and that he regarded PEL "as the bearer of the torch for the new generation".

109. As I have already concluded that there is no merit in any of the Petitioner's complaints, it is unnecessary for me to reach any final conclusion as to abuse of process and equitable relief or to consider the case law cited. Suffice to say that in my judgment the Respondents have established a strong prima facie case in this regard.

Representation:

Mr Ronny Tong, SC, Mr David Richards, QC and Mr Eugene Fung, inst'd by M/s Denton Hall, for the Petitioner

Mr Daniel Fung, SC and Mr Johnny Mok, inst'd by M/s Liu, Choi & Chan, For the 1st and 2nd Respondents

(I) Petitioner's application for stay of the taxations, etc to Court of Appeal dismissed. Please refer to CACV307/1999 and CACV328/1999 dated 29 November 2000 (II) Applications for leave to appeal to Court of Appeal by the Petitioner dismissed. Pleas refer to CACV307/1999 and CACV328/1999 dated 29 May 2001