Arthur Wise Company Limited v. Wong Tak Fai, Almon and Another

HCA006763/1988

No, A6763 of 1988

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

----------------

BETWEEN

---------------------

Coram: Hon. Liu, J. in Chambers

Date of hearing: 26th October 1988

Date of delivery of decision: 26th October 1988

-----------------

DECISION

-----------------

1. The plaintiff limited company sues the defendants on various allegations. There are two summonses before the court : one from the defendants for security for costs and another by the plaintiff against the defendants for an interim injunction.

2. At the inception of the proceedings today, Counsel for the defendants invited the court to first entertain the defendants' summons for security for costs. It was suggested that if the defendants' summons should be granted by this court, a stay would have to be applied for pending payment-in of the security for costs as ordered.

3. Counsel for the plaintiff resisted that invitation. It appeared highly desirable that the summons of the  defendants should be heard first before further costs is being thrown away without proper safeguard being afforded to the defendants as it was claimed, if the defendants were able to establish insolvency and the allegation of oppression by the three other co-directors brought through the instrument of the limited plaintiff company. There was little known prejudice to the plaintiff. I acceded to the request of the defendants.

4. On behalf of the defendants, Counsel refers to exhibit BB, an estimate of the plaintiff's assets and liability made admittedly on the 20th October 1988, quite some time after disputes had arisen and some time after the 1st defendant left the plaintiff company at or about the end of July. Counsel for the defendants maintains that the plaintiff's company's position has remained stagnant as everything has stood still.

5. But that is not the picture painted by Counsel for the plaintiff.

6. Counsel for the plaintiff, on instructions, informs the court that in addition to some $90,000 by way of assets of the plaintiff, the limited company has goods in stock to the value of another $80,000. In addition, it is claimed that some $40,000 would come into the plaintiff's coffers in the course of the next few days.

7. The estimate, BB, is admittedly an estimate made only recently by an adversary although part of the entries are not disputed. What is questioned in principle is a sum of $200,000 from Chau as well as the other lesser sums from the other directors.

8. As regards Mr Chau, Counsel for the plaintiff refers me to the affirmation of Mr Hung filed herein on the 12th October, in paragraph 3 of which it is stated that Mr Chau and Mr Cheung contributed some $200,000 for the purchase of 15% of the shareholdings of the plaintiff company. However, the defendants have through the 1st defendant, in paragraph 12 of his affirmation filed on the 20th October, maintained that such $200,000 was injected into the company by way of a loan or better described as an advance. That is a matter in dispute. Apart from the $200,000, if I were to accept information supplied by Counsel for the plaintiff, the plaintiff is decidedly not insolvent.

9. In view of the dispute and the estimate BB, the author of which is the lst defendant and in view of the offer made by the defendants for buying out the other directors of the plaintiff company made on the 18th August 1988 in the sum of $72,641.05 - that presupposes that the plaintiff company was worth either by way of assets or goodwill or both well over $72,000 as the offer made was not inclusive of the defendants' own shareholdings in the limited company - in short, in view of the disputed facts and these disclosures, I cannot say that I am satisfied that the plaintiff limited company has been shown to be insolvent.

10. It was submitted on behalf of the defendants that the proceedings were instituted against the defendants by the three other directors using the limited company as a vehicle. If the company were insolvent, then it might be said that the other directors are using an insolvent company to put pressure to bear on the defendants. I have said that I am not satisfied that the plaintiff limited company has been shown to be insolvent. Oppression per se without more would not be a ground for the defendants to seek security of costs from the plaintiff limited company in this case. The second ground advanced on behalf of the defendants by Counsel therefore also fails.

11. In the circumstances, I dismiss the application of the defendants with costs to the plaintiff.

Representation:

Mr Selwyn K.M. So instructed by M/s. S.H. Chan & Co. for Plaintiff.

Mr Peter Ip instructed by M/s. Ho, Wong & Wong for 1st & 2nd Defendants.