Kwan Sec Wah v. Mei Fung Co Ltd and Others

HCA002747/1980

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

ACTION NO. 2747 OF 1980.

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Coram: Hon. LIU, J. in Court

Date of Judgment: 18th July 1980.

Notice of Motion filed by 1st Defendant for an order vacating lis pendens

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JUDGMENT

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1. By a generally indorsed writ, the plaintiff claims against the four defendants in terms set out verbatim below:-

"The Plaintiff's claim is for damages jointly and severally against the 1st, 2nd, 3rd and 4th Defendants for the fraudulent and/or negligent and/or improper manner and acts in conducting the business and affairs of the 1st defendant; for damages jointly and severally against the 2nd, 3rd and 4th Defendants for loss suffered by the plaintiff as result of their breach of fiduciary duty of care owing to the Plaintiff and for oppression of the minority shareholders; for purchase by the 1st, 2nd, 3rd and/or 4th Defendants of the shareholding of the Plaintiff at a reasonable and fair rate; for an account to be rendered by the 1st, 2nd, 3rd and 4th Defendants as to any secret and/or private profits and/or gains made by the 2nd, 3rd and 4th Defendants, and to render just and equitable portion of the said profits and/or gains to the Plaintiff and/or the 1st Defendant; for an injunction to restrain the 1st Defendant either by itself or its agents from further charging encumbering, disposing or parting with possession of any or all the 1st Defendant's properties, movable or otherwise, and in particular the premises as listed in the schedule hereto, and for further or other relief including the winding-up of the 1st defendant upon the ground inter alia that it be just and equitable so to do."

2. On this general endorsement on writ, the plaintiff proceeded to register or cause to be registered a lis pendens in the Land Office against the property in question. By a notice of motion served on the plaintiff with notice to the 3rd and the 4th defendants but not served on the 2nd defendant, the 1st defendant seeks to have the registration of the said lis pendens vacated.

3. It was contended by counsel for the 1st defendant that the proceedings as framed are no more than a mismanagement action and that on the authority of the case of Thian's Plastics Industrial Co. Ltd. v. Tins' Chemical Industrial Co. Ltd., [1970] HKLR 498 (on appeal, reported in 1971 HKLR 249), in the exercise of the inherent jurisdiction of the Court such registration must be expunged for the action is not per se registrable under section 19 of the Land Registration Ordinance.

4. Alternatively, counsel submitted that should the claim in this action be held to be registrable, the plaintiff was not prosecuting it in good faith and there were good causes for the registration to be vacated.

5. Counsel for the 3rd and the 4th defendants chose to offer no contribution.

6. Counsel for the plaintiff sought to distinguish the present action from that in the case of Thian's. It was strongly urged by Mr. Mumford that the present action was not a mismanagement action simpliciter but an action with the view to preventing the directors and those responsible for management in the 1st defendant company from improperly and fraudulently misappropriating properties and assets. On perusal of the facts in Thian's case and the circumstances as known in the present case, I can draw no real distinction between the two. This notice of motion, therefore, falls to be decided on a point of law which has been well settled. Any recitation of facts is, in the light of the conclusion that I have reached, redundant.

7. An injunction is claimed in this case as a remedy in aid of enforcement of a cause of action successfully prosecuted. An injunction constitutes no independent cause of action, and it is not a subject-matter in litigation on its own. It seems plain that there have been disputes within the Company. In my view, no part of the general indorsement on writ is or may be taken as a lis affecting land. There has been no quarrel over ownership for the property in question. There has been no proprietary claim to any land or any interest therein; nor has there been any endeavour to charge it. None of the matters contained in the general endorsement affects land, and following the decision in the case of Thian's, in my judgment, the writ in this action is not registrable.

8. That will be enough to dispose of the matter before me this afternoon. Counsel have made exhaustive submissions on section 19 of the Land Registration Ordinance. Mr. Mumford on behalf of the plaintiff has conscientiously and with meticulous care drawn my attention to the background of the case and the alleged conduct of the defendants or some of them. It is quite unnecessary for me to consider and decide on the alternative submission of Mr. Kwok, but out of respect for the laborious endeavours of both counsel, I would record that should I be called upon to adjudicate on that limb of counsel's arguments, I would not be prepared to condemn the plaintiff as having, in any way, prosecuted this action without due diligence or in bad faith. Nor would I be prepared to come down in favour of the 1st defendant on its contention that there have been good causes for the registration to be vacated under section 19 of the Land Registration Ordinance. Morals seem to be on the side of the plaintiff.

9. In conclusion, I grant an order in terms of paragraph (i) of the notice of motion with costs for the 1st defendant against the plaintiff. Subject to what Mr. Chan has to say, I propose to make no order as to costs for the 3rd and the 4th defendants. Both counsel have indicated that costs being discretionary, the circumstances justify the same to be left entirely in my hands. I order accordingly.

10. On costs for summons to file Statement of Claim out of time

11. I do not propose to call upon Mr. Mumford. I indicated that there has been no culpable delay in filing the Statement of Claim. The complexity in the matters involved in these proceedings is obviously a contributory factor for the apparent inaction on the part of the plaintiff. The refusal to consent to the Statement of Claim being filed out of time by the defendants would seem to be more of a technical manoeuvre. All these matters will have to be gone into properly when the summons is to be revived. As presently advised on the information available, I cannot detect any conduct on the part of any parties which should be sanctioned by way of costs.

However, it is a matter to be decided when occasion arises. For the summons for leave to file the Statement of Claim out of time. I order: (1) Adjourned sine die with liberty to apply to restore before the Registrar by any party on 48 hours' notice to the rest of the parties hereto, and (2) Costs reserved for consideration by the Registrar.

Representation:

Mr. Mumford instructed by Messrs. Ronald W.H. Wong for Plaintiff.

Mr. Kenneth Kwok instructed by Messrs. Ho & Wong for 1st Defendant/Applicant.

Mr. Patrick Chan instructed by Messrs. Rowdget Young & Co. for 3rd and 4th Defendants.

Notice of Motion filed by 1st Defendant for an order vacating lis pendens