Silver City International (Holdings) Ltd v. Sino Luck Investment Ltd and Another

cacv 103/2004

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 103 of 2004

(on appeal from HCMP NO. 5412 of 2003)

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BETWEEN

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Before: Hon Rogers VP, Le Pichon JA and Waung J in Court

Date of Hearing: 8 September 2004

Date of Judgment: 8 September 2004

Date of Handing Down Reasons for Judgment: 17 September 2004

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REASONS FOR JUDGMENT

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Hon Rogers VP:

1.This was an appeal brought against the judgment of Deputy High Court Judge Poon dated 18 March 2004 whereby he had ordered the holding of an Annual General Meeting of the 2^nd defendant.

2.When the appeal was called on Mr Chan Wai-sun, who was a director of the 1^st defendant, the appellant, attempted to address the court.  He indicated that he wished to act in person and, if that were not permitted, he requested that the appeal of the 1^st defendant should be adjourned for a period of three months.

3.Before this appeal was due to be heard Mr Chan had made an application before the master to be permitted to represent the company in person without it being represented by solicitors and counsel.  The ground of that application was said to be:

“The only activity of the company is that it being an investment holding company of 49 percent shareholding in Silver Dynasty Investment Co Ltd (‘Silver Dynasty’) which is the 2^nd defendant in the subject action number HCMP 5412 of 2003.  I produce as exhibit the most updated annual return of the company, …”

4.What was apparently attached was a statement saying that Silver Dynasty had no profit and had never generated a profit and that there had been no dividend or any distribution to the shareholders and that Silver Dynasty had no income at all.

5.The master refused that.  In my view the master was correct to have done so for more than one reason.  In the first place as explained in the Reasons for Decision of Yuen JA given on 11 December 2003 in CACV 296 of 2003, it would appear that the rules do not extend to the master having jurisdiction to grant leave for a company to be represented by a director in appeal proceedings.

6.In the second place it is highly undesirable that a company should act through the person of a director and without legal advisers.  Mr Chan, in this instance, was quite forthright to the extent that he said that he would merely tell the court the facts and leave it to the court to decide everything else.  That is clearly not a satisfactory way of conducting an appeal.

7.However, more importantly as was explained by Sir Thomas Bingham in Radford v. Freeway Classics Ltd [1994] 1 BCLC 445 at 448G, a limited company, has clear privileges.  One of those is a limitation of liability for the shareholders so that shareholders and directors are not at risk should the company be held liable.  If the company, such as the 1^st defendant in this case, which has no income and never has had an income, is permitted to pursue an appeal in respect of a judgment which it has lost, the difficulty of an opposing party in securing payment of its costs is manifest.  In this case Mr Chan said that he needed three months in which to raise sufficient funds to be able to instruct solicitors.  That in itself is perhaps some indication of the difficulties which are likely to arise.  Since this appeal was set down in April and the date was fixed for hearing and notified to the parties by the end of April, the 1^st defendant has had more than adequate time in which to arrange finances to conduct this appeal.

8.In the circumstances Mr Chan’s requests were refused and the appeal was consequently dismissed.

Hon Le Pichon JA:

9.I agree.

Hon Waung J:

10.I agree.

Mr Jose-Antonio Maurellet, instructed by Messrs Kok & Ha,  for the Plaintiff/Respondent

Mr Chan Wai Sun, Director of the 1^st Defendant/Appellant (present)