Ming Shiu Chung and Others v. Ming Shiu Sum and Others
Read the full judgment text of HCA 18407/1999 on BabelCite. This High Court CFI judgment was delivered on 4 May 2005.
1. This action arises out of a dispute between members of the Ming family over the control of their family company, J.C. Ming Inc, the 2 nd defendant and its subsidiaries, collectively known as “the MHD Group”. On 30 April 2004 To DJ gave judgment after trial in favour of the plaintiffs, finding that certain purported allotments to the 1 st defendant of shares in the 2 nd defendant were void and that a shareholders’ resolution to remove the 1 st defendant as a director of the 2 nd defendant was
Cited by 3 cases
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HCA18407/1999 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO.18407 OF 1999 ------------------------------ BETWEEN
--------------------- Before : Deputy High Court Judge Muttrie in Chambers Date of Hearing : 4 May 2005 Date of Judgment: 4 May 2005 ------------------ R U L I N G ------------------ 1.This action arises out of a dispute between members of the Ming family over the control of their family company, J.C. Ming Inc, the 2nd defendant and its subsidiaries, collectively known as “the MHD Group”. On 30 April 2004 To DJ gave judgment after trial in favour of the plaintiffs, finding that certain purported allotments to the 1st defendant of shares in the 2nd defendant were void and that a shareholders’ resolution to remove the 1st defendant as a director of the 2nd defendant was valid and effective, and restraining the 1st defendant from continuing to act as a director of the 2nd defendant. 2.The 1st defendant, it appears, refused to relinquish control. He appealed, and applied for stay of execution pending appeal. The plaintiffs then applied for the appointment of Mr I.G. Robinson as receiver of the 2nd defendant and its subsidiary companies. When the two matters came before Suffiad J on 7 May 2004 the parties, after adjournment, came to agreement on the terms of the order. Mr Robinson was duly appointed receiver with general duties to carry on the business of the companies as far as is necessary for the protection and preservation of the companies’ assets and to do all things reasonably necessary to preserve the value of the assets and the business. Among his powers is a power, with the leave of the court, to sell or enter into binding commitments to sell any of the assets of the receivership companies. 3.By a summons dated 12 April 2005 the receiver now applied for directions as follows :
4.By a summons dated 3 May 2005 the receiver applied to amend the earlier summons by substituting for paragraph 2 an application for leave to execute a share mortgage document with the 1st defendant and by adding a paragraph 8, applying for leave to provide Mrs Bernadette Ming (who claims to be the administratrix in the USA of the deceased, Ming Shiu Wah Kenneth) or her representatives with such information and documents relating to the receivership companies and the affairs as he may deem fit. 5.The application is made against the background of the fact that the appeal against the judgment of To DJ is to be heard on 24 May 2005, i.e. 20 days from the hearing of this summons. 6.Having heard argument I amended the summons and allowed the plaintiffs’ application to adjourn all the applications in the amended summons, but heard the applications in paragraphs 1 and 4 as being urgent. 7.The position is this. Iseday Ltd (“Iseday”) owes an outstanding debt of about $34 million to the Standard Chartered Bank (“SCB”) which is secured by an all monies first legal charge over various properties in Jade Centre, 98-102 Wellington St, Central, Hong Kong. In January 2005 the SCB indicated to representatives of the receiver that it was unlikely that a formal renewal of the facilities extended to Iseday would be granted when they expired in January 2005. Various communications followed. The SCB in March 2005 indicated that the Jade Centre properties should be disposed of, and it would appoint a receiver to dispose of them if Iseday’s debt remained outstanding at the end of May 2005. The SCB later extended this time limit to 30 June 2005. From the terms of the e-mail message it appears that this was done in the knowledge that the receiver would, on 4 May 2005, apply to the court for permission to sell the properties. 8.Iseday has, it appears, property holdings valued by the surveyor, Mr Paul Varty at $83 million. While Iseday is asset-rich, the return on its assets is low. It has about $288,244 per month coming in from rents but its loan repayments amount to about $415,000 per month. In addition it apparently owes about $17 million to other group companies. 9.The receiver says that he has tried without success to obtain re-financing from four different banks. It would not be appropriate for other related companies to lend Iseday the money and in any event, the reserves are insufficient. The only way to avoid action by the SCB to recover the debt is to sell properties within Jade Centre. 10.The 1st defendant concurs with this plan. In fact, it appears that he wants all the assets to be liquidated. The same apparently applies to Bernadette Ming. The 4th defendant and the plaintiffs do not agree that any of the properties should be sold at least until the outcome of the appeal is known. The plaintiffs say that they want to continue the business of property holding, if they win the appeal. They also point to the fact of the currently rising property market. 11.It appears that the plaintiffs have obtained an offer of a credit facility from the Bank of America (“BOA”). Its term is longer than that of the facility originally granted by the SCB and the monthly repayments less though the receiver says that there will still be a shortfall, at least as long as the units at the 14th and 21st floors of Jade Centre remain vacant. The shortfall will however be small; about $4,000 per month. The terms are more advantageous than those of the SCB but the problem is that the BOA facility will only be obtainable in the event that the plaintiffs succeed on the appeal. 12.It is argued for the plaintiff that the whole point of having a receiver appointed is to preserve the assets for the parties ultimately successful on appeal. There should only be sale of assets if it is really necessary; and it is not, because the SCB has already extended the period from January to the end of June. Further, the application is premature on the receiver’s own evidence; he says that it looks highly likely that it will be necessary to sell some, though hopefully not all of the property. There is no immediate urgency. 13.I take into account that the effect of the judgment of To DJ is that there are seven shareholders, of which only two, namely the 1st defendant and Bernadette Ming, if she is indeed the 7th shareholder as administratrix of the estate of Kenneth Ming, wish to dispose of any of the assets. The majority are against it. Of course if the 1st defendant succeeds on the appeal, he will be the majority shareholder so he can do as he pleases. But the receiver is not there to follow the wishes of the majority of the shareholders; he is appointed by the court to preserve the assets and if that means disposing of some of them, so as to prevent a greater loss, then it may be necessary to allow him to do that. 14.I realise that the appeal is to be heard by the Court of Appeal in less than three weeks’ time. Realistically, the Court of Appeal will take time to hand down its judgment and there is certainly no guarantee that it will do so before 30 June 2005. In any event, as I noted in dealing with the application to adjourn, we do not know if the losing side will seek to appeal to the CFA. Given that this is a dispute between family members it seems not unlikely that whoever loses will fight all the way. So the final solution as to the share ownership may be far ahead. 15.I accept that there is a serious risk that the SCB will exercise its powers under the mortgages. It may have allowed extensions of time but there is no guarantee that it will continue to do so after 30 June 2005. 16.I accept also that the receiver will only — as the terms of the order he seeks require — sell units in Jade Centre so as to repay the outstanding indebtedness of Iseday to SCB. I also accept that he will not sell unless and until he has to and I am sure that he is as alive to the fact of the rising market as any of the parties. I do not think it is practical to say that he should simply come back to the court if and when he finds a buyer or buyers. That may lose a necessary sale or sales. I do not think the receiver’s hands should be tied, and I do not think the application is premature. 17.I will accordingly make an order in terms of paragraph 1 of the summons. 18.I turn to paragraph 4. The object of this is to enable the receiver to lease Unit 21, which is vacant since one of the subsidiaries ceased trading there, without further recourse to the court. Unit 14 is also vacant. No tenant seems to want it. 19.The plaintiffs and the 4th defendant do not want to see Unit 21 leased, partly for sentimental reasons but mainly because, if the plaintiffs win, they intend to carry on business there. I do not think anyone is much concerned about Unit 14. 20.It would be useful, though apparently not essential, to have money coming in from rent but obviously, if the plaintiffs win on the appeal and Unit 21 is leased for two years, which is the usual term, they will have to find somewhere else to use as an office for the rest of the term. That would be inconvenient and costly. 21.I have already allowed adjournment of the rest of the paragraphs on the basis that directions given before the outcome of the appeal may be premature and could be, in the words of Lord Scott in the Nina Wang appeal case “a pointless and inexcusable waste of money, time and judicial resources”. I think the power to lease is not so urgently required as to the power to sell and so I propose also to adjourn consideration of paragraph 4, for hearing along with the remaining directions.
Mr G. Wong of Messrs Richards Bulter, for the Plaintiffs Mr Patrick Hui of Messrs Robin Bridge & John Liu, for the 1st Defendant The 4th Defendant, in person Mr Robert Pe of Messrs Koo & Partners, for the Receiver |
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