Chen Ching Chih and Another v. Lu Wen Yun, Jenny

HCMP 1691/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1691 OF 2005

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BETWEEN

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Before: Deputy High Court Judge L. Chan in Chambers

Dates of Hearing: 8 to 10 February 2006

Date of Judgment: 3 March 2006

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J U D G M E N T

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1.This is an application under section 121 of the Companies Ordinance, Cap. 32 for inspection of the books of account of J & D Industrial (HK) Limited (“the Company”) at its registered office or at such other premises wherever in Hong Kong where the documents are kept.  The documents should cover the period from the respondent’s appointment as a director on 16 January 1997 to the present.

2.The application is supported by an affidavit of the 1st applicant.  The 1st applicant is a representative of Yi Chun Navigation Inc., one of the two equal shareholders of the Company.  The other shareholder of the Company is the respondent. 

3.The 1st applicant said that since early 1997 when he and the 2nd applicant were involved with the Company, they had left the conduct of the affairs of the Company to the respondent.  However, they subsequently learnt that the respondent had not conducted the affairs in a satisfactory manner.  On 31st August 2004, the Inland Revenue Department wrote to Messrs. Wong, Lam, Leung & Kwok, CPA Ltd., the auditors and tax representative of the Company, advising that the Company had defaulted in submitting the tax return for the 2003/2004 financial year and had thus breached section 51(2) of the Inland Revenue Ordinance.

4.The applicants thus convened a board meeting on 7 January 2005 and resolved that the respondent should deliver up immediately or facilitate and arrange for delivery up and inspection of the financial books of account and records of the Company to the secretary and auditor of the Company.  They wanted to inspect the books of account of the Company to prepare the profit and loss account for the financial year of 2003/2004.

5.The respondent refused the demand for inspection on the ground that the applicants may collaborate with the auditors to make use of the books of account to prepare a profit and loss account to her prejudice.  She also took out an originating summons in HCMP 170 of 2006 under section 121 of the Ordinance to inspect some documents that are kept by the applicants herein.  That originating summons has been compiled with substantially by the respondent therein before full hearing.  The date of hearing for the remaining narrow scope of dispute is fixed on 20 March 2006.

6.The respondent has applied for this application to be adjourned to 20 March 2006, but I dismissed that application with costs on the first day of the hearing, as I did not think that she had sufficient merit for that application. 

7.I also do not think the respondent had shown a meritorious opposition to this application (see Law Wai Duen and another v Boldwin Construction Company Limited and others [2001] 4 HKC 403), save one point which was initially mentioned by me and very well developed by Dr Pun, counsel for the respondent.  It is the question of whether the applicants are still directors of the Company and are therefore eligible to make this application in such capacity. 

8.The Company has three directors who are the applicants and the respondent herein.  Article 7 of the Articles of Association of the Company provides:

“At the Ordinary General Meeting to be held next after the adoption of these Articles and at every succeeding Ordinary General Meeting all Directors, except Permanent Directors if any are appointed, shall retire from office and shall be eligible for re-election.”

9.The last AGM of the Company was conducted by way of written resolutions dated 3 January 2003.  The pertinent resolution read:

“FURTHER RESOLVED that all directors who retired from the Board in accordance with the Article of Association, be and were hereby re-elected directors of the Company.

Members of the Board of directors until the next Annual General Meeting are:

CHEN CHING CHIH

LEE KWANG FUH

LU WEN YUN, JENNY”

The deadline for the next AGM was 3 April 2004, but no AGM has been held since the last one on 3 January 2003.  Dr Pun thus argued that by virtue of Article 7, all three directors of the Company had automatically retired on 3 April 2004, as none of them was a permanent director.  If that submission is correct, the applicants are no longer directors of the Company and have no locus to make this application.  Dr Pun has referred me to a number of cases.

10.The first case to consider is In re Great Northern Salt and Chemical Works 44 Ch. D. 472.  In that case, a Mr. Kennedy was a subscriber of shares of the company.  He challenged the validity of the allotment of shares to him by the directors of the Company.  He made the challenge after the company had been wound up and calls were made on the shareholders including him.

11.Articles 58 to 62 of Table A to the Companies Act, 1862, which applied to the company, provided as follows:

“Rotation of Directors

58.    At the First Ordinary Meeting after the Registration of the Company, the whole of the Directors shall retire from Office; and at the First Ordinary Meeting in every subsequent Year One-Third of the Directors for the Time being, or if their Number is not a Multiple of Three then the Number nearest to One-Third shall retire from Office. 

59.    The One-Third or other nearest Number to retire during the First and Second Years ensuring the First Ordinary Meeting of the Company shall, unless the Directors agreed themselves, be determined by a Ballot in every subsequent Year, the One-Third or other nearest Number who have been longest in Office shall retire.

60.    A retiring Director shall be re-eligible.

61.    The Company at the General Meeting at which any Directors retire in manner aforesaid shall fill up the vacated Offices by electing a like Number of Persons.

62.    If at any Meeting at which an Election of Directors ought to take place, the Places of the vacating Directors are not filled up, the Meeting shall stand adjourned till the same Day in the next Week, at the same Time and Place; and if at such adjourned Meeting the Places of the vacating Directors are not filled up, the vacating Directors, or such of them as have not had their Places filled up, shall continue in Office until the next Ordinary Meeting in the next Year, and so on from Time to Time until their Places are filled up.”

12.The subscribers to the memorandum of this company appointed in writing four directors for the Company.  The company then held the first ordinary meeting on 20 August 1888.  The members resolved in the meeting:

“that the appointment of other or further directors be in the option of the directors appointed by the subscribers to the memorandum of association, which directors are hereby authorized and requested to continue to act for the present, namely, D Smith, H Parry, and J W Jillings.”

13.Counsel for Mr Kennedy argued that by Article 58 referred to above, all four directors should have vacated on 20 August and, by Article 62, all four vacancies should be filled up in the ordinary meeting on that day.  If not, the meeting should be adjourned to the same day in the following week, and if the places were not filled up in the adjourned meeting in the following week, the vacating directors should continue in office until the ordinary meeting in the next year and so on until the vacancies were filled up.  However, these provisions had not been followed as there was no adjourned meeting to the following week.

14.Counsel thus further argued that there was no director on the board and the allotment of shares to Mr Kennedy on 20 August was invalid.  Stirling J at page 482 said:

“Then another objection to the validity of the allotment is this.  It is prescribed by article 58 of Table A, that at the first ordinary meeting after the registration of the company the whole of the directors shall retire from office; and it is said, therefore, that on the 20th of August, at the general meeting, which for the purpose I assume to have preceded the board meeting of the same date, they did retire.  Well, what is the result of that?  Article 61 provides that “the company at the general meeting at which any directors retire in manner aforesaid shall fill up the vacated offices by electing a like number of persons.”  What took place?  I have read the resolution, and that seems to me to be a resolution which at all events is valid to this extent, that it continued in office the then present directors.  It may be that part of that resolution was invalid, and that the directors could not be validly entrusted by a general meeting with the appointment of other or further directors in cases to which Table A did not apply; but it does seem to me that that is a sufficient expression of the will of the meeting that the then present directors who are named in that resolution should continue in office.  Besides that, I think there is this further observation to make, that by article 62 it is provided that if at any meeting at which the election of directors ought to take place the places of the vacating directors are not filled up, the meeting is to stand adjourned; and if at the adjourned meeting such places are not filled up, the vacating directors, or those of them whose places are filled up, shall continue in office until the ordinary meeting in the next year, and so on until their places are filled up.

Now it is quite true that an adjourned meeting did not take place here, supposing that the resolution of the 20th of August was ineffective.  But it seems to me that that portion of article 62 might very fairly be read as being a clause of the nature which is commonly described as directory only, and that the meaning of it is, that if for any reason either the first meeting, or the adjourned meeting at which the election of directors ought to take place, does not proceed validly to fill up the places of the vacating directors, then they are to continue in office.  I think, therefore, that three directors were validly in office on the 20th of August; two of those three made the allotment of the 200 shares; and it appears to me, therefore, that that allotment is binding.

15.Stirling J thus held that the members in the general meeting had resolved that the then directors should continue in office.  The learned judge also held in the alternative that Article 62 of Table A to the 1862 Act required that the vacating directors, whose positions had not been filled up, should continue in office.

16.The next case is In re Consolidated Nickel Mines Limited [1914] 1 Ch 883.  The articles of association of this company provided that general meetings were to be held once a year and that at the ordinary meeting in 1906, all directors should retire from office.  Articles 62, 101, 104 and 106 of the articles of association of the company provided:

“62.     General meetings shall be held once in every year, at
such time and place in England or in France as may be prescribed by the directors …

101.    At the ordinary meeting in 1906 all the directors, and at the ordinary meeting in every subsequent year one-third of all the directors for the time being respectively, or if their number is not a multiple of three, then the number nearest to one-third, but not exceeding one-third, shall retire from office.  A retiring director shall retain office until the dissolution of the meeting at which his successor is elected.

104.    The company shall, at the meeting at which any directors retire in manner aforesaid, fill up the vacated office of each director by electing a person thereto, and without notice in that behalf may fill up any other vacancies, unless the meeting determine not to fill up such vacancies.

106.    If at any meeting at which an election of directors ought to take place the places of the retiring directors, or some of them, are not filled up, the retiring directors, or such of them as have not had their places filled up, shall, if duly qualified, be deemed to have been re-elected, unless the meeting determine not to fill up such vacancies.”

17.The articles also provided for certain remuneration to the directors.  No general meeting was held in 1906 or 1907, but the directors continued to act as such.  The company was wound up in October 1910.  The directors submitted proofs for their remuneration.  The liquidator rejected the proofs wholly or in part on, inter alia, the ground that the directors should have retired under the Article 101 in 1906, and that it was their own fault that no general meeting was called in 1906 or 1907.  The objection was upheld by Sargant J who said at page 888:

“As to the two other directors, Steel and Phillips, there is another objection.  By clause 62 of the articles of association and by statute (s. 49 of the Companies Act, 1862) the directors were bound to summon a general meeting of the company once in every calendar year, and article 101 provided that “At the ordinary meeting in 1906 all the directors ... shall retire from office.”  No ordinary meeting was held or called in 1906 or 1907, and the liquidator’s contention is that all the directors vacated office on December 31, 1906, which was the last day on which a meeting of the company for that year could have been held.  That contention appears to me to be well founded.

A director on his appointment does not ordinarily step into an office which is perpetual unless terminated by some act, but into an office the holding of which is limited by the terms of the articles.  The meaning of article 101 is that the holding of the office of director was only to last until the end of 1906, or until
the earlier date on which the ordinary meeting for that year was held.  In re Great Northern Salt and Chemical Works is merely a decision as to the construction to be placed on clause 62 of Table A to the Act of 1862.  Moreover, article 106 in the present case shews that prima facie a retiring director vacated office, and is against the applicants’ contention.  The duty of the directors was to call a meeting in 1906 and 1907, and they cannot take advantage of their own default in that respect and say that they still remain directors.  Park v. Lawton is to some extent in point.  There it was decided that the fact that no general meeting had been held in a year was no defence to a charge of not sending in certain returns required to be made within a certain time after the first or only general meeting in the year.”

18.Sargant J thus distinguished In re Great Northern Salt and Chemical Works and drew some support from Park v Lawton and Another [1911] 1 KB 588. 

19.The company in Park v Lawton was governed by section 26 of the Companies Act, 1908 which required companies to file annual returns on certain particulars of their members.  The Company did not hold any general meeting in the year 1909 and the respondents were parties responsible for this.  They were charged with default in complying with section 26.  It was held that the absence of a general meeting was no defence to the charge.  Lord Alverstone CJ said at page 592:

“The question turns on the meaning of s. 26 of the Companies (Consolidation) Act, 1908, and it is not unimportant to point out that although the Companies Act, 1862, contained provisions similar to those of s. 26, it was not until the Companies Act, 1907, that a penalty was imposed for a default in holding an annual general meeting.  Sect. 26 of the Act of 1908 provides that once at least in every year a list is to be made of all persons who “on the fourteenth day after the first or only ordinary general meeting in the year are members of the company,” and the section goes on to say that that list must contain, in addition to full particulars with regard to the individual shareholders and the shares held by them, a summary specifying a number of most important particulars, including an audited statement of accounts, giving such particulars as are included in the annual balance-sheet other than the statement of profit and loss.  Sub-s. 5 of s. 26 imposes a penalty if default is made in complying with the requirements of the section.  The cases of Gibson v Barton LR 10 QB 329 and Edmonds v Foster 45 LJ (MC) 41 are clear authorities that a person charged with an offence under s. 26 is not entitled by way of defence to plead the impossibility of complying with s. 26 by reason of no general meeting having been held, at any rate if the person charged was also a party to the default in holding the meeting; in other words, a person charged with an offence cannot rely on his own default as an answer to the charge.”

Thus even if there was no general meeting in a particular year, the return still had to be filed as if the meeting had been held. 

20.I now come to a local case called Alexander Ward & Company v Samyang Navigation Company Limited and Another, Civil Appeal No. 20 of 1971 (unreported).  Alexander Ward & Co, the appellant, was incorporated in Hong Kong on 22 March 1967.  Article 48 of its articles of association provided that a general meeting of the company should be held in each calendar year at such time and place as the directors should appoint.  In default, any two members may convene a general meeting in the same manner as by the directors.  Article 80 provided that at the ordinary general meeting in every year, all the directors for the time being should retire from office. 

21.There were three directors in the appellant’s board as at 16 May 1967.  However, one director (Mr Choung) die on 4 October 1967 and the second director, Veritatem & Company, resigned on 20 June 1969.  The remaining director was Mr Ward.  The minute books indicated that no annual general meeting had been held since incorporation.

22.On or about 5 November 1970, the appellant issued a writ of summons in Scotland against Samyang Navigation.  Sam Yang Navigation then took out an action in this court for declarations saying that the appellant had no director in its board.  It was obvious that Samyang Navigation would, if successful in the local action, apply to strike out the Scottish writ of summons.

23.The appellant then entered a conditional appearance in the local action.  Samyang Navigation then took out a summons to strike out the conditional appearance on the ground that the appearance was entered without authority of the appellant as it had no director properly appointed and capable of giving instructions to a solicitor. 

24.Pickering J allowed the summons and stuck out the conditional appearance on 10 May 1971.  The full court dismissed the appellant’s appeal on 5 October 1971.  The appellant then applied to the full court for leave to appeal to the Privy Council.  The application went before Blair-Kerr, SPJ and McMullin J.  In refusing leave, Blair-Kerr SPJ said in his judgment of 25 November 1971:

“There was affidavit evidence before Mr. Justice Pickering that the statutory books of the company are in the possession of the auditors (Peat Marwick Mitchell & Co.).  These would, of course, include the minute book and the share register.  According to the affidavit evidence, there is nothing in the books of the company to indicate that any directors were appointed after the death of Mr. Choung or after the resignation of Veritatem & Co.; nor is there any record of any meeting of directors (other than the meeting held on 15th May 1967).  It also appears that no Annual General Meeting of the company has been held since incorporation.

That being so, it would appear that the 1st defendant and Veritatem & Co. ceased to be directors, if not as from 1st January 1968, certainly as from 1st January 1969.  As Sargent J. said in In re Consolidated Nickel Mines Ltd.

“A director on his appointment does not ordinarily step into an office which is perpetual unless terminated by some act, but into an office the holding of which is limited by the terms of the articles.  The meaning of article 101 is that the holding of the office of director was only to last until the end of 1906, or until the earlier date on which the ordinary meeting for that year was held.”

If the 1st defendant and Veritatem & Co. ceased to be directors as from 1st January 1968, or 1st January 1969 as the case may be, and there has been no other directors appointed, it would appear that the company has had no directors at any rate since 1st January 1969.”

25.The appellant thus failed in the local action.  It was wound up on 14 April, 1972.  However, its Scottish action survived because of the rectification by the appellant through the liquidator who joined that action on 12 January 1973.  Though the Scottish action was instituted without the authority of the appellant, the appellant was competent to institute it at the time when it was issued.  The appellant could have done so either by appointing directors to do it or to authorize the action by members in general meeting.  The members in general meeting have a residual authority to use the company’s powers in the absence of an effective board.  Since the appellant was competent to institute the action, its liquidator could have ratified the action for it (see Alexander Ward & Company Limited v Samyang Navigation Company Limited [1975] 1 WLR 673).

26.The next case that followed In re Consolidated Nickel Mines Limited is In re Zinotty Properties Limited [1984] 1 WLR 1249.

27.A Mr Brown had many joint ventures with a Mr Perry.  Mr Brown used to hold 25% of the shares of the joint venture vehicles and Mr Perry held the other 75%.  In 1967, they incorporated Zinotty Properties Limited for a development in Hampshire.  This time Mr Brown still held 25% shares of Zinotty through a company of his, but the remaining 75% was held by a company owned by Mr Perry and a Mr Bulfield.  There were disagreements and Mr Brown presented a petition on 14 December 1983 to wind up Zinotty. 

28.On 23 January 1984, the secretary of Zinotty sent Mr Brown a notice of an EGM to be held on 15 February 1984 for a special resolution to wind up Zinotty voluntarily and to appoint a Mr Ball, the auditor of Zinotty, as the liquidator.  Mr Brown did not favour this idea.  He did not attend the EGM thinking that with his absence, there would not be the necessary quorum of at least two members.  However, unbeknown to him, the secretary of Zinotty had on 10 February 1984 registered the transfer of one of the shares of Zinotty as held by the company controlled by Mr Perry and Mr Bulfield to Mr Bulfield personally.  With Mr Bulfield and the company he and Mr Perry controlled, there were two members attending the EGM on 15 February 1984.  The special resolution for voluntary winding up was thus passed and Mr Ball was appointed to liquidator.  Despite this, Mr Brown pursued his petition to wind up. 

29.Mr Brown’s counsel argued that the resolution for voluntary winding up was of no effect because the share had been improperly registered by the secretary under the name of Mr Bulfield.  His argument stemmed from the fact that Zinotty had no directors on 10 February 1984 when Mr Bulfield accepted the transfer of the share.  That was the consequence of Zinotty not having held any AGM coupled with the effect of Article 89 of Table A as amended by Article 16. 

30.Article 89 of Table A provided:

“At the first annual general meeting of the company all the directors shall retire from office, and at the annual general meeting in every subsequent year one-third of the directors for the time being, or, if there number is not three or a multiple of three, then the number nearest one-third shall retire from office.”

31.Article 16 of the articles of association of Zinotty provided:

“In cl 89 of Table A the words “all the directors shall retire from office” shall be deleted.”

32.Counsel on both sides agreed that when no AGM was held, Zinotty had no director by 1970.  In re Consolidated Nickel Mines Limited was also referred to by Mervyn Davies J in his judgment. 

33.Furthermore, Article 7 provided:

“The directors may in their absolute discretion and without assigning any reason therefor decline to register any transfer of shares, whether fully paid or not, not being a transfer to a person who is already a member of the company or to a transferee under cl 6 hereof.  Clause 24 of Table A shall not apply.”

It was held In re Swaledale Cleaners Limited [1968] 1 WLR 1710 that the directors had two months to decide whether to decline registration under an article which was the same as Article 7. 

34.Mervyn Davies J ruled against the registration of the share for Mr Bulfield on the ground that he would only have the right to be registered at the end of the two months as held in In re Swaledale Cleaners Limited.  If during this two-month period the absence of directors were remedied, the new directors would have an opportunity of refusing registration pursuant to art 7 until the end of the two months.

35.The last case I would refer to is the local Court of Appeal decision in The Incorporated Owners of Finance Building v Bright Hill Management Consultants Company Limited CACV 386/2000.

36.The applicant in these proceedings sought to recover building management fees from the respondent which was an owner of a unit in the building.  The respondent counterclaimed refund of overpaid management fees.  The matter was initiated in this court but was transferred by consent to the Lands Tribunal.  During the hearing before the Tribunal on 8 June 2000, the applicant’s representative admitted that there was no general meeting of the applicant since its incorporation on 8 October 1996.  The Presiding Officer then dismissed the claim on the basis that there was no validly constituted management committee through which the applicant could institute those proceedings.

37.The Presiding Officer also dismissed the respondent’s counterclaim on the ground that it was outside the Tribunal’s jurisdiction as conferred by the 10^th schedule of the Building Management Ordinance. 

38.The applicant did not appeal against the dismissal of its claim, but the respondent appeal against the dismissal of its counterclaim.  Though the applicant did not appeal, the ground for dismissing the claim was discussed in detail by the Court of Appeal.  Cheung JA took the view that the applicant’s claim was rightly dismissed as the members of the management committee had all retired automatically by lapse of time.  The learned judge said:

“Dismissal of the Incorporated Owners’ claim

14.   The Incorporated Owners has not appealed against the decision dismissing its claim.  In this regard, the Presiding Officer was clearly correct.  Under paragraph 1(1) of the Third Schedule of the Ordinance, the management committee shall convene-

(a)   the first annual general meeting of a corporation not later than 15 months after the date of the registration of the corporation;

(b)   an annual general meeting not earlier than 12 months, and not later than 15 months, after the date of the first or previous annual general meeting and

(c)   a general meeting of the corporation at any time for such purposes as the management committee thinks fit. 

15.   Under paragraph 3 of the Second Schedule of the Ordinance, the members of the management committee appointed at a meeting convened under s. 3, 3A, 4 or 40C, shall hold office until a new management committee is appointed and assumes office at the second annual general meeting of the corporation.  Paragraph 5(1) further provides that:

“At the second annual general meeting of a corporation convened in accordance with paragraph 1(1)(b) of the Third Schedule and thereafter at every alternate annual general meeting, all members of the management committee, other than the member (if any) deemed to be appointed under paragraph 2(2) in his capacity as the tenants’ representative, shall retire from office.”

16.   The Management Committee of the Incorporated Owners was appointed at a meeting held under s. 3 of the Ordinance.  The terms of paragraphs 3 and 5(1) of the Second Schedule mean that the office of the members of the Management Committee was only to last until, at the latest, the second annual general meeting of the corporation.  This must be conditional upon the Management Committee holding the first annual general meeting, as required by paragraph 1(1)(a) of the Third Schedule, not later than 15 months after the registration of the Incorporated Owners on 8 October 1996.  If the Incorporated Owners had in fact not held any annual general meeting after its incorporation, then clearly the authority of the Management Committee had lapsed by 11 January 2000 when it lodged the High Court application or by 18 May 2000 when the Notice of Application was filed in the Lands Tribunal. 

17.   I do not consider this construction to be contrary to the intention of the legislature.  While the Ordinance is aimed to provide for a better management of multi-owner buildings in Hong Kong and ensure that the powers of the corporation are to be performed on its behalf by the management committee, this must be based on the existence of a valid management committee.  It is clear that the ultimate power in the management of a building is vested in the corporation itself.  S. 14(1) provides that at a meeting of a corporation, any resolution may be passed with respect to the control, management and administration of the common parts or the renovation, improvement or decoration of those parts and any such resolution shall be binding on the management committee and all the owners.  Likewise under paragraph 5(2) of the Second Schedule, it is for the corporation to appoint a new management committee and their office bearers at the annual general meeting of the corporation at which the management committee retires. 

18.   When there is a valid management committee, the owners should, of course, request the Chairman to convene a general meeting under paragraph 1(2) of the Third Schedule.  But when there is none, given the ultimate power is vested in the owners through the corporation, the owners must have the power to convene a meeting for the purpose of appointing a new management committee.  These powers are available under S. 3, 3A, 4 or 40C.  While the Ordinance also requires the management committee appointed under these provisions to apply for the registration of the corporation, in my view, this is only necessary when there is no corporation in existence.  When such a corporation already exists, the management committee does not need to repeat the steps.

19.   The owners and the management committee may be ignorant of the provisions of the Ordinance but this cannot be the basis for prolonging the life span of a management committee for the sake of ensuring continuity in the management.  The contrary view is untenable.  It cannot be the intention of the legislation that, notwithstanding the breach of the provisions of the Ordinance in the holding of general meetings, the management committee could continue in perpetual existence.  The matter can be tested this way: if the contrary view is correct, there would be no need for the requirement of annual general meetings and retirement of the management committee, the Ordinance can simply state that the management committee shall continue in office indefinitely or until the occurrence of certain events not related to any specific period of time in which the management committee may remain in office.  Insofar as a contrary view was expressed by the Lands Tribunal in the Incorporated Owners of Maple Mansion v. Ho Yiu Keung and Regent Talent Industrial Ltd. LDBM 98/2000 (unreported, date of judgement 15 February 2001), on the validity of a management committee, in my view such decision was wrongly decided.  See also In Re Consolidated Nickel Mines Ltd. [1914] 1 Ch. 883.”

39.Woo JA took a different view, he said:

“31.   I am, however, unable to share Cheung JA’s view that Deputy Judge Lee, the Presiding Officer, was correct in her decision to dismiss the claim of the Incorporated Owners on the basis that the Management Committee had failed to convene a first annual general meeting in accordance with para 1(1)(a) of the Third Schedule to the Building Management Ordinance, Cap 344.  I need to express my own view on this point, not that there is an appeal from the Incorporated Owners against the decision dismissing the claim, nor that the point is necessary for the determination of Bright Hill’s appeal, but that this is an important matter that relates to the interpretation of the Ordinance and the effect of not following the provisions of the Ordinance in the matter of convening meetings for an owners corporation, which may have vast and widespread implications and repercussions in connection with management of multi-owner buildings pursuant to the Ordinance.

32.   The Presiding Officer described the effect of failure to convene the requisite meeting in the following ways:

“The Applicant does not have a Management Committee capable of carrying out the functions of the Incorporated Owners.  It is not in a position to institute legal proceedings, to accept service and to conduct a defence.”  (Judgment of 8 June 2000)

“… there is no longer a validly constituted Management Committee, through which the Applicant Incorporated Owners can institute legal proceedings, accept service of documents or to conduct a defence.  The Applicant has no locus standi.”  (Judgment of 6 July 2000 on review)

33.   Under para 1(1)(a) of the Third Schedule to the Ordinance, already cited by Cheung JA, the first annual general meeting shall be convened by the Management Committee within 15 months from the date of registration of the corporation, and since the registration of the Incorporated Owners in this case was on 8 October 1996, the first annual general meeting should, according to this provision, have been convened by 7 January 1998.  This has also been stated by Cheung JA.  However, what is the effect of the Management Committee failing to convene such a meeting by 7 January 1998?  And indeed according to what we were informed by counsel for the Incorporated Owners, the first general meeting that followed the registration of the Incorporated Owners was only convened on 10 July 2000 after the Presiding Officer had dismissed the claim, which was even after the date required by para 1(1)(b) of the Third Schedule for convening the second annual general meeting.

34.   There is no express provision in the Ordinance that in the event of such a failure, the management committee will automatically dissolve or cease to have the power to represent the corporation.  Also absent is any express provision that the members of the management committee will cease to hold office after the deadline.  The provisions of the Ordinance which, I think, are most relevant are set out below.

The long title:  To facilitate the incorporation of owners of flats in buildings or groups of buildings, to provide for the management of buildings or groups of buildings and for matters incidental thereto or connected therewith.

s. 6:  The Second Schedule shall have effect with respect to the composition and procedure of a management committee.

s. 8(2)(a):  With effect from the date of issue of the certificate of registration under subsection (1) –

(a)   the owners for the time being shall be a body corporate with perpetual succession and shall in the name of the corporation specified in the certificate of registration be capable of suing and being sued and, subject to this Ordinance, of doing and suffering all such other acts and things as bodies corporate may lawfully do and suffer;

s. 8(5):  The Third Schedule shall have effect with respect to the meetings and procedure of a corporation.

s. 18 provides for the duties and powers of a corporation.

s. 16:  When the owners of a building have been incorporated under section 8, the rights, powers, privileges and duties of the owners in relation to the common parts of the building shall be exercised and performed by, and the liabilities of the owners in relation to the common parts of the building shall, subject to the provisions of this Ordinance, be enforceable against, the corporation to the exclusion of the owners, …

s. 29:  Subject to this Ordinance, the powers and duties conferred or imposed by this Ordinance on a corporation shall be exercised and performed on behalf of the corporation by the management committee.

Second Schedule, para 3:  … the members of the management committee appointed at a meeting convened … shall hold office until a new management committee is appointed and assumes office at the second general meeting of the corporation.

Second Schedule, para 5(1):     At the second annual general meeting of a corporation convened in accordance with paragraph 1(1)(b) of the Third Schedule and thereafter at every alternative general meeting, all members of the management committee, …, shall retire from office.

Third Schedule, para 1(1):  The management committee shall convene-

(a)   the first annual general meeting of a corporation not later than 15 months after the date of the registration of the corporation;

(b)   an annual general meeting not earlier than 12 months, and not later than 15 months, after the date of the first or previous general meeting;

(c)   a general meeting of the corporation at any time for such purposes as the management committee thinks fit.

Third Schedule, para 1(2):  The chairman of the management committee shall convene a general meeting of the corporation at the request of not less than 5% of the owners for the purposes specified by such owners within 14 days of receiving such request.

(emphasis added)

35.   It is important to note that the Ordinance expressly gives power to the owners to request the chairman of the management committee to convene a general meeting (para 1(2) of the Third Schedule).  It would be impossible to give effect to that provision in the event that the owners request the chairman to convene a meeting after the management committee has failed to comply with para 1(1)(a) or (b) of the Third Schedule by the respective deadlines provided therein if the failure had the effect of having already made the office of all the members of the management committee, which necessarily include the chairman (para 2(1)(b) of the Second Schedule), to lapse.  Para 3 of the Second Schedule expressly allows members of the management committee to hold office until a new management committee is appointed.  An interpretation of paras 3 and 5(1) of the Second Schedule, combined with para 1(1) of the Third Schedule, that the management committee has ceased to exist or function 15 months after the date of the registration of the corporation or after the date of the previous annual general meeting would also give rise to a vacuum in the management of the building, as there would be no one or no body to exercise the powers and perform the duties set out in s 18 on behalf of the corporation under s 29 in the various aspects of management, such as collecting monthly management and maintenance charges, contracting with or instructing any contractors or workers to carry out necessary repair and maintenance works to the common parts after the deadline.  I am therefore compelled to come to the view that that cannot be the proper interpretation of these provisions of the Ordinance.

36.   The interpretation that the Management Committee would dissolve or cease to exist or be rendered powerless appears to violate the clearly expressed intent of the Ordinance as described in its long title and the provisions of para 3 of the Second Schedule.  It may well be that members of the management committee, in which the power to convene meetings is vested, may face difficulty in the case of a failure to hold any annual general meeting to lay claims of a personal nature arising out of their office, against the corporation or other owners, because they have failed to discharge their duty as such officers in complying with the statutory requirement to convene the first annual general meeting or subsequent annual general meetings by the respective deadlines.  This would be a matter pertinent to their duties towards the corporation and other owners in a similar position as directors towards a company and fellow directors and shareholders, but would not affect the rights and duties of the corporation towards any outsiders (see Alexander Ward & Co Ltd v Samyang Navigation Co Ltd [1975] 1 WLR 673, at 683B-C).

37.   The decision in In re Consolidated Nickel Mines Ltd [1914] 1 Ch 883, cited by Cheung JA, relates to the validity of the proof of debts by directors in respect of their remuneration as directors that they had lodged with the liquidator of a company which was being wound up.  No general meeting was held or called in the year 1906 or 1907 as required by articles 62 and 101 of the articles of association, but the directors continued to act as such.  Articles 62 and 101 (at p 883-884) of the articles provided as follows:

“62.   General meetings shall be held once in every year, …”

“101.    At the ordinary meeting in 1906 all the directors, and at the ordinary meeting in every subsequent year one-third of all the directors for the time being respectively, or if their number is not a multiple of three, then the number nearest to one-third, but not exceeding one-third, shall retire from office.  A retiring director shall retain office until the dissolution of the meeting at which his successor is elected.”

Sargant J held at pp 888-889 as follows:

“As to the two other directors, …, there is another objection.  By clause 62 of the articles of association and by statute (s 49 of the Companies Act, 1862) the directors were bound to summon a general meeting of the company once is every calendar year, and article 101 provided that ‘At the ordinary meeting in 1906 all the directors … shall retire from office.”  No ordinary meeting was held or called in 1906 or 1907, and the liquidator’s contention is that all the directors vacated office on December 31, 1906, which was the last day on which a meeting of the company for that year could have been held.  That contention appears to me to be well founded. 

A director on his appointment does not ordinarily step into an office which is perpetual unless terminated by some act, but into an office the holding of which is limited by the terms of the articles.  The meaning of article 101 is that the holding of the office of director was only to last until the end of 1906, or until the earlier date on which the ordinary meeting for that year was held.  In re Great Northern Salt and Chemical Works [44 Ch D 472] is merely a decision as to the construction to be placed on clause 62 of Table A to the Act of 1962.  Moreover, article 106 in the present case shews that prima facie a retiring director vacated office, and is against the applicant’s contention.  The duty of the directors was to call a meeting in 1906 and 1907, and they cannot take advantage of their own default in that respect and say that they still remain directors. ….” (emphasis added)

38.   I am of the view that the decision of Sargant J related to the construction of the articles of association of a company as between the company and its directors, and that was done in the light of the particular matrix of facts in that case.  That construction was at odds with the construction by Stirling J of article “62 of Table A to the Act of 1962” in In re Great Northern Salt and Chemical Works referred to by Sargant J.  Stirling J interpreted that article 62 as enabling the directors in that case to continue in office.  Moreover, Sargant J’s construction was well justified by his ruling that directors should not be allowed to take advantage of their own default vis-à-vis the company.  I do not think that Consolidated Nickel Mines should be applied to the interpretation of the Ordinance in our case.

39.   There may be apprehension that a management committee may persist in not convening any annual general meeting after registration of the corporation by the deadline or even for as long as they wish in order to perpetuate the committee members’ position and power in controlling the management of the building.  But this fear does not justify the interpretation, in the absence of express language, that the authority and power of the management committee and its members would lapse after the deadline.  First, power is given by para 1(2) of the Third Schedule to a sufficient portion of owners to require the chairman to convene a meeting.  If that is refused, resort can always be made to the Lands Tribunal, which has power under para 1 of the Tenth Schedule to the Ordinance, to enforce this provision.  The perpetuation of the management committee could thus only be achieved with the consent, acquiescence and lack of reaction from the owners.  Secondly, the intent of the Ordinance is clearly to enable and facilitate owners to have control over the management of their building, and it would be as reasonable to assume that some owners who have become committee members may wish to perpetuate their control of the management as that few owners would like to take up this kind of office and the responsibility of management.

40.   In the result, albeit without hesitation, I would prefer the interpretation of the provisions of the Ordinance in this respect that when a management committee fails to convene the first annual general meeting, and for that matter, any subsequent annual general meeting, the management committee will continue to operate and its members will continue to hold office until the next annual general meeting is held.  When the second general meeting is held, then the members of the management committee shall retire from office in accordance with para 5(1) of the Second Schedule.  I am of the view that the decision of HH Judge Chow on the same point in Incorporated Owners of Maple Mansion v Ho Yiu Keung & Regent Talent Industrial Ltd, LDBM 98/2000 (15 February 2001, unreported), p 3, is correct.”

40.Leong CJHC also said:

“42.   I have had the opportunity of reading the judgments of Woo JA and Cheung JA.  ….  I am of the opinion that, in so far as whether the Management Committee will still remain in being after a period of more than 15 months from the last annual general meeting where no further general meeting has been held, an issue which is not related to the matter of the respondent’s appeal, I do not think that the Management Committee will dissolve by itself because of the lapse of time without a general meeting to re-elect the Management Committee.

43.   Section 29 of the Building Management Ordinance provides that:

“The powers and duties conferred or imposed by the Ordinance on a corporation shall be exercised and performed on behalf of the corporation by the management committee.”

44.   Section 16 of the Ordinance provides that the rights, powers, privileges and duties of the individual owners in respect of the common parts of the building shall be performed by the incorporation.  It would appear that during the subsistence of the corporation it is necessary to have a Management Committee in being and the law does not intend that there should be no Management Committee in existence at any time.  That being the case, where no further general meeting has been held for a period of 15 months or more since the previous general meeting, the Management Committee should not cease to exist for failure of there being a general meeting.  If any individual owner considers that the Management Committee is undesirable to continue in office, the owners can always convene a general meeting to effect the removal or the dissolution of the current Management Committee and to have a new one re-elected.

45.   If no such general meeting is held and it is desirable that the current Management Committee should be dissolved, then the authority can always, under the provisions of the Building Management Ordinance, take control of the matter.  Thus, in the present case, the fact that no second annual general meeting has been held after an expiry of 15 months would not invalidate the existing Management Committee.”

41.Woo JA thus distinguished In re Consolidated Nickel Mines on the ground that the directors there were in default in convening the annual general meeting as required by clause 62 of the articles of association of that company and section 49 of the Companies Act, 1862.  They should therefore not benefit from their own default. 

42.A similar situation as in In re Consolidated Nickel Mines may arise under the Building Management Ordinance as section 18 and the 4^th schedule allow the incorporated owners in general meeting to remunerate the members of the management committee.  On the majority view of the Court of Appeal in Finance Building, there may be the situation that the members of the Management Committee may have all retired by the lack of annual general meeting and are no longer entitled to their remuneration, but they are nevertheless still entitled to act in such capacity in their dealings on behalf of the incorporated owners with outsiders.

43.I also note that there is no provision in the 2^nd schedule of the Building Management Ordinance that is similar to Article 62 of Table A of the Companies Act of 1862.  That article in Table A of the 1862 Act was relied on by Stirling J in his alternative ruling in In re Great Northern Salt and Chemical Works that the vacating directors, whose positions had not been filled up, should continue in office.  Paragraph 3 of the 2^nd schedule of the Building Management Ordinance is different from Article 106 of Consolidated Nickel Mines Limited or Article 62 of Table A of the Companies Act of 1862. 

44.Mr. Wilmot for the applicants also drew my attention to Didier JR Villatte v 38 Cleveland Square Management Limited [2002] EWCA Civ 1549.  Mr. Villatte was a tenant of a flat in a property.  There were four flats in the properties.  The respondent in the appeal was a company formed to manage the property and its members were the four tenants of the property.  In 1999, there was a dispute between the tenants of the other three flats on the one hand and Mr. Vilatte on the other as to the reasonableness of the service charges which the respondent had sought from the tenants.  They were to cover the substantial expenditure on projects of maintenance and repair to the property.  By October 1999, Mr. Vilatte was in arrears with payments of service charge.  The other tenants then agreed that the respondent should apply to the Leasehold Valuation Tribunal for a determination of the reasonableness of the service charges. 

45.The application was submitted by the respondent at the Tribunal on 29 October 1999 by its secretary.  There was a pre-trial review on 7 March 2000 in which the chairman of the Tribunal told Mr. Vilatte that he had to set out his case both on the items of dispute and on any points of law.  This he did not do.  On the morning of the trial on 27 June 2000, he produced a 20 page document seeking the dismissal of the application on the ground that the company had been operating since 1993 without a validly appointed board of directors and the application was issued without authority of the company.  The English Court of Appeal referred to the judgment of the Leasehold Valuation Tribunal on this point at paragraph 10 of the judgment:

“Ms Bhaloo, counsel for the Applicant, argued that the Respondent should not be permitted to raise issues at this late stage when he had not done so at the Pre-Trial Review on 7 March 2000.  She said that at the Pre-Trial Review, it had been made very clear to the Respondent by the Chairman that the Respondent had to set out his case, both in relation to any items of dispute and on any points of law.  This he had not done.  Ms Bhaloo also said that even if there had been any invalidity, any deficiency had been ratified by acquiescence.  The Respondent had been well aware that proceedings were to be taken against him even before they were issued and ‘no steps whatsoever’ had been taken by him.  He had therefore acquiesced and he was estopped by convention. 

After a short adjournment to consider the representations made by counsel for both sides, the Tribunal determined that it had an unfettered power to regulate its own procedures.  The application in this matter was dated 29 October 1999 and despite the Directions and letters to the Respondent from the Clerk to the Tribunal with a request to observe the Directions, nothing had been heard from the Respondent until the morning of the Hearing.  This being the case, it was determined that any deficiency in the application had been acquiesced by the Respondent.  The application before the Tribunal was therefore not to be either dismissed or stayed.”

46.Mr. Vilatte appealed to the Lands Tribunal.  The English Court of Appeal referred to the judgment of the Lands Tribunal on this point at paragraph 48 of the judgment:

“48. The Lands Tribunal addressed this issue in paragraphs 8 to 12 of its decision as follows:

“There have been produced before this Tribunal a number of resolutions purporting to be resolutions of the Board of Directors of the Respondent, authorising the works the subject of the disputed service charges, approving the expenditure and the accounts in respect of them and finally approving the making of the application to and instructing of solicitors and counsel at the LVT.  It is however agreed that these steps were taken by a Board which was not properly constituted, because the last two properly appointed directors had ‘vacated office’ in accordance with Article 79 of Table A, which is applied to the company by its Articles of Association.

In our judgment however that fact does not invalidate any of the acts upon which the Respondent had to rely, in order to proceed with the application to the LVT.  Article 92 covers the position with the following words:

‘All acts done by a meeting of directors, or of a committee of directors, or by a person acting as a director shall, notwithstanding that it be afterwards discovered that there was a defect in the appointment of any director or that any of them were disqualified from holding office, or had vacated office, or were not entitled to vote, be as valid as if every such person had been duly appointed and was qualified and had continued to be a director and had been entitled to vote.’

…

Accordingly, we conclude that the application to the LVT was validly made on behalf of the Respondent, and that the LVT was right to entertain it and that the Appellant’s sole surviving ground of appeal fails and the appeal must be dismissed.”

47.Mr. Vilatte then went to the English Court of Appeal.  Jonathan Parker LJ said:

“64. I do not, for my part, find it necessary to have recourse to regulation 92 in order to resolve the issue which arises on Mr Villatte’s first ground of appeal.  Not only is Mr Villatte’s case as to the validity of the directors’ appointment wholly devoid of merit, but, even if one were to assume in his favour that, on purely technical grounds, it may have some mileage in it, it must nevertheless fail, in my judgment, for two main reasons.

65. In the first place, although as a matter of form the proceedings have been launched in the name of the company, the dispute which fell to be resolved by the Leasehold Valuation Tribunal, and which underlies this appeal, is in substance a dispute between Mr Villatte on the one hand and the tenants of the other three flats in the property on the other.  By the present proceedings, the tenants of the other three flats (Miss Richardson, Mr Michael Lloyd and Miss Barter) seek to enforce Mr Villatte’s obligation to pay his share of the service charges.  As it was put in the statement of reasons submitted with the original application:

“Given that the Board has exercised its best endeavours in the interests of the building as a whole, the Board does not see why individual shareholders should be prejudiced by the non-payment of their service charge contribution by any one tenant.”

66. I am bound to say, nor do I.

67. Given that section 19(2A) of the Landlord and Tenant Act 1985 enables a tenant by whom a service charge is payable to apply to the Leasehold Valuation Tribunal for a determination as to the reasonableness of the service charge, I see no reason why, should it be necessary to do so, the proceedings could not as a matter of form be reconstituted as an application by the tenants of Flats 1, 3 and 4 against the tenant of Flat 2, with the company being added as an additional, and nominal, respondent. That would reflect the real nature of the dispute.  Whereas to allow the proceedings to founder on a technical ground related to the internal workings of the management company would, in the circumstances, be to countenance a triumph of form over substance.

68. But I do not find it necessary to resort to such procedural niceties in order to achieve substantial justice in this case, since in my judgment the equitable doctrine of laches applies, so as to prevent Mr Villatte from challenging the validity of the directors’ appointments in these proceedings.

69. In Re Bailey, Hay & Co Ltd [1971] 1 WLR 1357, an associated company of a company purportedly in voluntary liquidation sought to dispute the validity of the resolution for winding up.  Brightman J held that it was debarred from doing so by laches.  At p.1367D he said this:

“Secondly, the fertilizer company [the associated company] is, in my view, barred by laches from now disputing that the company is in liquidation.  The fertilizer company is setting up a positive case against the liquidator, a case which inevitably involves a claim that the liquidator has no status whatever and is wrongly in possession of the company’s assets.  In my judgment, the equitable doctrine of laches is applicable to that situation just as if the fertilizer company were seeking a remedy against the liquidator.

It will be sufficient for present purposes to cite a passage from the speech of Lord Blackburn in Erlanger v New Sombrero Phosphate Co (1878) 3 App Cast 1218, 1279:

‘In Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221, 239, it is said: “The doctrine of laches in courts of equity is not an arbitrary or a technical doctrine.  Where it would be practically unjust to give a remedy, either because the party has, by his conduct done that which might fairly be regarded as equivalent to a waiver of it, or where, by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases lapse of time and delay are most material.  … the validity of that defence must be tried upon principles substantially equitable.  Two circumstances always important in such cases are the length of the delay and the nature of the acts done during the interval, which might affect either party and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy.”  …, it must always be a question of more or less, depending on the degree of diligence which might reasonably be required, and the degree of change which has occurred, whether the balance of justice or injustice is in favour of granting the remedy or withholding it.  The determination of such a question must largely depend on the turn of mind of those who have to decide, and must therefore be subject to uncertainty; but that, I think, is inherent in the nature of the inquiry.’

…”

70. I return to the facts of the instant case.  Not only did Mr Villatte not challenge the validity of the appointments of the other directors at any time prior to the application made on his behalf to the Leasehold Valuation Tribunal on 27 June 2000 (an application made without notice and made in the face of the terms of the order made on the pre-trial review, to which I referred earlier), but he held himself out to his co-directors as being himself a director (that is to say, a validly appointed director) of the company.  Thus:

On 2 April 1996 Mr Villatte wrote to Miss Barter saying that he would like to peruse the company’s papers and correspondence SU11”before making any decisions as a director”.

Further, on 15 July 1996 Mr Villatte wrote to Miss Barter saying: SU11 “I am writing to state my official position on the matters for which you are seeking the immediate approval of the other directors of the management company. … ...

It is unthinkable that you should ignore the limitations of your directorial powers … ...

... my entitlements as a shareholder and a director of the freeholding company. ... Mr Suleyman, the fourth and last lessee, was not a director at the time ...”

Then on 10 October 1997 Mr Villatte wrote to Miss Barter saying: SU11 “Finally, it is not worth dwelling at length on the powers of any director of the freeholding company to attend personally to normal management duties and take action as appropriate to take care of the building ...”

71. In all the circumstances of the instant case, it is plain to me that it would be not merely “practically unjust” but a gross injustice to the other tenants to allow Mr Villatte to challenge the validity of the directors’ appointments in these proceedings.

72. That conclusion makes it unnecessary for me to consider questions of ratification.

73. For those reasons I would reject the first of Mr Villatte’s grounds of appeal.”

48.There are some features in Mr. Vilatte’s case which are distinguishable from the present case.  There is no article similar to article 92 in that case.  The deadline for holding the AGM in this case was 3 April 2004.  There is no evidence that the respondent has done anything since then which can amount to a waiver of her right to take this point.  Apart from taking out the originating summons in HCMP 170 of 2006, there is no evidence that she had asserted her position as a director of the Company to further her rights and/or interests.  There is also no evidence that she had by done anything which has put the applicants or Yi Chun Navigation into a position that makes it unfair for her to take this point now.  On the provision of some documents by the applicants to her as a result of the originating summons which she issued in the position of a director of the Company, I do not regard the applicants or Yi Chun of having been prejudiced by this.  They should not have kept any material documents from the respondent as she is a 50% shareholder of the Company.  I am of course not adopting a double standard.  If I am in a position to order the respondent to provide for inspection and to deliver up the documents, I would not hesitate.  In any event, even if there should be no distinguishable feature, I am still not bound by the English Court of Appeal.

49.However, the majority view in Finance Building is an obiter as the automatic retirement of the members of the management committee was not an issue in the appeal.  The ratio of the full court in Alexander Ward is contrary to the majority view in Finance Building.  By reason of stare decisis, I have no choice but to follow Alexander Ward.

50.Before I conclude on this point, I should also deal with one more point raised by Mr Wilmot for the applicants.  He referred to section 157 of the Companies Ordinance and Article 107 of Table A which provide that the acts of directors or managers shall be valid notwithstanding any defect that may afterwards be discovered in their appointments or qualifications.  I do not think these provisions can assist the applicants as they deal with appointments of directors and managers and not the automatic retirement of directors by reason of default in holding AGM.

51.I therefore have to agree with Dr Pun’s submissions that the applicants are no longer directors of the Company and have no capacity to make this application under section 121 of the Companies Ordinance. 

52.I also add that if I should be wrong and I should instead order inspection and delivery up of the books of account, I would still not make an order in respect of all the documents described in items 4, 5 and 6 of the schedule to the originating summons.  Items 4, 5 and 6 are “all board resolutions”, “all minutes of Company meetings”; and without limitation “all material correspondence with any third parties”.  They are not “books of account” and hence are not within the scope of section 121 (see Terrence Ho Pui Tin v. Wah Nam Group HCMP 5224/1999 by Yuen J (as she then was) at pages 7 to 8).

53.I therefore dismiss this application.  Since the respondent would have lost but for this point of automatic retirement which was initially raised by me, I would make an order nisi that there will be no order as to costs in this application.

54.At the end of the hearing of this application, I asked Dr Pun that in the event if I should dismiss this application, whether I should likewise dismiss the respondent’s application in HCMP170 of 2006.  Dr Pun agreed emphatically that that was the right thing to do. 

55.I therefore dismiss HCMP170 of 2006 as well and vacate the hearing date fixed on 20 March 2006.  I also make an order nisi that there will be no order as to costs in those proceedings.

Mr Wilmot of Holman, Fenwick & William, for the 1^st and 2^nd Applicants.

Dr Kevin Pun, instructed by Stephen Lo & P Y Tse, for Respondent.