Ng Wing Hong v. Choi Tak Lan and Others

HCMP 2274/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2274 OF 2006

______________________

BETWEEN

HCMP 2275/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2275 OF 2006

______________________

BETWEEN

HCMP 2276/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2276 OF 2006

____________

BETWEEN

(CONSOLIDATED BY THE ORDER OF THE HONOURABLE MR JUSTICE BARMA
DATED 17^th JANUARY 2007)

______________________

HCMP 2670/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2670 OF 2006

______________________

BETWEEN

HCMP 2671/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2671 OF 2006

______________________

BETWEEN

HCMP 2672/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2672 OF 2006

______________________

BETWEEN

(CONSOLIDATED BY THE ORDER OF THE HONOURABLE MR JUSTICE BARMA
DATED 1^st MARCH 2007)

______________________

Before : Mr Recorder P Fung SC in Chambers

Date of Hearing : 11 July 2007

Date of Handing Down Judgment : 27 July 2007

______________________

J U D G M E N T

______________________

THE PROCEEDINGS

1.There are 6 Originating Summonses before me.  They are as follows : -

(i)	HCMP No. 2274/2006;
(ii)	HCMP No. 2275/2006;
(iii)	HCMP No. 2276/2006;
(iv)	HCMP No. 2670/2006;
(v)	HCMP No. 2671/2006 and
(vi)	HCMP No. 2672/2006.

(They will hereinafter be referred to by their respective numbers, e.g. “HCMP 2274”, “HCMP 2275” and so on.)

2.The proceedings under (i), (ii) and (iii) in paragraph 1 above were all issued on 4^th November 2006.  They were consolidated by the Order of Barma J. on 17^th January 2007.  The Plaintiff in all three proceedings is Ng Wing Hong also known as Ben Ng (“Ben Ng”).  They relate to 3 companies respectively : -

(i)	HCMP 2274 –   Data World Technology (China) Limited (“Data China”);
(ii)	HCMP 2275 – Data World Computer & Communication Limited (“Data World”);
(iii)	HCMP 2276 – Nexus Solutions Limited (“Nexus”).

(This set of proceedings will hereinafter be referred to together as “Ng’s Proceedings”.)

3.The Proceedings under (iv), (v) and (vi) in paragraph 1 above were all issued on 20^th December 2006.  They were consolidated by another Order of Barma J. on 1^st March 2007.  There are 5 Plaintiffs in each of those proceedings, namely : -

(i)	Choi Tak Lan (“Choi”);
(ii)	Ho Kwok Kit (“K K Ho”);
(iii)	Ng Wing Hon (“W. H. Ng”) (who is not the same person as Ben Ng, the Plaintiff in Ng’s Proceedings);
(iv)	Suen Kit Yee Kitty (“Suen”) and
(v)	Lee Yeung Fai (“Y F Lee”).

The proceedings relate to the same 3 companies : -

(i)	HCMP 2670 – Data China;
(ii)	HCMP 2671 – Nexus;
(iii)	HCMP 2672 – Data World.

(This set of proceedings will hereinafter be referred to together as “Choi’s Proceedings.”)

4.Each of the 3 companies has been made a defendant in the relevant proceedings in the two sets of proceedings for the obvious reason that they are necessary parties.  The companies, however, are not represented.

5.Mr. C. Y. Li appears as Counsel for the Plaintiff in Ng’s Proceedings and for the 1^st Defendant (Ben Ng) in Choi’s Proceedings.  Mr. Ivan Cheung appears as Counsel for the Defendants other than the 3 companies in Ng’s Proceedings and for the Plaintiffs in Choi’s Proceedings.

6.The relief claimed in respect of each company in each set of the proceedings are the same and both Counsel have indicated to me that for all practical purposes I should just concentrate on HCMP 2275 and HCMP 2672 both of which relate to Data World, being the flagship in the group of companies involved in the dispute between the two camps, because the facts and evidence relating to all 3 companies are the same for practical purposes.

THE RELIEF CLAIMED

7.The relief claimed in HCMP 2275 are as follows : -

“	…………………… the plaintiff ………………………………... claims against the defendants for the following relief under Section 114B of the Companies Ordinance (Cap. 32) :
	(1)	that an Annual General Meeting of Data World Computer & Communication Limited (the “Company”) may be convened by the Court for the purpose of considering and if thought fit passing as Ordinary Resolutions the Resolutions set forth in the Schedule hereto;
	(2)	that the Court may give directions as to the manner in which the said Meeting is to be called, held and conducted and all such ancillary and consequential directions as it may think expedient, including a direction that one member of the Company present in person or by proxy shall be deemed to constitute a meeting.
	(3)	the defendants do pay the costs of this application, to be taxed, if not agreed.”

8.The relief claimed in HCMP 2672 are as follows : -

“	………………… the following court orders and/or such orders as the court thinks fit, against the 1st and 2nd Defendants, pursuant to the Articles of Association of the Company and the Companies Ordinance Cap. 32, that : -
	(1)	the extraordinary general meeting of shareholders of the Company held on 30th November 2004 was illegal, invalid and void and ought to be set aside; and the resolutions passed therein namely (1) the creation of additional 237,436 ordinary shares of HK$1.00 each and (2) the approval for the purpose of section 57B of the Companies Ordinance given to the directors of the Company to issue the said 237,436 shares to shareholders be declared void;
	(2)	the said 237,436 shares allotted to the shareholders NG WING HONG (149,274 shares), CHOI TAK LAN (50,006 shares), SUEN KIT YEE KITTY (31,282 shares) and LEE YEUNG FAI (6,874 shares) by the directors of the Company on 30th November 2004 to be declared invalid, null and void, and that the said allotment ought to be cancelled;
	(3)	the extraordinary general meeting of shareholders of the Company held on 20th June 2005 and its adjourned meeting held on 27th June 2005 was invalid and the resolutions passed therein be declared void;
	(4)	the annual general meeting of shareholders of the Company held on 8th June 2006 and its adjourned meeting held on 15th June 2006 was invalid and the resolutions passed therein be declared void;
	(5)	the 1st and/or 2nd Defendants do pay the costs of and occasioned by this application.”

THE CONDUCT OF THE PROCEEDINGS

9.Both sets of proceedings were fixed before me for one day on 11^th July 2007.  At the commencement of the hearing, I raised queries as to whether the case would finish in one day and whether Choi’s Proceedings could be decided on affidavit evidence without any of the deponents being called to give oral evidence and be subject to cross-examination.

10.As regards my first query, it was the consensus of Counsel that I should deal with Ng’s Proceedings first and then adjourn Choi’s Proceedings to another date to be fixed.  As it turned out, some time was taken up by Counsel in the course of the day for the purpose of coming to some sort of agreement or arrangement but without success, and the hearing on Ng’s Proceedings did not finish until about 5.45 p.m. when I reserved judgment on Ng’s Proceedings and said that I would give directions for the further conduct of Choi’s Proceedings.

11.As regards my second query, Mr. Li said that his position was quite open in the sense that he was not insisting on one way or the other.  On the other hand, Mr. Cheung wavered a bit.  At one stage, he said he was not sure that Choi’s Proceedings could be decided on affidavit evidence, then he changed his mind and said that they could be decided just on the documents.  Later on in the day, he indicated that he might wish to convert Choi’s Proceedings into proceedings by writ of summons and then changed his mind again and said that he would not do that.

12.I will therefore hereinafter give my directions for the further conduct of Choi’s Proceedings on the basis that the parties have chosen to ask the Court to deal with them on affidavit evidence alone.

THE FACTS

13.I now set out the brief facts relevant to the two sets of proceedings.

14.In November 1987, Data World was incorporated by a number of persons, namely, a person called Denny Ngo (“Ngo”) (the husband of Choi), W H Ng, a person called Lee Chi Luen also known as William Lee (the brother-in-law of W H Ng) and K K Ho.  This company which became the flagship in the group of companies later concentrated on the computer networking business.

15.Ben Ng was originally a customer of Data World.  As a result of his expertise in accountancy and company management, he was eventually asked to join in the business of Data World and became one of the shareholders.

16.There is some dispute as to whether Data World was formed as a quasi-partnership.  The Plaintiffs in Choi’s Proceedings say that it was but that is denied by Ben Ng.  It is not necessary for me to decide on the matter at this stage.

17.Eventually the other two companies, Data China and Nexus were also formed to carry on other aspects of business conducted by the same group of persons.

18.I now set out the particulars of the shareholdings of Data World at different stages as may be relevant.

(i)	In 1990
		Shareholder	Share ratio
		Ben Ng	18.98%
		Ngo	18.98%
		William Lee	18.98%
		Lee Kit Mui Kitty (sister of William Lee)	5.09%
		Leung Yok Mui (mother of K K Ho)	18.98%
		Tam Pik Chung (mother of W H Ng)	18.98%
		Total	100%
			========
(ii)	26th May 2004
	There was an allotment of shares on or about 26th May 2004 after which and after certain share transfers have been taken into account the shareholding details were as follows :-
		Shareholder	Share ratio
		Ben Ng	37.12%
		Choi (wife of Ngo)	12.63%
		Suen (wife of William Lee)	15.42%
		Y F Lee (son of William Lee)	3.39%
		K K Ho	15.42%
		W H Ng	15.42%
		Total	100%
			========
(iii)	May – September 2004
	There were further allotments of shares.  By a meeting of the board held on 28th May 2004, an allotment of shares was made to the existing shareholders on a pro-rata basis.  By another meeting of the board held on 8th September 2004, it was resolved that the remaining un-issued shares of the company would be allotted to the existing shareholders on a pro-rata basis to be accepted by 22nd September 2004.  Any unsubscribed for shares could be subscribed for by other shareholders on a pro-rata basis by 29th September 2004.  By 30th September 2004, only Ben Ng and Choi had subscribed for the new shares.  As a result thereof, the shareholding details became as follows : -
		Shareholder	Share ratio
		Ben Ng	49.76%
		Choi	16.67%
		Suen	10.43%
		Y F Lee	2.29%
		K K Ho	10.43%
		W H Ng	10.43%
		Total	100%
			========
	(It is to be noted that none of the aforesaid allotments of shares is the subject-matter of the attack in Choi’s Proceedings.)
(iv)	30th November 2004
	There was then another allotment of 237,436 new shares on 30th November 2004 to the shareholders as follows : -
		Shareholder	Share ratio
		Ben Ng	149,274
		Choi	50,006
		Suen	31,282
		Y F Lee	6,874
		K K Ho	-
		W H Ng	-
		Total	237,436
			==========
	The revised shareholding ratio became as follows : -
		Shareholder	Share ratio
		Ben Ng	50.18%
		Choi	16.81%
		Suen	10.52%
		Y F Lee	2.31%
		K K Ho	10.09%
		W H Ng	10.09%
		Total	100%
			========
	(This is one of the subject-matters of the attack in Choi’s Proceedings.  I shall deal with such attack hereinafter.)

19.I now set out the particulars of directorship of Data World at different stages as may be relevant.

(i)	According to the Annual Return made up to 26th May 2005 and filed with the Companies Registry on 30th May 2005, the directors of Data World were : -
	(a)	Choi;
	(b)	K K Ho;
	(c)	William Lee;
	(d)	Ben Ng.
(ii)	According to the minutes of an EGM held on 27th June 2005, 3 more directors were appointed, namely : -
	(a)	Mak Che Fai, Lawrence (“Mak”) – a business associate of Ben Ng;
	(b)	Chan Shuk Kuen, Tammy (“Tammy Chan”) – the wife of Ben Ng;
	(c)	Ng Yuk Kuen, Phyllis (“Phyllis Ng”) – the sister of Ben Ng.
(iii)	According to the minutes of an AGM held on 15th June 2006, the directors were : -
	(a)	Tammy Chan;
	(b)	Choi;
	(c)	Ben Ng;
	(d)	William Lee;
	(e)	Mak;
	(f)	Phyllis Ng.

(It is to be noted that the validity of the EGM held on 27^th June 2005 and the AGM held on 15^th June 2006 referred to in items (ii) and (iii) above is part of the subject-matter of attack in Choi’s Proceedings.  I shall deal with the same hereinafter.)

THE CASE OF THE CHOI CAMP

20.For convenience, I shall refer to all the parties to the 6 sets of proceedings other than Ben Ng and the 3 companies collectively as “the Choi Camp”.  This term would also include their respective family members and relatives who feature either as nominee members or directors in the 3 companies or as persons behind the scene in relation to such nominee members or directors.

21.The case of the Choi Camp can be summarised as follows : -

(i)	In or about 2003, Ben Ng began to show his desire to control the entire group of companies.  He started to dismiss other directors such as K K Ho and W H Ng from their original executive positions in the companies.
(ii)	There were pocketing of salaries of K K Ho as managing director by Ben Ng and substantial increase of Ben Ng’s own salary in 2005 – 2006.
(iii)	There was diversion of China business belonging to the group by Ben Ng in 2006 to Ben Ng’s own companies.
(iv)	Generally speaking, Ben Ng had been acting to promote his own interests instead of the interests of the group companies.
(v)	The EGM purportedly held on 30th November 2004 whereat the board of directors purported to pass resolutions leading to the creation, issue and allotment of the 237,436 new shares was illegal, invalid and void because there was actually no EGM held and the minutes were only signed by Ben Ng alone.
(vi)	The actual allotment of the 237,436 shares was invalid and void because there was no valid EGM authorising it and it was not a pro-rata offer to the existing members.
(vii)	The EGM purportedly held on 20th June 2005 and the adjourned EGM purportedly held on 27th June 2005 were both invalid and void because the quorum requirement was not satisfied.  Consequently, the appointment of the 3 new directors, Mak, Tammy Chan and Phyllis Ng, was invalid.
(viii)	The AGM purportedly held on 8th June 2006 and the adjourned AGM purportedly held on 15th June 2006 were invalid and void because they had not been convened by the board of directors and also the quorum requirement was not satisfied.

THE CASE OF BEN NG

22.The main allegations of the Choi Camp are denied by Ben Ng.

23.Ben Ng further relies on estoppel, laches and acquiescence against the Choi Camp.  He further explained that, to the knowledge of the Choi Camp, his actions were for the purpose of getting the companies out of financial difficulty.

OTHER POSSIBLE RELIEF

24.Despite the existing relationship between the parties, the serious allegations made by the Choi Camp against Ben Ng and the fact that the operation and management of the 3 companies are going through a very difficult phase, it is surprising to note that none of the parties has chosen to petition for winding-up or relief under section 168A of the Companies Ordinance.  I raised the matter specifically with the parties but I did not discern any keen interest on the part of anybody to go down that avenue.  That may, perhaps, suggest that the parties themselves do not think that they have reached the stage of an irretrievable breakdown.

NG’S PROCEEDINGS

25.In dealing with Ng’s Proceedings alone, I should not really go into the merits or demerits of the claims in Choi’s Proceedings, because there was actually not much argument on the same.  That is for another court on another day.

26.I shall therefore simply limit myself to considering the relief claimed in the Ng’s Proceedings.

27.Mr. Cheung has made it clear that he does not oppose the granting of the orders sought in paragraphs (1) and (2) of the Amended Originating Summonses in Ng’s Proceedings provided that suitable conditions can be imposed to ensure that Ben Ng will not be able to utilise his 50.18% shareholding (the validity of which is being challenged) to work to the disadvantage of the Choi Camp, e.g., by Ben Ng nominating directors which will result in him having a controlling majority, pending the determination of Choi’s Proceedings.

THE ARTICLES OF ASSOCIATION AND THE RELEVANT STATUTORY PROVISIONS

28.Article 1 of the Articles of Association of Data World provides that Table “A” in the First Schedule to the Companies Ordinance applies unless expressly excluded or modified.

29.Articles 49 in Table “A” reads as follows : -

“

49.

The Company shall in each year hold a general meeting as its annual general meeting in addition to any other meetings in that year, and shall specify the meeting as such in the notices calling it; and not more than 15 months shall elapse between the date of one annual general meeting of the company and that of the next.  Provided that so long as the company holds its first annual general meeting within 18 months of its incorporation, it need not hold it in the year of its incorporation or in the following year.  The annual general meeting shall be held at such time and place as the directors shall appoint.”

30.The relevant parts of section 111 of the Companies Ordinance provide as follows : -

“	111.	Annual general meeting
		(1)	Every company shall in each year hold a general meeting as its annual general meeting in addition to any other meetings in that year, and shall specify the meeting as such in the notices calling it; and not more than 15 months, or such longer period as the Registrar may in any particular case authorize in writing, shall elapse between the date of one annual general meeting of the company and the next :
			…………………………………………………………………...
		(2)	If  default is made in holding a meeting of the company in accordance with subsection (1), the court may, on the application of any member of the company, call, or direct the calling of, a general meeting of the company and give such ancillary or consequential directions as the court thinks expedient, including directions modifying or supplementing, in relation to the calling, holding and conducting of the meeting, the operation of the company’s articles, and including a direction that 1 member of the company present in person or by proxy shall be deemed to constitute a meeting.
		(3)	A general meeting held in pursuance of subsection (2) shall, subject to any directions of the court, be deemed to be an annual general meeting of the company; but, where a meeting so held is not held in the year in which the default in holding the company’s annual general meeting occurred, the meeting so held shall not be treated as the annual general meeting for the year in which it is held unless at that meeting the company resolves that it shall be so treated.
			…………………………………………………………………...
		(5)	If default is made in holding a meeting of the company in accordance with subsection (1), or in complying with any direction under subsection (2), the company and every officer of the company who is in default shall be liable to a fine; and if default is made in complying with subsection 94), the company and every officer of the company who is in default shall be liable to a fine and, for continued default, to a daily default fine.”

31.S. 114 B(1) of the Companies Ordinance provides as follows :-

“	114B.	Power of court to order meeting
		(1)	If for any reason it is impracticable to call a meeting of a company in any manner in which meetings of that company may be called, or to conduct the meeting of the company in manner prescribed by the articles or this Ordinance, the court may, either of its own motion or on the application of any director of the company or of any member of the company who would be entitled to vote at the meeting, order a meeting of the company to be called, held and conducted in such manner as the court thinks fit, and where any such order is made may give such ancillary or consequential directions as it thinks expedient, including a direction that 1 member of the company present in person or by proxy shall be deemed to constitute a meeting.”

32.Mr. Li has not explained why in Ng’s Proceedings section 114B rather than section 111 of the Companies Ordinance has been invoked as the applications relate to the holding of annual general meetings of the 3 companies.

33.As I see it, the principles applicable to the Court’s exercise of its discretion are not much different under both sections.

FINDINGS

34.It is clear that both the Companies Ordinance and the Articles of Association require the companies to hold an annual general meeting every year with no more than 15 months between one annual general meeting and the next.

35.Any default renders the company concerned and its officers liable to a fine on a continuing basis.

36.The evidence shows clearly that the last undisputed annual general meetings of the 3 companies took place in May 2005 and the last annual general meetings of the 3 companies (the validity of which is disputed) took place in June 2006.  On any showing, the next annual general meeting is due or long-overdue, depending on whether one treats the 2005 or the 2006 AGM as being the last AGM.

37.The evidence is also clear that there has been a concerted effort on the part of the members and directors in the Choi Camp not to attend general meetings and directors’ meetings.  It is certainly impracticable for Ben Ng to call a general meeting of the 3 companies because he will not be able to form the necessary quorum.

38.In such circumstances, it is certainly open to the Court to call or direct the calling of a general meeting of the 3 companies which should be treated as their annual general meetings for the year 2007.

39.In calling or directing the calling of such meetings, I agree with Mr. Cheung that the status quo should be maintained so that the Choi Camp will not be prejudiced by the utilising of the 50.18% majority shareholding of Ben Ng (which is being challenged) pending the determination of Choi’s Proceedings.

40.Mr. Li has referred me to the case of Re Success Plan Ltd. [2002] 3 HKC 610, a decision of Yuen J. A. sitting as an additional Judge of the Court of First Instance, with a view to persuading me that, if I were to order the calling of a meeting, I should not give directions as to how the parties were to vote.  In that case, in seeking a court-ordered meeting, the applicant was also asking the Court to direct the consideration and the possible passing of 28 proposed resolutions.  The learned Judge ordered the meeting to be called but refused to give directions regarding the 28 proposed resolutions.  I respectfully agree with the conclusion of the learned Judge.  She set out her reasoning in paragraphs 49 – 52 of her Judgment as follows : -

“	Meeting ordered
	49.	Accordingly, I take the view that a meeting should be ordered under s 114B.  Once it is accepted that a meeting has to be called, it is for the parties to consider what other matters they wish to put on the agenda.
	50.	I do not think it would be right for the court, at an application of a limited nature such as s 114B, to decide on the parties’ substantive rights, such as whether on the true construction of the supplemental deed, or whether there could be an implied term, that the plaintiff should have the right to appoint five directors after acquiring SC’s shares.
	51.	In my view, that is for the parties to resolve, whether by way of directors resolutions under art 13 or by way of an EGM.  It is not for the court to say how business should be conducted in advance.  Should any directors not be acting in the best interests of the company, they would be personally liable for breach of fiduciary duties.  Should any shareholders take any actions that would be oppressive to other shareholders, the prejudiced shareholders would be entitled to present petitions for unfair prejudice or for a just and equitable winding-up of the company.
	52.	Since the only issue now before the court is whether it should order a meeting of the company to be held to get it out of a ‘frozen’ state, it should confine itself to that consideration.  It is neither necessary nor desirable for the court at this stage to go any further to examine, in advance, the fairness of individual resolutions, as that would in effect pre-empt future considerations of the matters in the preceding paragraph.”

It is not for the Court to decide or prescribe for the parties as to how their company’s affairs should be managed.  It is to be noted that in that case there was no dispute about the size of shareholding between the parties, especially one which would affect the question whether one side or the other had the majority.

41.In the case of Re Sticky Fingers Restaurant Ltd. [1992] BCLC 84, W held 66% and M held 34% of their company.  They were the only directors of the company.  Dispute arose and no effective meetings of the board or the company could be held because of M’s refusal to attend meetings and hence the necessary quorum requirement could not be met.  Board meetings were needed to deal with the accounts, statutory returns, VAT and other matters.  M presented a petition under S. 459 of the Companies Act 1985 seeking an order that W purchase his shares.  W started proceedings seeking an order under S. 371 of 1985 Act (the equivalent of S. 114B of the Companies Ordinance) convening a meeting at which one member would constitute a quorum for the purpose of considering resolutions for the appointment of two new directors.  Mervyn Davies J. decided to grant the order sought by W subject to the provision that each of the directors appointed pursuant to it would be restrained from acting as a director until he had delivered to M’s solicitors an undertaking that pending the outcome of the petition

(a)	he would not exercise his rights to exclude M from his directorship;
	or
(b)	interfere in M’s day to day conduct of the restaurant business;
	or
(c)	effect any alteration in the constitution or capital of the company.

The learned Judge said at p. 88 f : -

“	The difficulty, as I see it, arises from the fact that (a) it may be proper to use S.371 to overcome the difficulty of achieving a quorum, but (b) it is not a proper use of S. 371 to use it indirectly to secure the removal of a director while a S. 459 petition is pending.”

He further said at p. 89 i – 90 e as follows : -

“	I turn to the consideration of the discretion conferred by S. 371.  It seems to me that discretion ought to be exercised so as to enable an effective board to be brought into being.  It cannot be right that Mr. Mitchell’s quorum tactics should be allowed to stop the company having its accounts, VAT difficulties, etc dealt with.  It may be many months before the S. 459 petition is heard.  On the other hand, it would not be right for Mr. Wyman, by using S. 371 for the purposes of constituting an effective board, to be given the opportunity of harming Mr. Mitchell, e.g. by causing him to be dismissed as a director, or by being excluded from any participation in the affairs of the company pending the outcome of the petition proceedings.
	I think the right course to take is to accede to paras 1, 2 and 2a of the application (see above), but to qualify the order in this way.  The order will provide that any director appointed pursuant to the order will be restrained from acting as such director, unless and until there is delivered to Mr. Mitchell’s solicitors an undertaking signed by the director to the effect that, pending the outcome of the S. 459 petition proceedings, he will not (a) at any meeting vote in such fashion as to dismiss Mr. Mitchell from his directorship, or to exclude him from his rights and duties as such director, or to diminish such rights or duties in any way, and (b) interfere with Mr. Mitchell’s day to day conduct of the restaurant business so long as Mr. Mitchell conducts such business as he has done in the past, and (c) vote to effect any alteration in the constitution or capital of the company.
	In making this order I say that I understand that it was not unacceptable to Mr. Weaver, but that Mr. Crow was without instructions on the subject.  I direct that a minute of the order should be prepared.  It should, in the first instance, be drafted by Mr. Crow.  The wording of the minute need not strictly follow what I have set out above.  I have sought to convey the sense of what I intend, and the drafting of the minute will be a matter for agreement between counsel.”

42.The Sticky Fingers case was approved and applied in at least two Hong Kong cases : -

(i)	Cheng Yuk Lin V. Chan Choi Wah [1993] 1 HKC 52, a decision of the Court of Appeal and
(ii)	Re Long Prime Ltd. [2001] 3 HKC 51, an earlier decision of Yuen J..

43.I also propose to apply the approach adopted in the Re Sticky Fingers case to maintain a balance between the interest of the Choi Camp and Ben Ng pending the determination of Choi’s Proceedings.

CONCLUSION

44.I therefore propose to make an order along the following lines :-

(i)	An annual general meeting of each of the 3 companies should be called to be held within 10 days of the date of my order at an appointed time and place.
(ii)	At each of such annual general meetings, one member shall constitute the quorum.
(iii)	At each of such annual general meetings, the member or members present in person or by proxy shall consider and vote upon the following matters : -
	(a)	the receipt and consideration of the appropriate audited accounts of the company together with the directors’ report/reports thereon;
	(b)	the election of directors;
	(c)	the appointment of auditors and their remuneration;
	(d)	the transaction of any other business.
(iv)	The directors to be elected shall consist of an even number of persons half of which are to be nominated by Ben Ng and the other half by the Plaintiffs in Choi’s Proceedings.
(v)	Each of the directors nominated by Ben Ng (including Ben Ng himself) will be restrained from acting as a director until both Ben Ng and such director himself have delivered to the solicitors acting for the Plaintiffs in Choi’s Proceedings an undertaking that pending the outcome of Choi’s Proceedings in the Court of First Instance each of Ben Ng and such director will not exercise any right based on Ben Ng’s shareholding or howsoever otherwise to exclude the directors nominated by the Plaintiffs in Choi’s Proceedings from their directorship or effect any alteration in the constitution or capital of the companies.

45.As in the Re Sticky Fingers case, I direct that a minute of the order along the lines indicated by me above should be drafted by Mr. Li, agreed by Mr. Cheung and submitted to me for approval within 5 days of the handing down of this my Judgment.

46.I make an order nisi that the costs of Ng’s Proceedings be in the cause of Choi’s Proceedings.

DIRECTIONS IN CHOI’S PROCEEDINGS

47.I make an order that Choi’s Proceedings, namely, HCMP 2670, HCMP 2671 and HCMP 2672, be adjourned for argument before a Judge on a date to be fixed in consultation with Counsel’s diaries and that an early date be given.  My estimate of the length of the hearing is two days, but the parties are at liberty to make representations to vary such estimate.