Xu Shengheng and Another v. Cheung Kwan

HCA 291/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 291 OF 2009

____________

BETWEEN

AND BETWEEN

____________

Before: Deputy High Court Judge L. Chan in Chambers

Date of Hearing: 18 April 2012

Date of Decision: 18 April 2012

_____________

D E C I S I O N

_____________

1.This application for leave to appeal against my decision dated 5 March 2012 is based on the argument that DI notice should be filed for executory or even contingent contracts for acquisition of shares.

2.I do not think this is the correct view of matters, as I have already pointed out the reasons in my decision.  If this argument is correct, it can result in misleading DI notices.  For example, A can contract to acquire at a future day, say two years later, the controlling amount of shares of a listed company from B when B has no such shares at the time of making the contract.  Nevertheless, on this argument of the applicant, A can and should immediately file a DI notice with the Stock Exchange, thereby informing the public that he is presently interested in the controlling shares of the company, when in fact he has none and can exercise no right as a shareholder of the company.

3.I do not think this argument has merit.  I think a DI notice should and should only be filed by a party when that party has a presently exercisable interest of the shares whether directly or by way of derivative.

4.There is another argument that the 1st plaintiff by counterclaim has committed material nondisclosure in not telling the ex parte judge that she did not have the necessary amount of shares to satisfy the alleged agreement of sale at the times when the alleged agreement should have been performed and at the ex parte application.  These matters involve discretion of the court, and I do not see any merits in them. 

5.I hold that the appeal does not have a reasonable prospect of success and there is no reason in the interests of justice that the appeal should be heard.  I therefore dismiss the application under section 14AA of the High Court Ordinance, Cap. 4, with costs to the 1st plaintiff by counterclaim.

(Discussion re summary assessment)

6.Costs be summarily assessed together with the costs occasioned at the last inter partes hearing.

Mr Paul Mak, instructed by Hampton, Winter & Glynn, the 1st plaintiff (by original action) and 1st defendant (by counterclaim)  

Mr B K Ho, instructed by Lau & Chan, for the 1st defendant (by original action) and the 1st plaintiff (by counterclaim)