Tam Po Kei v. Tam Bo Kin and Others

CACV 267/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 267 OF 2010

(ON APPEAL FROM HCCW 379/2007 AND HCMP 1590/2006)

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Before: Hon Tang VP, Cheung and Kwan JJA in Court

Date of Hearing: 12 July 2012

Date of Judgment: 12 July 2012

Date of Reasons for Judgment: 20 July 2012

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REASONS FOR JUDGMENT

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Hon Tang VP:

1.I have had the advantage of reading Kwan JA's reasons for judgment in draft. With respect, I agree.

Hon Cheung JA:

2.I agree with the judgment of Kwan JA.

Hon Kwan JA:

3.On 7 May 2012, we allowed the appeal of the 1^st to 5^th respondents in a petition under section 168A of the Companies Ordinance, Cap 32 and made an order on the winding-up petition presented by the subject company under section 177(1)(a) ([2012] 2 HKLRD 1227). The petitioner in the first mentioned petition, Tam Po Kei (“Po Kei”) applied for leave to appeal to the Court of Final Appeal. We dismissed his application with costs after hearing counsel. These are the reasons for our judgment.

4.The primary contention of Miss Chan, SC was that an appeal lies as of right. She relied on the second limb of section 22(1)(a) of the Hong Kong Court of Final Appeal Ordinance, Cap 484, namely that, “the appeal involves, directly or indirectly, some claim or question to or respecting property or some civil right amounting to or of the value of $1,000,000 or more”. As a fallback position, she sought discretionary leave under section 22(1)(b). It was submitted that the first three questions formulated in the Notice of Motion are questions of great general or public importance and that the remaining four questions give rise to exceptional circumstances such that leave to appeal should also be given on the “or otherwise” ground.

Appeal as of right

5.In the petition under section 168A, Po Kei, who holds 20% shares in the company, sought various reliefs. Among them are (1) an order that the 1^st respondent do repay or make restitution of or pay damages on all monies, benefits, profits and interests received by the 1^st respondent as a result of or in connection with the misfeasance alleged; and (2) an order that the company or the 1^st respondent do re-purchase Po Kei’s shares at such value as assessed on the basis that the company has had recovered the sums in (1) or otherwise as assessed by the court.

6.These claims are not claims within the second limb of section 22(1)(a). That the value of Po Kei’s shares has been assessed by the trial judge at HK$29 million odd is beside the point. These are unliquidated monetary claims, falling not merely outside the first limb of section 22(1)(a), but outside this provision altogether (WLK v TMC (No. 1) (2009) 12 HKCFAR 473 para7; Chinachem Charitable Foundation Ltd v Chan Chun Chuen & Anr, FAMV 20/2011, 28 October 2011, para 20(ii) and (iii)). There was no claim to or question respecting Po Kei’s shares in the company or his proprietary right in those shares. He sought relief as a member of the company under section 168A on the basis that the affairs of the company had been conducted in a manner unfairly prejudicial to him. As his claim is merely incidental to the enjoyment of his proprietary right in the shares, which is not itself the subject matter of the claim, this does not bring him within the second limb of  section 22(1)(a) (WLK v TMC (No. 1), paras 9, 12 and 13; Chinachem Charitable Foundation Ltd, para 20(iv)).

7.Miss Chan brought our attention to Wong Man Yin v Ricacorp Properties Ltd & Ors (2003) 6 HKCFAR 265 para 5, in which the court noted in the introductory part of the judgment that the petitioner in a petition under section 168A appealed as of right from the decision of the Court of Appeal. There was no reasoned decision of the Court of Appeal or the Appeal Committee granting leave to appeal as of right. I do not consider the said statement in the judgment to be of any assistance.

Questions of great general or public importance

8.The first two questions relate to the winding-up petition of the company presented under section 177(1)(a), that is on the ground that the company has by special resolution resolved that it be wound up by the court. Question 1 is to the effect whether it is proper or legitimate for this court to wind up the company under this provision where the trial judge has found that the 1^st to 5^th respondents were attempting to dispose of the shareholders’ dispute by drawing the company into the dispute, that the winding-up petition must have been presented in bad faith and was an abuse of process, and that there were alternative remedies available to the 1^st to 5^th respondents short of winding up the company. Question 2 is to the effect whether the jurisdiction under section 177(1)(a) is equitable, whether the majority shareholders should come to court with clean hands, whether equitable considerations and the existence of alternative remedies are relevant.

9.Two of the agreed issues for determination at trial were whether the 1^st to 5^th respondents’ attempt to put the company into liquidation was made in bad faith and/or for improper purposes (issue (k)); and in relation to the winding-up petition of the company, whether, having regard to the matters complained of by Po Kei in his petition, the 1^st to 5^th respondents are entitled to cause resolutions to be passed for the purpose of putting the company into liquidation (issue (l)). The judge noted in para 121 of his judgment that “the parties, including the Company, accept that the outcome of Po Kei’s petition [under section 168A] determines how [the judge] should deal with the Company’s petition.” He further stated as he has decided to grant relief under the section 168A petition, it follows that he would dismiss the company’s winding-up petition and it was not necessary for him to say more about issues (k) and (l).

10.This court had proceeded on the basis of the parties’ concession as recorded by the judge. Issues (k) and (l) were not argued by Miss Chan in the appeal as a fallback argument, should we decide to allow the appeal and decline to grant relief in the section 168A petition. Nor was the question of alternative remedies short of winding up the company ever canvassed by Miss Chan in the appeal.

11.Miss Chan now informed us that the concession recorded by the judge was not entirely accurate in that she only accepted at the trial if Po Kei should succeed in his petition, the company’s winding-up petition would be dismissed, but the converse was not correct.  It is far too late for this objection to be taken. The judge did not find it necessary to determine issues (k) and (l). What he said in para 123 of his judgment (which was heavily relied on by Miss Chan in this application) was largely in the context of the respondents improperly drawing the company into the dispute of shareholders so that the company should be deprived of its costs which were improperly incurred.

12.In any event, I do not think questions 1 and 2 are questions of great general or public importance. The principles regarding the court’s jurisdiction to wind up under section 177(1)(a) are sufficiently well established, in the cases cited by Miss Chan, see Re Comtowell Ltd [1998] 2 HKLRD 463.

13.Question 3 is as follows:

“Whether in an appeal against findings of primary fact:

3.1. it is proper or legitimate for the Court of Appeal to reverse the trial judge’s findings of fact, when such findings were based on the evidence of a witness who had personal and direct knowledge of the fact; and

3.2.  the Court of Appeal is entitled to substitute its own construction of the case with the trial judge’s findings of fact, when the case so constructed is inconsistent with the case and evidence advanced by the appellants themselves.”

14.The question posed is clearly case specific. The principal complaint of Miss Chan is that it was the respondents’ case that the dividends declared and paid by the company had all been paid to the father but this was not established on the evidence and yet this court held in para 50 of the judgment that whether all the declared dividends were actually paid to the father is not to the point and what matters is whether the father knew and approved of the payment of dividends. This statement in para 50 must be read against the other finding of the judge, which was upheld by this court, that the father dealt with the assets of the company, including the dividends, as he pleased and directed and the shareholders were not paid the dividends in accordance with their shareholdings. The full reasons why this court has decided to reverse the judge’s findings of fact appeared in paras 37 to 51 of the judgment.

15.Question 3 does not give rise to any question of great general or public importance.

“Or otherwise” ground

16.In short, it was contended in the remaining three questions in the Notice of Motion that there were sufficient bases to doubt whether this court was right in reversing the findings of fact of the trial judge and leave should be granted on the “or otherwise” ground as Po Kei has good prospects of success in the appeal and that the value of his shares has been assessed at HK$29 million odd. The submissions of Miss Chan were essentially the same as her submissions in the appeal.

17.I do not propose to analyse the evidence again. Suffice it to say that the high threshold for granting leave under the “or otherwise” limb is not satisfied here. In any event, whether leave should be granted on this exceptional basis is generally a matter for the Court of Final Appeal.

Ms Linda Chan, SC and Ms Zabrina Lau, instructed by Messrs Wilkinson & Grist, for the petitioner (respondent)

Mr Alan Leong, SC, Mr King Wong and Mr Ken Lee, instructed by Messrs Lo, Chan & Leung, for the 1st to 5th respondents (appellants)

Please refer to FAMV20/2012 for the relevant appeal(s) to the Court of Final Appeal.