Lehman & Co Management Ltd v. Effiscient Ltd and Another
Read the full judgment text of CACV 272/2011 on BabelCite. This Court of Appeal judgment was delivered on 18 July 2013 before Kwan JA, Chu JA, Barma JA.
Company law – winding-up – section 168A of the Companies Ordinance (Cap 32) – unfair prejudice – two-shareholder quasi-partnership company – managing shareholder's exclusion of other shareholder from board participation – compulsory share sale order – valuation – equitable relief – leave to appeal to Court of Final Appeal – Hong Kong Court of Final Appeal Ordinance (Cap 484) s.22(1)(a) and (b) – 'as of right' ground – questions of great general or public importance – Whether the 'as of right' ground under the second limb of s.22(1)(a) Cap 484 applies to an order for transfer of shareholding as a form of final mandatory injunction – Whether the proposed questions on valuation methodology under s.168A(2)(a)(iv), approbation and reprobation, and unfair prejudice raise questions of great general or public importance – Court of Appeal's earlier judgment allowing Lehman Management's appeal to a limited extent against Harris J's Liability and Remedies Judgments – consolidated petitions HCCW 377/2010 and HCCW 383/2010 – Leave to appeal refused on both 'as of right' and discretionary grounds – costs to Effiscient.
Legal issues: Whether leave to appeal to the Court of Final Appeal should be granted
Outcome: Leave to appeal to the Court of Final Appeal refused; costs awarded to Effiscient.
Cited by 12 cases · Cites 4 cases
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CACV 272/2011 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO. 272 OF 2011 (ON APPEAL FROM HCCW NOS. 377 AND 383 OF 2010) ________________________ HCCW 377/2010 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE COMPANIES (WINDING-UP) NO. 377 OF 2010 ________________________
________________________ BETWEEN
________________________ AND HCCW 383/2010 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE COMPANIES (WINDING-UP) NO. 383 OF 2010 ________________________
________________________ BETWEEN
________________________ (Actions consolidated pursuant to the order of
________________________ J U D G M E N T ________________________ Hon Kwan JA (giving the Judgment of the Court): 1.On 13 March 2013, this court gave judgment in the appeal brought by Lehman & Co Management Ltd (“Lehman Management”) against the Liability Judgment and the Remedies Judgment of Harris J in respect of two petitions brought by Lehman Management and Effiscient Ltd (“Efficient”) respectively under section 168A of the Companies Ordinance, Cap 32. We allowed Lehman Management’s appeal to a limited extent. 2.Lehman Management now seeks leave to appeal to the Court of Final Appeal, on the bases that the appeal is as of right and that there are questions of great, general or public importance. 3.I will first deal with the “as of right” ground. 4.In the Notice of Motion, the only ground of application in respect of the “as of right” ground is that “the matter in dispute on the appeal amounts to or is of a value in excess of HK$1 million”. This refers to the first limb of section 22(1)(a) of the Hong Kong Court of Final Appeal Ordinance, Cap 484, which applies to the situation “where the matter in dispute on the appeal amounts to or is of the value of $1,000,000 or more”. The first limb applies only to liquidated claims, so it would have no application to this situation (China Field Ltd v Appeal Tribunal (Buildings) (No 1) (2009) 12 HKCFAR 68, §18). 5.In his written submission, Mr Barlow, SC submitted that the application is within the “as of right” ground in that the appeal “directly or indirectly involves … questions respecting property, namely [Lehman Management’s] 50% shareholding in the Company, of a value in excess of HK$1 million”. This would be a reference to the second limb of section 22(1)(a), which relates to the situation where “the appeal involves, directly or indirectly, some claim or question to or respecting property … amounting to or of the value of $1,000,000 or more”. Mr Barlow argued that the appeal concerns the judge’s order requiring Lehman Management to transfer its shareholding in the Company to Effiscient, and this is a form of final mandatory injunction of the same nature as an order for specific performance, so would fall within the second limb as involving an indirect claim to the relevant property that is over the threshold value, praying in aid China Field Ltd, §25. 6.I do not accept his submissions. The second limb should be consistently interpreted and must not undermine the established construction of the first limb (Chinachem Charitable Foundation Ltd v Chan Chun Chuen & Anr (2011) 14 HKCFAR 798, §20(ii)). An unliquidated monetary claim falls not merely outside the first limb, but outside section 22(1)(a) altogether. The order which the court would make in disposing of the proposed appeal must have the immediate effect of conferring or imposing on the relevant parties a financial benefit or detriment in the quantified amount, without need for any further adjudicatory process to determine any question of fact or law, including any process of assessment, quantification or apportionment (China Field Ltd, §24; Chinachem Charitable Foundation Ltd, §§20(iii), (vi) to (viii) and 31). This requirement is plainly not satisfied here. 7.I turn to the discretionary ground in section 22(1)(b). Three questions are set out in the Notice of Motion and they are as follows:
8.I do not think it appropriate to grant leave to appeal on any of the three questions. 9.Question (A) was an argument Mr Barlow raised before us dealt with in our judgment at §§74 to 86 under the headings of “The Valuation Distortion argument” and “Other attacks on the valuation”. For the reasons given in our judgment, I do not think the arguments he advanced are reasonably arguable. In any event, as pointed out by Mr Manzoni, SC, there is no general rule as to the correct manner of valuation and it is a question to be determined on the facts of each case. 10.Question (B) relates to a complaint of Mr Barlow which we addressed in §§70 and 71 of our judgment. For the reasons given, we held that Effiscient was not “approbating and reprobating” from the valuation of the Company’s business and that the judge had not refused to exercise his jurisdiction under section 168A in an equitable manner. Quite apart from its fact specific nature, the arguments to be advanced under this question do not appear to be reasonably arguable. 11.Question (C) relates to the contention that the judge should have held on the facts of this case that unfair prejudice was established, an argument which we rejected for the reasons given in §§13 to 27 of our judgment. No question of great general or public importance arises out of the application of well settled law to the facts of this case. 12.For the above reasons, leave to appeal would be refused with costs to Effiscient.
Mr Barrie Barlow SC, instructed by Miller & Peart, for the Appellant / Petitioner Mr Charles Manzoni SC, instructed by Howse Williams Bowers, for the 1st Respondent / Cross-Petitioner |
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