Wu Yang v. Dayuan International Development Ltd and Others

HCMP 2143/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2143 OF 2011

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D E C I S I O N

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1.I have before me a summons issued on 19 June 2013 to stay my decision of 4 June 2013 pending an appeal. The application initially came on before Recorder Coleman SC on 21 June 2013. Although the Recorder was unsympathetic (for reasons given in his decision) to the application he considered it prudent to adjourn the application to me and grant a stay pending the hearing.

2.The grounds of appeal are as follows:

“1. The Court’s jurisdiction under section 152FA of the Companies Ordinance, Cap 32, is limited to the making of an order for the inspection of “the records of a specified corporation” and for the making of copies thereof (“the Category”). The learned Judge correctly rejects the extension of the Category to the documents of a subsidiary, but erroneously qualifies such rejection by holding (at §23 of the Decision) that the Category covers “records emanating from a subsidiary, which become owned by or possessed as of right by the specified corporation”, or records in the sense that the specified corporation “(1) has them in its possession, (2) they form part of the records of the specified corporation’s affairs and (3) the specified corporation had a right or power to obtain them” (“the Test”). The words “possessed as of right by”, and the formulation of the Test, are contrary to, and greatly extend, the scope of the Category, as is reflected in the scope of the Order. As it turns out the Order covers, not only documents of the 1^st Respondent, but also those of 12 other companies most of which are not even direct subsidiaries of the 1^st Respondent.

2. So far as the documents belonging to the 1^st Respondent are concerned, these are already the subject matters of a previous order made by the Honourable Mr Justice Au on 31 March 2011, which the Applicant had sought in his former capacity as director.”

3.The thrust of the appeal is that paragraph 23 of my decision was wrong and if the order were properly framed there would be nothing to inspect.  I note that at the hearing before me Mr Mok SC did not argue that if I was satisfied that the application for inspection was made bona fide and for a proper purpose, no order should be made because if the order was properly framed the only documents that it would cover had already been disclosed pursuant to Au J’s order of 31 March 2011.  Paragraph 2 of the grounds of appeal is, therefore, to that extent an afterthought.

4.Paragraph 23 of my June judgment dealt with an argument advanced by the Respondents, which suggested that there is a distinction between paragraphs 44 to 49 in Wong Kar Gee Mimi and Areva NC (Australia) Pty Ltd v Summit Resources (Australia) Pty Ltd and that my decision was wrong.  As I explained in paragraph 23 of my June judgment, I thought that this was to misunderstand my judgment in Wong Kar Gee Mimi.  In my view there is no material distinction between the two decisions.

5.The argument as it was advanced by the Respondents focused on the status of documents included in files in a parent company’s possession containing information about a subsidiary.  That part of paragraph 23 of my June judgment to which objection is taken is directed to this issue and, in particular, the practical problems that may arise in identifying whether or not a document can fairly be said to form part of the “records of a specified corporation”.  There will be cases in which a document or data the original of which belongs to a subsidiary is clearly owned by a parent company and forms part of its records.  For example, if a parent company has requested a subsidiary to provide a copy document for its own purposes and the subsidiary complies with the request, the piece of paper received by the parent company will become its property and the document forms part of its records.  However, it may be that documents or data containing information about the activities of a subsidiary find their way into files or data storage systems in the possession of a parent company as a matter of administrative practice rather than because of individual requests.  The status of such documents or data may be less immediately apparent and paragraph 23 of my judgment is directed to assessing whether or not they do form part of the “records of a specified corporation”. 

6.It was in recognition that such difficult cases might arise that paragraph 3 of my order of 4 June 2013 included general liberty to apply in order that a party could return to court for a direction if it was unclear whether or not a particular document did form part of the records of the specified corporation.

7.I have expressly stated in paragraph 23 that the documents must “form part of the records of the specified corporation’s affairs”.  I asked Mr Mok to explain how in the present case element (3) of my description of what in practice would constitute “records of the specified corporation” was problematic.  This resulted in a fairly lengthy discussion of whether or not there was in substance a difference between the test which in very loose terms is formulated in the grounds of appeal and preferred by the Applicant, and the way in which I have dealt with the issue I referred to above in paragraph 23 of my judgment.  Mr Mok as I understood it inclined to the view, having given the matter further thought, partly as a result of the debate which had taken place before Recorder Coleman, that perhaps there was not, and that in practice the better way for the Applicant to proceed would be to take advantage of paragraph 3 of my order if necessary, rather than pursue the appeal.  Mr Mok invited me to adjourn the present application for 14 days to give his client the opportunity to consider whether or not to withdraw the appeal although he did withdraw the current application.  I am not inclined to do that.

8.In my view the notice of the appeal raises a chimera, not a substantive argument.  I therefore decline to grant a stay pending the hearing of the substantive appeal and dismiss the application with costs.

Mr Frederick Chan, instructed by CWL Partners, for the applicant

Mr Johnny Mok SC, Mr William Wong SC and Mr Jason Yu, instructed by Li & Partners, for the 1^st to 3^rd respondents