HCCW1166/2000 XCHRX WONG WAN HUEN FREDERICK AND OTHERS v. W HAKING ENTERPRISES LTD. AND OTHERS - LawHero
HCCW1166/2000
高等法院（公司清盤）Deputy High Court Judge Woolley19/12/2001
HCCW1166/2000
HCCW 1166/2000
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
COMPANIES WINDING-UP PROCEEDINGS NO. 1166 OF 2000
____________
IN THE MATTER of W HAKING
ENTERPRISES LIMITED
and
IN THE MATTER of the
COMPANIES ORDINANCE (Chapter
32)
____________
BETWEEN
WONG WAN HUEN FREDERICK 1st Petitioner
WONG WAN CHAM HERBERT 2nd Petitioner
WONG WAN HAY RONALD 3rd Petitioner
CARMENSKI WONGO LIMITED 4th Petitioner
and
W HAKING ENTERPRISES LIMITED 1st Respondent
WONG SIU LING 2nd Respondent
WONG WAN CHEE ERNEST 3rd Respondent
WONG WAN CHIU IGNATIUS 4th Respondent
CHAN CHIU KAM PAULINE 5th Respondent
PALIC INVESTMENT LIMITED 6th Respondent
CHAN WAI FUN WINNIE 7th Respondent
CHUNG HAI YEN 8th Respondent
____________
- 2 -
Before: Deputy High Court Judge Woolley in Chambers
Date of Hearing: 13 December 2001
Date of Handing Down Decision: 20 December 2001
_______________
DECISION
_______________
1. This is an application by the 6th respondent, under Order 18,
rule 19, or under the inherent jurisdiction of the court, that paragraph 7(1)
and prayer (1) of the petition be struck out insofar as they are directed at
the 6th respondent on the grounds that they are frivolous and vexatious or
an abuse of the process of the court.
2. This is a petition issued by four of the minority shareholders of
W. Haking Enterprises Limited (the company) on the basis that, since 8
April 2000, the affairs of the company have been conducted in a manner
unfairly prejudicial to the interests of the petitioners, and seeking, inter alia,
an order under section 168A of the Companies Ordinance, Cap 32, that
their shares be purchased by the company or the respondents. It is in
respect of this part of the petition, and this prayer, that the 6th respondent
seeks this order. The unfairly prejudicial conduct complained of may
briefly be stated, that, at the AGM of the company held on 8 April 2000,
the reappointment of the 1st, 2nd and 3rd petitioners as directors was opposed
by a majority of the shareholders present, which included some of the
respondents, and they have accordingly ceased to be directors.
- 3 -
3. The shares in the company are held by family members of the
three founders, Dr Haking Wong, Mr Wong Chiu Lee, and Dr Pauline
Chan, and a number of family trusts. The total number of issued shares is
1,056,869 of which the Dr Haking Wong family and trusts hold 635,405,
the Wong Chiu Lee family hold 130,256, and Dr Pauline Chan, her niece
and the 6th respondent hold 291,208. Those held by the 6th respondent
were shares held by Dr Pauline Chan which she transferred to the 6 th
respondent, a BVI company, in July 1994. All the shares in the 6th
respondent are now held by HSBC Trustee in A/C 006-097448-001. I
have no other information about this trust. Prior to the annual general
meeting on 8 April 2000, HSBC Trustee caused the 6th respondent to
appoint Dr Pauline Chan as its proxy for the meeting, in her position as
chairman of the company and settlor of the trust.
4. What happened at the meeting is set out in the minutes, but
may briefly be described as follows. All directors, which included the
petitioners and respondents who were not corporate entities, were required
to retire under the company’s articles of association, but were eligible for
re-election. A majority voting against the usual practice of re-electing all
the directors en bloc, the meeting proceeded to vote on individual directors
on a show of hands. Any director could, under the articles, have
demanded a poll, when votes would be by number of shares held, but none
did. The votes were accordingly only of those present in person. As a
result of this voting procedure, the first three petitioners were not
re-elected.
5. The petition herein cites the exclusion of the first three
petitioners from the management of the company as a result of the
proceedings at the meeting on 8 April 2000 as their cause of complaint, and,
- 4 -
in paragraph 8, names the 6th respondent as being represented by proxy
exercised by Dr Pauline Chan. It is apparent that this was not the case.
As no poll was required in the voting on the directors’ re-election, and the
vote was on a show of hands only by those present, Dr Chan was only
voting on her own behalf, and not as proxy for the 6th respondent, whose
shares did not come into consideration at all. There can accordingly be no
sustainable allegation of wrongdoing at all on the part of the 6 th respondent.
6. Mr Chan, for the 6th respondent, says that it must follow that
the petition cannot succeed as against this respondent and must accordingly
be struck out. However, this assumes that the court cannot make an order,
or would be extremely unlikely to do so, against a member of the company
against whom no wrongdoing is alleged. This is clearly not the case. As
Mr Graham for the petitioners has pointed out, the language of section
168A is sufficiently wide to allow the court, in its discretion, to make a
wide variety of orders, including the purchase of the shares of any members
of the company by other members of the company, or by the company.
This does not restrict the powers of the court in any way as to who should
be ordered to buy out any other member, and Mr Graham again points out
that the 6th respondent’s shares are arguably under the control of the 5th
respondent, Dr Chan, and the court is entitled to take this, and any other
matters into account in deciding what relief should be ordered. To grant
the order requested would be effectively to deny the court which hears the
petition the discretion which section 168A clearly gives it.
7. This was recognised by Vinelott J when considering the
equivalent English legislation in Re a company (No 007281 of 1986) [1987]
BCLC 593, where he says at page 598:
- 5 -
“A petition under s 459 is not analogous to litigation in which the
issues raised affect only those against whom allegations are made
by the plaintiff. A closer analogy is an administration action,
where all beneficiaries having an interest in the relief sought
should be made parties or represented. The practice that has so
far been followed in the Companies Court is to require that all
members of the company whose interests would have been
affected by the misconduct alleged or who would be affected by
an order made by the court under the very wide powers conferred
by s 461 are to be made respondents to a petition or served with
it.”
8. The same view was expressed by Lindsay J in Re Little
Olympian Each-Ways Ltd [1994] 2 BCLC 420 where, after quoting
Vinelott J, he pointed out that that case showed that it is not a necessary
condition of joinder that a respondent should have been involved in any
way as a wrongdoer in the events complained of.
9. It may well be, as Mr Chan submits, that to make such a buy
out order it would have to be an exceptional case, but to accede to the
request made I would have to be sure that no court would make such an
order in this case. I find that I cannot do that. The 6th respondent is the
largest shareholder of all in this company, and may well be controlled by
one of those against whom wrongdoing is alleged. It is not sought to have
the 6th respondent removed from the proceedings entirely, but only in
respect of this part of the relief the petitioners seek. There is therefore no
prejudice in respect of this respondent, for instance by being forced to incur
what may turn out to be unnecessary costs, but there may well be in respect
of the petitioners by denying the judge hearing the matter the discretion to
pursue a course of action otherwise available under the ordinance.
10. Of course there are boundaries to any jurisdiction conferred on
the court, however wide that jurisdiction might be stated to be. But it is
- 6 -
not in my view for the court at a preliminary stage, looking only at the
petition, and without the benefit of examing all the evidence surrounding
the events complained of, and the nature and control of each of the
shareholdings, to deny the judge hearing the case any part of his discretion
within that jurisdiction.
11. For these reasons I find that there is no merit in this application
which will be dismissed with an order nisi that the petitioners have their
costs of it in any event.
(E T S Woolley)
Deputy High Court Judge
Mr Peter Graham, instructed by Messrs Anthony Chiang & Partners, for the
Petitioners
Mr Wilson Chan, instructed by Messrs Fairbairn Catley Low & Wong, for
the 6th Respondent
XCHRX WONG WAN HUEN FREDERICK AND OTHERS v. W HAKING ENTERPRISES LTD. AND OTHERS
HCCW 1166/2000
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
COMPANIES WINDING-UP PROCEEDINGS NO. 1166 OF 2000
____________
IN THE MATTER of W HAKING
ENTERPRISES LIMITED
and
IN THE MATTER of the
COMPANIES ORDINANCE (Chapter
32)
____________
BETWEEN
WONG WAN HUEN FREDERICK 1st Petitioner
WONG WAN CHAM HERBERT 2nd Petitioner
WONG WAN HAY RONALD 3rd Petitioner
CARMENSKI WONGO LIMITED 4th Petitioner
and
W HAKING ENTERPRISES LIMITED 1st Respondent
WONG SIU LING 2nd Respondent
WONG WAN CHEE ERNEST 3rd Respondent
WONG WAN CHIU IGNATIUS 4th Respondent
CHAN CHIU KAM PAULINE 5th Respondent
PALIC INVESTMENT LIMITED 6th Respondent
CHAN WAI FUN WINNIE 7th Respondent
CHUNG HAI YEN 8th Respondent
____________
- 2 -
Before: Deputy High Court Judge Woolley in Chambers
Date of Hearing: 13 December 2001
Date of Handing Down Decision: 20 December 2001
_______________
DECISION
_______________
1. This is an application by the 6th respondent, under Order 18,
rule 19, or under the inherent jurisdiction of the court, that paragraph 7(1)
and prayer (1) of the petition be struck out insofar as they are directed at
the 6th respondent on the grounds that they are frivolous and vexatious or
an abuse of the process of the court.
2. This is a petition issued by four of the minority shareholders of
W. Haking Enterprises Limited (the company) on the basis that, since 8
April 2000, the affairs of the company have been conducted in a manner
unfairly prejudicial to the interests of the petitioners, and seeking, inter alia,
an order under section 168A of the Companies Ordinance, Cap 32, that
their shares be purchased by the company or the respondents. It is in
respect of this part of the petition, and this prayer, that the 6th respondent
seeks this order. The unfairly prejudicial conduct complained of may
briefly be stated, that, at the AGM of the company held on 8 April 2000,
the reappointment of the 1st, 2nd and 3rd petitioners as directors was opposed
by a majority of the shareholders present, which included some of the
respondents, and they have accordingly ceased to be directors.
- 3 -
3. The shares in the company are held by family members of the
three founders, Dr Haking Wong, Mr Wong Chiu Lee, and Dr Pauline
Chan, and a number of family trusts. The total number of issued shares is
1,056,869 of which the Dr Haking Wong family and trusts hold 635,405,
the Wong Chiu Lee family hold 130,256, and Dr Pauline Chan, her niece
and the 6th respondent hold 291,208. Those held by the 6th respondent
were shares held by Dr Pauline Chan which she transferred to the 6 th
respondent, a BVI company, in July 1994. All the shares in the 6th
respondent are now held by HSBC Trustee in A/C 006-097448-001. I
have no other information about this trust. Prior to the annual general
meeting on 8 April 2000, HSBC Trustee caused the 6th respondent to
appoint Dr Pauline Chan as its proxy for the meeting, in her position as
chairman of the company and settlor of the trust.
4. What happened at the meeting is set out in the minutes, but
may briefly be described as follows. All directors, which included the
petitioners and respondents who were not corporate entities, were required
to retire under the company’s articles of association, but were eligible for
re-election. A majority voting against the usual practice of re-electing all
the directors en bloc, the meeting proceeded to vote on individual directors
on a show of hands. Any director could, under the articles, have
demanded a poll, when votes would be by number of shares held, but none
did. The votes were accordingly only of those present in person. As a
result of this voting procedure, the first three petitioners were not
re-elected.
5. The petition herein cites the exclusion of the first three
petitioners from the management of the company as a result of the
proceedings at the meeting on 8 April 2000 as their cause of complaint, and,
- 4 -
in paragraph 8, names the 6th respondent as being represented by proxy
exercised by Dr Pauline Chan. It is apparent that this was not the case.
As no poll was required in the voting on the directors’ re-election, and the
vote was on a show of hands only by those present, Dr Chan was only
voting on her own behalf, and not as proxy for the 6th respondent, whose
shares did not come into consideration at all. There can accordingly be no
sustainable allegation of wrongdoing at all on the part of the 6 th respondent.
6. Mr Chan, for the 6th respondent, says that it must follow that
the petition cannot succeed as against this respondent and must accordingly
be struck out. However, this assumes that the court cannot make an order,
or would be extremely unlikely to do so, against a member of the company
against whom no wrongdoing is alleged. This is clearly not the case. As
Mr Graham for the petitioners has pointed out, the language of section
168A is sufficiently wide to allow the court, in its discretion, to make a
wide variety of orders, including the purchase of the shares of any members
of the company by other members of the company, or by the company.
This does not restrict the powers of the court in any way as to who should
be ordered to buy out any other member, and Mr Graham again points out
that the 6th respondent’s shares are arguably under the control of the 5th
respondent, Dr Chan, and the court is entitled to take this, and any other
matters into account in deciding what relief should be ordered. To grant
the order requested would be effectively to deny the court which hears the
petition the discretion which section 168A clearly gives it.
7. This was recognised by Vinelott J when considering the
equivalent English legislation in Re a company (No 007281 of 1986) [1987]
BCLC 593, where he says at page 598:
- 5 -
“A petition under s 459 is not analogous to litigation in which the
issues raised affect only those against whom allegations are made
by the plaintiff. A closer analogy is an administration action,
where all beneficiaries having an interest in the relief sought
should be made parties or represented. The practice that has so
far been followed in the Companies Court is to require that all
members of the company whose interests would have been
affected by the misconduct alleged or who would be affected by
an order made by the court under the very wide powers conferred
by s 461 are to be made respondents to a petition or served with
it.”
8. The same view was expressed by Lindsay J in Re Little
Olympian Each-Ways Ltd [1994] 2 BCLC 420 where, after quoting
Vinelott J, he pointed out that that case showed that it is not a necessary
condition of joinder that a respondent should have been involved in any
way as a wrongdoer in the events complained of.
9. It may well be, as Mr Chan submits, that to make such a buy
out order it would have to be an exceptional case, but to accede to the
request made I would have to be sure that no court would make such an
order in this case. I find that I cannot do that. The 6th respondent is the
largest shareholder of all in this company, and may well be controlled by
one of those against whom wrongdoing is alleged. It is not sought to have
the 6th respondent removed from the proceedings entirely, but only in
respect of this part of the relief the petitioners seek. There is therefore no
prejudice in respect of this respondent, for instance by being forced to incur
what may turn out to be unnecessary costs, but there may well be in respect
of the petitioners by denying the judge hearing the matter the discretion to
pursue a course of action otherwise available under the ordinance.
10. Of course there are boundaries to any jurisdiction conferred on
the court, however wide that jurisdiction might be stated to be. But it is
- 6 -
not in my view for the court at a preliminary stage, looking only at the
petition, and without the benefit of examing all the evidence surrounding
the events complained of, and the nature and control of each of the
shareholdings, to deny the judge hearing the case any part of his discretion
within that jurisdiction.
11. For these reasons I find that there is no merit in this application
which will be dismissed with an order nisi that the petitioners have their
costs of it in any event.
(E T S Woolley)
Deputy High Court Judge
Mr Peter Graham, instructed by Messrs Anthony Chiang & Partners, for the
Petitioners
Mr Wilson Chan, instructed by Messrs Fairbairn Catley Low & Wong, for
the 6th Respondent