Dennis Kwok Hon Ming v Poon Sui Cheong Albert And Others

CourtCourt of Appeal (Hong Kong)
Judgment Date24 April 2019
Neutral Citation[2019] HKCA 461
Judgement NumberCACV169/2017
Subject MatterCivil Appeal
CACV9/2017 DENNIS KWOK HON MING v. POON SUI CHEONG ALBERT AND OTHERS

CACV 9/2017, CACV74/2017
and CACV 169/2017
(Heard Together)
[2019] HKCA 461

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NOS 9, 74 AND 169 OF 2017

(ON APPEAL FROM HCMP 1526, 1527 AND 1528/2013)

---------------------------

(ON APPEAL FROM HCMP 1526/2013)

---------------------------

IN THE MATTER OF Minloy Limited
and
IN THE MATTER OF Section 168A of The Companies Ordinance, Cap 32 of the Laws of Hong Kong

---------------------------

BETWEEN
DENNIS KWOK HON MING Petitioner
and
POON SUI CHEONG ALBERT 1st Respondent
TSENG SOLOMON CHIH KUO as the executor of the estate of IRENE TSENG 2nd Respondent
(by Order to carry on made by Deputy High Court Judge R Ismail, SC dated 30 August 2016)
YANG HONG CHING NORRIS 3rd Respondent
LUO MING XIN WILLIAM also known as 4th Respondent
LO MING TAK WILLIAM
LAW WING MEI HELEN 5th Respondent
ASIAN ADVENTURE LIMITED 6th Respondent
ENCHANTMENT PROPERTIES LIMITED 7th Respondent
CHINA FUNDS DEVELOPMENT LIMITED 8th Respondent
MINLOY LIMITED 9th Respondent

---------------------------

AND
(ON APPEAL FROM HCMP 1527/2013)

---------------------------

IN THE MATTER OF Top Master Development Limited
and
IN THE MATTER OF Section 168A of The Companies Ordinance, Cap 32 of the Laws of Hong Kong

---------------------------

BETWEEN

DENNIS KWOK HON MING Petitioner
and
POON SUI CHEONG ALBERT 1st Respondent
TSENG SOLOMON CHIH KUO as the executor of 2nd Respondent
the estate of IRENE TSENG
(by Order to carry on made by Deputy High Court Judge R Ismail, SC
dated 30 August 2016)
YANG HONG CHING NORRIS 3rd Respondent
LUO MING XIN WILLIAM also known as 4th Respondent
LO MING TAK WILLIAM
LAW WING MEI HELEN 5th Respondent
ASIAN ADVENTURE LIMITED 6th Respondent
ENCHANTMENT PROPERTIES LIMITED 7th Respondent
CHINA FUNDS DEVELOPMENT LIMITED 8th Respondent
TOP MASTER DEVELOPMENT LIMITED 9th Respondent

---------------------------

AND
(ON APPEAL FROM HCMP 1528/2013)

---------------------------

IN THE MATTER OF Wealth Island International Limited
and
IN THE MATTER OF Section 168A of The Companies Ordinance, Cap 32 of the Laws of Hong Kong

---------------------------

BETWEEN
DENNIS KWOK HON MING Petitioner
and
POON SUI CHEONG ALBERT 1st Respondent
TSENG SOLOMON CHIH KUO as the executor of 2nd Respondent
the estate of IRENE TSENG
(by Order to carry on made by Deputy High Court Judge R Ismail, SC
dated 30 August 2016)
YANG HONG CHING NORRIS 3rd Respondent
LUO MING XIN WILLIAM also known as 4th Respondent
LO MING TAK WILLIAM
LAW WING MEI HELEN 5th Respondent
ASIAN ADVENTURE LIMITED 6th Respondent
ENCHANTMENT PROPERTIES LIMITED 7th Respondent
CHINA FUNDS DEVELOPMENT LIMITED 8th Respondent
WEALTH ISLAND INTERNATIONAL LIMITED 9th Respondent

---------------------------

(Actions consolidated by the Order of the
Honourable Mr Justice Harris dated 27 January 2015)

---------------------------

(HEARD TOGETHER)


Before: Hon Cheung JA, Barma JA and Harris J in Court
Date of Hearing: 20 March 2018
Date of Judgment: 24 April 2019

__________________

J U D G M E N T

__________________

Hon Cheung JA:

1. I agree with the judgment of Barma JA and the orders he proposes to make.

Hon Barma JA:

Introduction

2. There were before us three appeals against judgments of Deputy High Court Judge Ismail SC given in relation to three petitions issued by the petitioner, Mr Dennis Kwok, pursuant to what was section 168A of the old Companies Ordinance (Cap 32), seeking orders that his beneficially owned shares in Minloy Limited, Top Master Development Limited and Wealth Island International Limited (which were registered in the names of Madam Man Pui Fong and Mr Law Joe Lok, the mother and father of the 5th respondent, Ms Helen Law) be bought out by four of the other five shareholders of those companies (“the majority shareholders”), on the grounds of allegedly unfairly prejudicial conduct on the part of the majority shareholders against him. HCMP 1526/2013 concerned Minloy, HCMP 1527/2013 concerned Top Master, and HCMP 1528/2013 concerned Wealth Island.

3. In each of the petitions, the 1st to 8th respondents were, respectively, Mr Albert Poon, Ms Irene Tseng (who, having unfortunately passed away before the trial, was substituted as 2nd respondent by her son and executor, Mr Solomon Tseng), Mr Norris Yang, Mr William Lo, Ms Helen Law, Asian Adventure Limited, Enchantment Properties Limited and China Funds Development Limited. Asian Adventure, Enchantment Properties and China Funds were corporate vehicles for Irene Tseng, Norris Yang and William Lo respectively, through which they held their interests in the three companies (although, in the case of Minloy, Irene Tseng held her shares in her own name). The majority shareholders consisted, in each case, of Albert Poon, Irene Tseng/Asian Adventure, Enchantment Properties and China Funds. No allegations were made, and no relief was sought, against the 5th respondent, Helen Law. Originally, the three companies were named as 9th respondents to the respective petitions, but they were removed as respondents prior to the trial by an order of Harris J at an earlier stage of the proceedings.

4. The parties’ shareholdings were the same in respect of each of the three companies. The petitioner held 10.714% (through his nominees - Madam Man, in the case of Minloy and Top Master, and Mr Law, in the case of Wealth Island). Helen Law held 17.857% (again through a nominee, her mother Madam Man). As for the majority shareholders, Albert Poon held 21.429%, Irene Tseng/Asian Adventure held 35.714%, Enchantment Properties held 7.143% and China Funds also held 7.143%.

The formation of the companies and the Shareholders’ Agreement

5. The background to the formation of the companies can be briefly summarised as follows. In about late 1991, Dennis Kwok and Helen Law (who at one time were cohabitees) identified an opportunity for the acquisition of some 900,000 square feet of land on Lantau Island for a price of some HK$6.80 per square foot. In order to proceed with the acquisition, funds of HK$7,000,000 would be required. In order to raise the necessary funds, they sought additional investors. Mr Kwok contacted his former colleague Mr Poon, while Ms Law contacted her friend Ms Tseng. Ms Tseng brought in Mr Lo, who in turn brought in Mr Yang. Although each of the eventual investors knew one or more of the others, it does not appear that they all knew each other, or that they had any prior business or other relationship in which they were all involved.

6. Following a number of meetings and site visits, the six investors agreed to pursue the proposed investment in the land. To this end, they entered into an undated written agreement (made in about January 1992) to set out the terms on which they would enter upon the investment – this agreement has been referred to throughout as “the Shareholders’ Agreement”. Initially, it was envisaged that the entire investment would be made through Minloy, which is the company referred to in the Shareholders’ Agreement. However, it was eventually decided that the land should be acquired by three separate companies (i.e. the three companies), and although no further agreements were entered into in relation to Top Master and Wealth Island, it was accepted by all parties that the Shareholders’ Agreement governed the relationship of the investors in respect of all three companies.

7. The Shareholders’ Agreement is of central importance to these proceedings. The key arguments on the issues of whether or not there has been unfairly prejudicial conduct, both before us, and in the court below, turn on its proper interpretation. Accordingly, it is best set out in full. It is in the following terms (sub-clause numbers in square brackets were inserted by the Deputy Judge for ease of exposition):

Minloy Limited

Shareholders’ Agreement Concerning the Land Acquisition on Lantau Island

1) Land Ownership

Minloy Limited (hereinafter, ‘Minloy’) is the legal entity acquiring approximately 900,000 s.f. of land on Lantau Island (for details regarding the land lots, see Attachment 1). The names of shareholders and their respective shareholdings in Minloy are listed at the end of this Agreement.

2) Funding

The total cost for this land acquisition project, including legal and transaction cost, working capital etc, is estimated to be HK$7,000,000 to be funded through:

1% - HK$70,000 paid up share capital (divided into 70 equal shares of HK$1,000 each, and each share having equal voting right of one vote per share)

99% - HK$6,930,000 shareholders’ loan, interest bearing at 2% per month compounded monthly.

Shareholders must prescribe (sic) to the loan pro-rata to their shareholding percentage. In the event the above amount is insufficient to fund the project upon approval of the new budget at a shareholders’ meeting, all shareholders will be required to subscribe to the additional loan amount pro-rata to their shareholding percentages.

3) Objective of this Project

The objective of Minloy to engage in this project is NOT for short-term gain through immediate disposal of its entire land assets.

3.1...

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