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William Wai Lau v D.j.h. Consultants Ltd

Judgment Cited authorities 6 Cited in Precedent Map Related
Vincent
Judgment Date29 November 1984
Subject MatterCivil Appeal
Judgement NumberCACV164/1984
CourtCourt of Appeal (Hong Kong)
CACV000164/1984 WILLIAM WAI LAU v. D.J.H. CONSULTANTS LTD

CACV000164/1984

Civil Appeals

Nos. 164, 165 & 166 of 1984

Company law - principles on which Court should allow

petition to be amended

___________________________________________

Company law - section 180(1) Companies Ordinance

____________________________________________

The Court's discretion to allow a demurrable petition to be amended is to be exercised in accordance with the principles and practice which relate to ordinary pleadings, and to other originating process. No rule of practice requires, in every case, an affidavit explaining the change of belief which enabled the petitioner to make his application to amend. It had not been shown that the judge had exercised his discretion wrongly in granting leave to amend.

The Court of Appeal would approach the appeal on the basis that the law was as had been accepted by Counsel for all the parties: that a fully paid-up shareholder had no locus standi to present a petition to wind up his company unless he alleged and proved that there was a probability of a surplus in the winding-up in which he would have a tangible share (In re Rica Gold Washing Co. (1879) 11 Ch.D. 36, followed consistently in England - e.g. in In re Chesterfield Catering Co. Ltd. [1977] 1 Ch. 373). However the Court did not wish to be understood to have accepted that the English practice should be followed in Hong Kong in view of section 180(1) of the Companies Ordinance which appeared, in seemingly unambiguous and peremptory language, to prohibit a Court from refusing to grant a petition solely on the grounds that the company has no assets.

The judge was justified in concluding that the three petitions before him would not inevitably fail and his refusal to strike them out would be affirmed.

IN THE COURT OF APPEAL

Civil Appeal

No. 164 of 1984

IN THE MATTER OF D.J.H. CONSULTANTS LIMITED

and

IN THE MATTER OF THE COMPANIES ORDINANCE (CAP. 32)

___________________

WILLIAM WAI LAU Petitioner

and
D.J.H. CONSULTANTS LIMITED Respondent (Appellant)

____________________

Civil Appeal

No. 165 of 1984

IN THE MATTER OF D.J.H. CONSULTANTS (CHINA) LIMITED

and

IN THE MATTER OF THE COMPANIES ORDINANCE (CAP. 32)

__________________________

WILLIAM WAI LAU Petitioner

and
D.J.H. CONSULTANTS (CHINA) LIMITED Respondent (Appellant)

___________________

Civil Appeal

No. 166 of 1984

IN THE MATTER OF D.J.H. CONSULTANTS (PHILIPPINES) LIMITED

and

IN THE MATTER OF THE COMPANIES ORDINANCE (CAP. 32)

______________________

WILLIAM WAI LAU Petitioner

and
D.J.H. CONSULTANTS (PHILIPPINES) LIMITED Respondent (Appellant)

_______________

Coram: Cons, Fuad & Kempster, JJ.A.

Date of Hearing: 20th and 21st November 1984

Date of handing down Reasons for Judgment: 29th November 1984

_______________________

REASONS FOR JUDGMENT

________________________

Fuad, J. A.:

1. We dismissed these appeals at the conclusion of the hearing, and now give our reasons.

2. By consent we heard the three appeals together, and they arise out of a decision reached by Mayo, J. on the 7th November this year. On that day the learned judge dismissed applications made by three closely connected companies to strike out in limine petitions to have them wound up which had been filed by Mr. William Wai Lau.

3. The petitions gave the following information about the companies:

(1) D.J.H. Consultants (China) Ltd.

Incorporated in February 1980 with a nominal capital of $10,000, divided into 1,000 shares of $10 each.

Amount of the capital paid up or credited as paid up - $10,000.

500 shares are registered in the name of Mr. William Wai Lau and 500 in the name of Mr. David James Hutcheson.

The sole directors were Mr. Lau and Mr. Hutcheson.

(2) D.J.H. Consultants Ltd.

Incorporated in November 1976 with a capital of $10,000, divided into 5,000 shares of $2 each.

Two shares were then issued and stood credited as fully paid up, one in the name of Mr. Hutcheson and the other in the name of Mrs. Mitchelle Hutcheson.

In May 1979 two shares were issued and stood credited as fully paid up, one in the name of Mr. Lau and the other in the name of Mr. Hutcheson.

In June 1981 one further share was issued (credited as fully paid up) in the name of Mr. Lau.

The two shareholders were the sole directors.

(3) D.J.H. Consultants (Philippines) Limited

Incorporated in December 1980 with a nominal capital of $10,000, divided into 1,000 shares of $10 each.

Amount of capital paid up or credited or paid up - $10,000.

Shares registered as follows:

500 in the name of Mr. Hutcheson;

350 in the name of Mr. Lau;

100 in the name of Miss Rosa Malabanan (Mr. Lau claims the beneficial ownership of these shares);

50 in the name of Mr. Efren Malabanan.

4. The directors were the four registered shareholders.

5. The petitions each refer to an agreement between Mr. Lau and Mr. Hutcheson. They say that apart from the objects for which the companies were established as stated in their Memoranda of Association, after the first issue of shares to Mr. Lau in the case of D.J.H. Consultants Ltd., and right from the inception of the two other companies, there was the additional object of pursuing an agreement between Mr. Lau and Mr. Hutcheson.

6. Each of the petitions describes the alleged agreement in this way:

"At or about the beginning of 1979 your Petitioner was the Chairman and director together with his sister of the Hong Kong incorporated company Direct Line Company Limited. The shares of such company were held equally between your Petitioner and his sister. At or about the middle of 1979, your Petitioner agreed with the said David James Hutcheson to enter into a joint venture combining your Petitioner's business contacts in and knowledge of China and its trade and the said David James Hutcheson's expertise in consultancy. The said agreement was to be implemented and so far as your Petitioner is aware was implemented by your Petitioner and the said David James Hutcheson by:-

(i)

transferring 50% of the issued shares in each of Direct Line Company Limited and D.J.H. Consultants Limited to your Petitioner and the said David James Hutcheson so that each held 50% respectively of the issued share capital in each company and/or by transferring sufficient shares in each company that each as between themselves held an equal number of shares in each of the companies;

(ii)

the resignation as director and shareholder of the Petitioner's sister from Direct Line Company Limited;

(iii)

the resignation as director from D.J.H. Consultants Limited of Mrs. M. Hutcheson;

(iv)

the appointment of your Petitioner as director in D.J.H. Consultants Limited and the appointment as director of the said David James Hutcheson in Direct Line Company Limited;

(v)

the running of the 2 companies on an equal basis as to ownership, management, enjoyment and profits. "

7. The petitions go on to say that it was in furtherance of this agreement that D.J.H. Consultants (China) Ltd. and D.J.H. Consultants (Philippines) Ltd. [and a third company - D.J.H. Consultants (International) Ltd. - which is not the subject of a winding-up petition] were incorporated. It will be recalled that the third company with which we are concerned had already been incorporated in 1976.

8. Each of the petitions then contains the following averments, in identical terms:

"At all material times (i) it was the intention of your Petitioner and the said David James Hutcheson that notwithstanding the Articles of Association in each of the respective companies the subject of the agreement between them that the management of the companies should be conducted jointly between them and/or that any casting vote attaching to the office of Chairman in any of the companies should not be used by your Petitioner or the said David James Hutcheson being the occupant of such office to breach the agreement and intention between them; (ii) your Petitioner and the said David James Hutcheson enjoyed equal signing rights over the bank accounts of the several companies. "

9. The Petitioner's complaints in each of his petitions are very much the same. In each petition it is first said that:

"In or about 1984 to-date differences have arisen between your Petitioner and the said David James Hutcheson as to the mode of conducting the business of the company and the other companies the subject of the agreement between them. Inter alia your Petitioner complains that:-

(i)

since from or before the 1st September 1984 the said David James Hutcheson has published that your Petitioner is leaving the company and the remaining 3 'D.J.H. Companies'.

(ii)

induced your Petitioner to sign minutes of directors' board meetings in all the 4 D.J.H. Companies dated the 18th August 1984 appointing the said D.J. Hutcheson chairman of each of the said 4 companies.

(iii)

at directors' board meetings held purportedly on the 3rd September 1984 in the company and the 3 other D.J.H. Companies which meetings your Petitioner did not attend, the said David James Hutcheson in the absence of any or any sufficient quorum purported to appoint one Perfecto C. Doroja as a director of the company and of the other 3 D.J.H. Companies;

(iv)

at directors meetings held purportedly on the 21st September 1984 in the company and the 3 other D.J.H. Companies which meetings your Petitioner
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