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Wong Yee Chuk v Lo Po Wai, Harry And Others

Judgment Cited authorities 7 Cited in Precedent Map Related
Vincent
Judgment Date16 April 2020
Neutral Citation[2020] HKCFI 600
Year2020
Judgement NumberHCMP3366/2016
Subject MatterMiscellaneous Proceedings
CourtCourt of First Instance (Hong Kong)
HCMP3363/2016 WONG YEE CHUK v. LO PO WAI, HARRY AND OTHERS

HCMP 3363/2016, HCMP 3365/2016, HCMP 3366/2016 and
HCA 193/2018 (HEARD TOGETHER)
[2020] HKCFI 600

HCMP 3363/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANOUS PROCEEDINGS NO 3363 OF 2016

____________________

IN THE MATTER of section 724(1) of the Companies Ordinance (Cap 622)

and
IN THE MATTER of Harsen Engineering Ltd. (凱訊機電有限公司) (“Company”)
____________________
BETWEEN
WONG YEE CHUK（黃宜祝） Petitioner

and
LO PO WAI, HARRY（羅保偉） 1st Respondent
PAN SHI LIANG （潘世良） 2nd Respondent
HARSEN ENGINEEERING LTD
（凱訊機電有限公司）		 3rd Respondent

____________________

AND HCMP 3365/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANOUS PROCEEDINGS NO 3365 OF 2016

____________________

IN THE MATTER of section 724(1) of the Companies Ordinance (Cap 622)
and
IN THE MATTER of Harsen Industries Ltd. (凱訊實業有限公司) (“Company”)
____________________

BETWEEN
WONG YEE CHUK（黃宜祝） 1st Petitioner
CHENG WAI KING, PAT（鄭偉琼） 2nd Petitioner

and
LO PO WAI, HARRY（羅保偉） 1st Respondent
PAN SHI LIANG （潘世良） 2nd Respondent
HARSEN INDUSTRIES LTD
（凱訊實業有限公司）		 3rd Respondent

____________________

AND HCMP 3366/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANOUS PROCEEDINGS NO 3366 OF 2016

____________________

IN THE MATTER of section 724(1) of the Companies Ordinance (Cap 622)
and
IN THE MATTER of Harsen (China) Ltd. (凱訊(中國)有限公司) (“Company”)
____________________

BETWEEN
WONG YEE CHUK（黃宜祝） Petitioner

and
LO PO WAI, HARRY（羅保偉） 1st Respondent
PAN SHI LIANG （潘世良） 2nd Respondent
HARSEN (CHINA) LTD
（凱訊(中國)有限公司）		 3rd Respondent
AND HCA 193/2018

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 193 OF 2018

____________________

BETWEEN
HARSEN INDUSTRIES LTD Plaintiff

and
WONG YEE CHUK （黃宜祝） Defendant
____________________
(HEARD TOGETHER)

Before: Hon Harris J in Chambers

Date of Written Submission by the 2nd Respondent: 25 February 2020

Date of Written Submission by the Plaintiff: 25 February 2020

Date of Written Submission by the Petitioners: 27 February 2020

Date of Written Submission by the 1st Respondent: 27 February 2020

Date of Decision: 16 April 2020

_______________

D E C I S I O N

_______________

The application

1. The 2nd Respondent (“Pan”) has issued summonses in each of the above four proceedings seeking orders that the originating process and points of claim be struck out alternatively, the proceedings be stayed save for the purpose of giving effect to an agreement alleged to have been made to settle the proceedings on the following terms:

(i) The Petitioner and Cheng Wai King Pat shall acquire the entire shares of Harsen Industries Limited and Harsen Engineering Limited for free in exchange for transferring the share under the name of the Petitioner in Harsen (China) Limited to the 1st Respondent and 2nd Respondent split in equal share free of any payment so that the same will be fully owned by the 1st Respondent and 2nd Respondent, pursuant to the settlement; and

(ii) The Petitioner and Cheng Wai King Pat shall be fully responsible for all matters in Guangzhou Yibao Electric Equipment Co Ltd (廣州市宜保機電設備有限公司) and Dongguan Yanfan Electric Co (東莞市洋帆機電有限公司), Harsen International Ltd and Takada (China) Ltd, pursuant to the Settlement.

2. The applications were originally to be heard before me on 4 March 2020, but I directed with the agreement of the parties that the applications be dealt with in writing and that an e-bundle be prepared. The e-bundle was not in compliance with my directions and there were also problems with the bundle of authorities. I comment further on this at [26] at the end of this decision. As a result I directed that paper bundles be filed.

Background

3. The three Petitions are all issued by Wong Yee Chuk and, in the case of HCMP 3365/2016 his Wife Cheng Wai King Pat, seeking orders pursuant to s725 of the Companies Ordinance, Cap 622, that his shares in the three relevant companies (with names all starting with “Harsen”) be bought by the other shareholders Lo Po Wai Harry and Pan Shi Liang. The Harsen Group was established in mid-1997 by Mr Wong and Mr Lo when Harsen Industries Ltd was incorporated (the company in HCMP 3365/2016) to carry on business manufacturing and selling electrical products.

4. Mr Wong and his Wife own 50% of Harsen Industries and Mr Wong owns 40% of the other two companies, Harsen Engineering and Harsen China, with Mr Lo owning 40% of each company and Mr Pan owning the 20% of Harsen Engineering and Harsen China and 10% of Harsen Industries. The relationship between the two camps began to break down in 2015 leading to issue of the Petitions in 2016.

5. The High Court Action is a derivative action brought by Hansen Industries at the instigation of Mr Lo and Mr Pan against Mr Wong seeking damages for establishing a competing business in breach of his fiduciary duties as a director and appropriating for his own use certain trademarks. The precise details of the claims in the respective proceedings do not matter.

6. On 17 December 2018 the parties conducted a mediation. It was unsuccessful. On 18 December 2018 Ernest Li & Co (solicitors for the Petitioners in the Miscellaneous Proceedings and the Defendant in the High Court Action) wrote to TKC Lawyers (solicitors for the 1st Respondent in the three Miscellaneous Proceedings) and Fung Wong Ng & Lam (“Fung Wong”) (solicitors for the 2nd Respondent in the Miscellaneous Proceedings and the Plaintiff in the High Court Action) with an offer of settlement. It is necessary to quote largely in full the contents of the letter and the subsequent correspondence, which was exchanged between the three firms of solicitors (each firm receiving each letter).

“We refer to the mediation meeting on 17 December 2018. With a view to further exploring the room of reaching a full and final settlement of the captioned cases, we are instructed to say that our clients are prepared to set out the terms of offer in lieu of litigation so that the matter can be fully settled, particulars please see below:-

a. Our clients shall acquire the entire shares of Harsen Industries Ltd and Harsen Engineering Ltd for free in exchange for transferring the shares under the name of Mr Wong to your respective clients in Harsen China Ltd free of any payment so that the same will be fully owned by your clients respectively;

b. Our clients shall fully responsible for all matters in Guangzhou Yibao Electric Equipment Co Ltd (廣州市宜保機電設備有限公司) and Dongguan Yanfan Electric Co (東莞市洋帆機電有限公司), Harsen International Ltd and Takada (China) Ltd; and

c. Each party shall bear his/her own legal costs and disbursement.

We would like to hear from you in respect the aforesaid on or before 21 December 2018.”

7. On 21 December 2018 Fung Wong replied:

“We write further to our letter dated 19th December 2018 and refer to your letter dated 18th December 2018 marked ‘without prejudice’.

For the purpose to bring the above actions to an early end to save the Court’s time and parties’ costs, please be advised that your clients’ offer (i.e. terms a – c set out in your said letter dated 18th December 2018) in lieu of litigation is accepted by our client.

In light of Harsen China Ltd (which holds the Mainland factory) will be transferred to our client and Mr. Lo after settlement, for avoidance of unnecessary doubt and for clarification purpose, kindly be advised that our client would look forward to take away only ‘Harsen’ trademark with other trademarks left with the other partners.

Please let us by return and at any event within the next 7 days the draft Summonses for the settlement for our consideration.

In the meantime, all rights of our client herein are expressly reserved.”

8. Ms Ip of Ernest Li then phoned Mr Tang of Fung Wong and, Mr Tang says in [17] of his affirmation that the call was very brief, and Ms Ip told him (and I quote from [24] of his affirmation) “her client’s offer could only be accepted in terms a-c set out in the letter dated 18th December 2018, which could be nothing more”. Ms Ip has not filed any evidence to dispute what Mr Tang says. As a consequence of this conversation Mr Tang wrote the 2nd letter Fung Wong sent on 21 December 2018:

“We refer to our letter of even date and the tele-conversation immediately thereafter between your Ms. Ip and our Mr. Tang.

Please be confirmed that:-

For the purpose to bring the above actions to an early end to save the Court’s time and parties’ costs, please be advised that your clients’ offer (i.e. terms a – c set out in your said letter dated 18th December 2018) in lieu of litigation is accepted by our client.

We further agree and confirm that your clients’ offer (i.e. only terms a – c set out in your said letter dated 18th December 2018) which are no less and no more are the only terms agreed by the parties for prompt settlement so to bring the above actions to the end without hiccups.

Kindly let us by return and at any event within the next 7 days the draft Summonses for the settlement for our consideration.

In the meantime, all rights of our client herein are expressly reserved.”

9. A 3rd letter from Fung Wong followed:

“We refer to the above matters AND our 2nd letter of even date and the letter also of even date from Messrs. TKC Lawyers both...

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