LAU CHO KWAN, LEO AND ANOTHER v. CORNWALL AGENCY CO LTD AND OTHERS

LAU CHO KWAN, LEO AND ANOTHER v. CORNWALL AGENCY CO LTD AND OTHERS

The court held that P1, as a director, is entitled to inspect the undisputed categories of company documents because the statutory and common law right to inspect is broad and not defeated by the respondents' allegations of improper purpose absent clear proof; the contested Dismissal and Indemnity Costs summonses were dismissed as either premature, misconceived or inappropriate; costs orders and directions were made proportionately to reflect unreasonable conduct by plaintiffs' advisers and to govern further steps including confirmation of the 47 bundles and undertakings on privilege.

Citation
[2020] HKCFI 2779
Parties
Plaintiff / 1st Petitioner: Lau Cho Kwan, Leo; Plaintiff / 2nd Petitioner: Lau Betty, Barbara; 1st Defendant / 1st Respondent: Lau Siu Fan, Elaine; Company / 2nd Defendant / 8th Respondent: Cornwall Agency Company Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
2 November 2020
Case Number
HCA1144/2020
Procedural Posture
Company Inspection, Derivative Action and Just and Equitable Winding Up Proceedings Under the Companies Ordinance / Interlocutory Hearing and Decision on Multiple Summonses Including Inspection, Strike Out and Costs; Directions for Further Substantive Hearing If Necessary
Outcome
Originating summons partly allowed in relation to undisputed documents; disputed categories subject to undertakings and confirmations; Indemnity Costs Summons dismissed; directions given for affirmations, costs orders nisi made and parties directed to proceed to substantive hearing if necessary
Legal Topics
Director Inspection Rights, Derivative Action, Winding Up Petition, Costs After Discontinuance, Statutory Interpretation of Companies Ordinance S.374 S.375 S.740
Source Language
EN
Company Law Civil Procedure Equity Costs Director Inspection Rights Derivative Action Winding Up Petition Costs After Discontinuance +1 more

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Parties

Lau Cho Kwan, Leo

Plaintiff / 1st Petitioner

Lau Betty, Barbara

Plaintiff / 2nd Petitioner

Lau Siu Fan, Elaine

1st Defendant / 1st Respondent

Cornwall Agency Company Limited

Company / 2nd Defendant / 8th Respondent

Procedural Posture

Company Inspection, Derivative Action and Just and Equitable Winding Up Proceedings Under the Companies Ordinance / Interlocutory Hearing and Decision on Multiple Summonses Including Inspection, Strike Out and Costs; Directions for Further Substantive Hearing If Necessary

Legal Issues

  1. 1 Whether a director is entitled to inspect company documents sought by originating summons under ss 374, 375 and 740 of the Companies Ordinance
  2. 2 Whether the inspection application was made for an improper collateral purpose
  3. 3 Whether the court has jurisdiction to order statutory declarations as sought in the originating summons

Ratio Decidendi

The court held that P1, as a director, is entitled to inspect the undisputed categories of company documents because the statutory and common law right to inspect is broad and not defeated by the respondents' allegations of improper purpose absent clear proof; the contested Dismissal and Indemnity Costs summonses were dismissed as either premature, misconceived or inappropriate; costs orders and directions were made proportionately to reflect unreasonable conduct by plaintiffs' advisers and to govern further steps including confirmation of the 47 bundles and undertakings on privilege.

Court Disposition

Originating summons partly allowed in relation to undisputed documents; disputed categories subject to undertakings and confirmations; Indemnity Costs Summons dismissed; directions given for affirmations, costs orders nisi made and parties directed to proceed to substantive hearing if necessary

Orders

  • P1 entitled to inspect the undisputed categories of company documents (the 47 Bundles) subject to the undertaking on confidentiality and legal privilege accepted by the court
  • Elaine and Rose directed to file an affirmation confirming the 47 Bundles comprise all documents in the company's possession or custody within the scope of the undisputed categories