MAGNIFICENT MELODY LTD v. LANCO INTERNATIONAL HOLDINGS LTD

HCMP1485/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1485 OF 2012

————————–

IN THE MATTER of LANCO INTERNATIONAL HOLDINGS LIMITED (“the Company”)

and

IN THE MATTER of Section 100 of the Companies Ordinance (Cap. 32, Laws of Hong Kong)

BETWEEN

MAGNIFICENT MELODY LIMITED Applicant/
Plaintiff

and

CHAN JOHN LOONG FAI 1st Respondent/
1st Defendant
NG CHI WO JACKY 2nd Respondent/
2nd Defendant
LANCO INTERNATIONAL HOLDINGS LIMITED 3rd Respondent/
3rd Defendant

AND

HCA1229/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1229 OF 2012

————————

BETWEEN

MAGNIFICENT MELODY LIMITED Plaintiff

and

LANCO INTERNATIONAL HOLDINGS LIMITED Defendant
(Consolidated by Order of Deputy High Court Judge Le Pichon dated the 1st day of November 2012)
————————–

Before: Hon Anthony Chan J in Chambers

Date of Hearing: 29 May 2013
Date of Decision: 29 May 2013

———————

D E C I S I O N

———————

1. This is an application by the plaintiff for summary judgment against the defendants. The carriage of the defence in this actionhas been on the shoulders of the 1st defendant (“Chan”). Chan has been acting in person since 24 May 2013.

2. Yesterday morning, this court received a letter (“Letter”) from Chan stating that he is unable to make himself available forthis hearing. The reason being that he is heavily engaged in resolving the financial troubles of the 3rd defendant (“Lanco”) in the Mainland in his capacity as the Chairman of it and the Legal Representative of a joint venture companyin which Lanco is interested.

3. The Letter also stated that Chan is unable to pay his lawyers. He asked for this hearing to be adjourned for 3 months.

4. Normally, the court would not be receptive to such a late application for adjournment. There is considerable force in the submissionof Mr Barlow, who appears for the plaintiff, that the history of these proceedings indicates unjustified delay attributable to theaction of Chan. However, I should say that whilst the reasons for adjournment are not entirely convincing, the evidence is thatdespite the fact that Lanco is in serious financial trouble (it is in receivership), Chan has been doing what he can to resuscitateit (see Bundle 1, p 71, §7).

5. The most important consideration for the present purpose must be the interest of justice. I must say that the circumstances ofthis case are such that I would not feel that the interest of justice has been served by letting this application be decided in theabsence of Chan.

6. The crux of the dispute in this case concerns the plaintiff’s entitlement in terms of shares in Lanco and payments under 2 writtenagreements (“Agreements”). The plaintiff was, and is, a company owned and controlled by Mr George Chu, who is a practicing barrister. The evidence shows that the Agreements are intricately bound to two loan transactions in favour of Lanco. There is no dispute thatthe loans were procured by Chu and that he was, in accordance with the terms of the loan agreements, handsomely rewarded for hiseffort (Bundle 2, p 424 and 505, cl. 8.3).

7. It is Chan’s case that shortly before the loan transactions were concluded, Chu made unwarranted demands for extra benefits interms of shares in Lanco and payments and threatened that the transactions would go off if his demands were not met. The defendantsyielded to Chu’s demands. Hence, the Agreements are not genuine in that the payments had been disguised as director’s remunerationpayable to Chu. In fact, Chu was not appointed a director of Lanco and did not perform any service which would have entitled himto any such remuneration. One of the key issues raised by the defence is that there was no consideration provided by the plaintiffunder the Agreements.

8. Chan’s case is hotly disputed by Chu. I have yet to hear oral submissions in this application and I should say no more aboutthe merits of the same, save that it is not the function of the court to decide disputed evidence on affidavits.

9. For these reasons, I accede to the application to adjourn this application for 3 months. Given the lateness of the adjournment,the costs of this adjournment must be borne by Chan.

(Anthony Chan)
Judge of the Court of First Instance
High Court

Mr Barrie Barlow, SC and Mr David Chen, instructed by Pang, Kung & Co, for the plaintiff in consolidated action

The 1st defendant in consolidated action was not represented and did not appear