Lee v Chou Wen Hsien
| Jurisdiction | UK Non-devolved |
| Court | Privy Council |
| Judgment Date | 1984 |
| Year | 1984 |
| Date | 1984 |
Company - Director - Removal - Articles of company requiring director to vacate office on request by co-directors to resign - Whether power conferred on directors fiduciary - Validity of request - Whether expelled director entitled to bring personal action
The plaintiff and the first seven defendants became directors of the eighth defendant company upon its incorporation in Hong Kong in 1972. Article 73(d) of the articles of association provided that the office of a director was to be vacated if he was requested in writing by all his co-directors to resign. In 1982 the plaintiff became concerned about the sale of the company's holdings in certain subsidiary and associated companies, and he asked the company secretary to convene a board meeting. Two days before the date of the meeting the plaintiff was given a notice pursuant to article 73(d) requesting his immediate resignation. By a writ of summons issued against all eight defendants in the High Court the plaintiff in his personal capacity claimed declarations that the notice was invalid and of no effect, and that he remained a director. The defendants applied for the writ to be struck out and the action dismissed on the grounds, inter alia, that the action was irregularly constituted and the writ disclosed no reasonable cause of action. Fuad J. dismissed the action and the plaintiff's appeal was dismissed by the Court of Appeal.
On the plaintiff's appeal to the Judicial Committee: —
Held, dismissing the appeal, that, although directors exercising their power under article 73(d) had to act in the best interests of the company and not for ulterior reasons, the provisions of article 73(d) required the office of director to be vacated immediately the holder received a notice in writing signed by all the other directors; and that, even if one or more directors had acted for ulterior reasons, the plaintiff's expulsion from the board was effective and his action claiming that it was void was misconceived (post, pp. 1206F–G, H–1207A, B).
Per curiam. The ordinary principles of Foss v. Harbottle (
The following cases are referred to in the judgment of their Lordships:
Bodega Co. Ltd., In re [
Foss v. Harbottle (
The following additional cases were cited in argument:
Allen v. Gold Reefs of West Africa Ltd. [
Estmanco (Kilner House) Ltd. v. Greater London Council [
Hayes v. Bristol Plant Hire Ltd. [
Hindle v. John Cotton Ltd. (
Legion Oils Ltd. v. Barron (
Pulbrook v. Richmond Consolidated Mining Co. (
Smith (Howard) Ltd. v. Ampol Petroleum Ltd. [
Wright v. Prescot Urban District Council (
APPEAL (No. 51 of 1982) with leave of the Court of Appeal of Hong Kong by Samuel Tak Lee (the plaintiff appellant) from a judgment of the Court of Appeal of Hong Kong (Cons and Zimmern JJ.A. and Hooper J.) given on 9 July 1982 dismissing an appeal by the plaintiff from an order made by Fuad J. in the High Court on 20 May 1982 striking out the general endorsement of the writ of summons dated 15 May 1982 and dismissing the action by the plaintiff against the respondent defendants, Chou Wen Hsien, Chow Chung Kai, Ann Tse Kai, Gaw Siong Chwan, Hsin Ting Chia, Hy Ca Fee, Cheng Wei Shue and Ocean-Land Development Ltd.
The facts are stated in the judgment of their Lordships.
Michael Sherrard Q.C. and Robert Rhodes for the plaintiff.
Richard Sykes Q.C. and Robert Kotewall (of the English and Hong Kong Bar) for the defendants.
31 July. The judgment of their Lordships was delivered by LORD BRIGHTMAN.
In this appeal the plaintiff, Mr Samuel Tak Lee, who became a director of Ocean-Land Development Ltd. upon its incorporation in 1972, seeks to retain his seat on the board in the face of expulsion by his co-directors in purported pursuance of a power in the articles.
Ocean-Land Development Ltd. (“Ocean-Land”) was incorporated in Hong Kong. It had an issued share capital of over H.K.$60,000,000 divided into shares of one dollar each. The shares are quoted on the Hong Kong stock exchange. The plaintiff is the registered holder of 248,000 shares. The company is principally a holding company, operating in shipping, real estate, mining and investments through some 23 subsidiary and associated companies. At the relevant time there were seven other directors. Under the articles of association a director, who needs no share qualification, is appointed...
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