Respondent ’ s oral c losing s ubmissions The applicationMay it please your lordship, As stated in the petition, Petitioner applied for:the 1st Respondent to buy out his shareholding in the 3rd Respondent under section 168A of the Companies Ordinance. Alternatively, under section 177(1)(f) of the Companies Ordinance for the winding up of the 3rd RespondentSeeks an order for the payment of 2009/ 2010 dividends.

1st and 2nd Respondents opposes the petition

I trust that The Law Relating to section 177(1)(f) and s168A of the Companies Ordinance well known; need to go over the law? For the court to order just and equitable winding up under s177(1)(f) under the Companies Ordinance as a quasi-partnership, several criteria should be satisfied:

1.1 company should be formed based on mutual trust and confidence of members,

1.2 understanding that shareholders shall participate in the conduct of the business;

1.3 The transfer of shares in the company is restricted;1.4 There is a breakdown of such mutual trust and confidence

between members, and/or1.5 There is a departure by some members from some unwritten

rights and/or obligations which members had agreed upon during the life of the company, e.g. to manage the company jointly.

Ebrahimi v. Westbourne Galleries Ltd [1973] AC 360.

Winding up order justified where the conduct of management calls for investigation

OR controlling members have precipitated sufficiently grave misconduct.

Re Comtowell Ltd [1998] HKLRD 463Re San Imperial Corporation Ltd (No. 2) [1980] HKC 463

additional requirement that a person seeking just and equitable winding up should come to court with “clean hands”When breakdown in trust and confidence was caused by the petitioner, he cannot insist on a winding up order in his favour. The misconduct in question caused the breakdown.(1) Ebrahimi v. Westbourne Galleries Ltd.

(2) Yeung Bun v. Brio Technology International Limited (HCCW 962/1999)

The Law Relating to section 168A It is established that for this section to apply, the affairs of the company has to be conducted both in an unfair and prejudicial manner.

See: Re Taiwa Land Investment Co Ltd [1981] HKLR227.

would first address the issue of whether there is a quasi partnership, and then the factual issues in dispute. 1st: Whether P Setting up competing business; 2nd committed misconduct in performing job duties 3rd

unauthorized spending on jewels. deal with allegations of 1st Respondent not paying the dividends and allegation of the allotment of shares to dilute P’s shareholding

Whether the Company can be regarded as a quasi-partnership Petitioner should not expect that he has an equal right to manage the affairs of the Company. It was not incorporated for the purpose of enabling the Petitioner to take over his father’s legacy. (Refer to page 12 of bundle) As Petitioner himself said in the affirmation, he had to prove himself to be worthy. See: Affirmation of the 1st Respondent at pages 62-63If the Petitioner is the most able member of the next generation, the Company and hence the Restaurant would be passed on to him.

Your Lordship may recall that the 1st Respondent owned 60% sharholding whereas the Petitioner owned 40% + Petitioner not appointed as director of the Company +The 1st Respondent undertook to train him. Therefore, impossible to regard him as an equal partner at the time of incorporation

Petitioner was still very green in management skills and running of a large restaurant upon incorporationAlthough the Petitioner had been learning from his father as an apprentice chef since he joined the Restaurant in 2001, skills primarily about food preparationmatters such as sourcing food ingredients from suppliers, building customers’ relationships, promotion and marketing, making financial arrangements with banks and financial planning were either taken care of by the Petitioner’s father or the 1st Respondent

See: Affirmation of the 1st Respondent at page 63.

he cannot expect to have any right of management from the outsetSee: Affirmation of the 1st Respondent at page 63.

The Petitioner ’ s setting up of a rival business clear that Yuko Maeda sent an email to the Petitioner discussing her father’s cooperation in business with the Petitioner.See: email from Yuko Maeda, at page 45.

Your Lordship may recall the Petitioner’s evasiveness during trial when asked about what the “new line of business” is. He claimed that it is a trade secret and could not reveal what it is.See: trial transcript at page 106.

no evidence to support the Petitioner’s contention that he held the shares in Akiba-38 on behalf of Takuya Maeda; also no evidence from any Japanese attorney or tax expert that such a purported trust arrangement can effectively avoid tax.

See: extract from May 2011 edition of HK Eating and Style Guru at page 87. On the other hand, the photo with the Petitioner in the shopping mall clearly shows that he has some degree of involvement in the business activities of Kushiro Sushi, and hence Akiba-38.

simplest explanation in light of all the evidence presented before the court, It is submitted that the Petitioner together with Takuya Maeda were setting up a competing business through Akiba-38 (HK) Limited (“Akiba-38”).

During trial, See: trial transcript at page 106. the Petitioner himself admitted that his girlfriend and future father in law are “in the same line of business” and competing with the Company. The Petitioner occupied a high ranking position in the Company as Chief Chef. It is clear that a person who is in an emotional relationship with the Petitioner can influence his decisions and potentially place him in a position of conflict

even according to the Petitioner ’ s own version of facts , being a trustee for Takuya Maeda, he is bound to take care of the interest of his future father-in-law, who is a beneficiary in the shareholding of a competing company. Even if what he does is procedural e.g. receiving $$ from Takuya Maeda to subscribe for new shares etc It is submitted that this in itself already places him in a position of conflict. See: trial transcript at page 104.

Misconduct of the Petitioner justifying dismissal

1st Respondent’s affirmation: only half true that the Petitioner made a special trip to Japan after the March eleventh Earthquake so as to source for new raw seafood supplies. Petitioner anxious to return to Kushiro to see if Yuko was well after the Earthquake; but 1st Respondent required the Petitioner’s help to find substitutes from regions other than north-eastern Japan, where the Restaurant used to source their ocean catches. However, the Petitioner refused to help unless the 1 st Respondent agreed that he could first return to Kushiro to see Yuko , and see “what he could do to help”. consistent with the evidence the main purpose was to see Petitioner’s girlfriend, BUT it did not exclude the possibility that he would be helping the restaurantexplains why during cross examination, Respondent said that P “was telling me that he required the title of “COO” to negotiate with new suppliers so as to replace our old ones.”

Futile for Petitioner to say that he travelled to Kushiro just to see his father the email shows that Yuko and Petitioner are in a relationship.At page 45“Don’t forget our lunch in Obiro today” “Luv, Yuko”

given that the Petitioner was trying to leave the Restaurant (mainly though not entirely) for his personal cause in times of crisis. 1st

Respondent was justifiably furious at the Petitioner’s attitude, Despite warning that he would be permanently replaced if he left this time, the Petitioner looked back and stepped out of the Restaurant, and said that he didn’t care how the Restaurant would be runSee: paragraph 15 of the Affirmation of the 1st Respondent at page 65.

Consistent with 1st Respondent’s evidence in the affirmation that there were previous trips to Kushiro in the 2 years before the Petitioner had been dismissed (i.e. 2009-2011), otherwise improbable that there can be such an emotional relationshipSee: paragraph 11 and 14-15 of the Affirmation of the 1st Respondent at pages 64-65. consistent with email asking for dividend; needed the money for “travelling” email p56 did so even though the restaurant was very busy. On several occasions, despite the 1st Respondent’s disapproval of his leave applications, the Petitioner simply ignored him and asked him to hire a temporary substitute chef to take his place. when the 1st Respondent declined his leave, the Petitioner insisted flying to Kushiro and notified the 1st Respondent only by telephoning him that he was about to board his flight at the airport.

See: paragraph 12 of the Affirmation of the 1st Respondent at page 64.

though 1st Respondent tolerated the Petitioner’s behavior because of uncle/ nephew relationship Restaurant’s business suffered. had to hire less experienced sushi chef on short notice to manage the sushi bar offended some of its longstanding customersSee: at page 64. paragraph 13 of the Affirmation of the 1st

Respondent

In view of Petitioner’s behavior, despite subsequent actions that he took to obtain supply from Takuya Maeda in Kushiro, it is submitted that the dismissal of the Petitioner is justified in the circumstances. There is no “ulterior motive” on the 1st Respondent’s part to cause him to dismiss the petitionerSee: paragragh 16 of the Affirmation of the 1st Respondent at page 65.1st Respondent’s termination of the arrangement with Takuya Maeda after 2 shipments is a commercial decision; the commercial decision does not absolve the Petitioner from his misconduct. See: Trial transcript at page 108.

Unauthorized spending on jewelstrue that the 1st Respondent taught the Petitioner to be generous and harmonious to family members. But Yet Respondent did not authorize him to use company money to buy the diamond ring and pearl. In any event, such an extravagant purchase would be far beyond the normal expectation of generosity towards relatives given the Petitioner’s and both Respondent’s family resources. See: (1) trial transcript at page 109 of the bundle.

(2) Credit card statements at pages 74-75.

Improbable for the 1st Respondent to ask the Petitioner to use company funds to buy jewels for 2 reasons. - 1st: 60% of the money used to purchase the diamond ring and pearls indirectly belongs to the 1st Respondent through the Company as majority shareholder. For any purchase 60% is indirectly out of his own pocket. Being the majority shareholder, the financial incentive for him to ask the Petitioner to spend company money on jewels for his own family members is not as strong as it first appears to be- 2nd: if a shareholder wants to use company funds for his own private purpose, it would be most strange for him to tell the other shareholder to do that for him

also, improbable that dividends would be used for “repaying” the unauthorized withdrawal (page 99); rather is used for “travelling” (p 56)More probable version of events is that although the 1st Respondent taught the Petitioner to be generous and harmonious to family members, it was not a licence authorizing him to use company funds for buying jewels. As a result, the jewels were probably bought for the Petitioner’s girlfriend.

The alleged failure to pay dividends to the Petitioner can be inferred that the dividends were paid to the Petitioner’s mother based on the email correspondence between the Petitioner and the 1 st

Respondent. The only way that the Petitioner and his mother’s interest can be “taken care of” and put into good use is to give the dividends as declared by the board, unless P is saying that his uncle is dishonest

See: email correspondence between the Petitioner and the 1st

Respondent at page 55 of the trial bundle.

Submitted that nothing strange that the 1st Respondent cannot recall the amount of dividend in question during trialThe dividends relates to amounts paid around more than 2 years ago. Without the accounts in front of the 1st Respondent when being cross-examined, one could hardly expect him to remember the exact amounts.

Petitioner did not receive the amount himself, +Respondent said that he has paid all of them to the Petitioner’s mother, the inference to be drawn is that the 1st Respondent did paid the sum to the Petitioner’s mother, with an expectation that the remaining 50% would be paid back to the Petitioner. This is consistent with the 1st Respondent’s affirmation.

See: (1) paragraph 35-36 of the affirmation of the 1st Respondent at page 70 to 71 of the bundle

(2) Trial transcript at page 110.

Further allotment in shares2 The Petitioner had failed to appreciate the gravity of the Company’s

financial situation brought about by the 311 Earthquake. The Company’s bank statement dated 31 March 2011 showed that its bank balance fell by around $500,000 in less than a month’s time.

easy to criticize in hindsight, but at a time of unprecedented crisis, as your Lordship may recall the events post March 11 Earthquake

submitted that justifiable the 1st Respondent perceived the need to inject more working capital into the Company. The Company had difficulty borrowing from banks at the time as they were all skeptical about the prospect of Japanese restaurants, given the confidence crisis. allotting new shares and actually injecting CASH was the only practical method to raise further finance. email at page 45 shows that Petitioner still in Japan in late April, probably the reason why he could not receive notice of EGM

See: (1) Paragraphs 31-32 of the affirmation of the 1st Respondent at page 69 of bundle.

(2) Trial transcript at page 110-111.

Conclusionthe 1st Respondent humbly invites this Honourable Court to (1) reject granting an order for winding up sought by the Petitioner, and (2) to refuse a buy out order refuse the order to pay dividends

in case that the court does not find conduct of the petitioner so wrongful as to refuse relief, the respondents would invite the court to order a buy out of the Petitioner’s shares. Affirmation of RespondentCosts:Costs follow event if P wins, no submission as to cost If R wins, cost to R on party and party basis