Li Guozhu v. New Century Iatrical Inv. Management Ltd and Others

HCMP 3353/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 3353 OF 2014

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DECISION

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I. INTRODUCTION

1.This is an application by the 2^nd, 3^rd and 4^th respondents by way of summons dated 15 April 2015 for an order staying all proceedings in the petition presented by the petitioner on the ground of forum non conveniens.  The background of the matter can be summarised as follows.

2.In May 2004, the petitioner, the 2^nd to 4^th respondents and 8 other individuals, all 12 of whom were residents of the Mainland, came together and decided to form a business venture by way of investing in and operating a hospital (which I shall simply call “the hospital”) in Bao Ying County, Jiangsu Province.  In order to benefit from the tax and other incentives offered by Mainland authorities to Hong Kong investors, these individuals agreed that a company would be incorporated in Hong Kong for the purpose of their business venture to invest in turn in a joint venture to be set up between the company and the relevant local government authority of Bao Ying County.  The 1^st respondent is the company that was eventually set up, which I shall refer to below simply as “the company”.

3.Accordingly, on 27 May 2004, the 12 individuals entered into an agreement called the “Cooperation Agreement” for that purpose.  The terms of the Cooperation Agreement are of considerable importance to this application and I shall set out the more important terms below.

Preamble:

(2):   “A company named ‘香港新世紀醫療投資管理有限公司’ will be incorporated in this investment project.”

(3):   “The cooperation is subject to PRC Company Law.”

(4):   “The parties to the agreement may not in principle withdraw from the agreement.  However, if any party obstructs the company’s development due to personal reasons or prejudices the company’s interest, the chairman of the board and the general manager may ask the board to deal with the matter or determine whether the relevant party should be ordered to withdraw from the agreement with his total investment returned to him together with interests at the fix rate of 6% per annum but without any additional subsidy or condition.  However, no party may withdraw when the company is making a loss.”

(8):   “The formation of the company is premised on a successful raising of capital for the hospital and is to prepare for listing on the Hong Kong stock market.”

Clause 1:   “This Cooperation Agreement is made on the basis of the provisions of the PRC Company Law.”

Clause 30:“Matters such as increase of capital or subscription of new shares by any director shall be governed by the PRC Company Law.”

Clause 38:“Any matters not covered by the agreement shall be implemented in accordance with the requirement of the PRC Company Law.”

Clause 41:“While standardised articles of association may be adopted in accordance with local registration requirements when the company is set up, such articles shall not represent our true intentions.  In the event of any legal dispute in connection with the joint venture, such dispute shall be governed by this agreement.”

4.The Cooperation Agreement also set out the shares of investments of the 12 individuals in the company.  In particular, it was stated that the petitioner, the 2^nd, 3^rd and 4^th respondents each has 100 out of 700 shares.  The agreement treated shareholders synonymously with directors and provided that the 12 individuals were all directors of the company.  

5.Pursuant to the Cooperation Agreement, the company was incorporated in Hong Kong on 11 June 2004 as a private company limited by shares.  

6.From the outset, however, the number of shares taken by the 12 individuals as subscribers as shown in the documents filed in the Companies Registry did not accord with the proportion of investment set out in the Cooperation Agreement mentioned above.  Thus, for example, 2,500 shares were subscribed to by the petitioner and 1,000 shares were subscribed to by each of the 2^nd, 3^rd and 4^th respondents.  The total number of issued shares was 10,000 shares.  

7.On 15 November 2004, pursuant to the Cooperation Agreement, the company entered into a joint venture agreement with the Health Bureau of Bao Ying County to operate the hospital for a term of 20 years.  Broadly speaking, the company has a 70% interest in the hospital under the joint venture agreement.  The hospital has been operated as a partnership between the company and the Health Bureau and has not been incorporated with any separate legal personality.

The petition

8.The matters complained of by the petitioner in these proceedings dated from 2009 and maybe broadly summarised as follows. The petitioner says that while he had entered into agreements with all the other investors in the company except the 2^nd to 4^th respondents for the petitioner to purchase their shares in the company in around 1 August 2009, the 2^nd to 4^th respondents secretly and in breach of the provisions on pre-emption rightsin the Cooperation Agreement sought to sell their shares in the company to 3 individuals named Jiang, Xiao and Mao.  Further, two meetings were held on 25 and 26 August 2009 respectively at which resolutions were purportedly passed for the company to raise capital and allot new shares to the 3^rd respondent, the 4^th respondent and one Mr Cui and for the petitioner to be removed as a director of the hospital and as the General Administrator of the hospital. The petitioner also complains that the 3^rd respondent purportedly entered into agreements with the other investors who had already agreed to sell their shares to the petitioner to purchase the shares.  On the strength of the resolutions passed on 25 and 26 August 2009, the petitioner was removed and excluded from the management of the company and the hospital while Jiang assumed the position of General Administrator of the hospital.

9.In January 2012, following the determination of certain proceedings by Mainland courts, the petitioner was reinstated as the General Administrator of the hospital.  It appears from the petition that from then on no further act had been done by the respondents that amounted to the conduct of the affairs of the company in a manner unfairly prejudicial to the petitioner.  The petitioner alleges that the initial cooperation was a quasi-partnership and that, as a result of the conduct of the 2^nd to 4^th respondents, there had been a complete breakdown of trust and confidence between him on the one hand and the 2^nd to 4^th respondents on the other.  The petitioner is concerned that the 2^nd to 4^th respondents may cause further damage and disruption to the company’s business in future.  

10.On this basis, the petitioner claims the following reliefs in the petition:

(1)   a declaration that the petitioner is the registered owner of 70% of the shareholding of the company;

(2)   an order for the 2^nd to 4^th respondents to sell to the petitioner all of their shares in the company “(and/or in accordance with paragraph 4 of the preamble of the Cooperation Agreement) at a fair value to be determined by court and/or in accordance with any consequent directions on valuation as to be determined by court”;

(3)   damages to be assessed in respect of the unfairly prejudicial conduct of the company’s affairs by the 2^nd to 4^th respondents, in particular in relation to the alleged misappropriation of the funds of the hospital by Jiang while he acted as General Administrator;

(4)   interest on all sums found to be due to the petitioner at such rate and for such period as the court thinks fit; and

(5)   such further or other relief as the court may deem fit.

11.At this point, I should mention that there was a previous set of proceedings (HCA 2023/2009) brought by the petitioner in Hong Kong in September 2009 seeking an injunction to restrain the implementation of the resolutions passed in August 2009 including that for the appointment of Jiang as the General Administrator of the hospital.

12.An ex parte injunction was obtained by the petitioner as plaintiff in that action on 29 September 2009, which was continued on 9 October 2009, at a stage when only the company among the numerous defendants had been served with the proceedings.  In dealing with an application by Jiang to discharge the injunction in March 2010, the late Deputy High Court Judge Carlson said in his judgment dated 23 March 2010 at paragraphs 21-22:

“21.   In this case, I am of the view that the Plaintiff should not be allowed to punch from a distance by obtaining an injunction in Hong Kong against the Hong Kong Defendant [i.e. the company] and seeking to bind all the other overseas defendants and yet not serving them with the writ.

22.   In this discretionary jurisdiction, I propose to discharge the effects of the injunction against D10 [i.e. Jiang] for this reason alone but additionally, I also propose to discharge it because it seems to me that the proper place to litigate this dispute is before the appropriate court at Bao Ying.  Everything that has happened in this case happened there.  The hospital is there.  The parties are there and the law governing the dispute is there.  These individual defendants should be pursued in those courts and not in this one.  The court at Bao Ying is best place to decide what PRC law says about these various transactions and how best to apply the appropriate remedies.”

The respondents have, not surprisingly, relied on this ruling and I shall deal with the arguments at a later stage.  

13.I should also mention that from around September 2010 onwards, a number of actions have been instituted in the courts in the Mainland by the parties against each other with the involvement of additional parties in some of the proceedings. I shall mention some of these actions below as far as they are relevant for present purposes.

The application

14.The 1^strespondent in these proceedings, ie the company, is of course located for present purposes in Hong Kong but the 2^nd to 4^th respondents are Mainland residents with no presence or residence in Hong Kong.  For reasons that are not entirely clear, however, their solicitors accepted service of the petition herein on their behalf without making any reservation of right.  Accordingly, while the summons seeks an order for setting aside service of the petition, alternatively, an order for stay of proceedings, Mr Alan Ng, who together with Ms Jane Ho appeared on behalf of the 2^nd to 4^th respondents, accepted that the pertinent application is one for stay of proceedings on the ground of forum non conveniens. 

15.As is well established, the principles governing the two kinds of applications are similar although there is a difference in respect of the burden of proof.  While these proceedings are not an action begun by writ but a petition for relief under s 724 and s 725 of the Companies Ordinance (Cap 622), it is common ground that this in itself does not take these proceedings outside the scope of the forum non conveniens principle as set out in Spiliada Maritime Corporation v Cansulex Ltd[1987] AC 460 and the cases that have followed it: see In re Harrods (Buenos Aires) Limited[1992] Ch 72, 126C.[1]  There are features of this statutory relief which Mr Samuel Chan and Mr Dennis Kwok, who appeared on behalf of the petitioner, prayed in aid, but they did so in the context of the application of the established principles rather than in any contention that those principles do not apply.  

16.There is equally no dispute regarding the correct framework for the analysis.  It mayconveniently be taken from the summary of a three-stage process in The Lanka Muditha [1991] 1 HKLR 741 at 744:

“(I) Is it shown that Hong Kong is not only not the natural and appropriate forum for the trial, but that there is another available forum which is clearly or distinctly more appropriate than Hong Kong ...

(II) If the answer to (I) is yes, will a trial at the other forum deprive the plaintiff of any legitimate personal or juridical advantages. The evidential burden here lies on the plaintiff.

(III) If the answer to (II) is yes, a court has to balance the advantages of (I) against the disadvantages of (II) ...  Deprivation of one or more personal or juridical advantages will not necessarily be fatal to the applicant provided that the court is satisfied that notwithstanding such loss substantial justice will be done in the available appropriate forum ....  Proof of this ... rest upon the applicant for the stay.”

17.The principles have been restated in a similar form by the Court of Appeal in DGC v SLC (née C) [2005] 3 HKC 293, 297 and affirmed by the Court of Final Appeal in SPH v SA (2014) 17 HKCFAR 364 at §51, where the courts emphasised that:

“The single question to be decided is whether there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of an action i.e. in which the action may be tried more suitably for the interests of all the parties and the ends of justice”.

18.So far as the connecting factors with the trial of the dispute are concerned, it seems to me plain that they favour the Mainland courts as a forum.  All the individuals concerned are Mainland residents.  The Cooperation Agreement was entered into in the Mainland and is plainly a contract governed by PRC law albeit not necessarily the PRC Company Law.  The company was merely the formal vehicle through which the investment was conducted, with no real business activity in Hong Kong.  The business of the company has been the operation of the hospital.  The hospital is in Bao Ying County.  It is a partnership with the Health Bureau of Bao Ying County governed by a joint venture agreement entered into in the Mainland and governed by PRC law.  The agreements dated around 1 August 2009 for the transfer of other investors’ shares to the petitioner were governed by PRC law.  The acts and events complained of in the petition took place for the most part in the Mainland.  While there is a complaint in the petition about the conduct of HCA 2023/2009 on the part of the respondents, that seems to me to be a matter of the conduct of litigation in Hong Kong rather than conduct of the affairs of the company.

19.The petitioner argued, however, that the court in Bao Ying County is not an available forum for the resolution of the dispute embodied in the petition because the Bao Ying court, as a matter of PRC law, has no jurisdiction in this matter.  The argument is based on the new PRC Civil Procedure Law, which came into effect on 1 January 2013, Article 26 of which provides:

“因公司設立、確認股東資格、分配利潤、解散等糾紛引起的訴訟，由公司住所地人民法院管轄。”

(Translation: An action instituted for a dispute arising from formation, shareholder eligibility confirmation, profit distribution, dissolution or any other matter of a company shall be under the jurisdiction of the people’s court at the place of residence of the company.)

The petitioner also relied on Article 259, which provides:

“在中華人民共和國領域內進行涉外民事訴訟，適用本篇規定，本篇沒有規定的，適用本法其他有關規定。”

(Translation: The provisions of this Part shall apply to foreign-related civil actions within the territory of the People’s Republic of China. Where this Part is silent, other relevant provisions of the Law shall apply.)

The petitioner further relies on Article 22 of the Supreme People’s Court’s Interpretation of the Civil Procedure Law, effective on 4 February 2015, which provides:

“因股東名冊記載、請求變更公司登記、股東知情權、公司決議、公司合併、公司分立、公司減資、公司增資等糾紛提起的訴訟，依照民事訴訟法第二十六條規定確定管轄。”

(Translation: For a lawsuit filed due to a dispute over any record in the register of members, request for change of any registered item of a company, the right to know of shareholders, a resolution of a company, or combination, division, capital decrease or capital increase of a company, the people’s court with jurisdiction shall be determined in accordance with Article 26 of the Civil Procedure Law.)

20.It was argued that because the company is located in Hong Kong and because the disputes between the parties, which are the subject matter of the petition, fall within the scope of the matters referred to in Article 26 of the Civil Procedure Law (being disputes over the confirmation of shareholders’ status), the Bao Ying court has no jurisdiction to deal with such matters by virtue of that article.

21.I am unable to accept this argument.  I prefer the opinion of the respondents’ expert, Professor Zhang Xianchu, on this point.  Article 26, as its terms suggest, is a domestic provision.  Its purpose seems to me to be to provide which People’s Court in the Mainland should have jurisdiction over the matters that fall within the scope of that article.  It presupposes that the company has a location in the Mainland itself.  Article 26 does not stipulate that no court in the Mainland shall have jurisdiction in relation to the kind of matters referred to in that article in the case of a company incorporated outside the Mainland.  Instead, it seems to me that relevant guidance may be sought from Article 551 of the Supreme People’s Court’s Interpretation which provides:

“人民法院審理涉及香港、澳門特別行政區和台灣地區的民事訴訟案件，可以參照適用涉外民事訴訟程序的特別規定。”

(Translation: Where a people’s court tries a civil lawsuit involving Hong Kong SAR, Macao SAR and Taiwan China, the special provisions of the procedure for civil proceedings involving foreigners or foreign affairs shall be referred to and applicable.)

22.The provisions of Civil Procedure Law on foreign-related cases are to be found in Part 4 of the Civil Procedure Law.  In particular, Article 265 within that Part makes provision for the basis for Mainland courts to assume jurisdiction where a defendant is not located in the Mainland, which seems to me apt to cover a case concerning a foreign company that has no presence in the Mainland.  That article provides:

“因合同纠纷或者其他财产权益纠纷，对在中华人民共和国领域内没有住所的被告提起的诉讼，如果合同在中华人民共和国领域内签订或者履行，或者诉讼标的物在中华人民共和国领域内，或者被告在中华人民共和国领域内有可供扣押的财产，或者被告在中华人民共和国领域内设有代表机构，可以由合同签订地、合同履行地、诉讼标的物所在地、可供扣押财产所在地、侵权行为地或者代表机构住所地人民法院管辖。”

(Translation: Where an action is instituted against a defendant which has no domicile within the territory of the People’s Republic of China for a contract dispute or any other property right or interest dispute, if the contract is signed or performed within the territory of the People’s Republic of China, the subject matter of action is located within the territory of the People’s Republic of China, the defendant has any impoundable property within the territory of the People’s Republic of China, or the defendant has any representative office within the territory of the People’s Republic of China, the people’s court at the place where the contract is signed or performed, where the subject matter of action is located, where the impoundable property is located, where the tort occurs or where the domicile of the representative office is located may have jurisdiction over the action.)

23.An examination of the petition shows that the essence of the unfair prejudice complained of by the petitioner consists in various breaches of the Cooperation Agreement.  The petition is in essence unmistakably an adversarial claim in which the petitioner, on the basis of alleged acts of the respondents which, on his case, infringed the Cooperation Agreement and constituted conduct of the affairs of the company in a manner unfairly prejudicial to himself, seeks various reliefs including a declaration as to ownership of shareholding, an order for the compulsory purchase of the respondents’ shareholding and damages.  

24.I reject the petitioner’s argument that the Bao Ying court lacks jurisdiction generally to deal with an action of this nature, which is not made out on the basis of the evidence on PRC law.  There is an issue as to whether an order for the compulsory purchase or sale of shares is an available remedy that can be granted by the Bao Ying court, but it seems to me that that is a separate question which is more properly to be considered in the second stage of the analysis, in particular in terms of whether the petitioner would enjoy a juridical advantage in the proceedings in Hong Kong which would not be available to him in any proceedings brought in the Bao Ying court.  

25.So far as the second stage of the analysis is concerned, it is common ground between the experts that there is in PRC law no power for the Mainland courts to order a compulsory sale of shares as a legal remedy in its company law.  The respondents argued, however, that an equivalent order may, in this case, be made in the form of specific performance of contract on the basis of paragraph 4 of the preamble of the Cooperation Agreement.  It was argued that that provision imposes an obligation to withdraw from the company, and hence to sell one’s shares at the specified rate of return, under certain circumstances.  It was further argued that that obligation can be specifically enforced by an order of a Mainland court akin to a decree of specific performance granted by a Hong Kong court.  It was said, therefore, that the availability of an order for purchase or sale of shares under ss 724 and 725 of the Companies Ordinance does not amount to a juridical advantage that the petitioner would lose if he was prevented from pursuing his petition in Hong Kong and left to institute proceedings in the Bao Ying court.  

26.The problem with that argument, as I see it, is that, assuming such obligation under paragraph 4 of the preamble can be enforced specifically by the Bao Ying court, with a result similar to a “buyout order” under the Companies Ordinance, that obligation does not arise according to the terms of paragraph 4 of the preamble until (i) the chairman of the board and/or the general manager name a person to be considered for being required to withdraw from the company, and (ii) the board decided to require such person to leave the company.

27.It is common ground that the petitioner was appointed the chairman of the board by a resolution on 6 August 2009 and remains to date in that position.  It was counsel’s consensus at the hearing that the position of general manager had remained vacant.  There was some suggestion in correspondence after the hearing that the petitioner may in fact also be the general manager, but the evidence is inconclusive.  In any event, assuming either (i) the chairman alone without the concurrence of the general manager may initiate the machinery in the preamble by naming a person to be considered for expulsion, or (ii) the petitioner is both the chairman and general manager, it is doubtful that the petitioner can cause the board to pass a resolution to require the respondents to withdraw from the company and sell their shares against their wishes.  

28.This is because under the Cooperation Agreement, the shareholders are regarded as the directors of the company.  There are provisions in the Cooperation Agreement in relation to proceedings of directors that require board resolutions to be passed by specified majorities both in terms of voting rights, which depend on shareholding in the company, and in terms of a headcount (see clauses 14(2) and 16(2)).  On the respondents’ own case, it appears that there are now only 4 shareholders and hence 4 directors in the company, namely, the petitioner and the 2^nd, 3^rd and 4^th respondents.  It does not seem to me that, in these circumstances, the petitioner can invoke the machinery in paragraph 4 of the preamble against the respondents at all if they oppose it for lack of a majority on a headcount under clause 16(2)(v).  Unless the requisite decision has been made by the board, on the face of the terms of paragraph 4 of the preamble, the person specified by the chairman and/or general manager is under no obligation to retire from the company and sell his shares.  On that footing, there would be nothing for the Mainland court to enforce by way of specific performance as a matter of contract law.

29.It follows that the remedy that the petitioner seeks under ss. 724-725 of the Companies Ordinance, based on the conduct of the affairs of the company, in the form of an order that has the effect of severing the ties between parties and releasing the petitioner from the shackles of co-ownership of the company, will not be available in the Baoying court.

30.This of course is not conclusive.  The availability of a juridical advantage to the plaintiff in the local forum does not necessarily mean that the action should not be tried in the court of another jurisdiction that is otherwise the appropriate forum: Spiliada, p. 482.  The test is not whether the plaintiff can obtain a particular form of relief it desires in the other jurisdiction, but whether or not it can obtain substantial justice there.  As Lord Goff said in Connelly v RTZ Corporation plc [1998] AC 854, 872-873:

“… Some guidance was given in the Spiliada case at pp. 482 et seq. as to the impact of specific advantages which the plaintiff might derive from the English jurisdiction, if a stay was not granted, viz., damages on a higher scale; a more complete system of discovery; a power to award interest; a more generous limitation period. From the discussion which followed, a general principle may be derived, which is that, if a clearly more appropriate forum overseas has been identified, generally speaking the plaintiff will have to take that forum as he finds it, even if it is in certain respects less advantageous to him than the English forum. He may, for example, have to accept lower damages, or do without the more generous English system of discovery. The same must apply to the system of court procedure, including the rules of evidence, applicable in the foreign forum. This may display many features which distinguish it from ours, and which English lawyers might think render it less advantageous to the plaintiff. Such a result may in particular be true of those jurisdictions, of which there are many in the world, which are smaller than our own, and are in consequence lacking in financial resources compared with our own. But that is not of itself enough to refuse a stay. Only if the plaintiff can establish that substantial justice cannot be done in the appropriate forum, will the court refuse to grant a stay: see the Spiliada case, at p.482. ”

See also de Dampierre v de Dampierre [1988] AC 92, 110.

31.An important object of the present action is to sever the ties between the parties.  This could be achieved by a winding up order or an order for the sale and purchase of shares under ss. 724-725 of the Companies Ordinance.  On the evidence, neither remedy can be obtained from any Mainland court. 

32.Nor, for the reasons explained above, can a contractual decree to enforce paragraph 4 of the preamble of the Cooperation Agreement realistically serve the purpose.  The respondents’ submission that the petitioner should be left to rely on the “buy-out mechanism” in the Cooperation Agreement rings hollow on the facts.  This is not a case such as Re a Company (No. 004377 of 1986) [1987] BCLC 94 where the machinery in the articles for the exit of a shareholder from the company is readily available as an effective option.

33.Legal proceedings could be and indeed have been brought by the parties in the Mainland for adjudication on their ownership of the company, and it may be that any finding made between the parties by the Mainland courts will give rise to issue estoppel binding upon the parties, so that to that extent the scope of the issues in the petition will be reduced.  As a matter of fact, the People’s Court of Yang Pu District in Shanghai had given judgment in favour of the respondents confirming that each of the 2^nd to 4^th respondents held 1/7 of the shareholding of the company (instead of 1/10 as shown in the annual returns in Hong Kong).  This ruling was upheld by the Second Intermediate People’s Court in Shanghai on 22 July 2015.  The petitioner has lodged a further appeal which is pending in the Higher People’s Court of Shanghai.  Nevertheless, it is common ground that there is no proceeding on foot in the Mainland that could lead to a compulsory severance of the relationship between the parties as co-investors in the company and hospital.

34.In contrast to the focus of the Mainland proceedings, the jurisdiction of the Hong Kong court under s. 725 is not only retrospective but also prospective.  In a petition complaining against unfairly prejudicial conduct, the court is not only concerned with righting a wrong or compensating for conduct in the past, but also potentially with regulating the company and its affairs for the future: Koy Holdings Corp v Spider Knitters Ltd [1998] 1 HKLRD 788, 790E; Grace v Biagioli [2006] BCC 85 at §73; Re Asia Television Ltd [2015] 1 HKLRD 607 at §58. 

35.In the circumstances of this case, the presence of the power in Hong Kong to make orders effecting a severance of the relationship between the parties is in my view of considerable importance. Without such remedy, the petitioner would not be able to put an end to the common venture despite all trust and confidence among the parties had, on his case, broken down because of the respondents’ conduct.  In the context of this case I think it may be said that he would not be able to obtain substantial justice outside Hong Kong to deal with the prospective relationship between the investors.  This is not at all a comment on the quality of justice that can be obtained from the Mainland courts but a consequence of the limits of the jurisdiction of the Mainland courts with regard to a company incorporated in Hong Kong.

36.In this respect the present case is readily distinguishable from In re Harrods (Buenos Aires) Limited, supra.  There, the minority shareholder of an English company sought an order that the majority shareholder buy its shares at a price adjusted to give compensation for the majority shareholder’s wrongdoing, alternatively a winding up order.  Albeit incorporated in England, the company in question carried on business in Argentina where all the connecting factors were located.  The majority of the English Court of Appeal held that the proceedings in England should be stayed. It is clear from the judgments that the court placed considerable weight on the fact that a winding up could be granted in Argentina (p.127A) and that the minority shareholder could recover in Argentina against the majority shareholder damages for loss caused by the majority shareholder’s wrongdoing, including damages for any loss sustained on the sale of the company’s business or assets during winding up (p. 126F).  On that basis Stocker and Bingham LJJ thought it had not been shown that the relief obtainable in England was significantly better than the relief in Argentina, still less that it would be unjust to confine the petitioner to its remedies in Argentina (p. 123A, 126H).  For the reasons that I have already given, the same could not be said in the present case.

37.Mr Ng further submitted that a petition by a majority shareholder such as the petitioner in this case can only succeed in exceptional circumstances, and that the concept of “unfair prejudice” is not apt to encompass prejudice from which the person whose interests are said to be prejudiced can readily rid himself: Re Baltic Real Estate Ltd (No. 2) [1993] BCLC 503, 507g; see also Re Legal Costs Negotiators Ltd [1999] 2 BCLC 171, 197.  However, although the petitioner does appear to hold a majority of the shareholding in the company (70% on his own case and 4/7 on the respondents’ case), the Cooperation Agreement contains provisions which prima facie mean that the respondents retain at least negative control on the board.  The respondents have not conceded that the petitioner has majority control over the company, nor have they gone so far as to contend that even if it was not stayed, the petition would be liable to be struck out on the ground that there was no prospect of the court granting the relief sought to the petitioner.  In these circumstances I do not think that it can be said that the petitioner’s claim for buy-out relief is doomed so that the availability of such relief in Hong Kong in principle can be discounted as a factor in deciding the present application.

38.For the foregoing reasons the 2^nd to 4^th respondents’ summons is dismissed. 

39.So far as costs is concerned, while the petitioner is successful in the outcome, I have in substantial parts upheld the respondents’ contentions in relation to PRC law and the relevant expert evidence.  Accordingly I make an order nisi that the 2^nd to 4^th respondents do pay the petitioner 70% of his costs, to be taxed if not agreed.

Mr Samuel Chan and Mr Dennis W H Kwok, instructed by Messrs. K Y Lo & Co, for the petitioner

The 1^st respondent was not represented and did not appear

Mr Alan M S Ng and Ms Jane T C Ho, instructed by Messrs. Yip, Tse & Tang, for the 2^nd‑4^th respondents