Zhi Charles v. The Stock Exchange of Hong Kong Ltd and Others

HCA 1618/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1618 OF 2016

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BETWEEN

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D E C I S I O N

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1.This is the 2^nd application for interlocutory injunction by the plaintiff (Zhi) in this action. In June 2016, he made an application for similar relief against all 16 defendants in this action. That application was heard and dismissed by Mr Justice G Lam with indemnity costs to those defendants who appeared at the hearing, including the 2^nd defendant (SMG) and the 10^th defendant (JH) which is the auditor of SMG (see Decision dated 30 June 2016).

2.In September 2016, there was another similar interlocutory injunction application by Zhi against all 12 defendants in another action, HCA 2397/2016.  JH is the 10^th defendant in that action.  That application was also dismissed by Mr Justice G Lam with costs (see Decision dated 23 September 2016).

3.The present application concerns only SMG and JH.  The injunctive relief relates to the use of a technical report referred to as the “HASS Reports”.

4.Zhi is a small shareholder of SMG, a company listed in Hong Kong, holding less than 1% of its shares.  He has a long battle with SMG and its management over the acquisition of a coal mine in Russia which took place in 2008.  The HASS Reports were used in support of certain contingent payment of part of the purchase price of the acquisition by way of a 3^rd Convertible Note (CN3) issued in April 2013. 

5.A good summary of the acquisition can be found in a Decision of Deputy High Court Judge Le Pichon dated 4 October 2016 (Decision) in yet another action arising from the acquisition, HCA 2694/2015. Although that action was initiated by 2 other shareholders of SMG, who had acquired their shares 2 months before the action, there are good reasons to believe that there was connection between those plaintiffs and Zhi (see paras 61 and 62 of the Decision).  Pursuant to the Decision, the action was struck out with indemnity costs to most of the defendants. 

6.As noted in para 62 of the Decision, Zhi has issued no less than 14 actions against SMG seeking to undermine the Convertible Notes issued in the acquisition.  A Restricted Proceedings Order was made against Zhi by Mr Justice G Lam on 20 June 2016 (see Siberian Mining Group Co Ltd v Zhi Charles [2016] 4 HKLRD 88).  However, this action is not covered by the Order.  The likely reason is that these proceedings had not been served when the Order was made (see §14 at p 92). 

7.The abuse by Zhi of the resources of the court is breathtaking, and cannot be allowed to continue.  For this reason alone, this application must be rejected.

8.Further, CN3 was issued more than 3½ years ago. The staleness of the subject matters of complaint is another good reason to reject this application.

9.Furthermore, I have great difficulty understanding the cause of action which Zhi may have against SMG and JH in this action. There is a strike out application on foot by the defendants against Zhi’s claims.  I shall therefore refrain from commenting further on Zhi’s cause(s) of action. 

10.However, even if there is a viable cause of action, I am unable to see any irreparable harm for which Zhi cannot be compensated by damages, which may justify the grant of an interlocutory injunction.

11.Accordingly, this application is dismissed, and I shall hear the parties on costs.

The plaintiff appeared in person

Ms Roberta Chan of Baker & McKenzie, for the 2^nd defendant

Mr Edward T C Chan, instructed by C K Chan & Co, for the 10^th defendant