Acropolis Limited Suing on behalf of Itself and All Other Shareholders in Aeso Holding Ltd and Another v. W&Q Investment Ltd and Others

HCA 1496/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1496 OF 2017

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BETWEEN

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J U D G M E N T

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Introduction

1.The present action arises out of disputes over the acquisition of shares by various defendants in a company called Aeso Holdings Limited (“Company”) which was listed on the GEM Board of Hong Kong Stock Exchange on 13 January 2017. Its trading has been suspended since 12 June 2017.

2.There are essentially two warring camps of shareholders of the Company, one headed by P2/Chan Siu Chung (“Jones Chan”) and the other by D2/Liu Chang Kien (“Wilson Liu”), and I shall refer to their respective camps as Chan’s Camp and Liu’s Camp.

3.The shareholders of the Company are:

(i) P1/Acropolis Limited (“Acropolis”) of which Jones Chan is the sole beneficial owner, holds 38.25% of the shares in the Company;

(ii) D1/W&Q Investment Limited (“W&Q”) of which Wilson Liu is the sole beneficial owner, holds 36.75% of the shares in Company.

(iii) The remaining 25% shares in the Company are held by subscribers to whom shares were placed in the listing exercise (“Placees”) and members of the investing public.

4.The disputes between the two camps have already given rise to no less than 8 sets of proceedings[1].

5.In this derivative action, Acropolis on behalf of the shareholders of the Company and Jones Chan (collectively “Ps”) are seeking various declarations, including that (1) the acquisition of the shares in the Company by W&Q and D5-D9 (“Requisitionists” as they are later called in this judgment) are null and void and of no legal effect; (2) that an extraordinary general meeting purportedly held on 12 June 2017 (“Disputed EGM”) is invalid and void ab initio, and the resolutions purportedly passed thereat (“Disputed EGM Resolutions”) are of no effect; and (3) that resolutions purportedly passed by the board of the Company in reliance of the Disputed EGM Resolutions are invalid and void ab ignitio and are of no effect.

6.Originally, there were 14 defendants, and on 17 August 2017, Ps had issued a summons to seek sought leave to further amend the injunction order they are seeking, and also to add D15 and D16, namely 2 companies which were subsidiaries of the Company, Aeschylus Limited (“Aeschylus”) and Aeso Limited (“Aeso HK”) to the writ in this action[2]. There was no opposition to the proposed amendments from those legally represented defendants present at the hearing before this court.  I so grant leave.

7.Of the defendants, those in Liu’s Camp, apart from W&Q and Wilson Liu, are D3/Zhang Qi (“Zhang”) a director of W&Q, and D4/ Law Wing Kit (“WK Law”), an old friend and also associate of Wilson Liu, were the two non-executive directors of the Company until their purported removal by the Removal Notices, as defined below in this judgment, but have since been re-appointed at the Disputed EGM.  3 of the defendants, D10-D12, are independent non-executive directors appointed under the Disputed EGM Resolutions (“Disputed INEDs”).  The Disputed EGM was held at a requisition dated 13 April 2017 (“Requisition”) issued by D5-D9 who held an aggregate of 10.825% of the shares in the Company at the date of the Requisition (“Requisitionists”).  As for D13/Daniel Kan Pui Kei (“Daniel”), as seen later in this judgment, he played an important role in the listing of the Company.  The Company, Aeschylus, and Aeso HK are the remaining defendants (collectively “Group”).

8.There are 3 summonses before this court:

(1)  A summons issued on 26 June 2017 (as amended) by Acropolis, on behalf of the Company, and Jones Chan seeking, among other things, to restrain Liu’s Camp, the Disputed INEDs, and the Group, until the determination of the parties’ dispute or further order, from relying on and/or carrying out into effect:

(i) The Disputed EGM Resolutions purportedly passed at the Disputed EGM;

(ii) The resolutions passed by the purported board of the Company (“New Board”) in reliance of the Disputed EGM Resolutions;

(iii) The resolutions purportedly passed and/or to be passed by Zhang, WK Law and the 3 Disputed INEDs purportedly appointed under the Disputed EGM Resolutions (“New Directors”) and by the purported board of Aeschylus and Aeso HK, in reliance on or deriving their authority from, whether directly or indirectly, resolutions passed purportedly by the New Directors.

(“Injunction Summons”)

(2)  A cross summons issued by W&Q on 10 August 2017 seeking, among other things, to restrain Jones Chan, until the determination of this action or further order, from holding himself out as having authority to carry out act(s) on behalf of each of the Group, without the authorization of the respective board of directors, and/or directly or indirectly obstructing resolutions from time to time passed by the respective board constituted pursuant to the Disputed EGM Resolutions of the Group.

(“Cross Summons”)

(3)  A summons issued by the Company, Aeso HK, Zhang, and Chan Kin Wing against Jones Chan and others on 7 August 2017 under HCMP 1721/2017 for production and/or inspection of certain documents of the Company (“Production Summons”).

9.The Injunction Summons was first heard on 30 June 2017 before Au Yeung J.  Having heard the parties’ submissions, and upon undertakings of Liu’s Camp, the Requisitionists and the Disputed INEDs (i) not to remove Jones Chan from the New Board of the Company or the board of any subsidiary of the Company including Aeso HK; and (ii) not to remove Jones Chan as a signatory of all the bank accounts of the Company and its subsidiaries, Au Yeung J declined to grant Ps’ application for an “interim” interim injunction.  She gave oral reasons for her ruling (“30.06.17 Ruling”), and gave directions for the Injunction Summons to be fixed for a substantive argument.  The Cross Summons was later issued by W&Q.

10.The Production Summons was issued for urgent inspection of  operational and financial information/documents of the Company, said to be for 3 purposes, (i) to file evidence in response to the Receivership Summons  issued under HCMP 1647/2017 issued by a company and alleged creditor of Aeso HK called Dragon Success Enterprise Limited (“Dragon Success”) against the Company, the details of which will be set out later in this judgment; (ii) Zhang and Chan Kin Wing, as directors of the Company and Aeso HK, required the financial and operational information to operate and manage the Company and Aeso HK’s business; and (iii) the Company needed the information to prepare audited financial reports for the year ended 31 March 2017 (due since 30 June 2017) and quarterly report for 3 months ended 30 June 2017 (due since 15 August 2017).

11.The Production Summons was first heard before Lisa Wong J on 11 August 2017, who gave a decision the same day allowing only those documents urgently required for (i) above, and adjourning the rest of the Production Summons to this hearing before this court (“11.08.17 Decision”).

12.The present summonses focus on the Disputed EGM, and the Disputed EGM Resolutions, namely the control of the board of the Company, pending determination of the parties’ dispute in this action.  

13.Mr Clifford Smith SC and Mr Kerby Law appeared on behalf of Ps, Mr Anson Wong SC, Mr Richard Yip, Ms Isabel Tam and Ms Tara Liao appeared on behalf of Lius’ Camp and Mr Jeffrey Tam and Mr Ian Chau appeared on behalf of the Disputed INEDS and the Requisitionists.

14.The Injunction Summons was served on Daniel, although he was not one of the defendants against whom an order was sought.  He was not represented in this action and did not appear at the hearing before this court. The Company, Aseschylus and Aeso HK were not separately represented and were absent at the hearing. 

15.The Disputed INEDs are said to be neutral and they have indicated that they will act in accordance with their legal duties and will abide by whatever this court deems appropriate, but they reserve the right to correct any unfair factual allegations made against them.  

16.The Requisitionists oppose Ps’ Injunction Summons and support Wilson Liu’s Cross Summons.

Background

17.The single most valuable asset of the Company is the 1 share (representing the entire issued share capital) in Aeschylus, a BVI company, which in turn holds Aeso HK, a Hong Kong company carrying on the business of fitting-out and renovation, of which Jones Chan was the founder.  Aeso HK is the sole operating arm of the Group and the cash cow of the Group.

18.Jones Chan established Aeso HK together with 3 partners in 2008 and in February 2009, he became the sole owner of Aeso HK.   

19.As for Wilson Liu, he said he used to work for Morgan Stanley Asia Limited in 2011 to 2012, and in late 2013, he set up his own investment business with his own financial resources with a view to focusing on long-term investment projects, including listed equities and pre-IPO investment.

20.According to Jones Chan, in around October 2015, through his acquaintance Mr David Leung (“David”), a consultant of Anglo Chinese Corporate Finance Limited (“Anglo Chinese”), he met Daniel, who was at that time a Responsible Officer and an Assistant Director of Anglo Chinese,  to explore the opportunity of applying for a public listing for Aeso HK.  Jones Chan was later informed that Aeso HK’s results met the listing requirements and that the listing expenses would be around HK$20m and that Daniel could introduce a pre-IPO investor to him to provide funds for the listing expenses.

21.It was not disputed that in around November 2015, Daniel   introduced Wilson Liu to Jones Chan at a meeting at which David was also present.

22.It was Jones Chan’s case that at the meeting, he and Wilson Liu reached an understanding that[3] :

(i) Wilson Liu would provide Aeso HK with the listing expenses (estimated to be around HK$20m); and

(ii) Wilson Liu would not intervene in the operation of Aeso HK and the subsequent entity that it will be listed as.

23.On the other hand, according to Wilson Liu, he was offered by Jones Chan that he could invest around HK$20m in his group of companies and in return he would have a 49% shareholding in the holding company proposed to be listed, and that it was agreed that Wilson Liu would be a passive investor and that he would hold no directorship in the company to be listed, unless the circumstances were to change substantially[4].

24.The preparation for the listing application commenced in around December 2015.  The other joint book runner, joint lead manager and underwriter with Anglo Chinese for the listing was Dongxing Securities (Hong Kong) Company Limited (“Dongxing”). 

25.According to Jones Chan, he had little connection with the finance circle and that Dongxing was recommended to him by Daniel.  So far as Wilson Liu was concerned, he said Dongxing was chosen by Jones Chan with the assistance of Anglo Chinese, and that he had no prior business dealings with Dongxing and that he first met the responsible person of Dongxing together with Jones Chan in December 2015 at the office of Anglo Chinese. 

26.Anyway, as part of the re-structuring for the listing, the Company was incorporated on 10 December 2015 in the Cayman Islands with its sole share transferred to Jones Chan, and on 16 December 2016, Aeschylus was incorporated in the BVI with its sole share allotted and issued to Jones Chan.  Subsequent thereto, full ownership of Aero HK was transferred to Aeschylus which then became a wholly-owned subsidiary of the Company.

27.As for Wilson Liu, W&Q was incorporated on 29 January 2016 as a BVI company which was used as the investment holding vehicle for his pre-IPO investment in the Company.

28.Pursuant to the subscription agreements and a supplemental agreement entered into among Acropolis, W&Q, and the Company, 4,900 shares in the Company were allotted and issued to W&Q at HK$19,913,600, and as a result, the Company was owned by 51% by Acropolis and 49% by W&Q, prior to the listing of the Company.

29.The listing of the Company took place by way of private placing, instead of a public offering.  According to Jones Chan, such a course of action was adopted at the suggestion and advice of Daniel and that when Jones Chan asked Daniel whether they would carry out any roadshows for promoting the placing of the shares to investors, he was told by Daniel that it would not be necessary as he would be able to find the eligible investors and underwriters for the Company[5].

30.4 firms were appointed by Dongxing as sub agents (“Placing Agents”) to procure subscribers for 50m shares placed by the Company (“Placing Shares”), and the Placing Shares represent 25% of the issued share capital.  The Placing Agents then placed the shares to various persons (“Placees”). 

31.The allotment of the 50m Placing Shares was completed on 12 January 2017 to the Placees.  49m out of the 50m Placing Shares were allotted to one of the Placing Agents, Cinda International Securities Co Ltd (“Cinda”), as nominees for some of the Placees.

32.When the shares were placed with the Placees, letters of independence were issued by each of the Placing Agents to confirm that the Placees and their ultimate beneficial owners are third parties independent of the Company, which Jones Chan said he and Acropolis relied on.

33.The Company was eventually listed on 13 January 2017 and at the date of the listing, the composition of the board of directors was:

(i) Jones Chan, chairman and executive director;

(ii) Mr Cheung Hiu Tung (“HT Cheung”), executive director;

(iii) Zhang and WK Law, 2 non-executive directors nominated by Wilson Liu through W&Q;

(iv) Mr Lee Chi Chung, Mr Or Chun Man and Mr Leung Ka Kui, Johnny, 3 independent non-executive directors (“Initial INEDs”).

34.According to Jones Chan, the following matters happened after the listing:

(i) Soon after Listing, On 19 January 2017, he had a meeting with Daniel and David during which he was told by Daniel that Wilson Liu would like to buy all his shares in the Company for HK$100m, but about HK$40m should be deducted being the proceeds of the Placing (“Placing Proceeds”),which according to Daniel the Placing Proceeds were the investment of Wilson Liu;

(ii) Jones Chan said he was surprised to hear that the Placing Proceeds were financed by Wilson Liu, and he rejected the offer telling Daniel that selling a “listing shell” was not his purpose for the listing;

(iii) On 9 March 2017, he had another meeting with Daniel and David, during which he was told by Daniel that Wilson Liu was still interested in the above deal, but this time he was willing to pay HK$100m, without deducting the Placing Proceeds of HK$40m;

(iv) Jones Chan said he again rejected the offer;

(v) During the meeting on 9 March 2017, Daniel had also mentioned that Wilson Liu considered that the Company should keep the Placing Proceeds in the Company, instead of transferring the same to Aeso HK as the Placing Proceeds were the investment of Wilson Liu, and that if the Placing Proceeds were to be transferred to Aeso HK then Wilson Liu needed to control the board of the Company;

(vi) Jones Chan said he disagreed, as the Placing Proceeds should be used by Aeso HK, being the only operating subsidiary of the Company and the Group, as disclosed in the Prospectus dated 30 December 2016 (“Prospectus”)[6] and the public announcement for the listing.

35.Wilson Liu had in his affirmation denied all the above allegations and said he did not have any meetings with Jones Chan, Daniel or David on 19 January 2017 or on 9 March 2017.  He denied that he had ever indicated that he was interested in buying out the shares of Jones Chan in the Company[7]. He had never suggested that the Placing Proceeds belonged to him and that they belonged to the Company.  He had further said that Jones Chan had already utilized a substantial portion of the Placing Proceeds, including an “objectionable transfer” of HK$15.9m from the Company to Aeso HK on 23 March 2017.

36.Then, 3 months to the date of the listing, the Requisition was suddenly made to the Company by the Requisitionists, requiring the Company to convene an extraordinary general meeting for the purpose  of passing resolutions to (i) remove all the 7 directors which were at that time on the board of the Company; and (ii) appoint 5 new directors[8]. 

37.Although Jones Chan said the Requisition was peculiar, an announcement was duly made by the board on 18 April 2017 giving notice of the receipt of the Requisition[9], and further on 2 May 2017, the board gave public notice pursuant to the Company’s articles of association of the extraordinary general meeting to be held at 6 pm on 12 June 2017[10].

38.Ps considered that the Requisition peculiar in that there had been no prior grievance expressed to the board and no reason was given for the replacement of all the members of the board.  Upon receipt of the Requisition, Jones Chan said he complained about Daniel’s conduct to the Co-Managing Director of Anglo Chinese, Mr Christopher Howe (“Howe”) and he had also instructed Anglo Chinese to investigate.  Daniel later resigned from Anglo Chinese on about 30 April 2017. 

39.The Requisitionists were collectively represented by Yu Ming Investment Management Limited (“Yu Ming”).  As part of the investigation, on 5 May 2017, Anglo Chinese had written to Yu Ming raising certain questions and concerns on the part of the Company[11].  However, Yu Ming did not provide the information sought by Anglo Chinese.

40.A meeting was held on 17 May 2017 between Mr Dennis Cassidy (“Cassidy”), Head of Corporate Finance, and Mr Wade Ho of Anglo Chinese, and Mr Warren Lee (“Warren Lee”) of Yu Ming (“17.05.17 Meeting”).  Notwithstanding this meeting, according to Jones Chan, the Company still did not know why the Requisitionists issued the Requisition, or the intentions of the Requisitionists.  There were notes of the 17.05.17 Meeting prepared by Mr Wade Ho which were produced by Ps (“Meeting Notes”)[12], which will be set out later in this judgment.

41.On 18 May 2017, Wilson Liu wrote to the Securities and Futures Commission (SFC) complaining about the “serious misconduct” committed by Jones Chan and Anglo Chinese[13] (“18.05.17 Letter”), alleging, among other things, that Jones Chan and Anglo Chinese had used various unlawful means to coerce him to sign a letter of undertaking to vote against all the resolutions proposed by the Requisitionists at the extraordinary general meeting.  Wilson Liu also claimed that his private detectives had discovered that his car was being bugged and tagged with a GPS machine and that a report had been filed with the police and that he had received threatening telephone calls from Howe.

42.On 19 May 2017,  Zhang, as non-executive director of the Company, instructed Bong Ng Solicitors to send a letter to the Company, among other things, denying that W&Q was in any way connected with the Requisitionists and, proposing a new resolution be added to remove Anglo Chinese as financial advisor to the Company[14].

43.On the same day, Jones Chan, as chairman of the board, sent a letter to SFC to ask for urgent intervention to direct the Stock Exchange to suspend trading in the Company’s shares and to apply to stay the forthcoming extraordinary general meeting on 12 June 2017 (“19.05.17 Letter”)[15].  The 19.05.17 Letter, was prepared by Anglo Chinese on behalf of the Company and contained as Appendix 1, a “Background check update III” prepared by Anglo Chinese (“AC Report”).

44.According to the 19.05.17 Letter, the Requisitionists held a total of 10.825% at the date of the Requisition[16] and their shareholding  plus Wilson Liu’s 36.75% will take the total to 46.58%.  Further, the Company stated that they had good reasons to believe that an analysis of the share register of the Company would show that Wilson Liu’s attributable shareholding and the Requisitionists when combined would exceed 52% of the Company’s shares triggering a mandatory general offer under the Takeovers Code.

45.The Enforcement Division of SFC sent a reply to the 19.05.17 Letter on 1 June 2017 to say there was insufficient evidence to provide a reasonable basis for SFC to investigate under the Takeovers Code or take any urgent action (“01.06.17 Letter”)[17].  There followed further communications from Anglo Chinese to SFC and there were two subsequent letters dated 12 June 2017 and 23 June 2017 sent by the External Relations Corporate Affairs Department of the SFC[18], indicating they were then looking into the Company’s complaint. 

46.Anglo Chinese had also engaged a private investigator Steve Vickers and Associates Limited (“SVAL) to carry out an investigation in respect of the relationship among Liu’s Camp and the Requisitionists and the proposed new directors.  SVA submitted its 1^st draft report dated 29 May 2017 (“1^st SVAL Report”)[19], and a further report dated 23 June 2017[20] (“2^nd SVAL Report”, which together with the 1^st SVAL Report are referred to as “SVAL Reports”).  It is Ps’ case that these reports show a web of connections between Liu’s Camp and the Requisitionists and the Disputed INEDs.  

47.On 24 May 2017, W&Q issued a derivative action under HCA 1277/2017 against Jones Chan, HT Cheung and the 3 Initial INEDs for alleged breach of fiduciary duties, and Anglo Chinese and the Company both named as defendants as well, but the writ was not yet served on any party.

48.On 31 May 2017, Jones Chan found out the following:

15 March 2017	21,650,000 shares held under Cinda were  removed from CCASS and on 20 March   2017, the same number of shares were    registered respective in the names of the Requisitionists
11 May 2017	3,305,000 shares held under Cinda were removed from CCASS and transferred to two persons Wang Kie and Lam Cheuk Yu respectively
17 May 2017	5,100,000 shares held under Cinda were removed from CCASS and transferred to  another person Zhang Chenwei
(Wang Kie, Lam Cheuk Yu and Zhang Chenwei collectively referred to as “3 Minority Shareholders”)

49.On 31 May 2017, Anglo Chinese had sent a further letter to SFC[21] to report on their suspicion of the above share transfers being related to the Requisition.  According to the analysis of Anglo Chinese, the above transfers to the 3 Minority Shareholders together with the shareholding of W&Q would make up a total of 51.78% of the share capital of the Company and could easily secure any resolutions to be passed at the extraordinary general meeting.

50.It is Ps’ case that there is a conspiracy perpetuated by Liu’s Camp and the Requisitionists to seize control of the Company.

51.On 8 June 2017, for fear that the extraordinary general meeting would be proceeded by Liu’s Camp and the Requisitionists, Acropolis filed its proxy form to vote against the proposed resolutions.  2 of the Initial INEDs resigned on 8 June 2017 and Ye Wenxin (“Ye”) and Wang Aisheng (“Wang”) were purportedly appointed as INEDs in their place by Chan’s Camp.  The only remaining of the Initial INEDs was Mr Lee Chi Chung (“Lee”).

52.There was then a flurry of activities on 9 June 2017, including the following :

(i) An announcement was issued by Zhang, as “Chairman and Non-executive Director” of the Company, without Jones Chan’s knowledge or approval of the board, that the newly appointed INEDs, namely Ye and Wang, were subject to removal in accordance with a proposed resolution at the extraordinary general meeting;

(ii) Chan’s Camp then served a notice of the board meeting to remove Zhang and WK Law as directors, and at 7 pm that day, 5 members of the then board signed a letter notifying Zhang and WK Law of their removal as directors (“Removal Notices”)[22];

(iii) W&Q issued another derivative action under HCA 1357/2017 against Jones Chan, HT Cheung, Lee, Wang and Ye for alleged breach of fiduciary duties and to invalidate the appointment of Wang and Ye.  On the same day, W&Q obtained an ex parte injunction to restrain the 5 directors from exercising any of their powers as director of the Company until the conclusion of the forthcoming extraordinary general meeting.  The 5 directors claimed that they were not aware of any hard copy or soft copy of this injunction until 12 June 2017.  This ex parte injunction was later discharged about a month later.

53.Further various reports were made to the police by the Company including false and misleading information concerning one of the proposed new directors and also on Zhang’s alleged access to the Company’s computer.

54.Conflicting announcements from the Company then followed on 11 and 12 June 2017 as to whether the Disputed EGM was to proceed or to be postponed.  The venue of the extraordinary general meeting was to be held at the premises of Orange Financial Printing Limited where there were several rooms.  The room where the extraordinary general meeting was to be held was, according to Jones Chan, the Lamborghini Room.

55.Jones Chan and Zhang gave conflicting versions as to what happened at the venue on 12 June 2017.  Zhang said Jones Chan had sent over a large group of unknown persons who occupied the Lamborghini Room. Police was also called at one stage to maintain order.  Jones Chan claimed he was prevented to enter the Mai Tai Room where the Disputed EGM was eventually held, but this was denied by Zhang who had produced a contemporaneous video recording of the venue at the material times[23].

56.Anyway, to add to the commotion, there was also a typhoon and according to Jones Chan, typhoon signal no 8 was hoisted at around 5:20 pm and that he was told the venue had to be vacated at 6:20 pm.

57.According to a letter dated 14 June 2017 issued to SFC by Zhang as chairman on behalf of the Company[24], the Disputed EGM was eventually held at about 6:10pm and Boardroom Share Registrars (HK) Limited, the Company’s branch share registrar, acted as scrutineer for the vote-taking of the resolutions, and that one of the Requisitionists, namely D8/Mr Chan Hin Hai Henry (“Henry Chan”) volunteered to be the chair.  According to this letter, the Disputed EGM ended at about 6:40 pm.

58.The Disputed EGM Resolutions were passed, and the gist of the results was that the New Board appointed consists of:

(i) Jones Chan, who was voted to remain on the New Board;

(ii) HT Cheung, the other executive director was removed;

(iii) Zhang and WK Law were appointed;

(iv) The only remaining Initial INEDs Lee was removed, and so were Ye and Wang;

(v) The 3 Disputed INEDs were appointed.

59.In particular, Zhang and WK Law of Liu’s Camp were appointed notwithstanding the Removal Notices served on them on 9 June 2017.  The resolution to remove Jones Chan failed, and he has remained a director but HT Cheung of Chan’s Camp was removed.

60.Thereafter, the New Directors purported to act upon the Disputed EGM Resolutions to carry out the business of the Company and/or the Group as directors of the Company, including (i) making announcements regarding the removal and appointment of directors; (ii) forming an “internal control committee”; (iii) changing composition of the audit committee, remuneration committee and nomination committee; (iv) appointing Zhang and a Mr Yeung Chi Fai as authorized representatives of the Company, and (v) appointing Zhang as the sole authorized signatory of all the existing bank accounts of the Company and any of its subsidiaries.

61.Further on 23 June 2017, the New Directors convened a board meeting of the Company to engage Harneys Westwood & Riegels as the Company’s legal representatives and to remove Jones Chan from the board of directors of Aeschylus and Aeso HK and to appoint new directors for the two companies.

62.The present action and the Injunction Summons were then commenced by Ps on 26 June 2017.

63.On 26 June 2017, Harneys Service (Cayman) Limited, the Company’s registered agent, had indicated in a letter that the register of directors and officers of the Company would not be updated until the dispute between Ps and Ds on the validity of the Disputed EGM was properly resolved.  However, as no “interim” interim injunction was made by Au Yeung J on 30 June 2017, the register of directors has been updated on 5 July 2017 by the registered agent to reflect the New Board of the Company;

64.After the 30.06.17 Ruling, a number of events took place:

“(i) On 4 July 2017, the Company received a letter dated 3 July from KL Gates (“KLG”), solicitors acting for Dragon Success referring to a purported loan facility agreement entered into by the Company with Dragon Success dated 8 June 2017 (“Loan Facility Agreement”) pursuant to which Dragon Success had advanced to the Company a total sum of about HK$34.8m, and that under the Loan Facility Agreement, Dragon Success may immediately demand repayment of the drawn down sums in the event the trading of the Company’s shares is suspended for more than 15 business days or there is change in, among other things, the Company’s management[25];

(ii) On 4 July 2017, Liu’s Camp called a board meeting and passed resolutions appointing Zhang as a director of Aeschylus and to require Jones Chan to provide all the books, records, bank statements, online password and/or token of all bank accounts of Aeso HK within 2 days;

(iii) On 5 July 2017, Liu’s Camp called a board meeting and passed resolutions that no repayment was to be made under the Loan Facility Agreement without written approval of all the members of the New Board and requiring Jones Chan to provide the draft of all financial records of the Company to all the New Directors within 7 days;

(iv) On 5 July 2017, Zhang sent a letter to KLG demanding a copy of the Loan Facility Agreement. On the same day, Jones Chan sent a letter purportedly on behalf of the Company to KLG acknowledging the alleged debt and requested for extension of time to repay, indicating that the Company had cash flow problems;

(v) On 6 July 2017 Zhang sent an email to Jones Chan and the Financial Controller of the Company Chiu Fu Keung (“Chiu”) requesting them to provide books and records of the Company within 7 days;

(vi) On 6 July 2017, Liu’s Camp called a board meeting and passed resolutions that all documents to be executed by the Company are to be signed by two directors of the Company, and all cheques to be signed and all bank accounts to be operated by two authorized signatories of the Company. Later that day, Liu’s Camp called a board meeting of Aeschylus to appoint two additional directors both of surname Chan (“Chans”) on the board of Aeso HK.

(vii) On 7 July 2017, the Chans called a board meeting of Aeso HK and passed various resolutions including adding the Chans as account signatories of all bank accounts of Aeso HK;

(viii) On 10 July 2017, Liu’s Camp called a board meeting and passed various resolutions including adding Zhang and another to be the authorized signatories of the Company’s bank accounts with HSBC;

(ix) On 11 July 2017, Zhang said she learnt from the registered agent of Aeschylus that they received a letter dated 10 July 2017 from Sabals Law, lawyers purportedly acting for Aeschylus that Jones Chan had executed a purported share charge of the 1 share in Aeschylus on 8 June 2017 in favour of Dragon Success to secure the loan facility of HK$50m under the Loan Facility Agreement.

(x)  On 13 July 2017, the Chans called a board meeting of Aeso HK and passed resolutions including adding the Chans as authorized signatories of Aeso HK’s accounts with HSBC and BEA and change the signing arrangement to allow any two of the authorized signatories to sign jointly to operate those accounts.  On the same day, a nomination committee of the Company appointed Zhang as an executive director on the New Board and 2 further board meetings were called by Liu’s Camp to add Zhang and another as authorized signatories of the Company’s accounts with HSBC and to change the signing arrangement to allow any two of the authorized signatories to sign jointly.”

65.Jones Chan had attended the above various board meetings, as observer and he challenged the directorship of Zhang and the Chans.  He remained silent during voting of the resolutions.

66.Further, according to Jones Chan, there had been a serious of unlawful harassing acts between 10 and 18 July 2017 at the Company’s premises, the office of his then solicitors Tang Tso and Lau and the chambers of his then Counsel Mr Laurence Li, Temple Chambers, with defamatory posters displayed with Jones Chan’s and Laurence Li’s names thereon. 

67.The above events led to further legal proceedings.  In fact, after the 30.06.17 Ruling, there have been a further 5 sets of proceedings commenced as follows[26]:

“(i) On 10 July 2017, a defamation action, namely HCA 1624/2017 was commenced by Wilson Liu against Jones Chan for defamatory remarks made by the latter;

(ii) On 12 July 2017, Acropolis filed a petition in HCCW 218/2017 against Liu’s Camp, the Requisistionists, the 3 Disputed INEDs, the 3 Minority Shareholders and the Company, seeking an order that the Disputed EGM and the Disputed EGM Resolutions be declared null and void ab ignitio and of no legal effect, the subscription of shares by W&Q and the Requisitionists and the other two subscribers be declared null and void and of no legal effect, or alternatively the Company be wound up;

(iii) On 21 July 2017, an action was commenced by Dragon Success under HCMP 1647/2017 against the Company for recovery of loans advanced to the Company under the Loan Facility Agreement and secured by the Share Charge, and a summons was issued on 31 July 2017 by Dragon Success to appoint interim receivers in respect of the 1 share in Aeschylus (“Receivership Summons”);

(iv) On 24 July 2017, an action was commenced by the Company and W&Q under HCA 1737/2017 against Dragon Success, Jones Chan and HT Cheung for, among other things, a declaration that the Loan Facility Agreement and the Share Charge are null and void and for Jones Chan to provide all the books and records of the Company and to deliver the proceeds obtained under the Loan Facility Agreement, and further, the Company and W&Q obtained an ex parte injunction on 24 July 2017, which was later continued by Lisa Wong J on 28 July 2017 (“1737 Injunction”).

(v) On 4 August 2017, HCMP 1721/2017 was commenced by the Company and Zhang and others against Jones Chan and others for production and inspection of books and record of the Company and Aeso HK, and as seen earlier , it was under this action, the Production Summons was issued.

68.The Receivership Summons has now been fixed for a substantive hearing before Au Yeung J on 1 September 2017.

The applicable principles

69.The relevant principles for interlocutory injunctions are well established.  The applicant must show that (1) there are serious issues to be tried; and (2) the balance of convenience lies in favour of granting the injunction sought, and that damages are not adequate remedy.

70.Ma J, as he then was, in Music Advance Ltd v Incorporated Owners of Argyle Centre [2010] 2 HKLRD 1041, had further held that among other things, the underlying principle for the grant of interlocutory injunction is that the court should “take whichever course appears to carry the lower risk of injustice if it should turn out that it is wrong”[27].

71.The court also has jurisdiction under the Companies Ordinance, Cap 622, to grant interim injunctions to restrain a person from affecting the interest of a company or its members, including (but not limited to) by breach of a director’s fiduciary or other duties[28].

72.In King Pacific International Holdings Ltd and Chun Kam Chiu & Others [2002] 3 HKLRD 49, the proceedings and the injunction summons arose out of the attempts by the two warring camps of shareholders (Camp A and Camp B) to seek control of the plaintiff’s board. One of the issues was whether Camp B had raised serious questions to be tried with regard to the re-election of 6 directors and the appointment of the additional directors.  DHCJ Poon, as he then was, granted the order for injunctions sought by Camp B to restrain the 6 directors and the additional directors from holding themselves out as directors of the plaintiff.

73.Among the matters/consequences considered by the Judge included (i) the board will be locked in disagreement, rendering the management and operation of plaintiff disruptive if not impossible; (ii) there were winding up proceedings at foot against the plaintiff and the plaintiff was entitled to at least raise a doubt on the veracity of the alleged debt owed to a creditor related to the other camp, and that if the defendants were not so restrained, the plaintiff’s position in defending the petition would be jeopardized; (iii) the plaintiff was technically insolvent and it was vital to obtain injection of funds from outside investors, and any attempt to find a suitable investor may well be frustrated if two camps of directors with such bitter differences were allowed to represent the plaintiff at the same time[29].

74.In Re Birmingham International Holdings Limited, HCMP 395 of 2015, (unrep) judgment dated 28.08.15, the company had obtained on ex parte basis an interim order for receivers to be appointed until resumption of trading of the company’s shares on the Hong Kong Stock Exchange.  A significant shareholder, Yeung, applied to discharge or vary the receivership order, and 8 minority shareholders sought leave to intervene and for the order to continue until resumption of trading.  One of the circumstances giving rise to the receivership application was that serious disagreement had arisen amongst the directors of the company concerning how the company should be managed and whether certain transactions should be investigated, and the board of directors was fractured into 2 camps.

75.Anthony Chan J had this to say:

“Where the court is concerned with a public company which is in a parlous state (see below), it has a duty to uphold the interest of that company and its shareholders as a whole. There is a great deal to be said that this court should adopt a forward-looking and constructive approach in this case and decide on the existing evidence what is best for the Company and the shareholders as a whole without delay (“Forward-looking Approach”)[30].”

76.In the above case there was an EGM which went ahead notwithstanding concerns expressed by the board consisting of the receivers and INEDs appointed by the receivers, and that new directors were appointed at the EGM, with 90.55% of the affirmative votes from Yeung and from a shareholder U-Continent Holdings Ltd of which a relative of Yeung was the shareholder and director.

77.It had been suggested on behalf of Yeung that the way forward was for a new EGM be called so that the shareholders could elect a new board to run the company.  The learned Judge however expressed the view that it was difficult to see how such an EGM could take the company forward in a constructive manner if U-Continent’s entitlement to vote was going to be challenged.  

78.Adopting the Forward-looking Approach, the learned Judge then decided to continue the receivership order, and the matters he took into consideration included that the evidence indicated that the company was in danger of becoming insolvent and that the receivers were doing a good job in keeping the company afloat and taking actions to recover its losses from the wrongdoers, and on the other hand, to allow Yeung to meddle with the running of the company would result in more litigation(s) and probably hinder the legal action and investigations against him[31].

79.I now turn to the present applications.

Whether a serious issue to be tried

30.06.17 Ruling

80.Mr Smith pointed out that in the 30.06.17 Ruling, Au Yeung J has said she is satisfied that there is a serious issue to be tried[32], but Mr Tam had submitted that was before the evidence had been filed by the defendants.  I accept that this court is not bound by the views of Au Yeung J, but I have come to the same view that there are serious issues to be tried for the reasons set out hereinafter.

On lack of legal basis

81.Mr Wong submitted that the basis on which Ps bring the present proceedings as a derivative action on behalf of the Company remains unclear, and further the legal basis of Ps’ case is questionable, even putting Ps’ case to the highest and assuming Ps’ allegation that D1/D2 colluded with the Requisitionists in breach of the SFO is made out, namely that:

(i) Ps have not shown how the breach of regulatory obligations would render W&Q’s and the Requisitionists’ shares (which were acquired and paid by them) void;

(ii) W&Q acquired shares at the Pre-IPO stage when it was far from certain whether the Company would be listed or not, and there is plainly no legal basis to suggest that a collusion, which on Ps’ case occurred at the time of listing, can render W&Q’s share in the Company void.

82.Even though no statement of claim has yet been filed, Ps’ complaint is clearly that the shares ought never to have been allocated to the Placeees who are acting in concert and/or connected with Liu’s Camp.

83.As pointed out by Mr Smith, Ps’ claim for nullifying the transfer and placement of share to Wilson Liu and the Requisitionists (at the very least) is on the basis the transfer and placement of such shares were procured by fraud and the result of a conspiracy to defraud by those involved.

84.These are serious allegations but Ps’ case, but as submitted by Mr Smith, if established, will show that the transfer and/or placement of shares to W&Q/Wilson Liu and the Requisitionists, and the Requisition itself, are simply instruments of fraud and that the whole transaction may have no legal effect at all and can be disregarded.

85.Having considered the evidence so far, I am unable to agree with Mr Wong at this stage that Ps’ claim has no legal basis.

On evidence

86.The submissions of Mr Wong and Mr Tam can be summarized as follows:

(i) The Requisitionists have provided an explanation as to why they had issued the Requisition;

(ii) Ps’ evidence of collusion is flimsy and Ps’ suspicions are unwarranted.

The Requisitionists’ explanation

87.Henry Chan had filed affirmations on behalf of the Requisitionists.  In his 1^st affirmation, he simply denied that any of the Requisitionists had committed fraud, collusion and/or conspiracy, as alleged by Ps or at all.  In his 2^nd affirmation, he had stated[33]:

(i) None of the Requisitionists had any relationship will Liu’s Camp or Daniel;

(ii) Of the 3 Minority Shareholders, none of the Requisitionists know Lam Cheuk Yu or Zhang Chenwei.  As for Wang Kie, D6 knew someone by that name 20 years ago.

(iii) In a press conference held on 25 May 2017, the Requisitionists had explained that they had issued the Requisition because the Company had not given a reasonable explanation for its poor financial results, and the EGM was requested so management would give a proper explanation[34];

(iv) Although the Prospectus and a profit warning dated 19 January 2017 (“Profit Warning”) warned generally of declining financial results, the specific figures released on 27 January 2017 caused the Requisitionists to be puzzled and alarmed.

88.Henry Chan went on to say that the Requisitionists decided to formally engage Warren Lee of Yu Ming to advise and represent them and the Requisitionists were advised that, without leverage, just asking the directors of the Company for a proper explanation was unlikely to prove fruitful, and that they could be ignored, and that any direct communications with the Company might put the Requisitionists in possession of insider information, which would constrain their ability to buy and sell their shares.  He said the Requisitionists were advised by Warren Lee that they needed to create “a dramatic occasion”, ie an EGM could be requisitioned for replacement of directors and then there would be pressure on the directors of the Company to give a proper explanation of the declining financial results[35].

89.Henry Chan further said the Requisitionisits did not have any expectation or goal that the directors would actually be removed, but in the event that they were, the Requisitionists considered that their proposed 5 replacement directors each had valuable experience and that they be assisted by the Company’s senior management team and that specific experience in the fitting-out and renovation industry was not considered to be a pre-requisite[36].

90.As pointed out by Mr Smith, what Henry Chan said was inconsistent with various other evidence, in particular Warren Lee’s evidence in his affirmation filed on in response to the Injunction Summons. 

91.In his affirmation, Warren Lee said he met the Requisitionists for the first time on around 29 March 2017 and that he had enquired from the Requisitionists whether they were parties “acting in concert”[37] with either Jones Chan or Wilson Liu and that he was satisfied that none of the Requisitionists would be “presumed to be acting in concert” with either Jones Chan or Wilson Liu under the Takeovers Code.

92.As for the 17.07.17 Meeting with Anglo Chinese, it can be seen from the Meeting Notes produced by Jones Chan that, among other things: -

(i) Warren Lee said he wanted to have a middle ground so that everyone could get what they wanted;

(ii) Warren Lee claimed he did not know the intention of the Requisitionists in making the Requisition and that Cassidy should not dwell on the intention of the Requisitionists;

(iii) Warren Lee said before he took the deal he had made sure that the Requisistionists were not acting in concert with any of the Company’s controlling shareholders, and Warren Lee had said nothing could stop the extraordinary general meeting to be held on 12 June 2017; (emphasis added)

(iv) Warren Lee then suggested that there be 3 INEDs nominated by the Requisitionists (“Yu Ming Proposal”);

(v) Cassidy counter-proposed to have 2 INEDs nominated by the Requisitionists, and 2 nominated by the existing controlling shareholder totaling 4 INEDs (“Anglo Chinese Proposal”).

93.Warren Lee had produced various emails with Howe with him in relation to the matter of the Requisistion and the 17.05.17 Meeting and according to Warren Lee, he understood the 17.05.17 Meeting to be on a without prejudice basis, and that the Meeting Notes should not have been produced by Ps.

94.Warren Lee had gone on in his affirmation to explain certain facetious comments made by him during the meeting and other matters in the Meeting Notes.  He did say he had not been instructed by the Requisitionists to make the Yu Ming Proposal, and it appeared that Cassidy also had no instructions to put forward the Anglo Chinese Proposal, as seen from an email sent by Cassidy to Warren Lee after the 17.05.17 Meeting, that Cassidy would get back to Warren Lee first, before Warren Lee put the Anglo Chinese Proposal to the Requisitionists.

95.Warren Lee said after the 17.5.17 Meeting, on 18 May 2017, Cassidy telephoned him to say that the Anglo Chinese Proposal was not feasible and that the Yu Ming Proposal was very suspicious as it would mean that Jones Chan and his associates would be outnumbered on the proposed board.

96.Anyway, no formal application was made by the Requisitionists to oppose the production of the Meeting Notes, and in any event, it was not clear as to why the 17.05.17 Meeting would need to be without prejudice even if the proposals put forward by either side would have to be subject to Cassidy and Warren Lee taking instructions from their respective clients.  In any event, Warren Lee did not really challenge what was recorded in the Meeting Notes, and he only set out further matters to be taken into account.

97.It seems that if Warren Lee said is correct, then as at the 17.05.17 Meeting, the Requisitionists had not disclosed their motives or intention for issuing the Requisition to Warren Lee and this appears to contradict what Henry Chan had said in his affirmation.

98.Further, as Henry Chan said the Requisitionists chose to hold on to their shares as they were not short-term speculators and if so, there seems to be no reason as to why they would then be concerned of any insider information causing a constraint on their ability to buy and sell their shares. 

99.As Jones Chan pointed out in his 4^th affirmation, the Requisitionists could simply have requisitioned an EGM to request the board to give a full explanation and disclosure as to the financial results.

100.The Meeting Notes clearly showed that no mention was ever made by Warren Lee on behalf of the Requisitionists in relation to the financial results even though that Warren Lee, and indeed Cassidy, appeared to be trying to explore a middle ground for their respective clients to get what they wanted.

101.The Requisistionists took more than two months after the release of the Third Quarter Results before engaging Warren Lee as their financial advisor.  Mr Tam submitted that the Requisitionists are not professional investors, and that it is understandable that it took some time for them to digest the financial results and eventually resolved to engage Warren Lee.

102.On their own evidence, the Requisitionists know each other well, and they frequently socialized and discussed stocks and investments. Whether they are professional investors or not, there is no evidence that they are inexperienced in stocks and investments.  They all decided to subscribe for some 43% of the Placing Shares in the Company through Cinda which was holding their shares deposited with CCASS as nominees.

103.It was Henry Chan’s evidence that the Requisitionists had each read the Third Quarter Report and Results in early February 2017. There seems to be no reason why they would need to take almost another two months to “digest the financial results” and/or to consult Warren Lee.

104.There was nothing in Warren Lee’s affirmation to indicate that it was he who suggested the Requisition to the Requisitions.  Anyway, the Requisitionists’ shares were all removed from CCASS on 15 March 2017 by Cinda and on 20 March 2017 the shares were registered in the individual names of the Requisitionists, and this appears to have been done in anticipation of the Requisistion being issued, and this was before they engaged Warren Lee/Yu Ming.

105.As pointed out by Mr Smith, notwithstanding the Profit Warning and the Third Quarterly Report and Results released by the Company, the shares went up 400% from the subscription price, namely HK$3.55 per share on 29 March 2017, and HK$3.20 on the date of the Requisition, which meant that the Requisitionists collectively held shares worth some HK$51,094,000. 

106.Henry Chan had said in his 2^nd affirmation that the Requisitionists chose to hold on to their shares because they “hoped” the share price would go up even further.

107.It was not clear at this stage as to what their “hope” was built on as the Requisition issued so soon after listing to remove all the then directors could only have an adverse effect on the operations of the Company.  After the 17.05.17 Meeting, it should also be clear that there was no common ground between the Chan’s Camp and the Requisitionists and/or the Liu’s Camp.

108.Anyway, Mr Smith submitted that it was “totally incredible” that not only Henry Chan, but all 5 Requisitionists had chosen not to take profit and to do what they did.  I agree.

109.I also agree with Mr Smith that on the present available evidence before this court, the reasons given by the Requisitionists at the time for the issue of the Requisition did not appear to be their real reasons.

Ps’ evidence

110.Mr Wong on the other hand pointed out that Ps’ evidence of collusion on the part of the Liu’s Camp and the Requisitionists is flimsy, namely that:

(i) SFC, which has a statutory duty to investigate regulatory matters, formed the view in their 01.06.17 Letter that there was insufficient evidence for them to investigate or take action;

(ii) The underwriters in the listing process namely Anglo Chinese and Dongxing were handpicked by Jones Chan himself, and who in turn appointed the Placing Agents, and that it is difficult to see how Wilson Liu could have colluded with the Requisitionist or the Placees without being detected by 6 reputable and experienced intermediaries;

(iii) The SVAL reports are based on far-fetched inferences drawn from unverified information purportedly gleaned from social media sites;

(iv) Ps’ conspiracy theory is not borne out by the Requisition and the results of the Dispute EGM.

111.As mentioned earlier, SFC’s 01.06.17 Letter was sent in response to the 19.05.17 Letter which enclosed only the AC report.  Even though SFC did not consider there was sufficient information for it to take action at that time under the Takeovers Code, SFC had said it would continue to assess the complaint.

112.The 1^st SVAL Report was submitted by Anglo Chinese to SFC on 2 June 2017[38].  As mentioned earlier, SFC had sent further letters dated 12 June 2017 and 23 June 2017 which indicated that they were looking into the complaint of Jones Chan.  Further Jones Chan had said in his 4^th affirmation that SFC was/is still carrying out investigations[39] and there is no sufficient evidence at this stage to contradict what he said.

113.So far as how the alleged collusion with the Requisitionists could have escaped the 6 intermediaries, as seen from the evidence so far, the main “intermediaries” were Anglo Chinese, Dongxing and Cinda.  Daniel had played an important role in the listing exercise.  There has been an internal investigation carried out by Anglo Chinese, and it appears that Anglo Chinese may commence proceedings against Daniel and another due to his alleged role in the conspiracy.  Jones Chan said he had relied on Daniel and it was Daniel who introduced Wilson Liu and also Dongxing and the Placing Agents to him.  Daniel clearly has a connection with Wilson Liu.  Wilson Liu and also had said he did not know any of the Requisitionists or the Disputed INEDs and Wilson Liu appeared to be “furious” when he was thought to be the “trouble maker” by Anglo Chinese and he had sent a long email to Daniel on 15 April 2017[40] for Daniel to forward to Howe[41]. It seems clear from that email that Wilson Liu declined to give an undertaking at that time to vote against the Requisitionists motions or to support Jones Chan, without even trying to find out the intentions of the Requisitionists.

114.Anyway, Daniel was one of the persons (which included Liu’s Camp’s solicitor and Counsel) Zhang had forwarded a copy of Jones Chan’s email dated 11 July 2017 concerning the Loan Facility Agreement and the Share Charge, and internal affairs of the Company[42] and thus Daniel seems to have maintained contact with the Liu’s Camp.

115.Based on the SVAL Reports, Ps have produced a chart attached to Mr Smith’s submissions showing the connections between Liu’s Camp and the Requisitionists and/or the Disputed INEDs (“Chart”).  Mr Wong has prepared a reply to the Chart and submitted that the alleged connections are drawn on “laughable basis”.

116.According to the Executive Summary of the 1^st SVAL Report,  among other things, the Requisitionists are striking in terms of their relative anonymity, to include their lack of company leadership history, lack of litigation history, and lack of online presence one would expect from “investors” able to fund and execute a takeover of the Company, and this  suggests that they are probably acting as proxies for others.  It appears that one Cyril Cheung Ka Ho (“Cyril Cheung”) acts as a key link between Wilson Liu and the Requisitionists[43].  Cyril Cheung is said to have described himself as a director of Pins Capital Group Limited (“PINS”) of which Wilson Liu has indirect links[44].

117.Cyril Cheung is said to have used the address of PINS as his address.  One of the Requisitionists, Denise Cheung has the same residential address as Cyril Cheung.  Since all 5 Requisitionists are on their own evidence close friends or long time friends, through Denise Cheung, they are linked to Cyril Cheung and through Cyril Cheung to PINS and in addition, according to the SVAL Reports, 2 of the Requisitionists, Henry Chan and D9/Kort Wing Ho, and Cyril Cheung had a long standing relationship as shown in their photograph and the description of that photograph on Facebook.  Further, according to the 1^st SVAL Report, Wilson Liu is said to have described himself as Managing Director of PINS on Facebook and has used a PINS email and also PINS’s address is the same as Praetor Capital Limited of which Wilson Liu is the sole shareholder (“Praetor”).  Wilson Liu and Cyril Cheung are also said in the Chart to be connected to one Spencer To Hang Ming (“Spencer To”) being business partners[45].

118.As seen earlier, the shares held by W&Q and the Requisitionists come to about 47.575%, and further shares were removed from CCASS by Cinda on 11 and 17 May 2017 and they were placed in the names of the 3 Minority Shareholders, namely Wang Kie, Lam Cheuk Yu and Zhang Chenwei, and together with these further shares, the aggregate would come to 51.78%.

119.Lam Cheuk Yu is according to the SVAL Reports the same person as a Lam Cheuk Yu, Cherry who had worked as an intern at PINS, and in the Chart, Wang Kie and Lam Cheuk Yu Cherry have been connected to Spencer To and/or Cyril Cheung and/or Wilson Liu as “Facebook Friends”.  I accept at this stage this seems to be the only evidence on the connection of Wang Kie and Lam Cheuk Yu to Wilson Liu.  However, for Zhang Chenwei, although he had a low profile online and does not appear in the Chart, he was represented at the Disputed EGM by one Yeung Chi Fai, Jason whom Liu’s Camp purported to appoint as one of the authorised representatives of the Company under a purported board resolution of the New Board, after the Disputed EGM[46].

120.Of the 3 Disputed INEDs, D11/Jacky To Man Choy (“Jacky To”) filed two affirmations on behalf of the three of them to indicate they continue to act as INEDs and deny any of them had committed fraud, collusion and/or conspiracy with any of the Ds, as alleged by Ps or at all.  Jacky To does not appear on the Chart and the only Disputed INEDs who appears is D10/ Dennis Ko Kwok Fai, who is said to be associated with one Wong Yin Chi and through whom, associated with Wilson Liu and Daniel.

121.Overall, at this stage, there seems a clear connection of the Requisitionists to Cyril Cheung and a clear connection between Cyril Cheung and Wilson Liu.  It would appear that Zhang in her CV had also used PINS’s Chinese name for Praetor confusing the two companies[47].  Having considered the SVAL Reports, I do not agree that Ps’ evidence of collusion between the Liu’s Camp and the Requisitionists is flimsy.

122.Mr Wong submitted that Ps’ conspiracy theory is not borne out by the Requisition and the results of the Disputed EGM, in that in the Requisition what was sought was the removal of all incumbent directors of the Company and the appointment of 5 new directors, but the motion for the appointment of 2 new executive directors put forward by the Requisitionists were voted down, and so was the one for the removal of Jones Chan.

123.Suffice to say at this stage, and as pointed out by Mr Smith, the results of the Disputed EGM were the same as that of the Yu Ming Proposal at the 17.05.17 Meeting.  In any event, the only director on the New Board is now Jones Chan himself.  Even though the Disputed INEDs are said to be neutral and independent, they were proposed by the Requisitionists.

124.Ps’ complaints about the Disputed EGM are not merely about procedural irregularities which are capable of ratification by the Company. As pointed out by Mr Smith, Ps’ complaints go to the very core and root of whether the Disputed EGM is considered to have been convened and/or whether any valid resolution can be considered to have been passed at the Disputed EGM. 

125.As for Ps’ evidence on the fraudulent conspiracy, Mr Smith has summarized a number of unusual features in the present case, including that:

(i) Extremely short time lapse between listing and the Requisition;

(ii) The Requisition is contrary to commercial sense and logic;

(iii) The proposed directors in the Requisition are unverified and have no connection with or experience of the industry;

(iv) The results of the Disputed EGM correspond with the Yu Ming Proposals put forward by Warren Lee in the 17.05.17 Meeting; 

(v) All the Requisitionists are long time friends and as seen earlier are connected with Wilson Liu and Liu’s Camp;

(vi) The Requisitionists and/or Liu’s Camp were associated with people with a known history of engaging in creating and exploiting shell companies[48];

(vii) The number of shares transferred out of CCASS prior to the Disputed EGM, together with shares held by W&Q amount to just over 50% and by contrast the trading and sale of the Company’s shares have been rather thin since listing[49];

(viii) A number of the Placees were unaware or had minimal awareness of their acquisition of shares in the Company[50];

(ix) Numerous investigations all concluded that there is at least prima facie case of a fraudulent conspiracy.

126.So far as (vi) is concerned, Ps’ allegations are based on the SVAL Reports, and such allegations are denied by the Liu’s Camp and the Requisitionists who say the allegations are fanciful.

127.I am prepared to disregard such evidence in the SVAL Reports at this stage.  However, I note that so far as Jones Chan’s evidence in relation to his two meetings with Daniel and David on 19 January 2017 and 9 March 2017 is concerned, notwithstanding Wilson Liu’s denial, David has filed an affirmation to confirm Jones Chan’s evidence of what was said by Daniel in those two meetings.  It is Jones Chan’s case that the Requisitionists engaged Yu Ming because he rejected Daniel’s proposal made on behalf Wilson Liu on 9 March 2017[51].

128.Howe has pointed out in his affidavit that the Requisition was properly set up by an expert and for all the reasons he set out, he has concluded, notwithstanding that what he said is against Anglo Chinese’s own interest , that “there is no suitable explanation for the Requisition other than there being an undisclosed agreement under s 317 of SFO”, and that the Requisition “was a fraudulent device in that it failed to disclose connection between the parties, their earlier dealings and true common objectives”[52].

Serious Issue to be tried

129.Having considered all the evidence so far, I agree with Mr Smith that the evidence overwhelmingly points towards the Requisition was really a device in a larger fraudulent scheme and the shares placed to the Placees were sham transactions.  I am satisfied that in the very least there is a serious issue to be tried.

Balance of convenience

130.Au Yeung J in the 30.06.17 Ruling had said: -

“the court is always vigilant to (sic) the idea of vetoing the decisions of shareholders or to impose directors on the board against the wishes of shareholders (see the case of Missions Capital v Sinclair). This authority applies with all the more force in a situation where 97.7 per cent shareholders have voted[53].”

131.In Mission Capital v Sinclair [2010] 1 BCLC 304, the two applicants counterclaimed an injunction reinstating them as employees and also reinstatement as executive directors of the plaintiff.  Floyd J had quoted from an earlier case where Arden LJ observed that in essence it was contrary to principle to impose a director on a company and it was highly impractical so to do in any event where there were disputes between the directors or indeed allegations of improper conduct; accordingly, the court would have to be extraordinarily cautious before imposing a director on a company by way of an interim remedy[54]. Floyd J further pointed out that in Mission Capital the order sought was mandatory in character.

132.Floyd J held in the end that although the applicants had an arguable case that their dismissal was invalid, the balance of justice came down in favour of refusing any application for injunctive relieve, because restoring them to their positions as directors would lead to strife as (i) they would then be under the control of a board of directors with whom they  were locked in litigation; (ii) they would be in the minority as directors; they had not shown that the company would be unable to manage satisfactorily without them, the company had given an undertaking not to make disposals without giving them notice, and the balance of justice was not sufficiently weighted in their favour to justify granting mandatory relief[55].

133.Mr Wong has also referred this court to China Investment Fund Co Ltd v Guang Sheng Investment Development Group Ltd (unrep, HCA 411/2016, 27 May 2016), and submitted that the court should be slow to intervene in general meetings and prevent a company’s internal democratic processes from taking their courts[56].

134.In the above case, G Lam J dismissed an application by the plaintiff company for an injunction to restrain the defendants who were members of the company from moving or voting in favour of a number of ordinary resolutions at any general meeting of the company until trial and for an order adjourning the extraordinary general meeting as requisitioned by the defendants until further order.

135.It was argued for the company that there were serious issues to be tried, but G Lam J did not think this would be enough, the case being the sort of case where an order continuing the interlocutory injunction until trial would be likely to be dispositive of the whole action, and that he had said that on this basis the company as applicant should be held to a higher standard so far as its prospects of success were concerned, and he was not satisfied that the company had sufficiently good prospects in that action. 

136.Although G Lam J had said that the court would seldom interfere with the way in which resolutions were to be proposed by members or were to be voted upon by them at properly convened general meetings, he recognized that there could be cases where the court would interfere[57].

137.There is no real dispute on the above general principles.

138.However, the circumstances of the present case are different.  At the heart of the present dispute is the transfer of shares to W&Q/Liu and the placement of shares in the Requisitionists and the 3 Minority Shareholders and if the transfer and/or placement were to be declared null and void, W&Q, the Requisitionists and the 3 Minority Shareholders would have no voting rights as shareholders and this would affect the validity of the Disputed EGM and appointment of the New Directors.

139.It has been submitted by Mr Wong on behalf of the Liu’s Camp as follows:

(i) The shareholders have collectively decided to have a more evenly-balanced board (with Jones Chan, Zhang, WK Law and 3 INEDs who are independent professionals), instead of leaving the Company and/or the Group in the absolute control of Jones Chan and “his puppets” (referring to HT Cheung, Lee , Wang and Ye);

(ii) The vesting of the control back in the hands of Jones Chan and his puppets is plainly against the interest of the Company and its shareholders;

(iii) Granting the interim relief sought will result in irreparable harm to the general body of shareholders. 

(iv) On the other hand, if the interim relief sought by Ps is refused, there is clearly no irreparable harm to the Company (on whose behalf Ps brought this derivative action).

140.As for the Requisitionists, it has been submitted there is a suspected fraudulent scheme by Jones Chan due to the Loan Facility Agreement with Dragon Success and also the Share Charge.  Further, the Requisitionists have complained that Jones Chan has treated the Company as if it is a private company of which he is the sole owner.

141.So far as the Requisitionists’ complaint that Jones Chan had treated the Company as if the company were a private company of which he was sole owner, and that he had caused Wang and Ye to be appointed as two INEDs in highly suspicious circumstances, the Requisitionists were relying on matters stated by Zhang in her affirmation filed in support of the 1737 Injunction, and also in her 1^st affirmation filed in these proceedings, which all took place after the Requisition.  The only matter prior to the Requisition complained by Zhang and/or Wilson Liu, in so far I could see, appears to be the use of the Placing Proceeds or the transfers of the same to Aeso HK.

142.As mentioned earlier in this judgment, Jones Chan had said that he and Wilson Liu reached an understanding prior to the listing and Wilson Liu would not intervene in the operations of Aeso HK and the Company, and even on Wilson Liu’s own case, he had said that he would only be a passive investor of the Company unless the circumstances were to change substantially. 

143.There is no dispute that Jones Chan was the founder of Aeso HK and according to the Prospectus, at the date of the listing, both he and the other executive director HT Cheung, had had nearly 19 years of experience in the building and construction industry.  On the other hand, Zhang and WK Law, both non-executive directors from Liu’s Camp, were to only play a consultative role and not day-to-day management, and their work experience was in finance related matters[58].  Incidentally, Zhang was only about 26 years old at the time of Listing and that in the 1^st SVAL Reports, it was noted that her background is interesting in that she claimed to have worked for a number of Mainland government departments[59]. Jones Chan is now challenging this aspect of Zhang’s CV[60].

144.Anyway, after listing, there are two signatories to the bank account/s of the Company, namely Jones Chan and Zhang, but so far as Aeso HK’s bank account/s are concerned, Jones Chan has always been the sole signatory.  So far as I could see, save for the transfer of the Placing Proceeds, there had been no major problems/complaints about Jones Chan’s and/or HT Cheung’s management/operations of the Company, nor were there any substantial change in circumstances until the Requisition was received.  The Profit Warning announced by the Company[61] was in accordance to what was set out in the Prospectus.  As seen earlier, subsequently the Third Quarter Report and Results were released on 27 January 2017 indicating a drop of approximately 34% in revenue compared to the corresponding period in 2015 and gross profit dropping 44.3%[62].  This was in line with the Profit Warning.

145.Zhang had referred to a board meeting on 23 March 2017[63], where there were proposals for 2 sums to be transferred from the Placing Proceeds received by the Company to Aeso HK, namely, a sum of HK$5.9m for acquisition of a property in accordance with the use of the Placing Proceeds as stated in the Prospectus, which was approved notwithstanding the opposition of WK Law and Zhang, but, insofar I could see, their opposition was on the ground that no decision had been decided on which property to acquire at that time. The other sum was for HK$10m for securing surety bonds, which was also according to the use of the Placing Proceeds as stated in the Prospectus.  WK Law had in fact voted for the resolution and only Zhang voted against it.  No reasons were stated in the minutes as to why Zhang voted against the proposal.  It was also agreed by Jones Chan at the meeting that after the transfer of the funds, the sole director of Aeso HK being himself would strictly follow the instructions of the board and the relevant disclosure in the Prospectus in the usage of the transferred funds.

146.It seems that at one stage during the meeting, there were certain remarks by WK Law in relation to misuse of money in other ways, which Jones Chan regarded as false and very serious.  However, in the end, 2 of the Initial INEDs agreed that the 2 cheques should be co-signed by Zhang as the amounts did not exceed the proposed use of the Placing Proceeds stated in the Prospectus, and that the 3^rd Initial INED, namely Lee, considered that the financial controller of the Company should be the main person to control the use of the funds. 

147.At this meeting, it was also disclosed to the board by one Donald Chiu, who I believe to be Chiu, the financial controller of the Company, that as at 31 March 2017, the expected use of the Placing Proceeds for the surety bonds was HK$10m of which HK$4m was placed, and that the Company expected to place another HK$5m by 31 March 2017 and HK$13m by 30 September 2017 respectively[64]. It had also been  pointed out by Chiu that the amount required to be utilized up to 31 March 2017 as per the Prospectus was HK$20.7m[65].  Thus, the transfers of the two sums appeared to be in line with what was stated in the Prospectus[66]. In fact, a representative of the Company’s solicitors, Ms Christina Fu, was present throughout the meeting, and would have voiced her views if there was anything not in line with the Prospectus.

148.Wilson Liu and Zhang have since taken issues with the transfers of the two sums from the Company to Aeso HK, and alleged that Jones Chan’s transfer of the funds “served no useful purpose other than to bypass the scrutiny of the Company’s board” since he was/is the sole director of Aeso HK and had/has sole control over the accounts of Aeso HK[67].  In this respect, Jones Chan denied the allegations and pointed out that the Placing Proceeds should be mainly used for the expenses and acquisitions in relation to the operations of Aeso HK, and that he had signed a provisional agreement for sale and purchase dated 13 April 2017 for the acquisition of a warehouse by Aeso HK[68], as disclosed in the Prospectus, and further he had provided bank statements of Aeso HK and cash flow summaries of the Group and from March 2017 to June 2017, to show there was no misappropriation of funds[69].

149.Co-incidentally, the date of the provisional agreement for sale and purchase was the same date as the Requisition.  Unfortunately, the acquisition was in the end not completed as Aeso HK had to maintain sufficient cash for normal operations[70].

150.The minutes of the board meeting of 23 March 2017 did not appear to show that Jones Chan had treated the Company as a private company as he was reporting to the Company and seeking the board’s approval on the proposed use of the funds.

151.In any event, the Requisitionists’ shares had already been removed from CCASS on 15 March 2017 and registered in their respective names by 20 March 2017, prior to the above board meeting.

152.The main allegations of the Liu’s Camp and of the Requisitionists now concern Jones Chan entering into the Loan Facility Agreement on behalf of the Company with Dragon Success and the Share Charge of the 1 share of Aeschylus to Dragon Success.  There have been allegations of fraud made by the Liu’s Camp against Jones Chan and HT Cheung.

153.Jones Chan had set out detailed explanations with supporting documents as to the use of the funds from Dragon Success[71].  Suffice to say, Liu’s Camp has obtained the 1737 Injunction and there is a serious issue to be tried.

154.The events and the board meetings which took place after the Disputed EGM have been set out earlier.  Liu’s Camp has attempted to take control of each board and every bank account of the Group.

155.Notwithstanding the changes which the New Board has tried to effect, Jones Chan has continued to be the only person with access to the bank accounts and bank statements of the Company and of Aeso HK because the bank accounts of the Company and Aeso HK at HSBC and BEA have been frozen by the banks due to the disputes between the two camps.

156.At present, there are serious issues to be tried, and if the allegations of Chan’s Camp of fraud against the Liu’s Camp and the Requisitionists are proved to be correct, this means Liu’s Camp and the Requisitionists will be part of the group of persons involved in a fraudulent scheme, and to allow directors nominated or proposed by them to continue to act may result in potential damage to the Company.

157.On the other hand, there have now also been some serious allegations of fraud made by Liu’s Camp against Jones Chan over the Loan Facility Agreement and the Share Charge involving Dragon Success, and there are also serious issues to be tried.  At the moment, Dragon Success has issued the Receivership Summons, which is due to be heard shortly.

158.Mr Wong submitted that the orders sought if granted will result in an irreparable harm to the general body of shareholders and there will be no irreparable harm to the Company on whose behalf Ps have brought this action.

159.Mr Wong submitted that in the Prospectus, it is stated that the Company and the Group are capable of carrying on its business independently of its controlling shareholders and their respective associates after listing[72]. However, as stated in the Prospectus, the basis for this had included that the then 3 Initial INEDs were “sufficiently experienced and capable of monitoring” the Company’s operations independently of the Controlling Shareholders.  Of the 3 Initial INEDs, Lee had nearly 22 years of experience in building and construction industry, one had nearly 22 years of experience in finance and accounting, and the remaining INED is a solicitor and had over 31 years of experience in the legal field.  One of the then executive directors was also HT Cheung who had nearly 19 years of experience in the building and construction industry.

160.If the orders sought by Ps are refused, then Liu’s Camp, or Zhang and WK Law and/or the Chans, would effectively be in control of the management of the Company and also the only operating company Aeso HK, with no one among those in control having the length of experience or extensive knowledge of running the operations of a business of fitting-out and renovation of properties as Jones Chan and HT Cheung.  This in my view cannot be in the interest of Aeso HK, nor the shareholders of the Company.

161.If the orders sought by Ps are granted, then Jones Chan would effectively be in control of the management of the Company and Aeso HK and also operations of Aeso HK, the only cash cow, can still continue as before.  Even if an interim receiver is appointed for Aeschylus, if Dragon Success’s Receivership Summons is granted, there is no evidence that a receiver would not want the operations of Aeso HK to continue. 

162.Mr Wong submits that Jones Chan’s stonewalling and obstruction of the New Board shows that he has no intention or effort to salvage the Company from receivership, and in fact Jones Chan has issued winding up proceedings, and that “Jones Chan is the person who wants the Company to die”, and that the court should not place the Company in the hands of a person who wants it to die.

163.However, I note from the transcript of the hearing before Au Yeung J, Liu’s Camp had at that hearing themselves made an alternative proposal to make an application for receivership[73].  In any event, in my view, the evidence currently indicates that Jones Chan has been trying to keep the operations of Aeso HK, the only cash cow, going and not to die. 

164.So far as the Company is concerned, as pointed out by Mr Smith, the orders sought, if granted, will only result in a “freeze” of the New Board in the interim, as the quorum for a board meeting is 2 directors, and Jones Chan being the only director on the New Board, will not be able to pass any resolutions on his own.  The Company’s only operating business is that of Aeso HK.  Trading of shares in the Company has been suspended.

165.Mr Wong has however argued that Jones Chan and Chan’s Camp has no respect to the court order and process in that they have acted in breach of the ex parte injunction granted on Friday 9 June 2017 under HCA 1357/2017 restraining Jones Chan, HT Cheung, Lee, Wang and Ye from exercising any of their powers as director of the Company until the conclusion of the extraordinary general meeting[74].  As seen from the affirmations of service, a sealed copy of that order was only delivered to the Company’s address at 7:16 pm and an email attaching the order was sent to the 5 directors only at 8:05 pm that day. It is Jones Chan’s evidence that the hard and soft copies of the injunction were only brought to the attention of the Company’s then solicitors, the Company and the 5 directors on 12 June2017, notwithstanding that Zhang and WK Law caused an announcement in relations to the injunction to be published on 11 June 2017 at 19:55[75].

166.It was submitted by Mr Wong that Au Yeung J refused to grant the “interim” interim injunction on the basis that there was no urgency and that the balance of convenience was in any event in favour of respecting the wishes of the shareholders at the Disputed EGM, and yet Jones Chan has acted in defiance of the 30.06.17 Ruling by, among other things, stonewalling the New Board and that purporting to act on behalf of the Group without the knowledge or authority of the respective boards, and colluding with Dragon Success to strip the Company of its only operating subsidiary and cash cow. 

167.On this, I am inclined to agree with L Wong J that I am not able to discern from the 30.06.17 Ruling that by refusing interim relief Au Yeung J had wished to disturb the status quo pending the determination of the Injunction Summons[76].

168.In any event, Jones Chan, by being the sole director and sole signatory of Aeso HK’s accounts will be able to continue to operate the bank accounts if the orders sought are granted.  At the moment, there have been a number of dishonoured cheques issued by Aeso HK to suppliers due to the freezing of the bank accounts by the banks and it seems instead of agreeing for the cheques to be cleared first, Zhang insisted on the Chans being signatories[77].

169.Mr Smith submitted that the orders if granted would have no or minimal adverse effect on any business or commercial activities.  The Company is a holding company only, and that Aeso HK has all along been managed by Jones Chan.  Further, the Disputed INEDs have adopted a neutral position concerning the interim relief sought, and thus the majority of the New Board does not in fact oppose the interim relief.

170.Having considered all the above, and weighing up the balance of convenience, and adopting a forward looking approach, I have come to the view that the balance of convenience and/or the course which appears to carry the lower risk of injustice if it should turn out to be wrong, would be to grant the interim relief sought by Ps, subject to certain exceptions stated below.

171.Mr Smith has accepted that it is in the interest of the Company to resist the Receivership Summons, and indicated that Ps would be prepared to give any undertaking in this respect although no exact wording was proposed.

172.I am of the view that the New Board should be allowed to continue to rely on or carry into effect any resolutions passed for the Company to continue to defend HCMP 1647/2017 and in particular the Receivership Summons, and also to continue HCA 1737 of 2017.

Conclusion

173.As said earlier, in this judgment, I have granted an order in terms of paragraphs 1, 3 and 4 of Ps’ summons issued on 17 August 2017, namely leave for the addition of D15 and D16 to these proceedings and to amend the writ accordingly, and for amendment of the order sought by Ps.

174.Further, in light of all of the above said, in respect of the Injunction Summons, I am prepared to grant the following orders:

(1)  D1-D4, D10-12, D14-16 be restrained from relying on and/or carrying into effect, until determination of the parties’ dispute herein, or until further order:

(i) The resolutions purportedly passed at the purported extraordinary general meeting of D14/the Company purportedly held on 12 June 2017 (“Disputed EGM Resolutions”);

(ii) The resolutions purported passed by the purported board of the Company in reliance of the Disputed EGM Resolutions;

(iii) The resolutions purportedly passed and/or to be passed by D3, D4, D10-D12 as purported directors of the Company, and by the purported board of directors of D15 and D16 in reliance on or deriving their authority from, whether directly or indirectly, the resolutions passed by D3, D4, D10-D12 as the purported directors of the Company

SAVE AND EXCEPT any resolutions passed for the Company to continue to defend HCMP 1647/2017 and in particular the Receivership Summons, and also to continue HCA 1737 of 2017.

(2)  An order in terms of paragraph 2 of Ps’ draft order, namely to have leave to serve out of jurisdiction, namely in the British Virgin Islands, on D1 and D15 the documents stated therein.

(3)  There be liberty to apply.

175.I dismiss the Cross Summons.

176.Ps have sought a speedy trial for this action. There has been no opposition from Ds.  I am prepared to so order subject to the directions for filing of pleadings and other directions being agreed by the parties.

177.As for the Production Summons, as stated in the 11.08.17 Decision of L Wong J, the information/documents were said to be required urgently for 3 reasons[78]:

(i) For the Company to file and serve evidence by 18 August 2017 in opposition to the Receivership Summons;

(ii) Zhang, being director of the Company, and one of the Chans, being director of Aeso HK required the information/documents to operate and manage the Company and the business of Aeso HK;

(iii) For preparation by the Company of the audited financial report for the year ended 31 March 2017 and quarterly report for the 3 months ended 30 June 2017.

178.For the reasons stated in the 11.08.17 Decision, those documents required for reason (i) above were granted by L Wong J.

179.As for documents required for reason (ii), above, this reason has fallen away in light of the orders made in respect of the Injunction Summons.

180.As for those documents required for reason (iii) above, the Company has by now defaulted on its obligations under the GEM Listing Rules to publish those reports by their respective deadlines.  I see no reason at this stage why the financial information/documents cannot be released by Chan’s Camp direct to the auditors for the Group to prepare the relevant reports.  In any event, I see no urgency in this matter.  

181.I have at the hearing directed that the Production Summons be dealt with on paper as there was no sufficient time at that hearing.  However, in light of my decision on the Injunction Summons, if the parties still wish to argue on the Production Summons, I will direct that the Production Summons be fixed for a further hearing of estimated length of half a day. 

182.As for costs of the Injunction Summons and the Cross Summons, I am of the view that this should be in the cause.  This is an order nisi, which shall be made absolute and final after 21 days.

Mr Clifford Smith SC and Mr Kerby Lau, instructed by Titus & Co, for the 1^st and 2^nd plaintiffs

Mr Anson Wong SC, Mr Richard Yip, Ms Isabel Tam and Ms Tara Liao, instructed by Bond Ng Solicitors, for the 1^st to 4^th defendants

Mr Jeffrey Tam and Mr Ian Chau, instructed by Cheung & Liu, for the 5^th to 12^th defendants

The 13^th defendant was not represented and did not appear

The 14^th defendant was not represented and did not appear