Read the full judgment text of HCA 1661, 1766, 2191/2014 & HCA 623, 939, 1564/2015 (Consolidated) on BabelCite. This Court of First Instance judgment was delivered on 31 January 2018 before G Lam J.
Company law – receivership – interim receivers appointed over shares pending determination of trust dispute – plaintiffs commenced six consolidated actions claiming beneficial interest in shares in CSI held by defendants as alleged trustees of BVI trusts – whether receivership should be discharged for material change of circumstances – whether facts were adequately disclosed at earlier hearings – whether 2,090 plaintiffs who had sold their interests under SPAs funded by Tianrui remained real stakeholders – whether Tianrui's involvement raised disclosure and Takeover Code concerns – whether alleged non-disclosure of the SPAs, the source of the RMB700 million purchase money, and the funding of KLG's fees by an unnamed 'friend' rendered the receivership untenable – interim receivership is akin to interlocutory injunction, amenable to review on material change of circumstances (Chu Hung Ching v Chan Kam Ming [2001] 1 HKC 396; Wong Pak Sum v Hong Kong Furniture & Decoration Trade Association Ltd) – purpose of insulating plaintiffs from intimidation had not been achieved for those who had sold – disclosure failures verging on the misleading – receivership discharged – split voting direction refused as fundamental reform of CSI's constitution beyond the receivership's protective function (Eclairs Group Ltd v JKX Oil & Gas plc [2015] UKSC 71 applied to shareholder voting) – alternative order placing CSI management under SH-nominated individuals held impossible – application to replace Receivers for alleged conflict of interest not determined as moot – application to fortify cross-undertaking not determined as moot – Receivers' strike-out application disposed of with no order – costs orders nisi against SH and KLG plaintiffs in favour of 1st defendant – Receivers' costs of strike-out summons to be paid out of assets in receivership.
Legal issues: Whether the receivership should be discharged for material change of circumstances and disclosure failures · Whether to grant a split voting direction to allow individual CSI shareholders to direct proportional voting of CSCG shares · Whether the plaintiffs' cross-undertaking as to damages should be fortified by payment into court · Whether the Receivers should be replaced for conflict of interest and loss of confidence · Whether to grant an alternative direction leaving the Receivers in office but placing CSI management under SH-nominated individuals · Whether certain passages in the SH plaintiffs' affirmations should be struck out as commentary, scandalous, or oppressive
Outcome: Receivership discharged; SH plaintiffs' applications for replacement of Receivers and alternative direction dismissed; no order on Receivers' strike-out summons; split voting direction refused; fortification application not determined.
Cites 6 cases