Read the full judgment text of HCCW 691/2009 on BabelCite. This Court of First Instance judgment was delivered on 6 July 2010 before Harris J.
Company law – winding up – interim injunction – control of wholly-owned foreign enterprises (WOFEs) – Companies Ordinance (Cap 32) ss.168A and 177(1)(f) – family company dispute – Petitioners and 1st and 2nd Respondents shareholders of Hong Kong Company that held two Mainland WOFEs – 1st Petitioner had effectively run WOFEs since 1998 and was appointed legal representative in June 2006 – 1st Respondent transferred 490 of the 2nd Petitioner's shares in the Company to the 3rd Respondent shortly before settlement of Japanese litigation, obtaining majority control of the Company's board – 1st Respondent then reappointed himself as the WOFEs' legal representative – whether it is just and convenient to grant an interim injunction maintaining the 1st Petitioner as legal representative and restraining disposal of WOFE assets pending trial – application of principles analogous to American Cyanamid v Ethicon [1975] AC 396 – whether damages would be an adequate remedy where there is a real possibility of winding up and any mismanagement would be difficult to quantify – comparative assessment of conduct of the parties – whether delay in bringing application defeats it – whether undertaking as to damages adequate – whether mandatory injunction should be granted – whether distinction between prohibitory and mandatory injunctions affects threshold – following National Commercial Bank Jamaica v Olint Corp [2009] 1 WLR 1409, distinction treated as barren; court looks to practical consequences – whether delay fatal following Monsanto v Stauffer [1984] FSR 599 and Legg v Inner London Education Authority [1972] 1 WLR 1245; mere delay not enough, must be practically unjust – see also Pringle v Callard [2008] BCLC 505 on valuation of shares and interim management – Interim injunction granted in terms of paragraphs 1 to 5 of the summons dated 24 March 2010, including mandatory order to withdraw the 26 June 2009 application to the Huizhou Commercial and Industrial Bureau, restraining replacement of the 1st Petitioner as WOFE legal representative and restraining disposal of WOFE assets pending trial – costs of the application to be the Petitioners' costs in the cause – general liberty to apply.
Legal issues: Whether it is just and convenient to grant an interim injunction maintaining the 1st Petitioner as legal representative of the WOFEs · Whether a mandatory injunction should be granted requiring withdrawal of the application to change the WOFEs' legal representative · Whether delay in bringing the application defeats the claim for an injunction · Whether the undertaking as to damages is adequate
Outcome: Interim injunction granted in the terms of paragraphs 1 to 5 of the summons dated 24 March 2010, maintaining the 1st Petitioner as the WOFEs' legal representative and restraining the Respondents from replacing him or disposing of the WOFEs' assets pending trial; costs of the application to be the Petitioners' costs in the cause; general liberty to apply.
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