Yu Yuchuan and Others v. Zhang Caikui and Others

HCMP 1028/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1028 OF 2015

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BETWEEN

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D E C I S I O N

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1.On 28 April 2015, the petitioners issued the petition in these proceedings. On the same day, they wrote to the court seeking an urgent hearing of an application for expedited directions for the determination of a summons to appoint receivers over the company.

2.The reason for the urgency is that the petitioners are concerned that the Annual General Meeting of China Shanshui Cement Limited (“Cement”) has been convened to take place on 22 May.  The company is a substantial shareholder in Cement. 

3.In short, the petitioners are concerned that resolutions proposed to be put to the company in the Annual General Meeting may give the board of Cement the opportunity to allot shares which will result in the further dilution of their interest in Cement.  The precise complaints and concerns that they rely on do not need to be described for the purposes of this application.  I am only concerned with whether or not I am satisfied that it is appropriate to direct an expedited determination of the summons for the appointment of receivers which as at the time of this hearing before me has not yet been issued.  I declined to do so for the following reasons:

(1) The Annual General Meeting of Cement has taken place at roughly the same time in the last four years as can be gleaned from checking the Hong Kong Stock Exchange website.  The dates have been: 20, 18, 24 and 16 May respectively.  There is, therefore, nothing surprising about the Annual General Meeting being convened on 22 May of this year.  Indeed, the Companies Ordinance requires that Cement, as a listed company, convenes its Annual General Meeting by 30 June.

The petitioners suggest that the directors of Cement should have fixed the AGM at about the end of June (the reasons for this I will come to in a moment) but they do not concern Cement.  I can see no reason why the directors of Cement, a listed company, should have determined to have the Annual General Meeting at a date assessed by reference to matters that concern the internal affairs of one of its shareholders.  Indeed, it seems to me to have taken into account that kind of matter would have arguably have been inconsistent with their duties as directors of Cement. 

(2) It is suggested that the court gives directions that result in a one‑day hearing taking place and a judgment delivered sufficiently before 22 May, because another hearing is currently fixed on 18 May before Godfrey Lam J at which he will consider an application to appoint receivers over a tranche of the shares in Investments and the judgment in that application may not be delivered in time to allow if successful, receivers to determine how Investments should vote at the AGM.  That hearing, namely the hearing on 18 May, was fixed, as I understand it, on 1 April and is listed for one day.  If the concern is that that application will not be determined in time in order to achieve the result that the petitioners had hoped would be achieved, it seems rather strange that it is thought that a new set of proceedings should be commenced in the Companies Court which is unlikely to result in a hearing much before the hearing of Godfrey Lam J, with a view to a helpful judgment being given by me before Lam J delivers his judgment. 

(3) It seems to me that the petitioners must be assumed either to have known, or certainly they should have known, that the AGM was likely to take place on or about the middle of May given what had taken place in previous years.  They should also have expected that resolutions of the sort that they are now concerned about would be included in the notice convening the meeting as they had been included in the notices for the last two years.  If they were concerned about the resolutions, they could and should have taken the action that they now wish to take very much earlier.  Certainly the underlying complaints made in the petition consist of matters which they have known about for some considerable period. 

(4) On any view of the matter, it appears that the petitioners or their advisors should have been considering how they wished to deal with the problems which have led to the making of the current application in early April.  It appears that junior counsel for the petitioners was present at the hearing before Godfrey Lam J on 1 April at which when fixing the hearing date on 18 May before him, express reference was made to the anticipated AGM taking place in May.  Certainly they must have been aware of the Annual General Meeting on or about 16 April and to have begun, if they were proceeding appropriately, to have considered what action to take.  As it is, no application was made before me until 28 April, some 12 days later.  The kind of timetable which the petitioners now seek would impose a far stricter time limit on the respondents to the application and to the court than they themselves have been operating under. 

(5) Although I do not currently know what the availability of other judges is during the relevant period, it would appear that fixing early dates is made all the more complicated by the fact that the receivers who the petitioners wish to appoint are partners in Ernest & Young, and for conflict reasons I do not hear disputed or contested applications involving Ernest & Young.  Therefore, the self-induced urgency that the court is currently dealing with will, on any view, cause considerable inconvenience and strain on the court’s limited resources. 

4.What I am prepared to do is to find a time that the inter partes summons, when it has been issued and served, can be heard in order that directions can be made in order that the matter proceeds fairly swiftly if the parties are not able to agree directions between themselves. 

5.So far as the costs of this application are concerned, I will hear counsel, but I am minded to the view that the petitioners should pay the 3rd respondent’s costs of attending court today.

Mr Victor Joffe and Mr Law Man Chung, instructed by Wong & Lawyers, for the petitioners

Mr Clifford Smith, SC, and Mr Kerby Lau, instructed by Hogan Lovells, for the 3rd respondent