Temple Chambers

Court winds up listed company at first hearing In Re Dexin China Holdings Company Limited [2024] HKCFI 1610, the Court of First Instance made a winding up order against the company, which was incorporated in the #Cayman Islands and listed on the Main Board of the Hong Kong Stock Exchange, at the first hearing of the petition before judge. The petition debt arose from certain senior notes issued by the company in 2020. The notes, until their maturity in December 2022, were listed on #HKEx. Since the company failed to make payment of the principal and accrued interest pursuant to the notes, the petitioner (as trustee for itself and noteholders) served a statutory demand in the sum of USD 410 million on the company. The statutory demand went unmet, culminating in the presentation of the petition. Linda Chan J found that there was no evidence in opposition to the petition. The affidavit purportedly filed by the company was late, in breach of rule 32(1) of the Companies (Winding-up) Rules (Cap 32H). The company did not issue any summons to apply for extension of time. Nor did the company provide any satisfactory explanation for the delay or have the means to pay the petition debt. Accordingly, the Court refused to grant conditional leave for the company to file its evidence out of time. Linda Chan J also concluded that even if (contrary to her view) there was proper basis for the court to grant leave for the company’s affidavit, the grounds raised by the company had no merit. In particular, the judge rejected the company’s contention that the second core requirement for the court to exercise the discretionary jurisdiction to wind up a foreign company under s.327(3) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap 32) is not met, observing (among other matters): -         As the company was a listed company, the leverage or commercial pressure created by the petition itself constitutes a sufficient benefit to the petitioner. -         The company carried out substantial fund-raising activities in Hong Kong including issuing the notes in Hong Kong which were listed on HKEx. -         There is a reasonable possibility of benefit that the #liquidators appointed in Hong Kong will be able to seek recognition and assistance from the Mainland courts under the “Mutual Recognition of and Assistance to Bankruptcy (Insolvency) Proceedings between the Courts of the Mainland and of the Hong Kong Special Administrative Region”. The full judgment can be viewed here: https://lnkd.in/gJbR3pQH. Queenie Lau SC and Thomas Wong were instructed by and acted for the petitioner.    

Court discusses principles of de facto directorship in a claim brought by special purpose vehicle of a parent company   In Shown Wai Investment Company Limited v Hui Yip Wing David [2024] HKCFI 1477, the Plaintiff (“SW”) instigated claims against the Defendant (“Hui”), who was both a director of SW’s parent company, Chime Corporation Limited (“Chime”), and a general manager of the Chinachem Group (“Group”). Hui had introduced to the Group a potential investment in a #PRC real estate #development project, which he negotiated on its behalf. Eventually, the Board of Chime passed a resolution to agree to the proposed investment through its wholly-owned subsidiary, and SW was thereafter appointed as the special purpose vehicle through which the Group was to enter into the transaction. The sale and purchase agreement was signed on 12 December 2009, but Hui was only formally appointed as a director of SW on 28 December 2009.   SW’s claim is that Hui was its de facto director at all material times prior to his formal appointment, and he acted in breach of his fiduciary duties and the duty to exercise reasonable care, skill and diligence in procuring SW to enter into the transaction. In any event, Hui had also breached his duties as de jure director after 28 December 2009 by failing to prevent SW’s completion of the transaction.   The Court dismissed SW’s claims. On the issue of de facto directorship, SW argued that Hui had assumed directorial duties and responsibilities vis-a-vis SW by playing the dominant and leading role in the negotiation of the transaction which was to be entered into by an SPV (which ended up being SW), and he individually drove the resolution of the Chime Board which was required as part of the Group’s corporate governance structure to approve the transaction. His role and responsibilities were at least equivalent to (if not greater than) those of a director of SW. The Court examined the applicable principles on de facto directorship and reiterated the need to plead and prove functions which are only referable to de facto directorship and not to any other capacity. As both Chime and SW had their own properly functioning boards, Hui could not be said to have individually assumed any responsibility to SW, and the Court distinguished two recent English cases cited by SW in which the director of the parent company was found to be a de facto director of the subsidiary. As to the period after Hui became a de jure director of SW, the Court found that there was no evidence that the directors of Chime or SW would have agreed to exiting the transaction and confining SW’s loss to the deposit paid.   The full judgment can be viewed here: https://lnkd.in/gtm_xhAz   Sara Tong SC, leading Esther Mak and Eugene Kwan, instructed by Gibson Dunn, acted for the Plaintiff. Bernard Man SC, leading Vincent Chen and Ian Yu, instructed by Lam & Co., acted for the Defendant. #Realestate

Judicial appointment Her Honour Judge Winnie Tsui Wan-wah, a former member of Temple Chambers, has been appointed a Judge of the Court of First Instance of the High Court, with effect from 3 July 2024.

Queenie Lau SC will share captivating insights from her distinguished career, and offer valuable advice to younger #practitioners at the first “WIA Coffee Roulette 2024” series on 10 July 2024, from 17:00 to 18:30 (HK Time). She will also discuss the advantages of being a woman in #arbitration, the purpose and highlights of her journey, and how she balances a demanding career with her passions, such as photography and travel. Thus, she will demonstrate that it is indeed possible to stop and smell the roses amidst a busy practice. Attendees will gain practical life lessons and professional wisdom from Queenie's extensive experience in #commercial law, #mediation, and #advocacy. Organised by HKIAC, the “WIA Coffee Roulette 2024” series is a platform for arbitration practitioners worldwide to connect with each other and engage in cross-cultural exchange. The events will be held every two months in a hybrid format (i.e., in-person and online). For more information about the event, please visit the website: https://lnkd.in/gjS9jyiB. Women in Arbitration (WIA，仲裁女性俱乐部） #WIA #Arbitration #Events #Womeninlaw #Legal #Talk #Career #HongKong

Court grants worldwide Mareva and notification injunctions in s.214 SFO proceedings In SFC v Leung Anita Fung Yee Maria & Ors [2024] HKCFI 1210, the Court of First Instance granted worldwide Mareva and notification injunctions (“Injunctions”) against the 1st respondent (R1) in favour of the SFC in proceedings commenced under s.214 of the Securities and Futures Ordinance (Cap. 571) (“SFO”). This is a notable case because it is the first time that the #SFC has obtained injunction orders of this kind in an ongoing legal action under s.214 SFO proceedings, and signifies the possibility of similar relief being granted in future cases in appropriate circumstances.     Together with her late husband Wong Yu Hong, Philip (黃宜弘) (R2), R1 held a number of senior management positions in SMI Culture and Travel Group Holdings Limited (R4), a company previously listed on the Hong Kong Stock Exchange. It is the SFC’s case that R1 and R2 had implemented an elaborate scheme to misappropriate substantial assets from R4, in the range of HK$32.5M to HK$74.27M, via BVI entities that were ultimately controlled by R1 and R2 (“Scheme”). The SFC took urgent action after a former employee of R4 (“Informant”) revealed (inter alia) that (i) R1 was seeking to concurrently dispose of her properties in Hong Kong, Shanghai, and Canada (“Properties”) and relocate to Canada and (ii) R1 had threatened the Informant and her daughter if the Informant “betrayed” (出賣) her, as evidenced by a series of “WeChat Messages” purportedly sent by R1 between August and September 2023. DHCJ Jonathan Wong granted the Injunctions against R1. In particular, the judge found there was a real risk of dissipation by R1, bearing in mind (amongst other things): ·        the nature of the claims against R1 which was based on fraud and dishonesty (referring to Convoy Collateral Ltd [2020] 6 HKC 81, [2020] HKCA 537); ·        the terms of the two SPAs in relation to the Shanghai and Canadian Properties (which R1 had disclosed pursuant to the notification injunction) were highly unusual especially with regards to the timing of their execution, which was shortly after the Informant first approached the SFC close to when the WeChat Messages were sent; and ·        despite R1’s challenge to the authenticity of the #WeChat Messages, the judge found that it was more likely than not that the WeChat Messages had not been fabricated in the circumstances. The full judgment can be viewed here: https://lnkd.in/gtnpeg4p Jin Pao SC and Sheena Wong were instructed by and acted for the SFC (the Petitioner). Bernard Man SC also acted for the SFC at an earlier stage of the proceedings. 

Personal Representatives Must be Registered as Members Before Seeking Court-Convened General Meeting In Tang Yi, as the Administratrix of the Estate of Bong Won Ling (Deceased) v Caliger Enterprises Ltd and ors [2024] HKCFI 1485, Harris J held that the personal representative of a deceased’s estate must first be registered as a member of the defendant companies (“Companies”) of which the deceased was a shareholder, before she has locus to apply under s.570 of the Companies Ordinance (Cap. 622) for the court to order a general meeting. The plaintiff made an application under s.570 to seek orders that each of the Companies convene extraordinary general meetings to consider and resolve reconstituting the board by appointing three additional directors. Harris J held the plaintiff, who was not a member of any of the Companies, did not have locus to pray in aid of s.570 and dismissed her application. A personal representative does not become a member of a company by transmission of shares, but only becomes the legal and beneficial owner of the shares. The plaintiff could only become a member by registration, and  should have applied to the Court under s.159 of the Companies Ordinance, which empowers the Court to order the Companies to register her as a member if her application was “well-founded”. In any event, the plaintiff failed to prove that it was impracticable for her to convene general meetings, as she adduced no evidence that members of the Companies would refuse to attend them. The full judgment can be viewed here: https://lnkd.in/gjuii5aY Laurence Li SC and Brian Lee, instructed by Tony Kan & Co, acted for the 1st, 3rd, and 4th Defendants. Sheena Wong, instructed by Bobby Tse & Co, acted for the 2nd Defendant. 

Court of First Instance on Schedule 2 of the #Arbitration Ordinance There is generally no right to appeal against arbitral awards in Hong Kong under the Arbitration Ordinance (Cap 609), unless the arbitration #agreements provide for it. That is a change from the previous Arbitration Ordinance (Cap 341), where parties had a right to appeal if the arbitration was a “domestic” one. For arbitration agreements executed before the new Cap 609 came into operation, the right to appeal is preserved if the parties “provided that arbitration under the agreement is a domestic arbitration”: s.100(a) of Cap 609.   In Sun Tian Gang v Hong Kong & China Gas (Jilin) Limited [2024] HKCFI 1597, the Court gave guidance on how s.100(a) of Cap 609 is to operate. Rejecting Sun’s argument that he had a right to appeal, Mimmie Chan J held that the arbitration agreement in question did not provide for domestic arbitration. It was not enough that the arbitration would have been a domestic one under the old Cap 341 – the whole point of the legislative change is to create a unitary regime where the #Court did not have to examine whether the arbitration was “domestic” or “international”. As to the principle of legality, Mimmie Chan J held that the language of the statute was clear and there was no justification to read down or limit the scope of s.100(a) of Cap 609. This latest #judgment is line with previous judgments by Mimmie Chan J on s100(a) of Cap 609, including A v D [2017] 1 HKLRD 779 and Employer v Consultant [2022] HKCFI 887. It will hopefully provide clarity to parties and their legal representatives as to their rights to appeal against arbitral awards. Full judgment can be viewed here: https://lnkd.in/gW-ADHgm. Stewart Wong SC, Frederick HF Chan, and Dexter Leung, instructed by Tanner De Witt, for the plaintiff in HCCT 64/2023 & for the respondent in HCCT 84/2023. Laurence Li SC, Martin Ho, and Chee-Ching Sik, instructed by Mayer Brown, for the defendant in HCCT 64/2023 & for the applicant in HCCT 84/2023.

Court of Appeal explains law on notional add-back in ancillary relief proceedings In LCC v LTLA [2024] HKCA 406, the Court of Appeal clarified the law on the court’s jurisdiction to notionally add back wantonly and recklessly dissipated sums into a matrimonial pot. The judgment concerns an appeal from an ancillary relief judgment handed down on 24 June 2022 by Au-Yeung J (“Judge”), where the Husband (“H”) was ordered to pay the Wife (“W”) a lump sum of HK$292m. At trial, W said H incurred around HK$96.59m in gambling losses (“Gambling Losses”) after parties separated. W sought to have those Gambling Losses notionally added back into the matrimonial pot on grounds that H had wantonly and recklessly dissipated them. H said the Gambling Losses should not be added back because (i) W condoned his gambling; (ii) he only suffered HK$29.687m in gambling losses, not HK$96.59m; and (iii) in any event, HK$24,039,689 should be deducted from the Gambling Losses, because that amount was spent on various items, not lost to gambling. The Judge found that H’s evidence on the Gambling Losses was particularly unreliable, and rejected it. Her Ladyship went on to add back the Gambling Losses to the pot. H appealed. His appeal was primarily against the Judge’s decision to add back the Gambling Losses. Allowing the appeal, the Court of Appeal held that notional add-backs must be cautiously made, and an amount can only be notionally added back if there is clear evidence that it has been dissipated. There was no clear evidence that there had been wanton and reckless dissipation of the Gambling Losses by H. The full judgment can be viewed here: https://lnkd.in/d-iJcr9F Bernard Man SC and Cristian Tsang, instructed by Chaine Chow & Barbara Hung, acted for the Petitioner. Theresa Chow also acted for the Respondent Husband in the proceedings below.

Temple Chambers Moot 2024 The 3rd annual Temple Chambers Moot will be held on Saturday 3 August 2024. The last annual moot was held in August 2023. The final round was judged by the Honourable Mr Justice Godfrey Lam, Justice of Appeal and former member of Temple Chambers, Paul Shieh SC, Head of Chambers, and Eva Sit SC. The final round of the upcoming moot will be judged by the Honourable Mr Justice Anderson Chow, Justice of Appeal and former member of Temple Chambers, Paul Shieh SC, Head of Chambers, and Abraham Chan SC. Undergraduate law and JD students are invited to participate in the upcoming moot. For more information, please click here: https://lnkd.in/d7BpZ3VN. #Templechambers #Barrister #Lawstudent #Mootcourt #legal #Career

Laurence Li SC was recently interviewed by the Hong Kong Lawyer. He shared his experience as a barrister and, speaking as #Chairman of the Financial Services Development Council (FSDC), he highlighted some of the exciting #developments in the #financial industry and explained his confidence that Hong Kong will continue to be a leading #international financial centre. He also thanked the other lawyers involved in FSDC’s work. To access the full interview, please click here: https://lnkd.in/gWEwyYiF