RE WEST TRUE DRAGON TRANSPORTATION (HK) LTD

HCCW 47/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 47 OF 2008

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D E C I S I O N

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1.    This is the second time in the course of this week that an ex parte application of this nature has come before me.

2.    The applicant is the petitioner of a petition presented under section 168(A) of the Companies Ordinance, Cap. 32 and section 177(1)(f).  He seeks an order for an interim injunction to restrain the other shareholders, who together hold 60% of the shares of the company in question West True Dragon Transportation (HK) Limited (“the Company”), from exercising their right to vote on their shares at an extraordinary general meeting of the Company to remove him as a director of the Company.

3.    The extraordinary general meeting is scheduled to be held tomorrow.  The application for the interim injunction is made the day before the scheduled meeting.  The petitioner has had notice of this proposed general meeting as early as 28 December 2007, more than a month ago.  I have inquired with counsel why an application is made ex parte the day before the scheduled meeting.  I am told the parties have been in negotiation and that the petitioner has been trying to persuade two of the respondents not to remove him as a director.  It was only early this week that the petitioner knew these two respondents would not accede to his request.  As I have indicated to counsel, I do not consider that a good reason for making this late application, nor do I consider there is any proper reason for the application to be made ex parte.  Leaving that aside, I see no sufficient reason why I should exercise my discretionary power to grant an interim injunction as sought.

4.    The business of the Company is in transportation.  The substantial business of the Company is carried out by its wholly owned subsidiary in Mainland China, a company called West True Dragon Transportation (Guangzhou) Limited.  The petitioner has been removed, rightly or wrongly, as a director of the Mainland subsidiary as early as 15 October 2007.

5.    On 28 December 2007, the 4^th respondent issued a notice to convene a board meeting of the Company on 8 January 2008 to call for an extraordinary general meeting of the Company on 1 February 2008 to consider a resolution to remove the petitioner as a director of the Company with immediate effect.

6.    As I understand the petitioner’s case for seeking an interim injunction, he is saying that if the resolution to remove him as a director is passed tomorrow, he would have no say in the management of the Company and would lose control of how the banking facilities of the Company are to be utilised.  He says there is a risk that the bank would call on the charge on his home and his unlimited personal guarantee, which are part of the securities he provided to the bank for extending facilities to the Company.  Hence, he wants to remain as a director to continue to monitor the Company’s business.

7.    I do not consider that a sufficient reason for an interim injunction.  As I have mentioned earlier, the petitioner has been removed as a director of the Mainland subsidiary which carried on the substantial business of the Company as early as mid October last year. 

8.    The other shareholders and directors have also provided securities to the bank in the form of unlimited personal guarantees.  The 4^th respondent has also charged a property to the bank as additional security.  There is no evidence to suggest that the 1^st to 4^th respondents would behave in an irresponsible way to sabotage the Company or that they would draw on the facilities in such a manner that the bank would call on the securities provided for the facilities to the Company, including the securities furnished by the respondents.

9.    The risk mentioned by the petitioner is wholly speculative.  This is not a proper basis for injunctive relief.

10.    For these reasons, I dismiss the petitioner’s application.