XCHRX SECURITIES AND FUTURES COMMISSION v. MANDARIN RESOURCES CORPORATION LTD. AND ANOTHER

HCCW348/96

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING UP PROCEEDINGS NO. 348 OF 1996

--------------------

--------------------

--------------------------

D I R E C T I O N S

--------------------------

1. I give these written directions pursuant to a summons taken out by the 2nd Respondent Mr Chim Pui-chung and heard in chambers on Monday 1st March 1999.

2. I did not give the directions at the time of the hearing because Mr Chim had prepared a 10 page submission written in Chinese which neither the Court nor Mr Rogers, who appeared for the Plaintiff, was able to read.

3. It was agreed by all that in the time available (it was listed for a 30 minute hearing) the parties would make their oral submissions and then the Petitioner undertook to prepare a translation of Mr Chim's written submission which they would send to the Court as soon as possible. The written translation was received on 4th March. I have read and considered it in addition to the oral submissions and I now make the following directions.

4. Mr Chim made five applications. I will deal with them in turn.

1. Firstly he sought a direction that at the hearing of the Petition the Court should restrict itself to hearing matters related to Mandarin Resources and its interest and no other companies.

The Court has given directions on this issue at previous hearings. In November and December of 1996 both the 1st Respondent (Mandarin Resources) and the 2nd Respondent took out summons seeking to limit the scope of the Petition by applying to strike out various parts of it which, they submitted, did not relate to Mandarin Resources. The summonses were dismissed. The judge hearing the matter, Rogers J. (as he then was) delivered a written judgment on 7th January 1997. This issue was not appealed. It is not appropriate to re-open the issue now, six weeks before trial. Accordingly I do not make the direction sought. Of course, relevance will be an on-going issue during the hearing of the Petition.

2. Mr Chim's second application is that the Court should only hear matters concerning Mandarin Resources which occurred before the date of the issue of the Petition, namely 25th June 1996.

This matter was also aired and determined at the time of the previous summons (supra). Again, leave was granted to plead post-petition events in the Petition. Again, regardless of the detailed matters set out in Mr Chim's written submission, it is simply not appropriate to make new directions which fly in the face of the Courts' rulings.

For the avoidance of doubt, even if this were the first time such directions were being sought, this Court would have made the same orders as made by Rogers J. in January 1997.

3 & 4. Mr Chim's application in paragraph 3 of the summons is a request for "a special meeting of shareholders". The 4th paragraph makes a similar request. The difference appears to be that by paragraph 3 approval is sought from the minority shareholders to call a "special meeting" (an EGM) and by paragraph 4 a direction is sought that the Court should call an EGM.

Provisional liquidators were appointed on 23rd July 1996. Over 31/2 years have passed since then. The hearing of the Petition is due to commence on 19th April 1999. I am not persuaded that any useful purpose would be achieved if a special meeting of the minority shareholders was convened at this stage.

5. By paragraph 5 of the summons Mr Chim seeks a stay in the proceedings pending his appeal of the Court's order for directions made on 19th January 1999. The directions concerned, inter alia, the conduct and timing of the substantive hearing. On that occasion a further adjournment of the hearing was granted to 19th April 1999. Mr Chim lodged notice of appeal against all the directions made and that appeal is due to be heard on 23rd March 1999.

To stay all proceedings pending an appeal of summons for directions would only be appropriate in exceptional circumstances and for a specific reason. Otherwise, not only would litigation never end, it would never begin either. It is neither prejudicial nor unreasonable to expect the Respondents to continue with their preparation for trial in compliance with the Court's directions, pending the outcome of the appeal. The only thing which should effect the directions made on 19th January is the result of the appeal, not the lodging of the appeal.

5. I dismiss all five applications with costs. The 2nd Respondent must be under no illusions that, subject to the Court of Appeal's decision on 23rd March, it is intended that this trial will start on 19th April.