SONG LIAN ZHONG AND OTHERS v. CHAN SZE WAN AND OTHERS

HCA 277/2013

[2019] HKCFI 2683

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 277 OF 2013

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DECISION

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1.  In this application, the plaintiffs apply by summons dated 6 August 2019 for an order that:

“Unless the 1^st, 4^th and/or 5^th Defendants do within 7 days from the date of the Order to be made herein execute the instruments of transfer and/or other necessary documents for the transfer of all the estate, right, title, interest and benefit of the said Defendants of and in the shares now registered in their names to the 1^st Plaintiff or his nominee(s) in respect of the following companies:-

(i)  China NTG Investments Limited; and

(ii) China NTG Investment Limited,

the Registrar of the High Court be appointed by the court and be invited and requested to execute the same as if they are executed by the 1^st, 4^th and/or 5^th Defendants.”

2.  This matter arises out of a judgment from Madam Recorder Teresa Cheng SC dated 23 May 2017 following a trial of the action in which she gave various declarations which are recorded in the sealed judgment and include a declaration that the 1^st plaintiff is the rightful owner of 46% shareholding in China NTG Investments Limited collectively held by the defendants themselves and/or their trustees and/or their nominees on trust for the 1^st plaintiff.  The Court of Appeal in a judgment dated 12 October 2018 upheld the decision of Madam Recorder Teresa Cheng SC.  The 1^st, 3^rd and 4^th defendants have made an application for leave to appeal to the Court of Final Appeal, but as at the date of this decision that application remains pending.

3.  By a letter dated 2 October 2019, the solicitors for the 1^st, 3^rd and 4^th defendants have indicated that they do not oppose the plaintiffs’ summons and would consent to an order being made in the terms thereof.  In the circumstances, I make an order in accordance with the terms of paragraph 1 of the summons.

4.  Paragraph 2 of the summons is in the alternative and given that I have made an order in the terms of paragraph 1, it does not arise.

5.  Paragraph 3 of the summons seeks an order as follows:

“The 1^st Plaintiff be declared to be the rightful owner of CNTG Energies Group Limited, a deregistered Hong Kong company, being an entity within the meaning of paragraph 3 of the Judgment.”

6.  Paragraph 3 of the sealed judgment is in the following terms:

“The 1^st Plaintiff be declared to be the rightful owner of any other direct or indirect interests of CNTG BVI (or any of its subsidiaries) dealing in the business of supplying natural gas in certain provinces and localities in Mainland China (‘the Project’).”

7.  It is said that CNTG Energies Group Limited falls within paragraph 3 of the judgment.  That is despite Madam   Recorder Teresa Cheng SC saying in paragraph 104 of her judgment that:

“The expenditure that can be seen from these accounts is in the order of HK$150 million in less than two years. Moneys have been paid to outside companies such as a CNTG Energies Group Limited which is related to Annie Chan.”

8.  It would thus appear from the judgment that the recorder was of the view that CNTG Energies Group Limited was an “outside company”.  I have been told today that that was, in the context of that judgment, not an inaccurate statement but it did not represent the entire position.  The Court of Appeal did not address the matter further. 

9.  It would appear from the annual return of CNTG Energies Group Limited in Hong Kong that the shareholder is a company known as CNTG Energies Group Limited Corporation with an address in the BVI.  That corporation is not before this court, is not a party to this action although has been served with these papers.  CNTG Energies Group Limited (the Hong Kong company) has been deregistered and the plaintiffs wish to have the declaration that it falls within paragraph 3 of the sealed judgment of Madam Recorder Teresa Cheng SC in order that it may apply for a re‑registration of the company because, the plaintiffs say, CNTG Energies Group Limited is in fact the owner of various oil and gas projects in China which do fall within paragraph 3 of the sealed judgment.

10.  I note that the 1^st, 3^rd and 4^th defendants consent to an order in the terms of the summons.  It would therefore appear that there is some merit in the proposition made by the plaintiffs that CNTG Energies Group Limited does in fact fall within the terms of paragraph 3.  However, I am not satisfied that this court is the correct place in which a declaration as to that should be made.  It seems to me that if I were to make a declaration in terms of the summons, I would run the risk of overriding the potentially legitimate interests of the currently recorded shareholder of CNTG Energies Group Limited, namely the BVI corporation.  I am not prepared to do that in circumstances where the BVI corporation has not had a full and complete opportunity to address this court.

11.  I am aware and conscious of the fact that they have in fact been served with the summons.  However, that does not properly bring that organisation before the court for the purpose of a declaration as to the proper ownership of what, on the official documentation, appears to be the corporation’s subsidiary.  If there is a proper venue for that to be addressed, it seems to me it is probably the Companies Court. 

12.  Therefore, despite having some sympathy for the position which the plaintiffs face, I am not prepared to make an order in terms of paragraph 3 of the summons.  I will not dismiss it.  I will simply make no order and will leave the plaintiffs to whatever remedies they may obtain through the Companies Court concerning re-registration and addressing, probably within the Companies Court, the proper ownership of CNTG Energies Group Limited incorporated in Hong Kong. 

13.  As to costs, I make a costs order that the costs of this application be to the plaintiffs forthwith.