CHUNG HO FAI v. GORDON (HK) DESIGNER & ENGINEER LTD AND OTHERS

HCMP1203/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.1203 OF 2004

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J U D G M E N T

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1. This is an ex parte application for an injunction by the petitioner, a minority shareholder in the 1st respondent, Gordon (H.K.) Designer & Engineer Limited ("Gordon HK") to restrain the majority shareholders the 2nd and 3rd respondents from "taking any further step(s) to apply for or obtain a Certificate of Competence (資質証書) to be issued from or to be granted by the Ministry of Construction of the People's Republic of China (中華人民共和國建設部) to the Beijing Gordon Strike Interior & Design Company Limited (北京哥頓進工設計工程有限公司) ("BGS") save and except the BGS would be wholly owned by Gordon (H.K.) Designer and Engineer Limited ("Gordon HK")". Paragraph 2 of the ex parte originating summons set out various steps which are covered in paragraph 1 of the ex parte originating summons. And paragraph 3 seeks further injunction to restraining the 4th respondent Chua Koh Ming (蔡國民) "from further purportedly representing Gordon (H.K.) Designer & Engineer Limited under the name of authorized representative (法定代表) or any name likely to mislead or deceive the public or the authorities in the P.R.C. into the belief that Chua Koh Ming has the due authorization from Gordon (H.K.) Designer & Engineer Limited to represent the latter in transacting or conducting business relating to the incorporation and registration of, opening bank accounts to be held by and application for a grant of a Certificate of Competence (資質証書) from the Ministry of Construction of the People's Republic of China (中華人民共和國建設部) to the said BGS".

2. Gordon HK, the 1st respondent, has been doing business in the Mainland. However, I understand from the affirmation of Mr Chung Ho Fai, the petitioner, there has been a change in the Mainland regulations which now requires the registration of a PRC company to conduct such business. The newly formed PRC company would be permitted to takeover the business of Gordon HK and it seems a new certificate of competence would be issued to the new company. It is said that there is some urgency in the matter because the existing certificate of competence expired at the end of April this year and that the application for the registration of a new company to takeover or to obtain a replacement certificate of competence has already progressed to its final stages. In fact, Mr Kwan who appeared for the petitioner told me this morning that the application has been approved but there are other procedural steps which have to be undertaken before the matter is finalised.

3. The plaintiff's complaint is that the new company which is formed to takeover the business in China which is a company called Beijing Gordon Strike would be owned as to 49% by Gordon HK and 51% by the 2nd respondent, which is a Singaporean company. The 2nd respondent as I understand directly and indirectly owned 51% of the 1st respondent Gordon HK. It is said that the plaintiff would suffer irreparable damage if an ex parte injunction is not granted.

4. I do not think this is a case where I ought to grant any ex parte relief. If, indeed, as alleged by the petitioner, the registration of the new company is a fraud on Gordon HK or more importantly on the petitioner as minority shareholder, there are ample remedies available in Hong Kong to the petitioner.

5. As for the urgency justifying an ex parte application it is suggested that if notice was given to the respondents, they might, out of the cash resources of Gordon HK paid over RMB4.9 million to the new company to be formed in China so that there would be no running capital left to form another 100% owned subsidiary to carry on the business Gordon HK in the PRC. I have clarified with Mr Kwan and it is indeed the case that Gordon HK has cash resources out of which RMB4.9 million could be paid out. However, if there is indeed a fraud on the minority or a fraud on the 1st respondent, the 51% of the shares in the new company which would presumably be issued in favour of the 2nd respondent may well be held on trust by the 2nd respondent for the 1st respondent. In that case, there would be no doubt a remedy available to the 1st respondent in Hong Kong. Moreover, it seems from the affirmation of Mr Chung Ho Fai that the new company BGS in the Mainland would have a paid-up capital of RMB10 million, out of which Strike, the 2nd respondent, presumably would contribute RMB5.1 million and then Gordon HK RMB4.9 million.

6. So I do not think a case for an ex parte application has been made out and therefore, for all these reasons, I refuse to grant the ex parte orders sought.