TU JIANHUA v. USUM INVESTMENT GROUP HONG KONG LTD

HCMP 118/2025

[2025] HKCFI 2782

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 118 OF 2025

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D E C I S I O N

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1.  On 21 January 2025, the Applicant Tu Jianhua (“Mr Tu”)  filed an Originating Summons (“OS”)  for leave to commence a statutory derivative action in the name of USUM Investment Group Hong Kong Ltd (“the Company”)  under s.732 - 733 Companies Ordinance (Cap. 622)  against Beijing Long An Law Firm (“D1”), Beijing Dacheng (Shanghai)  Law Firm (“D2”)  and Pingyang Yansheng Equity Investment Centre (Limited Partnership)  (“D3”).

2.  According to the draft Statement of Claim (“SOC”)  annexed to the OS, the Company is incorporated in Hong Kong and is an intermediate holding company within a group of companies under a PRC company.  The Company’s sole shareholder is USUM Investment Group Ltd (“USUM PRC”)  but Mr Tu claims to be the ultimate majority beneficial owner of the Company.

3.  D1 and D2 are law firms which, by an order of a PRC court made on 7 February 2022, were appointed joint administrators of 13 companies including USUM PRC. 

4.  It is alleged in the SOC that in July 2024, D1 and D2 improperly and without authorization altered a restructuring plan (which had been approved by the PRC court on 21 November 2022)  by entering into certain agreements with D3, and purported to remove Chen Danni (“Ms Chen”)  and Miao Yu (“Mr Miao”)  as the Company’s directors in December 2024. The relief claimed in the SOC are for an injunction and damages.

5.  On 4 March 2025, Haldanes filed an Acknowledgment of Service (“AS”)  purportedly on behalf of the Company. 

6.1  On 10 March 2025, Mr Tu’s solicitors wrote to Haldanes denying the latter’s authority to act for the Company, asserting that Ms Chen and Mr Miao who remain the Company’s directors as they had not been validly removed had not authorized Haldanes’ engagement to act for the Company. 

6.2  On 13 March 2025, Haldanes replied that USUM PRC as the Company’s sole shareholder had on 4 December 2024 passed a resolution to remove Ms Chen and Mr Miao as directors of the Company.  

6.3  The same day (13 March 2025), Mr Tu filed a summons for an order that the AS filed by Haldanes be struck out on the ground that Haldanes had no authority to act for the Company (“the Authority Summons”).

7.1  However on 18 March 2025, Haldanes wrote to Mr Tu’s solicitors alleging that Mr Tu was no longer a shareholder of the Company as a transfer of shareholding had been approved by the PRC court, and consequently Mr Tu had no locus standi to maintain the OS.

7.2  This was followed on 29 April 2025 by a summons filed by Haldanes for an order that the OS be struck out on the ground that Mr Tu has no locus standi to seek leave to commence a statutory derivative action on behalf of the Company (“the Locus Summons”).

8.  The question then arose as to which of the Authority Summons or the Locus Summons should be heard first, or together. This is the question I have been asked to decide today.

Discussion

9.  Having read counsel’s submissions and authorities and heard them orally, I consider that it would be logical, as well as sensible from the point of view of time and costs, for the Authority Summons to be heard first.  The conduct of any litigant’s proceedings lies primarily with its solicitors.  Where the solicitors’ authority to act for that litigant is challenged, that challenge should be raised at the outset and determined by the court at the earliest opportunity, because acts of commission (or omission)  by solicitors directly impact upon the litigant, its opponents and the court’s proceedings. 

10.  In the present case, the Authority Summons was issued by Mr Tu in good time and is supported by (among other things)  a PRC legal opinion.  As at the time of this hearing, the evidence in opposition has not been read, but it has not been suggested in written or oral submissions before me that the Authority Summons was itself frivolous, vexatious or an abuse of the process.

11.  I do not consider that the Locus Summons could or should be heard first before one knows if Haldanes was authorized even to issue it on the Company’s behalf. 

12.  I also consider that the Summonses should not be heard together as that would be tantamount to hearing the authority challenge together with substantive issues in the case, a procedure discouraged by the Court of Appeal in Bold Shine Investment Ltd v Zheng Deli[1]

13.  In the circumstances, I would make the following order:

(1)  Time to file and serve evidence in opposition to the Authority Summons is extended to 26 June 2025 with costs agreed at $1,040 to be paid to the Applicant forthwith;

(2)  Leave to the Applicant to file and serve evidence in reply thereto within 42 days thereafter;

(3)  The Locus Summons be stayed pending determination of the Authority Summons;

(4)  Costs of this hearing be to the Applicant.