TONG TIN TAI v. ZHANG MINGLIN AND ANOTHER

HCMP 508/2026 & HCA 733/2026
(Heard together)

[2026] HKCFI 4034

HCMP 508/2026

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 508 OF 2026

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AND

HCA 733/2026

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 733 OF 2026

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REASONS FOR DECISION

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1.  The 2^nd Defendant (“Winlight”) is a Hong Kong company incorporated in 1999. It is a holding company and wholly owns a Chinese Mainland subsidiary in Fujian (“Fujian Fanasia”). Fujian Fanasia is engaged in the business of real estate development.

2.  The Plaintiff (“P”) and one Mr Yang (“Yang”) are the two directors and shareholders of Winlight on its incorporation, holding 7,100 shares and 2,900 shares respectively.

3.  Yang is a government official in Fujian. He is acquainted with both P and the 1^st Defendant (“D1”).

4.  P contends that he is the sole beneficial owner of Winlight and the sole contributor to its capital. Yang executed a declaration of trust (“DoT”) in 2003 to confirm that he held his 2,900 shares in Winlight on trust for P. Yang was only a nominee shareholder. This was to provide Yang with sufficient standing to deal with and manage the affairs of Winlight’s subsidiaries in the Chinese Mainland, in light of his extensive experience and business network.

5.  In contrast, D1 contends that Winlight is controlled and owned by Yang. Yang was concerned that his status as a Chinese Mainland public official might attract investigation by the Chinese Mainland government into his holdings in overseas companies or suspected bribery. Yang therefore asked P to set up Winlight in 1999 and be its paper owner and his nominee. Yang will carry out and hold his investments through Winlight. P will hold a majority stake in name on Yang’s behalf and Yang will hold a minority stake. At the same time, Yang executed the DoT so that he could present it to protect himself in response to any investigation by the Mainland Chinese government. In reality, P did not manage the affairs of Winlight or contribute funds for its investments.

6.  D1 contends that in around 2010, Yang asked D1 to jointly invest with him in a plot of undeveloped land in Fuzhou City owned by Fujian Fanasia. They agreed that Yang would provide financing to acquire Fujian Fanasia (and the subject land), and D1 would provide funds for the subsequent development and construction. In return, D1 would get shares in Winlight. Yang suggested that D1 provide funds to Winlight rather than to Fujian Fanasia directly for tax benefits. From around 2011 to 2015, D1 claims to have injected significant capital into Winlight. He claims that he no longer has the payment records due to the long lapse of time. On the other hand, P claims that it was his decision to invest in Fujian Fanasia through Winlight, and he did not know D1 until Yang introduced D1 to him in around 2014.

7.  In 2010, Winlight acquired Fujian Fanasia for RMB 19.2 million. There is a dispute between P and D1 on how the consideration was paid, and who provided the funding. The plot of land owned by Fujian Fantasia was developed into a residential estate. It was completed in phases from mid-2014 to early 2015, and was available for occupation in June 2015.

8.  In March 2016, P transferred his 7,100 shares in Winlight to D1 (“Subject Shares”):

(1)  P’s case is that in around May 2015, Yang and D1 discussed with P about using the name of Winlight to invest in some real estate projects in Indonesia. Although P was not interested in these projects, he agreed to lend a helping hand given his trust in Yang. As P was undergoing treatment for cancer and rehabilitation at that time, to facilitate an effective decision-making process in respect of the Indonesian projects, P and D1 reached an oral consensus that D1 were to hold the Subject Shares as nominee shareholder while P was to remain the sole beneficial owner, and D1 has no interest or rights in Fujian Fanasia and its underlying business (“Oral Consensus”). Pursuant to the Oral Consensus, P transferred the Subject Shares to D1. D1 did not pay for the Subject Shares. D1 was appointed as a director of Winlight, and P ceased to be a director himself. P continued to be widely referred to as the Chairman by the staff members of Winlight and Fujian Fanasia, and he remained to be the ultimate decision-maker.

(2)  D1’s case is that Yang directed P to transfer the Subject Shares to him in return for D1’s injection of funds into Fujian Fanasia in honour of Yang’s promise in 2010. The Subject Shares were transferred to D1 in two tranches (3,100 shares in May 2015 and 4,000 shares in March 2016). This was because it was unclear whether D1 had to provide additional funding in the future, and the amount of shares to be transferred to him had to be adjusted based on the amount of funding he had provided. After the Subject Shares were all transferred to D1, P would no longer play a nominee role in Winlight, and he therefore ceased to be director in March 2016.

9.  In 2022, Yang’s health condition deteriorated rapidly and has since fallen into a vegetative state.

10.  In August 2023, the 2,900 shares in Winlight held in Yang’s name were transferred to P:

(1)  P’s case is that due to the deteriorating health of Yang, the 2,900 shares (which Yang all along held on trust for P) were transferred back to P. P was appointed as a director in place of Yang. The shareholder resolution approving the transfer was signed off by D1 as the chairman of the meeting, and expressly referred to Yang holding the shares on trust for P. The Notice of Change of Company Secretary and Director filed with the Companies Registry for P’s appointment as director was signed by D1.

(2)  D1’s case is that after Yang fell ill, P contacted D1 and proposed to help him operate Fujian Fanasia in exchange for shares Winlight. At that time, D1 was busy with the affairs of his various other overseas. He also needed assistance in managing Winlight because Yang was in a coma, and D1 trusted P. D1 therefore passed the shareholder resolution to approve the transfer, and appointed P to replace Yang as a director of Winlight.

11.  D1 claims that in December 2025, he received a whistleblowing report from Mr Liu (the supervisor of Fujian Fanasia) that there were serious irregularities in the conduct of Mr Ke (the financial manager) and Ms Lin (one of the directors), involving substantial transfer of funds out of Fujian Fanasia without prior approval or justification. D1 caused Winlight (as the sole shareholder of Fujian Fanasia) to issue a notice to suspend the duties of Mr Ke and Ms Lin, and requested them to hand over assets and documents under their control. Mr Liu proposed to set up an independent audit investigative committee. Mr Ke and Ms Lin were uncooperative. Ms Chen who is the legal representative of Fujian Fanasia (and P’s daughter-in-law) also refused to cooperate, and queried the urgency of the investigation and questioned the qualifications of the proposed independent audit investigative committee.

12.  Given the obstructive attitude of Mr Ke, Ms Lin and Ms Chen, D1 took steps to take control of Fujian Fanasia:

(1)  On 3 February 2026, D1 procured Winlight to execute a shareholder resolution of Fujian Fanasia (“Fujian Fanasia Resolution”) to appoint his son as a director and legal representative of Fujian Fanasia, amend its articles of association and submit the relevant applications to the Fuzhou Administration for Market Regulation (“FAMR”) to effect the changes. D1 contends that he is entitled to do so, pursuant to a board resolution of Winlight in October 2023 which allows each of P and D1, as a single director, to execute declarations or shareholder resolutions of Fujian Fanasia on behalf of Winlight.

(2)  On 27 February 2026, D1 passed a shareholder resolution of Winlight (in the absence of P as the other shareholder) to remove P as a director of Winlight and appoint D1’s son in his place (“Winlight Resolution”). D1 accepts that the Winlight Resolution is invalid. It was passed at an inquorate meeting (the articles require a quorum of two members). No notice of the meeting was given to P as a shareholder and also as the director sought to be removed.

13.  On 31 March 2026, P commenced HCMP 508/2026 against D1 and Winlight to challenge the validity of Fujian Fanasia Resolution and Winlight Resolution and to restrain D1 from exercising the right of Winlight as a shareholder of Fujian Fanasia unless duly authorized by Winlight’s board. On the same day, P issued an inter partes summons (“HCMP Summons”) seeking interlocutory injunctions for the same reliefs.

14.  The HCMP Summons was first heard by Recorder Jose Maurellet SC on 17 April 2026 and was adjourned to 24 April 2026 before me for interim-interim relief, which I refused to grant by reason of lack of extreme urgency: [2026] HKCFI 2502. In particular, the FAMR has at that time refused to effect the change of management of Fujian Fanasia in view of P’s objection, so there was no imminent risk that any change would take effect. D1 gave an undertaking not to implement the Winlight Resolution to effect the board change of Winlight pending substantive argument. An interlocutory injunction to the same effect was made against Winlight by Recorder Jose Maurellet SC and continued by me.

15.  On 7 May 2026, P commenced HCA 733/2026 against D1 and Winlight. He seeks a declaration that D1 holds the Subject Shares on bare trust, constructive trust and/or common intention constructive trust for P by reason of the Oral Consensus, and asks for transfer of the Subject Shares back to him. On 11 June 2026, P issued an inter partes summons (“HCA Summons”) seeking interlocutory injunctions to restrain D1 from exercising the right as a shareholder of Winlight (including to call a general meeting) to appoint any additional director or remove P as a director, and from disposing of the Subject Shares.

16.  The HCA Summons was first heard by DHCJ Grace Chow on 18 June 2026. D1 gave an undertaking not to appoint additional director or remove P as director of Winlight or call a general meeting for such purpose. The HCA Summons was adjourned to be heard together with the HCMP Summons.

17.  The HCMP Summons and HCA Summons came before me on 8 July 2026. Mr Ambrose Ho SC, leading Mr Aidan Tam and Mr Jacky Zhang, appeared for P. Mr Ernest Ng and Ms Nicole Chui appeared for D1.

18.  Mr Ho confirms that P will not pursue the injunctions sought in the HCMP Summons regarding the implementation of the Fujian Fanasia Resolution and exercise of Winlight’s right as shareholder of Fujian Fanasia, in view of the FAMR’s firm stance so far that it will not effect the changes under the Fujian Fanasia Resolution. There is thus no need for any interim protection pending the determination of the action. P will continue to pursue the injunction restraining the implementation of the Winlight Resolution in light of D1’s continued threat to effect the board change of Winlight. Mr Ng accepts that this injunction stands and falls with the HCA Summons, to which I now turn.

19.  At the core of the HCA Summons is who owns the Subject Shares. Mr Ho submits that there is a serious issue to be tried that P is the sole beneficial owner of Winlight (including the Subject Shares), and this supports the veracity of the Oral Consensus:

(1)  The DoT executed by Yang corroborates P’s case that Yang is a nominee and P is the true owner of Winlight. This was acknowledged by D1 when he signed off the shareholder resolution to approve the transfer of Yang’s 2,900 shares in Winlight to P in 2023 ([10(1)] above). D1’s case that the DoT is in effect a sham document created to shield Yang from possible future investigation by the Chinese Mainland government is a serious allegation of impropriety, is no more than a bare assertion and incredible, and must be approached with extreme caution given Yang is unable to respond by reason of his incapacity.

(2)  D1’s case that Yang has promised him shares in Winlight in return for D1’s fund injection in Fujian Fanasia is ambiguous and lacks particularity. There was no discussion on how many shares would be given to D1, or the reason for eventually giving 7,100 shares, or how D1’s fund injection translated into a 71% shareholding. There is also no explanation why despite starting to contribute funds in 2011 (as D1 alleges), he did not get any shares in Winlight (or at least some portion of them) to signify his contribution until the first tranche of the Subject Shares were transferred to him in 2015.

(3)  P produces evidence which he claims to show that he has been the sole contributor to the capital of Winlight and its subsidiaries. These include his direct payment of RMB 600,000 to Yang in February 2010, and settlement of the balance of the purchase price of Fujian Fanasia by way of a sum of RMB 5 million paid out of P’s personal account. In contrast, D1 is unable to produce any evidence that he has injected capital in Fujian Fanasia through Winlight, which is meant to be the quid pro quo for the Subject Shares.

(4)  P was involved in the daily operation of Fujian Fanasia, including approving staff movements and payrolls (I note that D1 disputes the authenticity of P’s signature). This undermines any suggestion that P is only Yang’s nominee. In contrast, there is little if any evidence from D1 to show that he was participating in the business of Fujian Fanasia. All he has produced are some WeChat messages with staff of Fujian Fanasia. They were all in 2025.

20.  In response, Mr Ng submits that the Oral Consensus is incredible:

(1)  The register of members is prima facie evidence of any matters that are inserted therein. The presumption is that beneficial ownership of shares vests in the legal owner.

(2)  D1 has been the registered owner of the Subject Shares since March 2016. P alleges the Oral Consensus after 10 years of dealings, and only after the relationship between P and D1 became strained. There is no documentary evidence in support. There is no mention of the Oral Consensus in any communication between P and D1. It is incredible that a controlling stake worth millions of dollars would be entrusted to a mere acquaintance by an oral agreement, especially when P found it necessary to have the DoT in place in respect of a minority shareholding in Winlight. This is all the more implausible when P claims that he did not know D1 well, and he reached the Oral Consensus because of his trust in Yang. The Oral Consensus also left D1 with no security in the Indonesian projects.

(3)  The rationale for the Oral Consensus is inherently incredible. It was not a mandatory requirement to use Winlight’s name to invest in the Indonesian projects. The Subject Shares can also be transferred to Yang alone, or arrangements could be made to ensure that Yang holds a majority stake so that he can maintain control. There is also no need for P to resign as director of Winlight, if P remains as the ultimate owner and decision-maker of Winlight.

(4)  P did not demand D1 to return the Subject Shares after Yang was incapacitated and could not monitor D1.

(5)  D1’s son is a director of Fujian Fanasia and oversees its various departments. If the Oral Consensus exists and D1 agreed that he would have no interests or rights in Winlight, it is inconceivable for his son to have taken such an active role in Fujian Fanasia.

(6)  P has adduced no record to support his bare assertion that he was the sole contributor to the capital of Winlight. There is no documentary evidence to show that the payments made by P are injected into Winlight or applied to the operations of Fujian Fanasia.

(7)  Any difficulty posed by the unavailability of corroborating evidence from Yang by reason of his health condition cuts both ways: it applies equally to P’s evidence.

21.  Whilst there is force in both counsel’s submissions, I am of the view that P has crossed the threshold of establishing a serious issue to be tried, which is not a very steep hurdle. There are certainly merits in Mr Ho’s submission that I should treat D1’s case with some caution, since it involves a serious allegation of impropriety against a Chinese Mainland official (Yang) and use of a sham document (the DoT) created for the purpose of fending off potential investigations by the Chinese Mainland government. In contrast, the threshold of showing no serious issue to be tried is a high one, as it would be necessary to demonstrate that the claim should be struck out: Hong Kong Civil Procedure 2026 at 29/1/10, citing Yifung Properties Limited v Manchester Securities Corp (CACV 258-259/2015, 9 September 2016) at [20]. Despite the eloquent submissions from Mr Ng, I am not satisfied at this stage that P’s claims lack substance and have no prospect of success in reality.

22.  There is clear evidence that D1 intends to deal with the Subject Shares and exercise the shareholder rights attached to them:

(1)  On 11 March 2026, D1 transferred 200 shares out of the Subject Shares to each of his son and daughter. The share transfers are pending approval by the board of Winlight.

(2)  On 27 May 2026, D1 requested Winlight to call a general meeting and moved shareholder resolutions to appoint his son as director of Winlight and remove P from the board, after being served with the Writ in HCA 733/2026. He refused to withdraw the request and proposed resolutions, or provide an undertaking in the meantime. D1 has no intention to acknowledge the disputed ownership in the Subject Shares pending the determination of the action.

23.  I agree with Mr Ho that damages are an inadequate remedy:

(1)  For the proprietary injunction to preserve the Subject Shares, there is no need to show that damages would not be an adequate remedy: Gentle Soar Limited v CMBC Capital Finance Limited & Anor [2021] HKCFI 3450 at [36].

(2)  For the injunction to restrain D1 from exercising any voting rights attached to the Subject Shares, this is ancillary to the proprietary injunction over the Subject Shares. In any event, infringement of a shareholder’s voting rights cannot be compensated by damages: Pacific Telecom & Navigation Limited v Ye Lei [2020] HKCFI 586 at [30] and [34].

(3)  D1 admits that one of the purposes of securing a majority at the board of Winlight is to cause Fujian Fanasia to carry out changes in its senior staff members and replace with people from D1’s camp. D1 also intends to remove P as a director of Winlight. P will be then be unable to have meaningful checks and balances in both Winlight and Fujian Fanasia in the meantime. Any harm that may be caused to P’s interest as the beneficial owner of the Subject Shares is likely to be irreparable and difficult to be quantified in money terms. The interest of third parties dealing with a wrongly constituted board of Fujian Fanasia may also be adversely affected, should the Court in the end find in favour of P’s case.

24.  The balance of convenience plainly lies in granting the injunctions to preserve the status quo and maintain the same board composition of Winlight.

(1)  Winlight is a holding company. There is no urgency to effect any board change.

(2)  As for D1’s concern that the affairs of Fujian Fanasia have to be investigated urgently, D1 may either apply to the Court to appoint an independent director or manager to the board of Winlight, or receivers over Winlight’s shares in Fujian Fanasia, so that any necessary protective steps may be taken.

(3)  Any harm and prejudice caused by any unauthorized dealings in Fujian Fanasia in the meantime would be quantifiable and compensated by way of damages.

(4)  There is no urgency for D1 to deal with or dispose of the Subject Shares.

25.  For the above reasons, at the conclusion of the hearing on 8 July 2026, I granted the injunctions sought in the HCMP Summons and the HCA Summons, with P’s costs in the cause and certificate for one junior counsel. Although P did not pursue all the injunctions sought in the HCMP Summons, it was because there was no practical necessity for urgent protection in light of the firm stance taken by the FAMR ([18] above), rather than a concession of defeat on P’s part. There is therefore no reason to penalize P on costs or award D1 on any part of his costs, when P must be regarded as the overall winner.

26.  I thank counsel for their assistance.