LI GUOZHU v. MA HONGQI AND OTHERS

HCA 2023/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2023 OF 2009

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D E C I S I O N

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1. By the order made on 2 May 2014 with the consent of the plaintiff on the one hand, and the 1^st, 2^nd, 3^rd, 10^th, 12^th and 13^th defendants (“the said Defendants”) on the other, the applications by the said Defendants to strike out these proceedings or alternatively to discharge the interlocutory injunction granted by Deputy High Court Judge Carlson on 9 October 2009 (“the Interlocutory Injunction”) have been disposed of in the following manner:

(1) These proceedings (including any interlocutory proceedings) be stayed as against the said Defendants;

(2) The striking out application issued by the said Defendants be withdrawn;

(3) The Interlocutory Injunction shall cease to have any effect on the 1^st, 2^nd, 3^rd, 12^th and 13^th defendants, and their respective names shall be removed from the Interlocutory Injunction, save and except that the same shall continue to be binding on the 11^th defendant;

(4)   Each party shall bear his/her own costs of the application.

2. Therefore, it only leaves the application for final judgment and post‑judgment injunction by the plaintiff against the 11^th defendant company.  The application for the extension of the validity of the writ will be adjourned sine die by reason of the order to stay these proceedings.

3. On 18 December 2009, the 11^th defendant company filed its Acknowledgement of Service stating that it did not intend to contest these proceedings.

4. By Summons dated 3 April 2014, the plaintiff applies to enter final judgment against the 11^th defendant and post-judgment injunction.

5. It is trite law that the power to make binding declaration of right is a discretionary power.  Usually, a declaration can only be made after proper argument and cannot be made by consent or in default without a trial.

6. The plaintiff submits that a declaration can be granted without trial, if the plaintiff has a genuine need for such relief and the court could properly grant it based on the merits of the case.

7. Having considered all the circumstances of this case, I am not satisfied that I should exercise my discretion to grant the declaration in favour of the plaintiff against the 11^th defendant.

(1) The 11^th defendant is very much a nominal defendant in this action.  No cause of action is pleaded against the 11^th defendant in the Statement of Claim.  The real fight is between the plaintiff and the said Defendants over the control of the 11^th defendant.

(2) The plaintiff is the majority shareholder and in control of the 11^th defendant. Not surprisingly, the 11^th defendant has not contested this action.

(3) There are ongoing legal proceedings in the People’s Republic of China between the plaintiff and the said Defendants regarding the validity of the company resolutions of the 11^th defendant, the subject matter of the declaration sought.  This makes it wholly inappropriate for this court to make any binding and final declaration of right, even if it only relates to the 11^th defendant.

(4) According to the plaintiff, there is a need for the declaration and an injunction to prevent any attempt to file improper company returns with the Companies Registry.  In this regard, I am of the view that the plaintiff’s position is sufficiently protected by the Interlocutory Injunction, which is to remain binding on the 11^th defendant notwithstanding the stay of this action as against the said Defendants.  Accordingly, in my view, the plaintiff cannot be said to have a genuine need for the declaration sought.

8. For the reasons stated above, the plaintiff’s Summons dated 3 April 2014 is dismissed.