LAO YUAN YI v. BEIJING HANTONG YUZHI CONVENTION CENTRE LTD

FAMV No 5 of 2016

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 5 OF 2016 (CIVIL)

(ON APPLICATION FOR LEAVE TO APPEAL FROM

CACV 163 OF 2014)

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REASONS FOR DETERMINATION

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Mr Justice Tang PJ:

1. At the hearing we dismissed the defendant’s application for leave to appeal.  These are our reasons.

2. This action concerns the beneficial ownership of one of two issued shares in Praiseup Ltd, a Hong Kong company, registered in the name of the defendant.  The plaintiff’s case is that the defendant holds the share in trust for China Venture Tech International Investment Corporation Shanghai (“VTI Shanghai”), a wholly owned subsidiary of China Venture Tech Investment Corp (“VTI China”).  Both VTI China and VTI Shanghai were state-owned non-financial enterprises.

3. In June 1998, the People’s Bank ordered that VTI China be closed down and that its investments in and loans to its subsidiaries be disposed of by the winding-up committee.  The facts have been comprehensively stated in the judgment of To J and will not be repeated here. Suffice it to say that in October 2007, the plaintiff purchased VTI China’s investments, including its investment in VTI Shanghai. 

4. The defendant challenged the locus standi of the plaintiff to bring this action and the question was ordered to be tried as a preliminary issue.

5. It is accepted that whether the plaintiff has locus standi depends on PRC law and regulations which is a question of fact.  At the hearing of the preliminary issue, To J had the benefit of expert evidence from Mr Sun Jianming for the plaintiff and Mr Pu Hong for the defendant whose expert reports ran to 75 pages (without enclosures).  To J concluded:

“74. … Under the law of the PRC applicable to such an enterprise, the Plaintiff as beneficial owner of the 100% shareholding in VTI Shanghai has capacity to participate in litigation on behalf of VTI Shanghai in its own right or as the person responsible for its liquidation. In the circumstances, the Plaintiff has the locus standi to sue the Defendant for the return of the share in Praiesup which he admittedly holds on trust for VTI Shanghai.”

6. On appeal, this finding was affirmed by the Court of Appeal after a detailed consideration of the expert evidence.

7. Mr Bernard Man, who appeared for the defendant, accepted that there were thus concurrent findings of fact against the defendant. Despite his valiant effort, we were not satisfied that this is one of those exceptional cases where we should give leave on the “or otherwise” ground and allow a further appeal.