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

____________

BETWEEN

____________

__________

R U L I N G

__________

1.  The 10th Defendant is applying to discharge an inter partes injunction made by me on 9 October 2009 against the 11th Defendant which is a Hong Kong company. He has been met with the response, inter alia, that he has no locus to apply for such an order which I am deciding first, as a preliminary issue. If he has no locus, that is an end of the matter so far as he is concerned.

2.  This is a dispute between 14 individuals who live in the mainland (that is to say the Plaintiff and the 1st to 10th Defendants and the 12th and 13th Defendants), and the 11th Defendant, the Hong Kong company. The present state of the litigation is that on 29 September, Beeson J granted the Plaintiff an injunction ex parte in these terms [and I need to set out the terms because they will be material to the issue that I am now required to decide]:

“IT IS ORDERED THAT:-

The 11^th Intended Defendant (whether acting by itself, its directors, officers, employees, servants, agents or otherwise howsoever (including the 1st to 10th and the 12th to 13th Intended Defendants, namely, Ma Hongqi (馬紅其), Cai Hongming (蔡鴻銘), Shu Weimin (殳偉民), Zhang Zheng (張正), Huang Shu (黃舒), Zou Xiangzhuang (鄒憲壯), Miao Chenwei (繆晨煒), Li Anping (李安平), Shang Jiong (尚炯), Jiang Wensong (姜文松), Mao Ruiqui (茆瑞琪) and Xiao Jin (肖進) be restrained, from:-

(1)   implementing or otherwise carrying into effect the resolutions (‘the Resolutions’) of the 11th Intended Defendant dated 25^th August 2009 and 26^th August 2009 passed on the meetings of, namely:-

(a)  the Board of Directors Meeting; and

(b)  the Shareholders/former shareholders;

copy of which are annex hereto (together with its English translation);

(2)   purporting to pass any resolutions, doing any acts and/or passing any resolutions of the same effect as the Resolutions;

(3)   Leave be granted to the Plaintiff to serve the said Ex Parte Order out of the jurisdiction on the 1st to 10th and the 12th to 13th Defendants pursuant to Order 11(1)(C) Rules of High Court, Cap.4;

(4)   Costs of and occasioned by this Application be reserved to the hearing of the inter parte summons or any further order of the court; and

(5)   Liberty to apply.”

3.  What is apparent from the Order is that it is an Order against the 11th Defendant [the company] only, although the Order makes clear that the 11th Defendant is enjoined from doing the acts referred to in paras 1-3 of the injunction “whether by itself, (albeit that it is difficult to conceive how a company might do anything by itself where it acts through its directors and those charged with its management)” and thereafter more relevantly “its directors, officers, employees, servants, agents or otherwise howsoever (including in this case all the other Defendants who are named including the 10th Defendant whose application this is)”.

4.  And so, this Defendant is one of the parties named in the Order, which is a matter that I will return to shortly.

5.  The parts of the Order relating to its Duration says that the return date is to be on 9 October 2009 but contemplates that such a hearing need not take place if the 11th Defendant serves notice that it does not require the application to discharge the Order to come back to court, which serves to underline that it is only the 11th Defendant that is the subject of the injunction. Nevertheless, this having been said, the Order provides for Variation or Discharge and says this:

“The Defendants/Intended Defendants (or anyone notified of this Order) be at liberty to apply to the court at any time to vary or discharge this Order upon giving 48 hour’s notice to the Applicant’s solicitors of their intention to do so.”

The effect of the Order is also set out — this all being standard form to comply with the relevant Practice Direction:

“A Defendant who is a corporation and which is ordered not to do something must not do it itself or by its directors, officers, employees or agents, or in any other way.”

6.  Leave was also given to serve all the mainland defendants in the PRC — out of the jurisdiction. This was effected by the mainland authorities following well established procedures for service of Hong Kong Orders in the mainland.

7.  The 11th Defendant is a partnership with a mainland China corporation to operate a hospital over there. The 10th Defendant has been appointed as the hospital Administrator. He is not a director nor a shareholder of the 11th Defendant.

8.  Miss Lau, who appears for the Plaintiff, submits that in such circumstances the Defendant can have no standing to ask for a discharge of the injunction against the company (11th Defendant). He is not a shareholder nor is he a director.

9.  Mr Ng’s response on behalf of the 10th Defendant is that his standing to make this application comes from the fact that he has been named in the Order and that he has been served with it. It therefore affects him and he is, in such circumstances, entitled to be heard. To shut him out would be a basic denial of justice.

10.  My mind has wavered in the course of the argument but finally, I have decided that where the 10th Defendant is affected by the Order he must be allowed to say what he wishes to about the Order including that it should be discharged.

11.  It is a big step to completely shout out a party affected by an Order of the court which may ultimately give rise to contempt proceedings with all the potential consequences that such proceedings entail.

12.  And so I am against Miss Lau. There is a difference between completely shutting out a party wishing to be heard on an Order affecting him and which names him and on the other hand regulating how much he can actually say on the merits. Whilst I am prepared to hear Mr Ng because I consider the 10th Defendant, as an affected party, does have sufficient standing and interest in the matter, he may find that in addressing the merits of the injunction and its continuation, variation or otherwise that given his lack of a formal relationship with the company as a non-shareholder or director, that the scope and reach of his submissions on his discharge application may well be seriously limited and I give him due warning of that.

13.  This sort of application is much more appropriately brought by a director and/or a shareholder than a non-member or director of the company. Mr Ng has succeeded in getting his foot in the door, whether he actually gets very much further must be left to the hearing of the merits of his application and to the permissible extent of his submissions given his lack of a formal relationship with the Defendant in circumstances where he is the Administrator of the hospital of which it is a part-owner.

14.  As to costs having heard argument on the matter, it seems to me that the appropriate order is that the costs of this application should be the 10th Defendant’s costs in the cause of the application to discharge the injunction.