SOREMI INVESTMENTS LTD v. CHINA NATIONAL GOLD GROUP HONG KONG LTD AND ANOTHER

HCA 797/2025

[2025] HKCFI 6417

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 797 OF 2025

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DECISION

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1.  This is an application of the 1^st Defendant (“CNG”)  pursuant to RHC O.59 r.2B for leave to appeal against my Decision (“the Decision”)[1] refusing to grant a permanent stay in favour of arbitration under s.20(1)  of the Arbitration Ordinance (Cap 609): [2025] HKCFI 4514. The application is opposed by the Plaintiff (“SIL”).

2.  CNG’s proposed grounds of appeal set out in the draft notice of appeal attached to its Summons dated 10 October 2025 (“the Summons”)  were grouped in its written submissions under three broad grounds.  CNG submitted that leave should be granted because (1)  its intended appeal has a reasonable prospect of success, or (2)  there is some other reason in the interests of justice why the appeal should be heard.

A.  WHETHER THE INTENDED APPEAL HAS REASONABLE PROSPECTS OF SUCCESS

A1.  Ground 1

3.  Under Ground 1, CNG submitted that the court wrongly focused on whether SIL was a “transacting” or “non-transacting” party, and the reason why it was named a party to the SHA, both being irrelevant considerations.

4.  The court’s observation about SIL not being a transacting party under the SHA (in the Decision [23])  was only one of the points taken into consideration when construing the arbitration agreement in clause 13.17 of the SHA: Decision [17] to [25].  It was made in the context of what the court considered to be the practical object of making SIL to be a party to the SHA, which is a relevant consideration when construing a document: Decision [14].  Insofar as CNG suggested that the court recognised a legal concept of “transacting” or “non-transacting” party in deciding whether the disputes between the parties fell within the ambit of the arbitration agreement,[2] that would be a misunderstanding of the Decision.  I am unable to agree with CNG that its intended appeal under Ground 1 has a reasonable prospect of success.

A2.  Ground 2

5.  Under Ground 2, CNG submitted that the court erred in mischaracterising the substance of SIL’s claims against CNG as being misappropriation of assets and ignoring that the cause of action relied on by SIL to substantiate that allegation (namely conversion)  engages the issue of whether CNG has breached clause 4 of the SHA, therefore bringing the dispute within the ambit of the arbitration agreement in clause 13.17 of the SHA.

6.  In this leave application, CNG suggested that the substance of SIL’s claims against CNG is conversion.[3]  However, this is not how the matter was argued before: Decision [29] to [38].  At the substantive hearing, CNG neither advanced any submission in relation to SIL’s claim for conversion, nor argued that the resolution of the disputes on conversion would require a determination of whether CNG had breached the SHA.[4]

7.  Be that as it may, having now considered CNG’s submissions made in this application, I do not think CNG has a reasonable prospect of success to contend that the substance of the disputes between SIL and CNG is conversion. 

(1)  CNG submitted that to make good its claim for conversion, SIL must prove that the Wrongful Transfers were made “without authority”.  CNG therefore argued that to determine whether or not it has committed the conversion, the relevant question is to ask whether the Wrongful Transfers were authorised by SIL’s board of directors, which engages clause 4 of the SHA.

(2)  Clause 4 of the SHA, amongst other things, draws a distinction between matters requiring approval by all of SIL’s directors, and those by a simple majority of SIL’s directors.  The way in which SIL’s conversion claim is currently pleaded does not involve a determination of whether all of SIL’s directors, or only a simple majority thereof, approved the Wrongful Transfers at the material times. Further, it is unclear how CNG’s position that the Wrongful Transfers were allegedly permitted under the SHA would provide any potential defence to the conversion claim.  As pointed out by SIL on the basis of the various authorities cited,[5] there are important legal differences between the authority conferred by the board of directors acting collectively and in the best interests of SIL, and the agreement between SIL’s shareholders in relation to corporate procedure under clause 4 of the SHA.  In other words, even if there was compliance under clause 4 of the SHA, it does not follow that CNG would have a valid legal defence to the claim of conversion.

(3)  CNG referred to the conclusion in Robotunits Pty Ltd v Mennel (2015)  49 VR 323[6] to support its position.  In this case, Croft J concluded that the matter in question fell within the arbitration clause because at the heart of the controversy between the parties in that case was whether the shareholders’ agreement, which contained the arbitration clause, provided a proper basis for the impugned payments ([54]-[55]).  This conclusion was based on the learned Judge’s view that “the heart of the controversy between the parties” involved the question of “[whether] the Shareholders Agreements provided a legal or equitable basis for Mennel to cause Robotunits to make the Share Payment” ([28]).  The decision turns on its own facts.  It does not lay down any legal principles which are relevant to this application.  Given that I do not consider that clause 4 of the SHA would negate SIL’s conversion claim, what Croft J said in the decision would not assist CNG. 

(4)  Accordingly, I do not agree that CNG has a reasonable prospect of success to contend that the determination of SIL’s conversion claim would depend on whether clause 4 of the SHA is breached.

(5)  In any event, in addition to the conversion claim, SIL has relied on other causes of action (namely dishonest assistance, unlawful act conspiracy and lawful act conspiracy)  against CNG.  These other claims do not in my view involve a determination of whether there was a simple majority or unanimous consent of SIL’s board of directors to approve the Wrongful Transfers: Decision [3(2)] to [3(4)], [34] to [38].  The fact that some references are made in SIL’s Statement of Claim to the acts of conversion as particulars for the other causes of action does not detract from this.  I therefore disagree with CNG’s submission that these are “parallel causes of action”.  CNG’s reliance of Re Sirnaomics Ltd [2025] HKCFI 4284 does not assist.  In that case, DHCJ Gary Lam considered whether the transfer of certain shares to the petitioners was governed by a members’ agreement (containing an arbitration agreement), or by a share exchange agreement (which did not have an arbitration agreement).  Having analysed the facts and evidence in that case, the learned Judge concluded that the substance of the petitioner’s claim was the enforcement of a clause in the members’ agreement and that the dispute should be stayed in favour of arbitration ([48]-[58]).  In my view, this authority again turns on its own facts and does not take CNG’s position any further.

8.  For these reasons, I do not think CNG’s intended appeal under Ground 2 has a reasonable prospect of success.

A3.  Ground 3

9.  Under Ground 3, CNG submitted that the court’s holding that the presumption in Fiona Trust does not assist or apply in the present case, or has otherwise been displaced by the parties’ contrary intention, is not supported by a proper application of Fiona Trust and contradicted by the broad terms of the arbitration agreement.

10.  The court’s conclusion in [39] of the Decision in relation to the Fiona Trust presumption was arrived at after its recognition of the relevant legal principles (Decision [12] to [15] & [17])  and its construction of the arbitration agreement in the SHA “on the particular facts of this case” (Decision [18] to [25]).  I do not think it is reasonably arguable that the court had misapplied the Fiona Trust presumption.  In these circumstances, CNG’s intended appeal under Ground 3 does not in my view have a reasonable prospect of success.

B.  WHETHER LEAVE SHOULD BE GRANTED IN THE INTEREST OF JUSTICE

11.  CNG suggested that the Decision has introduced a “novel concept” of “transacting party” in determining the application of an arbitration agreement in a shareholders’ agreement.  It submitted that leave should therefore be given so that the Court of Appeal can clarify whether the approach adopted in the Decision is the correct one in construing arbitration clauses.

12.  I repeat what I said in paragraphs 4 and 10 above.  Given that the Decision ultimately turned on a proper construction of the arbitration agreement on the basis of the particular facts in the present case, I cannot see how the Decision is “likely to have significant impact on future disputes of a similar nature”, as suggested by CNG.  I therefore decline to give leave on the basis that there is some other reason in the interests of justice why the appeal should be heard.

C.  DISPOSITION ON THE SUMMONS

13.  For all of the above reasons, I dismiss CNG’s Summons for leave to appeal. 

14.  For the avoidance of doubt, in dismissing CNG’s application for leave to appeal, the court has not taken into consideration SIL’s submissions that CNG’s stay application constituted an improper purpose and/or abuse of process.

15.  I make an order nisi that the costs of and occasioned by the Summons are to be paid by CNG to SIL, to be summarily assessed.  CNG is directed to lodge and serve a statement of opposition to SIL’s statement of costs dated 24 November 2025 (of not more than 3 pages)  on or before 31 December 2025.  SIL is directed to lodge and serve a statement of reply (of not more than 2 pages)  on or before 5 January 2026.

D.  CNG’S APPEAL AGAINST MASTER HUI’S ORDER

16.  In the materials to support the Summons for leave to appeal, CNG included a separate Notice of Appeal dated 7 November 2025 (“the Notice of Appeal”)  to set aside the order of Master Hui made on 6 November 2025, who refused to allow an extension of time for CNG to file its Defence herein until the final determination of the Summons, and only allowed an extension of time until 4 December 2025.  In their main submissions to support of the Summons filed on 10 November 2025, CNG’s counsel saw fit to ask the court to determine the appeal against the Master’s order and submitted that the Master was plainly wrong in making the order.

17.  In its supplemental submissions recently filed on 15 December 2025,[7] CNG acknowledged that (1)  this court had already ordered that the time for CNG to file and serve its Defence be extended to 28 days from 26 September 2025 (“the September Order”), and (2)  its current solicitors and counsel were not aware of the September Order until 11 December 2025. 

18.  Insofar as CNG considered that the appeal should be disposed of in a particular way, it should either have sought directions from the court or consulted the other party on the way forward.  It was highly inappropriate for CNG to unilaterally put the Notice of Appeal before this court in this paper application without seeking prior directions from the court or prior consent from SIL. 

19.  In their supplemental submissions, CNG acknowledged that “the [September] Order has been superseded by subsequent developments, including the Order made by Master Kwong at the [hearing on 11 December 2025], pursuant to which the time for CNG’s filing and service of its Defence has been extended to 8 January 2026”.  Given that CNG’s Summons dated 10 October 2025 for leave to appeal under RHC O.59 r.2B has now been dismissed (and finally determined), it follows that the Notice of Appeal should also be dismissed with costs.

20.  I dismiss CNG’s Notice of Appeal dated 7 November 2025.  I make an order nisi that the costs of and occasioned by the Notice of Appeal are to be paid by CNG to SIL, to be summarily assessed.  SIL is directed to lodge and serve its statement of costs for summary assessment on or before 29 December 2025.  CNG is directed to lodge and serve its statement of opposition (of not more than 3 pages)  on or before 31 December 2025.  SIL is directed to lodge and serve its statement of reply (of not more than 2 pages)  on or before 5 January 2026.

[1]  All the abbreviations used in the Decision are adopted in this decision.

[2]  Cf §11 of CNG’s Submissions.

[3]  Cf §§14 and 15 of CNG’s Submissions.

[4]  CNG only argued in a general way that SIL’s claim of misappropriation of SIL’s assets was in substance a claim that the Wrongful Transfers were made in breach of clause 4 of the SHA: Decision [30].

[5]  See in particular the authorities cited in Billion Express Industrial Ltd v Tsang Hung Kong [2012] 5 HKC 51 at [94] – [97].

[6]  The case was not cited at the substantive hearing.

[7]  Leave to file and serve the supplemental submissions dated 15 December 2025 is granted to CNG.