LU JUN v. YU QI AND OTHERS

bjbj H%QW HCCW 282/2010 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE COMPANIES WINDING-UP PROCEEDINGS NO 282 OF 2010 ____________ IN THE MATTER of ASTROTEC COMPANY LIMITED and IN THE MATTER of Sections 168A and 177(1)(f) of the Companies Ordinance, Cap 32 ____________ BETWEEN LU JUN( bers Date of Hearing: 30 July 2013 Date of Decision: 30 July 2013 Date of Reasons for Decision: 2 August 2013 ________________________________ R E A S O N S F O R D E C I S I O N ________________________________ Introduction At the end of the hearing, I dismissed the petitioner s application for the appointment of interim receivers of the 4th respondent ( the Company ) pending the determination of this petition or until further order. I indicated that reasons for the decision would be given later. They appear below. Background The petitioner commenced this petition in June 2010, relying on ss 168A and 177(1)(f), Companies Ordinance (Cap 32). The gist of his complaints was: the respondents wrongfully excluded him from the Company s management; the respondents wrongfully attempted to dilute his shareholding by increasing the share capital; the wrongful disposal of the Company s asset (namely, shares in a Mainland company) at undervalue; the failure to declare/pay dividends. After a 4-day trial, the court decided in the petitioner s favour as regards the 1st and/or 3rd respondents liability to buy out the petitioner. Further, after another hearing, directions were given as to the valuation of the petitioner s shares in the Company. These include: the appointment of an independent valuer whose valuation should be final and conclusive; the parties are to provide the relevant documents to the appointed valuer for such purpose; the parties are at liberty to inspect such documents; the parties are at liberty to make written representations to the appointed valuer. This application The petitioner frankly admitted during the hearing: the valuer has earlier been appointed; since the appointment: the valuer has not indicated that any of the parties have failed to provide the documents sought; the parties are yet to inspect the documents, or to make written representations. He also accepted that this application is a preemptive step to ensure the valuation for the buy-out could be properly carried out. In these circumstances, I agree with the 1st and 3rd respondents that this application is misconceived (or at least premature). First, no doubt has been cast on the appointed valuer s integrity or competence, nor is there doubt that it otherwise will be unable to perform its duty (whether for want of documents or not). Hence, there was no need (at least no need yet) for the petitioner to take steps to ensure that the appointed valuer would be able to do so. Secondly, the obligation to buy out the petitioner falls on the 1st and 3rd respondents, and not the Company. There is no suggestion they are financially unable to pay for the petitioner s shares. Thirdly, the buy-out order has specified the valuation date to be the date of the petition. Since the time of the buy-out order, the petitioner s interest should lie more with the sale proceeds of his shares than the affairs of the Company (albeit he is in name still one of the Company s shareholders). Fourthly, although there was a hint of dissipation of the Company s assets, the petitioner (correctly) no longer pursued that ground at the time of the hearing. Finally, the appointment of a receiver over the assets and business of a company is a draconian remedy. The discretionary power to do so should not be lightly exercised. Certificate for two counsel The 1st and 3rd respondents sought such a certificate. Without disrespect to senior counsel, I agree with the petitioner that neither the nature of the hearing nor its complexity warranted the attendance of two counsel for the 1st and 3rd respondents. For this reason, I will decline the 1st and 3rd respondents request for such a certificate. (Andrew Chung) Judge of the Court of First Instance High Court Mr Jonathan Wong, instructed by Deacons, for the petitioner Mr Edward Chan, SC leading Mr Danny Fung, instructed by Hastings & Co, for the 1st & 3rd respondents 2nd & 4th respondents were not represented and did not appear Official Receiver did not appear PAGE - A B C D qlqlq gdH hK-+ hK-+ hk)2 hk)2 hk)2 gd'd E F G H I J K L M N O P Q R S T U V A B C D E F G H I J K L M N O P Q R S T U V A B C D E F G H I J K L M N O P Q R S T U V A B C D E F G H I J K L M N O P Q R S T U V [Content_Types].xml Iw}, $yi} _rels/.rels theme/theme/themeManager.xml K Y, sQ}# theme/theme/theme1.xml w toc'v )I`n 3Vq%'#q x}r :\TZaG I u3 L+M2 e\O* $*c? )6-r IqbJ#x ,AGm T[XF64 E)`# R>QD =(K& =al- 4vfa 0%M0 theme/theme/_rels/themeManager.xml.rels 5 6?$Q K(M&$R(.1 [Content_Types].xmlPK _rels/.relsPK theme/theme/themeManager.xmlPK theme/theme/theme1.xmlPK theme/theme/_rels/themeManager.xml.relsPK <?xml version="1.0" encoding="UTF-8" standalone="yes"?> <a:clrMap xmlns:a="http://schemas.openxmlformats.org/drawingml/2006/main" bg1="lt1" tx1="dk1" bg2="lt2" tx2="dk2" accent1="accent1" accent2="accent2" accent3="accent3" accent4="accent4" accent5="accent5" accent6="accent6" hlink="hlink" folHlink="folHlink"/> 1[8HW: t"5B8 vk$h( 6CJo 6CJo vk$h t"5B (s<X setup hccw (for Susan Kwan only).dot Cheung Tsui Wah, Winnie Microsoft Office Word Judiciary Hong Kong Title H%QW H%QW <b:Sources SelectedStyle="\APA.XSL" StyleName="APA" xmlns:b="http://schemas.openxmlformats.org/officeDocument/2006/bibliography" xmlns="http://schemas.openxmlformats.org/officeDocument/2006/bibliography"></b:Sources> <?xml version="1.0" encoding="UTF-8" standalone="no"?> <ds:datastoreItem ds:itemID="{70D7EA2E-0023-4408-8382-D157DF65727A}" xmlns:ds="http://schemas.openxmlformats.org/officeDocument/2006/customXml"><ds:schemaRefs><ds:schemaRef ds:uri="http://schemas.openxmlformats.org/officeDocument/2006/bibliography"/></ds:schemaRefs></ds:datastoreItem> Microsoft Office Word 97-2003 Document MSWordDoc Word.Document.8