JINGANG GROUP INVESTMENT LTD (suing on behalf of itself and all other shareholders in the 11th and 12th Defendants) v. JAIME CHE AND OTHERS

JINGANG GROUP INVESTMENT LTD (suing on behalf of itself and all other shareholders in the 11th and 12th Defendants) v. JAIME CHE AND OTHERS

Because D11 is in liquidation and controlled by the JPLs (and D12, as a wholly owned subsidiary, is also under the JPLs' effective control or otherwise unavailable for double derivative relief), a minority shareholder cannot maintain the derivative or double derivative proceedings; plaintiff failed to present any arguable case or evidence that Bermuda or BVI law permits such proceedings in liquidation and therefore the striking out was correct; withdrawal of concessions would not alter the outcome.

Citation
[2021] HKCFI 948
Parties
Plaintiff (derivative and Double Derivative Claimant): JINGANG GROUP INVESTMENT LIMITED; 1st Defendant: JAIME CHE (謝能尹); 2nd Defendant: LO WING YAT (盧永逸); 3rd Defendant: CHEN YANPING (陳言平); 4th Defendant: CHAN YUK TONG (陳育棠); 5th Defendant: FEI TAI HUNG (費大雄); 6th Defendant: TSE KAM FOW (謝錦阜); 7th Defendant (secured Lender): FORTUNE TEAM INVESTMENT LIMITED (匯添投資有限公司); 8th Defendant (appointed Receiver): TANG CHUNG WAH (鄧忠華); 9th Defendant (appointed Receiver): HOU CHUNG MAN (侯頌雯); 10th Defendant (appointed Receiver): KAN LAP KEE (簡立祈); 11th Defendant (company in Liquidation): FDG ELECTRIC VEHICLES LIMITED (五龍電動車(集團)有限公司); 12th Defendant (wholly Owned Subsidiary of 11th Defendant): FDG STRATEGIC INVESTMENT LIMITED
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
8 April 2021
Case Number
HCA562/2020
Procedural Posture
Derivative and Double Derivative Proceedings / Appeal Against Master\u2019s Striking Out Order and Summons for Leave to Withdraw Concessions; Hearing and Decision in Chambers
Outcome
Appeal dismissed; summons dismissed; plaintiff\u2019s claim struck out
Legal Topics
Derivative Actions in Liquidation, Locus Standi of Shareholders, Conflict of Laws (place of Incorporation Bermuda/bvi), Costs
Source Language
EN
Company Law Insolvency Civil Procedure Derivative Actions in Liquidation Locus Standi of Shareholders Conflict of Laws (place of Incorporation Bermuda/bvi) Costs

Case Brief

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Parties

JINGANG GROUP INVESTMENT LIMITED

Plaintiff (derivative and Double Derivative Claimant)

JAIME CHE (謝能尹)

1st Defendant

LO WING YAT (盧永逸)

2nd Defendant

CHEN YANPING (陳言平)

3rd Defendant

CHAN YUK TONG (陳育棠)

4th Defendant

FEI TAI HUNG (費大雄)

5th Defendant

TSE KAM FOW (謝錦阜)

6th Defendant

FORTUNE TEAM INVESTMENT LIMITED (匯添投資有限公司)

7th Defendant (secured Lender)

TANG CHUNG WAH (鄧忠華)

8th Defendant (appointed Receiver)

HOU CHUNG MAN (侯頌雯)

9th Defendant (appointed Receiver)

KAN LAP KEE (簡立祈)

10th Defendant (appointed Receiver)

FDG ELECTRIC VEHICLES LIMITED (五龍電動車(集團)有限公司)

11th Defendant (company in Liquidation)

FDG STRATEGIC INVESTMENT LIMITED

12th Defendant (wholly Owned Subsidiary of 11th Defendant)

Procedural Posture

Derivative and Double Derivative Proceedings / Appeal Against Master\u2019s Striking Out Order and Summons for Leave to Withdraw Concessions; Hearing and Decision in Chambers

Legal Issues

  1. 1 Whether a minority shareholder may bring a derivative action on behalf of a company in liquidation
  2. 2 Whether leave must first be obtained from the court of incorporation (Bermuda/BVI) before commencing derivative proceedings in Hong Kong
  3. 3 Whether the plaintiff can withdraw concessions made at an earlier hearing

Ratio Decidendi

Because D11 is in liquidation and controlled by the JPLs (and D12, as a wholly owned subsidiary, is also under the JPLs' effective control or otherwise unavailable for double derivative relief), a minority shareholder cannot maintain the derivative or double derivative proceedings; plaintiff failed to present any arguable case or evidence that Bermuda or BVI law permits such proceedings in liquidation and therefore the striking out was correct; withdrawal of concessions would not alter the outcome.

Court Disposition

Appeal dismissed; summons dismissed; plaintiff\u2019s claim struck out

Orders

  • Appeal dismissed
  • Summons for leave to withdraw concessions dismissed