張才奎所託管中國山水投資有限公司股份相關員工 AND OTHERS v. 張才奎 AND ANOTHER

張才奎所託管中國山水投資有限公司股份相關員工 AND OTHERS v. 張才奎 AND ANOTHER

Receivers were appointed because plaintiffs demonstrated serious issues to be tried together with clear risk of jeopardy to trust property arising from the trustee's conflicts of interest, alleged misuse of trust funds, and orchestrated intimidation/attempted purchases of beneficiaries' interests; less intrusive remedies were inadequate, potential prejudice to third parties was unproven or speculative, and appointment limited to a block of shares in the holding company was appropriate to preserve the beneficiaries' interests.

Citation
張才奎所託管中國山水投資有限公司股份相關員工 AND OTHERS v. 張才奎 AND ANOTHER
Parties
Applicants: Plaintiffs (participating employees); 1st Defendant / Sole Trustee: Mr Caikui Zhang (1st defendant); 2nd Defendant: 2nd defendant
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
20 May 2015
Case Number
HCA2191/2014
Procedural Posture
Civil Interlocutory Applications for Receivership and Injunctions / Inter Partes Hearing of Interim Receivership Applications; Reserved Judgment on Injunctions; Interlocutory Orders Made
Outcome
Applicants' summonses for appointment of receivers granted in all five actions
Legal Topics
Appointment of Receivers, Interim Preservation of Property, Constructive Trust Vs Discretionary Trusts, Conflict of Interest of Trustee, Shareholder Voting Rights, Intimidation of Beneficiaries, Effect of Receivership on Change of Control Covenants
Source Language
EN
Trusts Company Law Equity and Fiduciary Duties Civil Procedure Interlocutory Relief Appointment of Receivers Interim Preservation of Property Constructive Trust Vs Discretionary Trusts Conflict of Interest of Trustee +3 more

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Parties

Plaintiffs (participating employees)

Applicants

Mr Caikui Zhang (1st defendant)

1st Defendant / Sole Trustee

2nd defendant

2nd Defendant

Procedural Posture

Civil Interlocutory Applications for Receivership and Injunctions / Inter Partes Hearing of Interim Receivership Applications; Reserved Judgment on Injunctions; Interlocutory Orders Made

Legal Issues

  1. 1 Whether the court should exercise its discretion to appoint interim receivers over a block of shares held by the 1st defendant as trustee
  2. 2 Whether there is sufficient jeopardy to trust property to justify receivership
  3. 3 Whether damages or less intrusive relief (eg injunction) would be adequate

Ratio Decidendi

Receivers were appointed because plaintiffs demonstrated serious issues to be tried together with clear risk of jeopardy to trust property arising from the trustee's conflicts of interest, alleged misuse of trust funds, and orchestrated intimidation/attempted purchases of beneficiaries' interests; less intrusive remedies were inadequate, potential prejudice to third parties was unproven or speculative, and appointment limited to a block of shares in the holding company was appropriate to preserve the beneficiaries' interests.

Court Disposition

Applicants' summonses for appointment of receivers granted in all five actions

Orders

  • Order in terms of the draft minutes of order annexed to the receivership summonses in all 5 actions
  • Costs nisi: 1st defendant to pay plaintiffs' costs of the receivership summonses forthwith with certificate for two counsel