QIYANG LTD AND OTHERS v. MEI LI NEW ENERGY LTD AND OTHERS

QIYANG LTD AND OTHERS v. MEI LI NEW ENERGY LTD AND OTHERS

The transfer to Rare Earth and subsequent appointments were a nominee/nominee‑trust arrangement keeping beneficial control with Chung; by operation of Bankruptcy Ordinance ss.12 and 58 Chung's beneficial interest and powers vested in the Official Receiver/trustees and Rare Earth/Mei Li (being complicit and having knowledge) could not validly exercise those powers or ratify solicitors without trustee/Official Receiver consent; therefore the resolutions appointing Huang and authorising DSC/CLCMC were invalid and the solicitors lacked authority, so the Authority Summons succeeds and the Leave to Appeal Summons and notice of change of solicitors are set aside.

Citation
QIYANG LTD AND OTHERS v. MEI LI NEW ENERGY LTD AND OTHERS
Parties
1st Plaintiff: QIYANG LIMITED; 2nd Plaintiff: THUNDER SKY ENERGY TECHNOLOGY LIMITED; 3rd Plaintiff: FDG ELECTRIC VEHICLES LIMITED; 1st Defendant: MEI LI NEW ENERGY LIMITED; 2nd Defendant: CHUNG HING KA; 2nd Defendant: CHUNG WINSTON
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
31 August 2016
Case Number
HCA420/2011
Procedural Posture
Civil/company and Bankruptcy / Authority Summons Hearing and Judgment on Solicitors' Authority (summons Restored and Heard)
Outcome
Authority Summons allowed; Leave to Appeal Summons and Notice of Change of Solicitors set aside; costs awarded with qualifications
Legal Topics
Authority of Solicitors, Vesting of Bankrupt's Property, Register of Members and Notice of Trust, Ratification of Acts by Directors, Inherent Jurisdiction to Debar Counsel, Fraudulent Nominee Arrangements
Source Language
EN
Company Law Bankruptcy Law Civil Procedure Trusts Professional Conduct/regulation of Lawyers Authority of Solicitors Vesting of Bankrupt's Property Register of Members and Notice of Trust +3 more

Case Brief

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Parties

QIYANG LIMITED

1st Plaintiff

THUNDER SKY ENERGY TECHNOLOGY LIMITED

2nd Plaintiff

FDG ELECTRIC VEHICLES LIMITED

3rd Plaintiff

MEI LI NEW ENERGY LIMITED

1st Defendant

CHUNG HING KA

2nd Defendant

CHUNG WINSTON

2nd Defendant

Procedural Posture

Civil/company and Bankruptcy / Authority Summons Hearing and Judgment on Solicitors' Authority (summons Restored and Heard)

Legal Issues

  1. 1 Whether the sole share in Mei Li was validly transferred to Rare Earth
  2. 2 Whether Rare Earth and Mei Li were beneficially owned and controlled by Chung
  3. 3 Whether Huang and Mei Li had knowledge of Chung's bankruptcy and beneficial ownership

Ratio Decidendi

The transfer to Rare Earth and subsequent appointments were a nominee/nominee‑trust arrangement keeping beneficial control with Chung; by operation of Bankruptcy Ordinance ss.12 and 58 Chung's beneficial interest and powers vested in the Official Receiver/trustees and Rare Earth/Mei Li (being complicit and having knowledge) could not validly exercise those powers or ratify solicitors without trustee/Official Receiver consent; therefore the resolutions appointing Huang and authorising DSC/CLCMC were invalid and the solicitors lacked authority, so the Authority Summons succeeds and the Leave to Appeal Summons and notice of change of solicitors are set aside.

Court Disposition

Authority Summons allowed; Leave to Appeal Summons and Notice of Change of Solicitors set aside; costs awarded with qualifications

Orders

  • Authority Summons of the 3rd Plaintiff allowed
  • 1st Defendant's Leave to Appeal Summons set aside