ZHANG YUZHEN v. YANG YUEXIANG AND OTHERS

ZHANG YUZHEN v. YANG YUEXIANG AND OTHERS

Although the plaintiff established a serious issue to be tried (including plausibly improper concealment and potential misappropriation of the Company’s sole asset and arguable claims against the purchaser), the balance of convenience favoured allowing the sale and operation of ZJ to continue to protect the company's going concern value; accordingly the court partially discharged the ex parte injunction (paras 1 and 3) but continued paragraph 2 and ordered the purchaser to place the outstanding balance into court.

Citation
ZHANG YUZHEN v. YANG YUEXIANG AND OTHERS
Parties
Plaintiff (derivative Claimant): Zhang Yuzhen; 1st Defendant: Yang Yuexiang; 2nd Defendant: Yue Zhenbo; 3rd Defendant: Zhang Huiyi; 4th Defendant: Sunrun Int'l (Asia) Co, Limited; 5th Defendant: Wong Paul Ho Yin; 6th Defendant (the Company): Junya International (HK) Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
10 August 2015
Case Number
HCA157/2015
Procedural Posture
Common Law Derivative Action by Shareholder / Interlocutory Application to Continue/discharge Ex Parte Injunction (application Heard and Decided)
Outcome
Ex parte injunction partially discharged: paragraphs 1 and 3 discharged with immediate effect; paragraph 2 continued; costs in the cause (order nisi)
Legal Topics
Derivative Action, Interlocutory Injunction, Undervalued Asset Disposition, Bona Fide Purchaser Defence, Indoor Management Rule, Material Nondisclosure, Unclean Hands
Source Language
EN
Company Law Equity Civil Procedure Contract Derivative Action Interlocutory Injunction Undervalued Asset Disposition Bona Fide Purchaser Defence +3 more

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Parties

Zhang Yuzhen

Plaintiff (derivative Claimant)

Yang Yuexiang

1st Defendant

Yue Zhenbo

2nd Defendant

Zhang Huiyi

3rd Defendant

Sunrun Int'l (Asia) Co, Limited

4th Defendant

Wong Paul Ho Yin

5th Defendant

Junya International (HK) Limited

6th Defendant (the Company)

Procedural Posture

Common Law Derivative Action by Shareholder / Interlocutory Application to Continue/discharge Ex Parte Injunction (application Heard and Decided)

Legal Issues

  1. 1 Does plaintiff have locus standi as a member to bring derivative claim?
  2. 2 Was there a serious issue to be tried that the Company’s sole asset was sold at an undervalue and/or by improper means?
  3. 3 Was there material nondisclosure or 'unclean hands' by applicant warranting discharge of ex parte order?

Ratio Decidendi

Although the plaintiff established a serious issue to be tried (including plausibly improper concealment and potential misappropriation of the Company’s sole asset and arguable claims against the purchaser), the balance of convenience favoured allowing the sale and operation of ZJ to continue to protect the company's going concern value; accordingly the court partially discharged the ex parte injunction (paras 1 and 3) but continued paragraph 2 and ordered the purchaser to place the outstanding balance into court.

Court Disposition

Ex parte injunction partially discharged: paragraphs 1 and 3 discharged with immediate effect; paragraph 2 continued; costs in the cause (order nisi)

Orders

  • Paragraphs 1 and 3 of Au J's ex parte injunction discharged with immediate effect
  • Paragraph 2 of Au J's ex parte injunction continued