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

Given serious issues to be tried, credible evidence of trustee conflicts of interest and intimidation of beneficiaries, and a clear qualitative risk of jeopardy to the trust property and beneficiaries' interests that could not be adequately remedied by damages or by interlocutory injunction alone, the court exercised its discretionary equitable jurisdiction under s.21L to appoint independent receivers over the relevant block of CSI shares to preserve the property and protect beneficiaries pending trial; concerns about prejudice to third parties and delay were not shown to outweigh the need for interim protection.

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
Plaintiff(s): Participating employees (plaintiffs); 1st Defendant; Sole Trustee: Mr Caikui Zhang (Mr Zhang); 2nd Defendant: 2nd defendant
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
20 May 2015
Case Number
HCA1661/2014
Procedural Posture
Civil Actions for Declarations, Receivership and Injunctive Relief Concerning Trust Held Shares and Company Voting Rights / Interlocutory Applications Heard Inter Partes Concerning Appointment of Interim Receivers and Injunctions; Judgment on Interim Applications
Outcome
Plaintiffs' applications for appointment of receivers granted in all five actions; injunction applications not given separate interim relief and essentially superseded
Legal Topics
Interim Receivership, Constructive Trust, Breach of Trust, Conflict of Interest, Dilution of Shareholding, Mareva/asset Preservation, Intimidation of Beneficiaries, Interim Relief
Source Language
EN
Trusts Equity Company Law Civil Procedure Injunctions Receivership Interim Receivership Constructive Trust +6 more

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Parties

Participating employees (plaintiffs)

Plaintiff(s)

Mr Caikui Zhang (Mr Zhang)

1st Defendant; Sole Trustee

2nd defendant

2nd Defendant

Procedural Posture

Civil Actions for Declarations, Receivership and Injunctive Relief Concerning Trust Held Shares and Company Voting Rights / Interlocutory Applications Heard Inter Partes Concerning Appointment of Interim Receivers and Injunctions; Judgment on Interim Applications

Legal Issues

  1. 1 Whether interim receivers should be appointed over shares in CSI held by the 1st defendant as trustee
  2. 2 Whether there is a real risk or jeopardy to the trust property and beneficiaries' interests
  3. 3 Whether damages are an adequate remedy

Ratio Decidendi

Given serious issues to be tried, credible evidence of trustee conflicts of interest and intimidation of beneficiaries, and a clear qualitative risk of jeopardy to the trust property and beneficiaries' interests that could not be adequately remedied by damages or by interlocutory injunction alone, the court exercised its discretionary equitable jurisdiction under s.21L to appoint independent receivers over the relevant block of CSI shares to preserve the property and protect beneficiaries pending trial; concerns about prejudice to third parties and delay were not shown to outweigh the need for interim protection.

Court Disposition

Plaintiffs' applications for appointment of receivers granted in all five actions; injunction applications not given separate interim relief and essentially superseded

Orders

  • Order in terms of the draft minutes of order annexed to the summonses for the appointment of receivers in all five actions (appointment of independent professional receivers over the relevant CSI shares)
  • Costs order nisi that the 1st defendant do pay the plaintiffs their costs of those receivership summonses forthwith with a certificate for two counsel