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

The court required the Former Receivers to prove on the balance of probabilities that an actual or potential indebtedness existed in respect of their fees. The evidence failed to establish the asserted loans or their terms by contemporaneous documentation or satisfactory explanation; the asserted funding and repayment mechanism remained unproven and hypothetical. Given the discretionary nature of the relief and the evidential shortcomings, the court refused to grant the declaration of an equitable lien and dismissed the Lien Summonses.

Citation
[2021] HKCFI 1805
Parties
Plaintiffs: 1st Group of Relevant employees whose shares in CHINA SHANSHUI INVESTMENT COMPANY LIMITED were held by ZHANG CAIKUI on trust; Plaintiffs: 2nd Group of Relevant employees whose shares in CHINA SHANSHUI INVESTMENT COMPANY LIMITED were held by LI YANMIN on trust; Plaintiffs: Li Ming and others (Relevant Employees whose shares in CHINA SHANSHUI INVESTMENT COMPANY LIMITED held on trust by Zhang Caikui and Li Yanmin); Interested Party: CHINA SHANSHUI INVESTMENT COMPANY LIMITED; 1st Defendant: ZHANG CAIKUI; 2nd Defendant: LI YANMIN; Applicants (receivers Seeking Lien): EY Receivers (Former Receivers)
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
23 June 2021
Case Number
HCA623/2015
Procedural Posture
Consolidated Trust Actions and Related Proceedings (hca 1661,1766,2191/2014; HCA 623,939,1564/2015; HCA 1282/2017) Lien Summons / Decision After Hearing (application for Declaration of Equitable Lien Dismissed)
Outcome
Lien Summonses dismissed; ancillary request that shares remain deposited refused; costs order nisi in favour of SH Plaintiffs with certificate for two counsel
Legal Topics
Receiver's Lien, Indemnity, Waiver, Abuse of Process, Burden of Proof, Preservation of Assets
Source Language
EN
Equity Trusts Receivership Civil Procedure Injunctions Receiver's Lien Indemnity Waiver +3 more

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Parties

1st Group of Relevant employees whose shares in CHINA SHANSHUI INVESTMENT COMPANY LIMITED were held by ZHANG CAIKUI on trust

Plaintiffs

2nd Group of Relevant employees whose shares in CHINA SHANSHUI INVESTMENT COMPANY LIMITED were held by LI YANMIN on trust

Plaintiffs

Li Ming and others (Relevant Employees whose shares in CHINA SHANSHUI INVESTMENT COMPANY LIMITED held on trust by Zhang Caikui and Li Yanmin)

Plaintiffs

CHINA SHANSHUI INVESTMENT COMPANY LIMITED

Interested Party

ZHANG CAIKUI

1st Defendant

LI YANMIN

2nd Defendant

EY Receivers (Former Receivers)

Applicants (receivers Seeking Lien)

Procedural Posture

Consolidated Trust Actions and Related Proceedings (hca 1661,1766,2191/2014; HCA 623,939,1564/2015; HCA 1282/2017) Lien Summons / Decision After Hearing (application for Declaration of Equitable Lien Dismissed)

Legal Issues

  1. 1 Whether court-appointed receivers are entitled to an equitable lien over the Receiver Shares to secure their remuneration and expenses
  2. 2 What is the applicable standard of proof to establish an 'actual or potential indebtedness' for purposes of a declaration of lien
  3. 3 Whether the receivers waived any lien by conduct (transfers, delay)

Ratio Decidendi

The court required the Former Receivers to prove on the balance of probabilities that an actual or potential indebtedness existed in respect of their fees. The evidence failed to establish the asserted loans or their terms by contemporaneous documentation or satisfactory explanation; the asserted funding and repayment mechanism remained unproven and hypothetical. Given the discretionary nature of the relief and the evidential shortcomings, the court refused to grant the declaration of an equitable lien and dismissed the Lien Summonses.

Court Disposition

Lien Summonses dismissed; ancillary request that shares remain deposited refused; costs order nisi in favour of SH Plaintiffs with certificate for two counsel

Orders

  • The Lien Summonses are dismissed.
  • Order refusing the ancillary relief that shares deposited with the Court shall remain so deposited (§3 refused).