CHINA ENERGY UTILIZATION LTD (incorporated under the laws of the British Virgin Islands) v. CHINA PEOPLE (HONG KONG) LTD AND ANOTHER

bjbj HCCW 186/2013 and HCCW 187/2013 and HCCW 188/2013 (Heard Together) [2019] HKCFI 1101 HCCW 186/2013 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE COMPANIES (WINDING UP) PROCEEDINGS NO 186 OF 2013 _____________ IN THE MATTER of CHINA PEOPLE (HONG KONG) LIMITED and IN THE MATTER of sections 168A and 177(1)(f) of the Companies Ordinance (Cap RY Petitioner DEVELOPMENT LIMITED (incorporated under the laws of the British Virgin Islands) and CHINA PEOPLE (HONG KONG) LIMITED 1st Respondent CHINA ENERGY INDUSTRY 2nd Respondent DEVELOPMENT LIMITED (incorporated under the laws of Hong Kong) _____________ AND HCCW 188/2013 COMPANIES (WINDING UP) PROCEEDINGS NO 188 OF 2013 _____________ IN THE MATTER of CHINA ENERGY UTILIZATION LIMITED (incorporated under the laws of Hong Kong) and IN THE MATTER of sections 168A and 177(1)(f) of the Companies Or ED 2nd Respondent (incorporated under the laws of Hong Kong) _____________ (Heard Together) Before: Mr Recorder Stewart Wong SC in Court Dates of Hearing: 6 9 and 15 November 2018 Date of Judgment: 30 April 2019 JUDGMENT INTRODUCTION This is the trial of three petitions taken out in July 2013 under section d, with issues such as purchase price and shareholding percentages etc be adjourned for the parties to seek to resolve their differences, failing which the matters were to be restored. As it turned out the parties could not agree and the matters were restored before G , at 01 to 8 08; Re Bird Precision Bellows Limited [1986] Ch 658. 6. It follows, therefore, that even where the parties have agreed that the respondent is to buy out the petitioner, it is usually necessary for the court to come to a determination on the merits of the petition, to the effect that the petition is well founded, before the court can make an order for buy out under s e of the shares to be transferred. In these circumstances, I do not think it is essential to have the consent order set aside, whether by this court if there is jurisdiction to do so, or otherwise, provided it is recognised that the jurisdiction of the court to make an order for buy out is circumscribed in the way that I have already described. 8. The better course, it seems to me, instead of being bogged down on questions of jurisdiction for the consent order, is to have the matter set down for trial as "o/ ( /n) / g P lQ -N n"u mi |v g P lQ -N n)R (u g P lQ 7_; zlQ `\ FO ng inter alia the resolution to allot and issue 6,400 shares at $10,000 each to each shareholder in proportion to their shareholding. It was recorded that the board meeting was attended by Wang and Pang. As a result of the resolutions at 9(10) and (12) above, Wang was allotted eight and 5,688 shares of China People. I note that despite the resolution referred to at 9(10) above, as recorded in a Return -N W g P lQ g held eight shares, in China People. As a result of the allotments, Wang s shareholding increased to 5,704 shares, while Lai s remained at two. Thus, from being an 80% owner of China People, Wang became a 99.96% owner. The following are the relevant corporate documents of China Industry HK, which on their face show: A notice dated 12 m WS-N )Y 6q#l |v)R (u g P lQ rding Wang s proposal to inter alia nominate Lai, Pang and Tu as directors of Huainan Energy in place of the three incumbents, with Lai to be nominated as chairman of the board, and the consent of Lai, Chen, Pang and Tu thereto. The following are the relevant corporate documents of China Utilization HK, which on their face show: A notice dated 12 A g-N P[ n g P lQ oposal to inter alia nominate Lai, Dan and one other person as directors of Yulin Energy in place of the incumbent, with Dan to be nominated as chairman of the board, and the consent of Lai, Chen and Pang thereto. The consent of Tu (instead of Dan) was also recorded but that would appear to be a mistake. Dan (rather than Tu) did sign the minutes. It is the petitioners case that at a meeting on 15 Lai for a few hours. Wang then coerced Lai and Chen to sign on various documents relating to the three subject companies. They did not have the chance to read the documents before signing, nor were they given copies thereof despite their repeated requests. It is also the petitioners case that Lai and Chen did not receive any notice convening general meetings of the three subject companies to be held on 28 n his behalf. At the meeting, it was inter alia resolved that eight shares were to be allotted to a company held by Wang notwithstanding Lau s objection. Further, the secretary of China People was changed to a company associated with Stevenson, Wong & Co ( SW & Co ), the solicitors then acting for Wang. However, the allotment had not been approved at a general meeting of China People, as required by Article China People] has been improperly managed. 40. By reason of the matters aforesaid, the affairs of [China People] have therefore been conducted in a manner unfairly prejudicial to the interests of [Lai] and [Lai] respectfully urge this Honourable Court for just and equitable relief. The pleas of China Industry HK and China Utilization HK in their respective Points of Claim are materially the same, but of course they rely on what they allege to have happened on 15 additional directors be appointed to China Industry HK and China Utilization HK. To effect the appointments, documents referred to at 9(2) (4) and (7) (8) above were signed by Lai and Wang. Lai signed out of his own free will. The date of appointment of Pang was backdated to 28 |T nd as the respondents do not appear to cross-examine them, I direct at the trial that the witnesses are to give their evidence-in-chief orally, and not simply adopting their witness statements, so that I can better assess the credibility of their evidence. I have listened to the oral testimony of the witnesses carefully. The evidence of each of Lai, Chen, Hu and Lau is consistent, and each of them gives evidence in a clear, straightforward and convincing manner. As between Lau and Wong, while their respect -N g P lQ m 3W ^NO g P lQ NO j) T \OTS p ple (signed by Lai) and China Energy Holdings (signed by Chen). Under this agreement, China People would invest RMB 45,000,000 for 90% ownership of China Industry HK, and RMB 126,500,000 for 75% ownership of China Utilization HK, and China People was to inject RMB 45,000,000 within 20 working days. One of the provisions in the agreement was that after all the injection of capital for NO EQTS p T \OTS p &t; WS } \g IP) e_ s =~ o came in with him continued to assault Chen. Chen was made to kneel down, facing Wang, who was sitting on a sofa. In the meantime, Lai asked Wang not to assault Chen but was told to shut up. Zhao also tried to intervene. Tu tried to assault Zhao but was stopped by Wang, who said N Sb N N /f N /f b S a`O & & P[ 2m lQ w S m WSlQ w S `O w S w S b/fy^ m 3W `O8e #~ `O w S s (W-N N`O_N l gI hao, do you know who I am? Do you know what I do? I know where you live in Shenzhen. I know where your mother lives in You County. I know where your brother lives. Nowadays Chinese law requires evidence. If I kill you there will be no evidence. ) Chen replied: w S `O/fy^ _N N w S `O/f w S m WS TP[ 2m N (W ZP )Y (W t fail. If he could not do something he wanted, no one else could either. He also told them his success in kicking out a partner in a project in Inner Mongolia, and that he was so strong willed that he was able to kick off a drug addiction. The effect of this was to show Lai and Chen that Wang was a very determined person who would do anything to achieve his objectives. After further discussions on the affairs of the three subject companies, and Lai and Chen further explaining why there was nothing wrong , Pang immediately took back the signed document, and gave Lai another one to sign. Lai was not given any opportunity to read the documents before he signed them, nor was he told what they were. When Lai signed the documents, they did not have any signatures on them. After Lai finished signing, Chen was asked by Pang to sign the documents. Like Lai, Chen was given one document at a time to sign, and Pang immediately took back the signed document and gave Chen another one to sign. Chen was not given any opportunity to read the documents before he signed them, nor was he told what they were. When Chen signed the documents, they did not have any signatures on them save for Lai s, which had just been put on. When Lai and Chen signed the documents as told by Pang, Wang was sitting on a sofa in the room watching them. 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