U.K. Prolific Petroleum Group Company Limited v 鑫都集團有限公司 [2025] HKCFI 4769; [2025] 6 HKC 966; [2025] 5 HKLRD 982 (Jeff Yau)
Jeff Yau represented the Plaintiff in U.K. Prolific Petroleum Group Company Limited v 鑫都集團有限公司 [2025] 6 HKC 966; [2025] 5 HKLRD 982; [2025] HKCFI 4769.
A memorandum executed in January 2015 (2015 Memorandum) between, among others, UKPPGC and X. The memorandum stated that X had an interest in 20% of UKPPGC’s shares and an entitlement to 20% of the shares and convertible bond (CBs) of a Listed Company (ListCo) initially owned by UKPPGC as well as a 20% distribution of other interests belonging to UKPPGC. X’s case was that it agreed to give up certain claims under the 2015 Memorandum in exchange of X’s entitlement to 20% of UKPPGC’s shares as of January 2011, 20% of the shares and CB of ListCo initially owned by UKPPGC, and 20% of other rights and benefits owned by UKPPGC, and so it may trace its 20% entitlement by claiming 1.86 billion shares in ListCo and the remainder by way of CB with a principal amount of HK$199,120,000 (collectively the Subject Securities). The Subject Securities were pending arbitration in the Shenzhen Court of International Arbitration. X obtained a stop notice from the Court of First Instance over the Subject Securities (Stop Notice). UKPPGC commenced an action in the Court of First Instance (HCMP546/2024) to discharge the Stop Notice pursuant to O 50 r 14 of the Rules of the High Court (Cap 4A), contending that X was not beneficially entitled to the Subject Securities. X commenced another action in the Court of First Instance (HCMP 630/2024) seeking injunctive relief under RHC O 50 r 15 to restrain ListCo from registering the transfers of the Subject Securities standing in UKPPGC’s name and issuing new share and bond certificates in respect of the same.
Held, granting leave to file and serve an amended stop notice, granting a stop order with adjustments made to the computation of the Subject Securities in favour of X and adjourning UKPPGC’s application for fortification in HCMP 630/2024, that:
(1) The Court of First Instance had wide and flexible powers over stop notices and stop orders falling within the ambit of prescribed securities without superimposing any further limitation on jurisdiction. In line with the adaptive flexibility inherent in its equitable jurisdiction, the court had jurisdiction to seal the Stop Notice and grant a stop order in the present case. The statutory restrictions concerned the type of securities and the locus of an application, and no restriction was imposed to the territorial jurisdiction over the person in whose name the prescribed securities was held. As the regime sought to preserve the shares in specie while there was an unresolved claim or dispute on their entitlement, an applicant falling within the regime was eligible to invoke the regime’s protection regardless of where and how the dispute was to be resolved. Compania Sud Americana de Vapores SA v Hin-Pro International Logistics Ltd [2017] 4 HKC 379; Lee v Buckle [2004] 3 IR 544; Sir Elly Kadoorie & Sons Ltd v Samantha Jane Bradley [2024] 6 HKC 262; Securities and Futures Commission v C [2009] 4 HKC 167; Wolverhampton City Council v London Gypsies and Travellers [2024] AC 983; and Secretary for Justice v Persons Conducting Themselves in Any of the Acts Prohibited under Paragraph 1(a), (b), (c) or (d) of the Indorsement of Claim [2024] 3 HKLRD 905, [2024] HKCA 688, [2024] HKCU 2782 considered. Siskina v Distos Compania Vaviera S.A. [1979] AC 210; and Mercedes-Benz AG v Leiduck [1995] 3 HKC 1 distinguished (paras 28, 34-39, 42-43, 46-50).
(2) Whether the principles of a Mareva injunction were applicable to a stop order application depended on the nature of the claim. In the present case, X claimed a beneficial interest in the Subject Securities and the stop order was akin to a proprietary injunction. The requirements for the grant of an interlocutory injunction, namely there must be a serious issue be tried and the balance of convenience must lie in favour of granting the injunction was applicable. Pacific Rainbow International Inc v Shenzhen Wolverine Tech Ltd [2017] HKCU 1076; (HCA 3023/2016, Deputy High Court Judge Douglas Lam SC, 2 May 2017, unreported) considered (paras 53, 55-56, 62).
(3) On the facts, there were serious issues to be tried (paras 65-73, 76-79, 81-106).
(4) There should be adjustments made to the computation of the Subject Securities in view of X’s proprietary claim. The court did not appear to have power under RHC O 50 r 14 to discharge the Stop Notice in part or vary the same. If the securities were incorrectly stated in the Stop Notice, the proper remedy was for an amended stop notice to be filed and served (paras 127, 132-134).
[The above is excerpted from the headnote to the report in HKLRD.]
