A

HCA 1618/2016

- 2 A

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

C

ACTION NO 1618 of 2016

D
E
F

I
J
K
L
M
N
O
P
Q
R

BETWEEN
ZHI CHARLES

Plaintiff

THE STOCK EXCHANGE OF HONG KONG LIMITED

SIBERIAN MINING GROUP COMPANY LIMITED
CHINA HOUSEHOLD HOLDINGS LIMITED
SOLARTECH INTERNATIONA HOLDINGS
PEACE MAP HOLDING LIMITED
HORNBRIDGE HOLDINGS LIMITED
KING STONE ENERGY GROUP LIMITED
G-RESOURCES LIMITED
EFORCE HOLDINGS LIMITED
JHCPA ALLIANCE LIMITED
ELITE PARTNERS CPA LIMITED
BDO LIMITED
SHINEWING (HK) CPA LIMITED
EARNST & YOUNG
DELOITTE TOUCH TOHMATSU
ZHONGHUI ANDA CPA LIMITED
__________________

T
U
V

F
G

and
1st Defendant
2nd Defendant
3rd Defendant
4th Defendant
5th Defendant
6th Defendant
7th Defendant
8th Defendant
9th Defendant
10th Defendant
11th Defendant
12th Defendant
13th Defendant
14th Defendant
15th Defendant
16th Defendant

H
I
J
K
L
M
N
O
P
Q

Before: Deputy High Court Judge Seagroatt

Date of Hearing: 24 June 2016
Date of Decision: 24 June 2016

__________________

G
H

COURT OF FIRST INSTANCE

R
S

Date of Reasons for Decision: 28 June 2016

T
U
V

- 3 A

R E AS O N S F O R D E C I S I O N

1
D
E

This application has come before me at very short notice in

all the circumstances as will appear from what follows. It was issued on
20 June 2016, Monday of this week. In it the plaintiff, in person, seeks
injunctions or restraining orders against the Stock Exchange of Hong

F
G

I
J
K
L
M
N
O
P
Q
R

auditors. The bone of contention behind these proceedings is the status of

T
U
V

F
G
H

from the Australasian Mining & Metallurgy Institute, and his membership
thereof invalidated as from the date of admission (meaning he cannot
legitimately claim ever to have been a member of it at any time) on the

I
J

grounds of his false and fraudulent claims of qualifications, expertise and

experience. It appears that all the listed companies, and in due course
their auditors, have relied upon his reports in the promotion of investment
opportunities

including

securities

and

possibly

other

K
L

financial

instruments, and will continue to do so unless restrained.

M
N

However the plaintiff has a number of obstacles in his path

the major and initial one, being that he has already been adjudicated a
vexatious litigant in proceedings before Mr Justice Godfrey Lam on

O
P

20 June 2016 (HCMP No 443 of 2015) the same day as he issued these
proceedings before me. A particularly worrying factor, and a distinct
problem on its own for this plaintiff, is that Mr Justice Lam issued his
decision at 11:54 am on Monday and this plaintiff took out his offending

Kong, and a number of listed companies including their respective

a purported expert mining engineer, Herman Tso, who has been expelled

proceedings at 12:24 pm on the same day, ie within 30 minutes of that

decision.

Q
R
S
T
U
V

- 4 A

A
B

The ambit of the prohibition imposed upon him is wide and

very clear. I extract from the Judges order the following:

C

1. The Defendant be restrained or otherwise prohibited

from commencing or issuing any fresh claims or proceedings in
any court in Hong Kong by whatever originating process
without leave of one of the following judges being first
obtained

D
E
F
G

There then follow the names of four judges of the High Court of whom
the first-named is Mr Justice Godfrey Lam.

H
I

B
C
D
E
F
G

6.
For all applications for leave to commence or issue a
fresh claim or proceedings:

(1) The Defendant shall at least 14 days before filing his

application notify each intended defendant or respondent
in writing of his intention to make such a leave
application.

J
K

J
K

7. All leave applications by the Defendant and all matters

ancillary thereto shall be dealt with on the papers without an
oral hearing unless the designated Judge otherwise directs.

M
N
O

4
before me.

As far as I am concerned that order covers the proceedings

These were commenced by the filing of the Writ and

Statement of Claim at 11:51 am on 18 June 2016, Saturday. The learned

P
Q

Judge on 20 June 2016, the next working day, would not have been aware
of these proceedings, (nor would the plaintiff, the 2nd defendant in the
action before me) otherwise he would, I am sure, have included it with

the other existing actions identified in 3 of the stay order.

5

U
V

N
O
P
Q
R
S

S
T

The plaintiff in his comments before me indicated that he

felt that the solicitors appearing for the plaintiff before Godfrey Lam J

T
U
V

- 5 A

A
B

had encouraged him to think that any other existing action commenced by
him was not caught by the order and that he was therefore at liberty to

C
D
E
F

finding on it. If it remains a live issue it can be dealt with on another day.

The second problem faced by Mr Zhi is that he has no

locus standi in relation to this action against all these defendants, at least

Claim that at all material times [he] was a general investor in stocks

Hong Kong so as to establish, for example, that he is owed a duty of care

regards him as a shareholder in itself as from a registration date in

Q
R

If the plaintiff is indeed a shareholder in any one or more of

T
U
V

J
K
L

N
O

even then on a limited basis, only against those companies in which he is

P

a shareholder or investor.

The last matter does not emanate from anything the plaintiff

has or has not done.

The 12 th defendant is a well-known firm of

accountants in the United Kingdom. They were my accountants for over

S

the defendant companies then he must assert this but it will avail him, and

the skeleton written submissions on behalf of the 2nd defendant, that it

October 2014.

shareholder or investor in any of the defendant companies trading in

M
N

in support of the summons. He merely says in 1 of the Statement of

and thereby entitled to bring these proceedings. However I noted from

K

D
E

listed on The Stock Exchange of Hong Kong. He does not claim to be a

I

pursue it. It is not for me to examine that contention and make any

he does not plead such in either his Statement of Claim or his affirmation
G

R
S

twenty-years when I was in professional practice at the Bar. That is of

course now some two decades or so ago. I was then one of their many

T
U
V

- 6 A

A
B

clients.

There is currently considerable sensitivity, perhaps even

controversy, about a judges direct or indirect past contact with a party to

C
D

under the bridge since Binder Hamlin acted as my accountants involving

this litigation, particularly since the plaintiff is a litigant in person who

direction or ruling on any substantive matter. I will make clear what I can
and will do at the end of this decision.
9

I suspect that the plaintiff feels that he can take up the

cudgels on behalf of the world at large and conduct a roving commission

K
L

N
O
P
Q
R
S
T
U
V

F
G
H
I
J
K

to ensure that large public listed companies, and their regulatory body,
The Stock Exchange, do not proceed to ignore the significant
development to which I have referred earlier, namely the fact that a

situation. This last matter makes it clear that I will not make or give any

I
J

advice, I consider it safer to recuse myself from sitting on any aspect of

obviously does not have the benefit of legal advice to deal with such a

litigation which comes before him. Although much water has passed
regular contact with the Inland Revenue on my behalf and investment

L
M

purported engineering expert has been so discredited by the AM & M1

that any institution which has hitherto relied upon his or his companys
purported expertise, valuations, investigations, opinions and reports has

N
O

to discard them forthwith if they have played any part in the promotion of
the institutions business for the purposes of encouraging investment and
the purchase of shares by members of the public.
10

It is obvious that where such reports etc. have been used as,

even at least in part, the foundation for promoting the commercial success

P
Q
R
S

of the company commissioning them, such a company cannot ignore that

T
U
V

- 7 A

A
B

the status of the so-called expert relied upon hitherto, has been so
discredited. If it did do so it would be negligent.

C
D

11

Some of the contents of the skeleton submissions advanced

by the 2nd defendant are alarming and suggestive of a less than rigorous
E
F

reasons why I have felt it necessary to highlight them. The plaintiff

those to whom such duty is owed, and therefore has no locus standi to

12

13

T
U
V

On the face of it the time-scale is irrelevant. The findings

N
O

Although the 2nd defendant may need to investigate what

impact [his] alleged expulsion from AM & M1 will have on his
previous work product to the 2nd defendant .

14

was done.

Herman Tsos alleged work product for the 2nd to the

9th defendants all were completed in 2010 or 2011,
obviously many years ago .

expertise such as to make them worthless, however long ago the work

against Tso are highly likely to vitiate work etc based upon his claimed
N

The specific contents are:

L
M

and transparency is not being applied, even though he may not be one of
effect any pressure.

application of the duty of the company concerned. This is one of the

would be encouraged by such statements to consider that the duty of care

The expulsion is unchallenged, and Tso has not appealed

against it, and so the need for investigation is obviously an imperative.

P
Q
R
S

Any failure to do so thoroughly would be negligent.

T
U
V

- 8 A

A
B

15

If this skeleton truly reflects the approach of the

2nd defendant to this serious development, it clearly suggests a reaction, or

C
D

F
G
H

risk. The regulatory authority has a clear overall duty. I do not need to

the public to bring over-mighty institutions to account, if not to heel.

16

However, even if this plaintiff were able to establish a

locus standi, litigation of this nature may well be premature unless

authority to remedy them. There exists machinery for shareholders and

company and the regulatory body to pay heed to is Chapter 18 of the

17

The upshot of this is that having recused myself I can make

R
S
T
U
V

J
K
L
M
N
O

Godfrey Lam, J for his consideration. In the meantime this plaintiff must
put his house in order, if he can, and he must do this as a matter of
urgency within 14 days. He must also be prepared to set out clearly the

resorting to litigation. Amongst other relevant provisions both for such a

no orders. Instead the only proper course is to refer the matter back to

proper steps have been taken by the company concerned or the regulatory

Listing Rules (in particular 18.05 and 18.21)

F
G

M
N

2 defendant. Such an attitude merely encourages concerned members of

investors to call the company and/or the regulator to account before

K

nd

default, neglect, breach of duty of care has already occurred and no

I

lack of it, which is irresponsible. There are shareholders and investors at

consider any of the other detail emerging from the reactions of this

P
Q

basis for his contention that the Order of Godfrey Lam, J of the 20th June
2016 did not apply to these proceedings which he had set in train on the
Saturday morning immediately proceeding the learned judges Order on

R
S

the following Monday morning.

T
U
V

- 9 A

A
B

18

The costs will be reserved.

(Conrad Seagroatt)
Deputy High Court Judge

E
F
G

The plaintiff, appeared in person

I
J

Mr Eugene Kwok, instructed by Baker & McKenzie, for the 2 defendant

The 3rd defendant was not represented and did not appear
The 4th defendant was not represented and did not appear

Mr Isaac Chan, instructed by Michael Li & Co, for the 7th defendant

The 11th defendant was not represented and did not appear
Mr Sassi, instructed by Smyth & Co, for the 12th defendant

T
U
V

L
M
N
O
P

Mr Tai Chun Yin Terence, instructed by Philip K Y Lee & Co,

for the 13th defendant
Mr C S K Sharrock, instructed by Kennedys, for the 14th defendant
Ms A Beattie, instructed by OMelveny & Myers, for the 15th defendant

The 9th defendant was not represented and did not appear
The 10th defendant was not represented and did not appear

Mr Samuel Ngo, instructed by K & L Gates, for the 6 defendant

th

The 8th defendant was not represented and did not appear
M

nd

Mr Charles Allen, instructed by Sidley Austin, for the 5th defendant

K

F
G

Mr Victor Dawes, instructed by LIMC LATERS, for the 1st defendant

H

Q
R
S

th

The 16 defendant was not represented and did not appear

T
U
V