Jin Yao Holdings Ltd v Forever Winner International Ltd and Sino Century Holdings Ltd

• Jurisdiction: British Virgin Islands
• Court: High Court (British Virgin Islands)
• Judge: Mithani, J.
• Judgment Date: 14 May 2025
• Neutral Citation: VG 2025 HC 8
• Year: 2025
• Docket Number: BVIHC(COM) 0641 of 2024

Jin Yao Holdings Ltd

and

Forever Winner International Ltd and Sino Century Holdings Limited

Mithani, J. (Ag.)

BVIHC(COM) 0641 of 2024

High Court

Appearances:

Mr. Mathew Collings KC (instructed by Kendall Law) and, with him, Mr. John Carrington KC, of Kendall Law, for the Applicant

Mr. Michael Todd KC (instructed by Carey Olsen BVI) and, with him, Mr. Alex Hall Taylor KC, of Carey Olsen, BVI, for the Respondent

INTRODUCTION, BACKGROUND, AND ISSUES

1 Mithani, J. (AG.): [1] In this application (“the Main Application”), the Applicant is JIN YAO HOLDINGS LTD (“the Applicant”). It seeks the appointment of joint liquidators (“the liquidation order”) over Forever Winner International Ltd. (“the Company”), a company incorporated and registered in the BVI. The Main Application is made pursuant to s. 162(1)(b) of the BVI Insolvency Act, 2003 (“the BVIIA 2003”) on the ground that it is “just and equitable” to do so.

2 The Applicant owns half of the issued shares in the Company. The other half is owned by the Second Respondent, SINO CENTURY HOLDINGS LIMITED.

3 The Main Application was brought by the Applicant by way of an Originating Application dated 20 December 2024. The Company is a notional respondent to the Application. SINO CENTURY HOLDINGS LIMITED is the second respondent to the Main Application.

4 The brief circumstances of the dispute between the parties are as follows.

5 The Applicant is a company owned and controlled by Yao Guoliang (“Mr. Yao”) and, as noted above, owns 50% of the issued shares in the Company. The other 50% shareholder of the Company is the Second Respondent, a company owned and controlled by Wang Jiansheng (“Mr. Wang”). Mr. Wang and Mr. Yao are the only directors of the Company. Just as counsel did before me, I will, for the sake of convenience, when referring to Mr. Yao or the Applicant, include either or both of them (or any company or entity controlled by them), as the context may require; and, likewise, when referring to Mr. Wang or the Second Respondent, include either or both of them (or any company or entity controlled by them), also as the context may require.

6 The Company was incorporated as a quasi-partnership between Mr. Wang and Mr. Yao to hold shares in Strong Petrochemical Holdings Limited (“SPHL”), a company incorporated in the Cayman Islands. The shares in SPHL are listed on the Main Board of the Stock Exchange of Hong Kong Ltd. The Company holds 1,041,746,000 shares in SPHL, representing 49.06% of SPHL's issued shares. The other shareholders in SPHL and the percentage shares they own in that company are:

• (a) Mr. Yao: 5.89%;

• (b) Speed Success Group Limited, one of Mr. Wang's companies: 2.38%; and

• (c) Hongkong Hengyuan Investment Limited (“Hengyuan”): 16.65%.

7 Mr. Wang is a director of SPHL; Mr. Yao is not. Mr. Yao resigned as a director of SPHL on 24 January 2025, one day before an extraordinary general meeting of SPHL, which Linda Chan, J. in the Court of First Instance in Hong Kong had directed to be held. The purpose of the meeting and the background circumstances relating to it are set out in Mr. Wang's first affirmation and do not require further mention here.

8 Mr. Yao maintains that SPHL is controlled by Mr. Wang because, together with Hengyuan, which holds 16.65% of the shares in that company (with whom Mr. Wang has a strong association and with whom he is alleged by Mr. Yao to act in concert), they exercise shareholder control over SPHL. Mr. Yao also says that Mr. Wang now has control of that company at the directorial and managerial level because he, together with his son, is the only operational director of the company.

9 Mr. Wang and Mr. Yao each make serious allegations against the other. Mr. Yao states that Mr. Wang, whether acting directly or indirectly, inter alia: (a) secretly and wrongfully purported to remove Mr. Yao as a director of the Company and then concealed it so as to be in control of voting (or disenfranchising) the Company's shareholding in SPHL for the purpose of meetings convened by SPHL; (b) denied access to Mr. Yao of information relating to the Company; (c) wrongly held up the payment of dividend from SPHL to the Company; (d) obstructed Mr. Yao from having any access to the books and records of the Company; (e) wrongly presented a winding-up petition against SPHL, which caused SPHL's share price to slump by more than 40% from HK$0.216 within a matter of some four weeks; (f) submitted a requisition for an EGM of SPHL to consider resolutions to remove all of its directors of SPHL (including its independent non-executive directors) except for Mr. Wang in purported breach of SPHL's articles of association and the Hong Kong Stock Exchange Listing Rules in an attempt to hand over unfettered control of SPHL to Mr. Wang, which is ultimately what happened because the resolution was passed; (g) has been guilty of serious financial wrongdoing in respect of SPHL; (h) before gaining control of SPHL, sent letters to SPHL's major banks which led to its accounts being frozen, an inability to pay wages and a halt in trading; and (i) secretly accumulated shareholdings in SPHL in breach of regulatory requirements.

10 Mr. Wang alleges that Mr. Yao's motive for bringing the Main Application is due to his desperate desire to hold onto the management and control of SPHL against the wishes of the other shareholders of SPHL, following the breakdown in the negotiations that took place between him and Mr. Wang in October 2024 regarding a buy-out by Mr. Wang of Mr. Yao's interest in SPHL. He further alleges that Mr. Yao was guilty of serious wrongdoing by attempting, directly or indirectly, to misappropriate the assets of SPHL.

11 Each party, therefore, makes serious allegations of impropriety against the other.

12 For reasons which will become apparent, it is not necessary for me to say much more about the background facts and circumstances, other than to mention that there have been, and continue to be, several sets of proceedings between Mr. Wang and Mr. Yao in Hong Kong and elsewhere. Nor is it necessary for the allegations that each party makes against the other to be tested at this stage. It may be necessary for findings to be made about those allegations at the hearing of the Main Application if the Main Application proceeds to a final hearing.

13 It is common ground between the parties (for the purposes of the Main Application) that the Company is “deadlocked”. There is no suggestion by either party that the Company is, or may become, insolvent. Mr. Yao's position is that this Court should exercise its discretion in favour of making a liquidation order against the Company under s. 162(1)(b) on the basis that it is deadlocked. Mr. Wang states that a liquidation order is not appropriate because Mr. Yao has failed to pursue other remedies available to him before seeking the liquidation order, including refusing to accept an offer by Mr. Wang for the purchase of Mr. Yao's shares at a fair price. He says that to allow Mr. Yao to pursue the Main Application, in such circumstances, would be an abuse of the process of the Court. He accordingly applies to strike out the Main Application by way of an ordinary application dated 28 January 2025 (“the Strike-out application”).

14 Mr. Yao applies, by way of an ordinary application dated 14 January 2025, for the appointment of joint provisional liquidators (“the JPL Application”) to the Company pending the final hearing of the Main Application. He does so on the basis that there is an urgent need to safeguard the Company and its assets. Specifically, he states that there is a valuable dividend due to the Company, which needs to be secured for the Company, and which may be in jeopardy if Mr. Wang is allowed to decide, by his control of SPHL, whether or not that dividend is paid.

15 I will refer to the Strike-out application and the JPL Application collectively as “the Ordinary Applications”. There was what I thought was another issue that I needed to decide – see para. 79 of Mr. Todd's skeleton argument, but Mr. Todd confirmed that this was not so.

THE LAW

16 For the purpose of determining the Ordinary Applications, it is not necessary for me to set out a detailed exposition of the law governing the Main Application. What follows is a brief treatment of that law, so far as it is relevant to the determination of the Ordinary Applications. I will deal with the law that governs the Ordinary Applications in the course of my analysis of the merits of each application.

17 Section 162(1)(b) of the BVIIA 2003 provides that the court may, on the application of, among others, a member, appoint a liquidator of a company under s. 159(1) of that Act if the court is of the opinion that it “is just and equitable” to do so. However, this provision is subject to s. 167(3), which states that:

“Where an application to appoint a liquidator is made by a member under section 162(1)(b), if the Court is of the opinion that:

• (a) the applicant is entitled to relief either by the appointment of a liquidator or by some other means; and

• (b) in the absence of any other remedy, it would be just and equitable to appoint a liquidator; it shall appoint a liquidator Unless it is also of the opinion that some other remedy is available to the applicant and that he or she is acting unreasonably in seeking to have a liquidator appointed instead of pursuing that other remedy.”

(Emphasis supplied).

18 The leading authority in this jurisdiction on the application of the above statutory provisions is Chu v. Lau [2020] U.K.P.C. 24, a decision of the Privy Council, on appeal from the Court of Appeal of the Eastern Caribbean Supreme Court. In the context of my determining the Ordinary Applications, it is only necessary for me to refer to the following passages of the opinion of Lord Briggs (with whom Lord Hodge, Lord Leggatt, and Lord Burrows agreed):

• “[13] Remedies in the alternative...