Howard Smith v Ampol Petroleum

This appeal concerns a claim by the Respondent company, Green Elite Ltd (“Green Elite”), against its former directors and HWH Holdings Ltd (“HWH”), a company owned and controlled by one of the former directors. The claim relates to the payment of HK$150 million, comprising the proceeds of sale of the Company’s only assets, together with a further HK$8.7 million, paid to the former directors and HWH. Green Elite alleged that these payments were made and received in breach of the duties owed by the former directors.

After a trial at which extensive evidence was given, Jack J, sitting in the High Court (Commercial Division) of the Eastern Caribbean Supreme Court (British Virgin Islands), upheld the claim (BVIHC (COM) 2018/0222). He ordered the former directors to pay the total sums claimed plus interest, and HWH to pay HK$3.45 million (being part of the HK$8.7 million) plus interest, to the Company. The Court of Appeal of the Eastern Caribbean Supreme Court (BVI) dismissed an appeal by Fang Ankong, one of the former directors, and HWH. Mr Fang and HWH appeal as of right to the Board.

The background to the present case is a joint venture formed in about 1999 between Mr Fang, who ran a scrap metal business in the People’s Republic of China (“the PRC”), and Stephan van Ooijen and Herman de Leeuw, whose business based in the Netherlands included the export of scrap metal from Europe.

In 2008, Mr Fang, Mr van Ooijen and Mr de Leeuw (“the Principals”) decided to float the business on the Hong Kong Stock Exchange by an initial public offering. Chiho-Tiande Group Ltd (“CT”) was incorporated in the Cayman Islands to serve as the vehicle for the flotation. The shares in CT were issued in equal numbers to Delco Participation BV (“Delco”), a Dutch company owned by Mr van Ooijen and Mr de Leeuw, and to HWH, a company incorporated in the British Virgin Islands (“BVI”) and owned by Mr Fang.

As part of the flotation, the Principals envisaged that there would be a share incentive scheme for three key employees – Fang Anlin (Mr Fang’s brother), Mr Gu Liyong and Mr Ding Guopei (Mr Fang’s brother-in-law). At Mr Ding’s request, it was agreed that any benefits should go to his daughter, Ms Ding Li. To implement that arrangement, the following steps were taken: