Small shareholders fighting former Citic Pacific chairman Larry Yung Chi-kin over investments losses in the conglomerate have given up their battle after being notified they would have to hire expensive lawyers to fight the case in the High Court.
The Small Claims Tribunal yesterday ruled it could not continue to hear the compensation claims of the three shareholders and suggested it be settled in the High Court. That is a victory for Yung who had argued for a High Court hearing, but bad news for the small investors.
The Small Claims Tribunal is favoured by the less well off because parties to actions are not allowed to hire lawyers. A 'small claim' is one for money involving HK$50,000 or less and includes debts, service charges and consumer claims.
The claimants - Joseph Leung, So Wai-ching and Wong Kam-wan - were seeking compensation of HK$115,516 from Yung. They claimed they lost money when they sold shares of Citic Pacific on October 20, 2009 following the company's disclosure of massive currency losses, which were known by its board six weeks earlier.
Ivan Wong Lai-wing, the tribunal's deputy adjudicator, explained in his judgment that the case involved too many complicated legal issues, such as business law, as well as securities and futures regulations, which should be dealt with in a court with lawyers and barristers.
He added that Yung, as the chairman of Citic Pacific, only had to be responsible for the company and it was not necessary for him to be responsible for the small shareholders unless they had a direct contractual relationship.
'Claimants seeking compensation due to a slump in share prices is not reasonable,' Ivan Wong said. 'Moreover, the statement [about a profit warning due to the company's investment loss] was not issued by Larry Yung and he has no contractual relationship with small shareholders.'