THE Chung Ying Theatre Company, embroiled in controversy since the beginning of the year, got a fresh shock yesterday when artistic director Ms Chris Johnson announced her resignation. In what is is undoubtedly an upward move, the 37-year-old Australian who has led Chung Ying since November 1988, will be leaving Hongkong at the end of August to join the Royal Queensland Theatre Company as artistic director - the first woman to head a state theatre company in Australia. The honour could not come at a better time for Ms Johnson who has had to contend with a bitterly divided company since last December when she told three actors that their contracts would not be renewed. What began as a pruning, almost ended in disintegration three months later when five other actors presented Chung Ying's board with a letter of protest which they had co-signed with the dismissed trio, and announced that they too would be leaving. Ms Johnson stressed yesterday that her decision to take up the Queensland post ''had nothing to do with any of that,'' though she didn't hide her disgust with the eight who threw Chung Ying into turmoil. ''To me the greatest offence was that those three young people who were told their contracts would not be renewed in March, were intent on causing the company as much trouble as possible. ''They did nothing in December. They waited until late February to make their protest, knowing full well what chaos would result - as it did when their five friends resigned at the last possible moment before new contracts were due to be signed. ''As a result, programmes were cancelled and a lot had to be reorganised, but we managed.'' Ms Johnson said the crisis also revealed those who were ''true supporters'', most notably veteran actor Lee Chun-chow. A huge favourite with the public, Lee is now actor-director for Chung Ying - in effect deputy artistic director. Yesterday's bombshell was followed by excitement today as Ms Johnson and four of her actors left for Vancouver to take part in the city's celebrated children's festival. Yesterday, Chung Ying chairman Mr Vincent Chow praised Ms Johnson for maintaining ''consistently high standards'' of professionalism and paid tribute to her innovative work which has brought the company international respect and a large, responsive localaudience. During her tenure, the 14-year-old theatre company was finally given a permanent home, though Ms Johnson would have preferred to see the largesse come with proper funding from the Government. When the artistic director learned that Chung Ying, which is dependent on central Government funds, was to have its grant frozen for the third year running, she warned: ''I'm starting to cut heads right now.'' It is tempting to assume that a thaw in the Government's arts funding policy could have saved Chung Ying and Ms Johnson a lot of misery and acrimony.