Zeng Li Feng v. Super Worth International Ltd

HCA 1043/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1043 OF 2012

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D E C I S I O N

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The application

1.This is the Plaintiff’s (“P’s”) summons for leave to re-amend the Statement of Claim.  The defendants (“Ds”) oppose the application.  The parties are legally represented.[1]

2.Ds’ grounds of objection are:

(a)  Delay.

(b)  The proposed amendments are ambiguous, which will cause prejudice to the defendants.

Factual background

3.Relating to this application, the factual background, as according to P, is as follows:

(a)  D2 is the owner of D1.

(b)  D2 is also an owner of other two companies named Earn Cheer Limited and Flying Max Limited. D1 and these companies are collectively called (“the companies”)

(c)  The companies are the majority shareholders of a listed company, Nature Dairy (NZ) Holdings Ltd, which is listed on the Hong Kong Stock Exchange under Stock Code 462.

(d)  By an agreement in writing, P agreed with D1 and D2, collectively called (“Ds”) for the purchase of a number of the shares of the listed company for the consideration of $40 million, with a buyback provision, upon due notice, by Ds for $60 million if P was unable to sell off those shares within one month after the date of the purchase of those shares.

(e)  P and Ds later agreed that time for buyback option was to be extended for another six months from the expiration of one month after the date of purchase of the shares. Ds agreed to pay extra $5 million for the extension of time on top of the $60 million agreed price for the buyback.

(f)  The written agreement was therefore post-dated 5 months later i.e. 18 April 2011.

(g)  P had paid the price of $40 million for the shares.

(h)  During the material time up to 18 April 2011, the listed company’s shares were suspended from trading.

(i)  P did not issue the buyback notice in writing, for which he says that this requirement has been waived. P had only made the request orally. But Ds had failed to buyback those shares at the agreed price.

(j)  P claims for specific performance of the agreement, and further or in the alternative, damages in lieu.

Defences

4.Ds’ defences to the claims are simply that Ds deny that there had been agreement of any buyback by Ds nor any oral agreement as to the extension of time and compensation of $5 million.  The Written Agreement as stated in the Amended Statement of Claim is not valid for no consideration or alternatively for past consideration.

Discussion

5.On the first ground of delay, the burden is on Ds to set out the delay and prejudice that would be caused to them.  It will then for P to answer those allegations.

6.Ds have failed to set out any of those issues.  As such, this is a non-starter for any argument for Ds.

7.As to the issue of ambiguity, the same principle applies.

8.Ds’ complaint is that the proposed new paragraph 5 contains matters not pleaded by P in the previous Statement of Claim.  This begs the question why P should amend the Statement of Claim if it has contained such matters in the original Statement of Claim.

9.As to the so called “new sentence” which Ds say is ambiguous, I am afraid that Ds have not spelt out in what way they find ambiguity.  This morning Mr. Wong acting for Ds has explained to me the reason why Ds say that the proposed amendments are ambiguous.  Having referred to paragraph 3(3) of the Amended Statement of Claim, I do not find it difficult to understand the meaning of the word “requirement”.  However, if Ds have any problem in understanding this new sentence, they may take out appropriate application for clarification under the Rules of the High Court.

10.Ds have failed to convince this Court that leave should not be granted to P to amend the Amended Statement of Claim.  In this particular case, a pertinent consideration in giving effect to the underlying objectives is that the court ‘shall always recognise that the primary aim in exercising the powers of the Court is to secure the just resolution of disputes in accordance with the substantive rights of the parties’. (Order 1A rule 2(2)) “Absent any real prejudice, the case must be decided upon the general principle that a court of law seeks to adjudicate on the real issues and disputes between the parties and, if possible, technical and procedural rules should not stand in the way of allowing the parties to raise their real claims or defences before the court for adjudication.”  See paragraph 22 of VSC Building Products Co Ltd v Kono Insurance Ltd (unreported, HCA 947/2005, 9 September 2009 per A. Cheung J. (as he then was))

11.Leave is granted to P for the proposed re-amendments to the Amended Statement of Claim.

Costs

12.As to the costs of this application, there is no reason why the costs should not follow the event for today’s argument, though the costs for the re-amendments and occasioned by the re-amendments should be borne by P.  Ds propose that the costs of and occasioned by the amendment be set off the costs for today’s hearing, which P disagrees to accept.  In view of P’s disagreement, this Court should not accede to Ds’ request.  The costs order should be that the costs of the application and the costs occasioned by the re-amendments should be given to Ds, to be taxed if not agreed, in any event.  Today’s costs should be given to P, to be assessed summarily under O.62, r.9A RHC at $28,000 to be paid by Ds within 14 days from the date hereof.

Order

13.I shall make an order in terms as follows:

(a)  P’s application is allowed;

(b)  P shall file and serve the Re-amended Statement of Claim within 7 days from the date hereof;

(c)  Ds are at liberty to make consequential amendments to the pleadings and file and serve the same within 28 days thereafter;

(d)  P is at liberty to file and serve a Reply within 14 days thereafter; and

(e)  The costs are as per paragraph 12 above.

Case management

14.This matter is adjourned to 11:30 am on 7 June 2017 for the 5^th Case Management Conference with the following directions:

(a)  The parties are to seek Counsel's advice within 28 days after close of the amended pleadings;

(b)  All interlocutory applications as may be advised shall be taken out within 14 days thereafter; such applications, if contested, shall be fixed before the Registrar for argument;

(c)  Liberty to apply;

(d)  (Costs of this Case Management Conference be in the cause (30 minutes).

Mr. Anthony Cheung, instructed by S. W. Tai & Co., for the Plaintiff

Mr. C. K. Wong, of Charles Yeung, Clement Lam, Liu & Yip, for the Defendants