Read the full judgment text of CACV 33/2017 on BabelCite. This Court of Appeal judgment was delivered on 12 June 2018 before Lam VP, Poon JA and L Chan J.
Civil law – fraudulent misrepresentation – inducement – private placement of shares – exchange for distribution rights – CP representation (ownership of Chinese patent) – GlobalMed representation (status of Grenada subsidiary) – pleading that representations induced share purchase – reliance – whether minimum-share obligation in Share Agreement confined inducement – held: inducement adequately pleaded and established on the evidence; CP representation went to the core objective of the investment and continued in effect through successive private placements – Civil law – damages – foreign currency judgment (Canadian dollars) – pre-judgment interest – conventional rate of prime plus 1% established by Komala Deccof and followed in Polyset, Waddington and Tadjudin Sunny – whether fraudulent misrepresentation warrants a higher rate – held: no separate rule for fraudulent misrepresentation; pre-judgment interest is compensatory and not a substitute for aggravated damages – judge erred in awarding pre-judgment interest at judgment rate; correct rate is Hong Kong prime rate plus 1% – whether Hong Kong or Canadian borrowing rates apply – held: where shares were paid for in HK and US dollars into the 2nd Defendant's Hong Kong bank accounts, and the Plaintiffs are Hong Kong residents/companies, Hong Kong dollar borrowing rates (prime plus 1%) apply in the absence of evidence that Canadian-dollar commercial borrowing was available in Hong Kong – Fargo Shipping distinguished insofar as it relied on deposit rates – Costs – Order 22, rule 24 – sanctioned offer of CAD 1,900,000 not accepted – judgment sum exceeded offer even on Defendants' Canadian-rate calculation – held: no injustice made out; trial judge's discretion to impose indemnity costs and enhanced interest upheld – appeal court intervention limited to errors of principle, irrelevant considerations or unsustainable outcomes (Re A; L v Canterbury District Law Society; Tsit Wing) – Defendants pay 90% of Plaintiffs' costs of the appeal with certificate for two counsel – private placement shares in Canadian biotechnology company – Tetrodin (TTX) for drug withdrawal – Nanning Maple Leaf Pharmaceutical Company Limited – Chinese patent – Peru distributorship – Winland Enterprises Group Inc – Mr Shum and Grace as representing officers – 1st Plaintiff resident in Hong Kong – 2nd and 3rd Plaintiffs Hong Kong companies – judgment entered at HCA 537/2013 – appeal dismissed save as to pre-judgment interest rate.
Legal issues: Whether the CP representation was pleaded and proved as inducing the share purchase · Whether the GlobalMed representation was a fraudulent misrepresentation · Appropriate rate for pre-judgment interest · Hong Kong rates versus Canadian rates for pre-judgment interest on a Canadian-dollar judgment · Imposition of indemnity costs and enhanced interest under Order 22, rule 24
Outcome: Appeal against the main judgment dismissed. Appeal against the pre-judgment interest rate allowed to the extent that interest is reduced from judgment rate to Hong Kong prime rate plus 1%. Appeal against enhanced interest and indemnity costs dismissed.
Cited by 10 cases · Cites 6 cases