Read the full judgment text of FACV No. 3 of 2010 on BabelCite. This Court of Final Appeal judgment was delivered on 13 January 2011 before Bokhary PJ, Chan PJ, Ribeiro PJ, Mortimer NPJ and Lord Walker of Gestingthorpe NPJ.
Company law – unfairly prejudicial conduct – Companies Ordinance (Cap 32) s.168A – buy-out orders – property valuation as at date of petition – payment of purchase price by way of set-off against distributable profits – award of interest on petitioner's share of net proceeds of sale – whether interest order can be sustained – whether interest can run from date of deemed completion where no delay in payment – whether 'proxy' compensation for delayed access to premises can justify interest award – background facts of two married couples jointly running schools and kindergartens through several companies with 50/50 shareholdings – deadlock from 1997 – non-payment of rent – failure to distribute profits – petition issued on 17 September 2004 – Kwan J's buy-out and compensation orders dated 14 June 2007 and 5 March 2008 – properties at No 49 and No 57 Cumberland Road valued at $66.56 million and $68.22 million respectively – deemed sale and completion on 17 September 2004 – rental income credited to petitioner and 1st respondent respectively as from 18 September 2004 – issue of whether the interest order on petitioner's share of net proceeds of sale was valid – held no because proceeds were payable to Richmond not to petitioner – petitioner was a purchaser not a recipient of proceeds – held there was no delay in payment of purchase price because payment was by set-off against distributable profits on the same day – issue of whether the Court of Appeal's revised order charging interest on petitioner's share of distributable profits could be sustained – held no because the revised order's fundamental premise was flawed – petitioner was credited with her share of distributable profits on 17 September 2004 and used the funds to purchase the property on the same day via set-off – provision for interest 'until payment' could not be given sensible meaning as no debt remained due after 17 September 2004 – issue of whether the orders could be justified as 'proxy' compensation for the 1st respondent having delayed the petitioner's access to premises at No 49 – held no – Kwan J had already made specific calibrated orders for reimbursement of rent for No 49 at HK$120,000 per month from 1 January 2006 to 5 September 2008 – if rental reimbursement was allegedly insufficient, that was a matter for appeal to the Court of Appeal not relitigation before the Court of Final Appeal – an award of $26.2 million or $29.45 million based on an interest calculation could not conceivably be regarded as the appropriate compensation for delayed access to No 49 – appeal allowed – paragraph 10 of Kwan J's order dated 5 March 2008 and the Court of Appeal's order dated 3 June 2009 set aside – order nisi for costs against the petitioner in favour of the 1st and 2nd respondents.
Legal issues: Validity of interest order on petitioner's share of net proceeds of sale · Validity of the Court of Appeal's revised order on distributable profits · Whether interest/revised order can be justified as proxy compensation for delayed access to premises
Outcome: Appeal allowed; the interest order made by Kwan J and the revised order made by the Court of Appeal were set aside.
Cites 2 cases