Read the full judgment text of HCA 1244/2009 on BabelCite. This Court of First Instance judgment was delivered on 7 September 2011 before Hon To J.
Civil procedure – interlocutory applications – receivers appointed under contractual share charge – application to vary powers of receivers – application for mandatory interlocutory injunction – application to amend pleadings – civil contempt and default judgment – conflict of interest – misrepresentation – unjust enrichment – promissory estoppel – Top One International (China) Property Group Co Ltd and Another v. Top One Property Group Ltd and Others – In 2007, Stark Investments financed Thumb China with SGD120 million secured by shares in Sino-Environment under a Notes Trust Deed. When the collateral value dropped, on 30 April 2008 the 2nd Defendant executed a Share Charge over all his shares in Top One A in favour of the 2nd Plaintiff as security trustee. Top One A's primary asset was its 100% shareholding in Chongqing Dading, owning the Dading Group. The 3rd Defendant had incorporated Top One B one month before the Share Charge was executed. Within three months of the Share Charge, Top One A's shares in Chongqing Dading were transferred to Top One B for RMB200 million, and ten months later to Fujian Dahong, in breach of undertakings. Thumb China defaulted, leaving approximately SGD50 million outstanding. Receivers were appointed over Top One A. Four interlocutory applications were before the court: the 2nd Defendant's Representation Application (to vary the powers of the Receivers so that he could represent Top One A in PRC proceedings, the 2nd Chongqing Proceedings, brought by FTI on behalf of the 2nd Plaintiff to set aside the share transfers and restore the Chongqing Dading shares to Top One A), Amendment Application (to re-amend his defence to plead misrepresentation, mistake/unjust enrichment, and estoppel), and Injunction Application (for a mandatory injunction requiring the Receivers to enable him to represent Top One A), and the Plaintiffs' Withdrawal Application (withdrawing their claims against the 2nd Defendant with his consent). First issue (Amendment Application): whether leave to re-amend should be granted to plead misrepresentation of fact that the Share Charge was only a formality and would never be enforced. Held: amendment refused, as the statements were statements of opinion or future intention and lacked particulars of dishonesty, and the plea was bound to be struck out under Natamon Protakorn and Citibank NA [2009] 1 HKLRD 455. Second issue (Representation Application): whether the Court has power to vary the powers of contractual receivers. Held: refused, as the receivers were appointed under the Share Charge, not by the Court, and were not officers of the Court (Picarda, The Law Relating to Receivers, Managers and Administrators, 4th ed). Order 102 RHC was inapplicable. Third issue (Injunction Application – serious issue to be tried): whether the 2nd Defendant established a serious issue to be tried. Held: refused, as there was no evidence of misrepresentation of fact; the 2nd Defendant filed no affirmation, and the affirmations from his solicitor and the 3rd Defendant lacked particulars, with no evidence from Mr U. The valuation expert argument was 'non-sense'. Fourth issue (Injunction Application – balance of convenience): whether the balance favoured granting the mandatory injunction. Held: refused; applying American Cyanamid Co v. Ethicon Ltd [1975] AC 396 and Music Advance Limited v. The Incorporated Owners of Argyle Centre Phase I, HCA 2574/2002, damages were adequate for the 2nd Defendant, the 2nd Plaintiff (Bank of New York Mellon) would be good for any damages, the 2nd Defendant would not be good for the SGD50 million in damages that could be awarded against him, and the 2nd Defendant was in a real conflict of interest with Top One A. Restitution would yield only a personal remedy (Graham Virgo, The Principles of the Law of Restitution, 2nd ed). Outcome: Plaintiffs' Withdrawal Application granted with costs to the 2nd Defendant. The 2nd Defendant's three applications refused with costs to the Plaintiffs (with certificate for counsel, taxed if not agreed, payable forthwith), subject to the Receivers' undertaking to fund separate independent legal representation for the 1st Plaintiff in the 2nd Chongqing Proceedings, recoverable as a first charge on Top One A's assets.
Legal issues: Whether leave to re-amend the Amended Defence to plead misrepresentation and estoppel should be granted · Whether the 2nd Defendant may invoke the Court's jurisdiction to vary the powers of contractual Receivers to enable him to represent Top One A in PRC proceedings · Whether the 2nd Defendant has shown a serious issue to be tried to support a mandatory interlocutory injunction · Whether the balance of convenience favours granting a mandatory interlocutory injunction requiring the Receivers to enable the 2nd Defendant to represent Top One A
Outcome: Plaintiffs' Withdrawal Application granted with costs to the 2nd Defendant. The 2nd Defendant's three applications (Representation, Amendment, and Injunction) were all refused with costs to the Plaintiffs, subject to the Receivers' undertaking to fund separate independent legal representation for the 1st Plaintiff in the 2nd Chongqing Proceedings.
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