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Asia Pacific Infrastructure Investment Fund, Lp v Keyway Holdings Ltd

Judgment Cited authorities 3 Cited in Precedent Map Related
Vincent
Judgment Date31 August 2018
Neutral Citation[2018] HKCFI 2228
Year2018
Judgement NumberHCA689/2018
Subject MatterCivil Action
CourtCourt of First Instance (Hong Kong)
HCA689/2018 ASIA PACIFIC INFRASTRUCTURE INVESTMENT FUND, LP v. KEYWAY HOLDINGS LTD

HCA 689/2018

[2018] HKCFI 2228

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 689 OF 2018

______________

BETWEEN
ASIA-PACIFIC INFRASTRUCTURE INVESTMENT FUND, LP Plaintiff
and
KEYWAY HOLDINGS LIMITED Defendant

______________

Before: Deputy High Court Judge Keith Yeung SC in Chambers

Date of Hearing: 31 August 2018

Date of Decision: 31 August 2018

___________________

DECISION

___________________


1. There are two summonses before me:

(a) the summons dated 24 August 2018 (the “Joinder Summons”) for leave to join “Keyway Holdings Limited (啟聯集團有限公司)” (“Keyway HK”) as the 2nddefendant in the action herein (together with consequential amendments to the Writ, and an order that service of the amended Writ upon Keyway HK be dispensed with); and

(b) another summons also dated 24 August 2018 (the “Injunction Summons”) for an Order as follows:

“ 1. The Defendant [(“Keyway Seychelles”)] and/or [Keyway HK] shall forthwith transfer or cause to be transferred (whether by its directors, officers, employees, or agents, including but not limited to China Times Securities Limited (‘China Times’) and/or Key Way Holdings Limited), or otherwise vest the 79,300,000 freely trading ordinary shares (‘the Pledged Shares’) of the common stock of Asia Allied Infrastructure Holdings Limited (stock code: 711.HK) [(“Asia Allied”)], a corporation organised under the laws of Bermuda which stock listed on the Stock Exchange of Hong Kong Limited, and any such dividends received in respect of the Pledged Shares since deposit on 4 July 2017, in favor of an independent collateral agent instructed by the Plaintiff, Sun Hung Kai Investment Services Limited, in the place of China Times, subject to the Plaintiff paying into Court the sum of HK$36,019,426.67 as security for the Plaintiff’s potential outstanding indebtedness towards the Defendant and/or [Keyway HK] (if any) under the loan agreement dated 29 June 2007 entered into between the Plaintiff and the Defendant and/or [Keyway HK];

2. Relief of paragraph 1 above in the interim pending determination of the Summons herein or such further order of the court;

3. The time for the Plaintiff to comply with the undertaking as set forth in the Order of Madam Justice Lisa Wong dated 22 August 2018, i.e. to issue and effect service of the Summons herein, be extended for one day”.

THE PLAINTIFF’S PLEADED CLAIM

2. The Writ herein was taken out on 26 March 2018. In its original form it was against Keyway Seychelles only. A Statement of Claim was indorsed thereon. It was pleaded that pursuant to a loan agreement of 29 June 2007 between Keyway Seychelles and the plaintiff, Keyway Seychelles as lender agreed to provide a non-recourse loan of up to HK$37,000,000 (the “Loan”) to the plaintiff as borrower. The security wasto be the Pledged Shares. The terms of the agreements were that the plaintiff would remain the beneficial owner of those shares, retain exclusive control over them, would be entitled to exercise all voting rights and powers appurtenant to them, and that Keyway Seychelles “shall not Transfer[1] any Pledged Shares prior to an uncured Event of Default.” Pursuant to the Loan Agreement, Keyway Seychelles advanced to the plaintiff a total of HK$33,740,386 (the “Advanced Sum”). Transfer of the Pledged Shares was effected as security. They were deposited into an account opened in the plaintiff’s name with China Times. However, it subsequently transpired that the number of Asia Allied shares hold by China Times recorded or evidenced by the CCASS records has since 7 July 2017 fallen below 79,300,000, ie the number of the Pledged Shares. That suggested that part of the Pledged Shares had been transferred away. The plaintiff seeks inter alia (1) damages to be assessed; (2) all necessary accounts and inquiries as to the whereabouts of the Pledged Shares; and (3) a mandatory injunction that any shortfall be replenished, with a prohibitory injunction restraining further disposition.

THE JOINDER SUMMONS

3. I have read the affirmation of service of Chua Mei Mei filed on 28 August 2018. I am satisfied that a copy of the Joinder Summons has validly been served upon Keyway HK. I turn to the merits.

4. In the preamble of the Loan Agreement, Keyway Seychelles was described as “Key Way Holdings Limited, a Seychelles corporation having an address at Capital City, 1st Floor, Suite 106, Victoria, Mahe, Seychelles”. No Chinese name was mentioned therein. This is to be contrasted with the company chop of the lender at the execution clause on page 24 of the Loan Agreement, whereby the lender was described as “Keyway Holdings Limited 啟聯集團有限公司”.

5. The plaintiff has taken steps to serve the Writ outside jurisdiction in Seychelles. Those steps were however unsuccessful. According to the searches conducted on the plaintiff’s behalf, it transpires that there is no company incorporated or registered in Seychelles in the name of “Keyway Holdings Limited”.

6. The plaintiff then sought to serve the Writ upon a firm of lawyers in New York. That firm had on behalf of Keyway Seychelles on previous occasions communicated with the plaintiff in relation to businesses connectedto the Loan Agreement. The plaintiff applied for and obtained an Order ofsubstituted service for that purpose. Amongst other documents, a concurrent Writ was successfully delivered to that firm. However, on 25 July 2018, that firm wrote to the plaintiff’s legal advisers and said that “… this firm has never represented Keyway Seychelles. This firm did represent a company known as Keyway Holdings Limited, but such company was not incorporated in Seychelles.”

7. Service via that firm of lawyers was therefore also unsuccessful. The evidence discussed above also raises concern about the true identity of the lender.

8. In the meantime, on 4 July 2018, the plaintiff obtained an Order from B Chu J ordering China Times to disclose the current status and whereabouts of the Pledged Shares together with the particulars of the custodian utilized to hold the same. The disclosure was made by Mr Frank Yu via his 3rd affirmation dated 19 July 2018. He is a director of China Times. He produced a one-page statement of Sinteza Invest Group entitled “Investment Report” (the “Sinteza Statement”). It concerned an account held in the name of Keyway Holdings Limited. The address of that company (Keyway Holdings Limited) was said to be 1301, Bank of America Tower, 12 Harcourt Road. According to...

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