Your World of Legal Intelligence
 Hong Kong | 1-800-335-6202

China Cinda (Hk) Asset Management Co., Ltd v Linca Industry (Hong Kong) Holdings Co Ltd

Judgment Cited authorities 2 Cited in Precedent Map Related
Vincent
Judgment Date22 October 2019
Neutral Citation[2019] HKCFI 2565
Judgement NumberHCA1428/2018
Subject MatterCivil Action
CourtCourt of First Instance (Hong Kong)
HCA1428/2018 CHINA CINDA (HK) ASSET MANAGEMENT CO., LTD v. LINCA INDUSTRY (HONG KONG) HOLDINGS CO LTD

HCA 1428/2018

[2019] HKCFI 2565

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1428 OF 2018

______________

BETWEEN
CHINA CINDA (HK) ASSET MANAGEMENT CO., LIMITED Plaintiff
and
LINCA INDUSTRY (HONG KONG) HOLDINGS COMPANY LIMITED 1st defendant
CHAN RONG JI 2nd defendant

______________

Before: Deputy High Court Judge William Wong SC in Chambers
Date of Hearing: 11 September 2019
Date of Decision: 11 September 2019
Date of Reasons for Decision: 22 October 2019

____________________

REASONS FOR DECISION

____________________

1. This is an appeal against the orders of Master Vincent Lung dated 15 April 2019 (“the Master’s Orders”) whereby the 2nd defendant was granted unconditional leave to defend whilst summary judgment was granted in favour of the plaintiff against the 1st defendant.

2. Both the plaintiff and the 1st defendant appealed against the Master’s Orders. Before the hearing, the 1st defendant filed a Notice of Discontinuance. There is no objection from the plaintiff. Accordingly, I made the following orders:

(1) Leave be granted to the 1st defendant to discontinue its appeal against the Orders of Master Vincent Lung of the Court of First Instance, High Court, Hong Kong dated 15 April 2019;

(2) Costs of and occasioned by the appeal be paid by the 1st defendant to the plaintiff on an indemnity basis, to be taxed, if not agreed.

3. So what remained to be decided by this Court is the plaintiff’s appeal against the Master’s decision to grant unconditional leave to defend to the 2nd defendant. At the end of the hearing, I allowed the plaintiff’s appeal and granted summary judgment against the 2nd defendant. I now give my reasons.

Background

4. This is a very simple and straightforward case.

5. The plaintiff’s claim against the 1st defendant is for specific performance of a put and call option deed dated 1 March 2017 (the “Option Deed”) entered between the plaintiff and the 1st defendant pursuant to a put option exercise notice issued by the plaintiff to the 1st defendant on 19 October 2017 (the “Put Option Exercise Notice”).

6. The plaintiff’s claim against the 2nd defendant is for payment of the sum of HK$800,000,000 (the “Put Option Consideration”) pursuant to a personal guarantee dated 1 March 2017 signed and executed by both the plaintiff and the 2nd defendant qua guarantor (the “Personal Guarantee”).

7. On 2 December 2016, the plaintiff and Guoyan Capital (Hong Kong) Limited (the “Placing Agent”), placing agent for International Business Settlement Holdings Limited (the “Listco”), signed a placing confirmation letter, pursuant to which the plaintiff agreed to subscribe for 640,000,000 ordinary shares at HK$1.25 each in the Listco (the “Placing Shares”).

8. The plaintiff authorized two of its British Virgin Islands companies, both wholly owned by the plaintiff, to hold 554,000,000 and 96,000,000 of the Placing Shares respectively.

9. Under the Option Deed:

(1) The 1st defendant granted the plaintiff a put option to which the plaintiff may require the 1st defendant to purchase all of the shares in the first BVI company or both BVI companies (Clause 4.1 and Schedule 2).

(2) The plaintiff granted the 1st defendant a call option pursuant to which the 1st defendant may require the plaintiff to sell all the shares in the first BVI company (Clauses 4.2, 4.3 and Schedule 4).

10. On 14 July 2017, the plaintiff issued a margin call notice to the 1st defendant stating that (a) a margin call event has occurred; (b) the margin cash in the amount of HK$844,800,000 (the “Outstanding Margin Cash”) is immediately due and payable by the 1st defendant; (c) the 1st defendant shall pay the Outstanding Margin Cash into the Margin Cash Account within five days; and (d) failure to make the requested payment would constitute an event of default.

11. There is no dispute that the 1st defendant failed to pay the Outstanding Margin Cash as requested. Thus, an event of default has occurred pursuant to Clauses 6.4, 8.4(a) and (b) of the Option Deed.

12. On 19 October 2017, the plaintiff exercised the Put Option and issued the Put Option Exercise Notice to the 1st defendant pursuant to Clause 8 of the Option Deed.

13. Under Clause 5 of the Option Deed, the 1st defendant is required to pay the plaintiff a call option fee (the “Call Option Fee”) computed and accruing on a daily basis at the rate of 8% per annum on the amount equal to HK$1.25 per share times the number of shares in the Listco indirectly held by the plaintiff from the date of the Option Deed to the specified completion date of the Put Option Exercise Notice, namely,25 October 2017. The Call Option Fee of HK$9,468,493.16 is required to be paid on 25 October 2017.

14. Under the Personal Guarantee:

(1) The 2nd defendant irrevocably and unconditionally agreed to,inter alia, (a) guarantee to the plaintiff punctual performance by the 1st defendant of the Secured Liabilities (as defined in the Option Deed); and (b) be liable as principal debtor and primary obligor to indemnify the plaintiff against any cost,loss or liability it incurs as a result of the 1st defendant not paying any Secured Liabilities on the date it is stated to be due (Clause 2.1).

(2) The amount specified in a demand made by the plaintiff as to the amount of any Secured Liabilities or the amount due from the 2nd defendant under the Personal Guarantee shall be conclusive and binding on the 2nd defendant save for manifest error (Clause 2.2).

(3) Any outstanding and unpaid amount owed by the 2nd defendant to the plaintiff shall bear interest at the agreed rate of 0.1% per annum from the due date until the date of payment (Clause 2.3).

15. Notwithstanding a letter of demand dated 19 June 2018 issued by Messrs White & Case to the 1st and 2nd defendants:

(1) The 1st defendant has failed to acquire the shares of both BVI companies pursuant to the Put Option, and pay the Put Option Consideration and the Call Option Fee, in breach of the Option Deed.

(2) The 2nd defendant has failed to pay the Put Option Consideration in breach of the Personal Guarantee.

16. There is no dispute that the 2nd defendant is a very sophisticated and seasoned business man. There is also no dispute that he signed the Personal Guarantee.

The 2nd defendant’s defence

17. I am informed that before the Master, the 2nd defendant mainly relied on the defence of non est factum. His case is that whilst he admits that he did sign a signature page on a document, he said that he does not understand English and he cannot be certain that the page he signed was indeed page 68 of the Personal Guarantee.

18. I agree with Ms Lam for the plaintiff that such defence cannot even get off the ground. If the 2nd defendant chose to sign a document in Russian, but chose not to understand its content before he signed it, then it is a matter entirely for him. He should, nonetheless, be bound by what he signed. He had all the opportunities to understand the content of the document he was about to sign before he appended his signature on the document.

19. In Saunders (Executrix of the Will of Rose Maud Gallie, Deceased) v Anglia Building Society [1971] AC 1004, Lord Hodson at p 1019B–C said:

“ The plea of non est factum requires clear and positive evidence before it can be established. As Donovan L.J. said, delivering the judgment of the Court of Appeal in Muskham Finance Ltd. v. Howard[1963] 1 Q.B. 904, 912: ‘The plea of non est factum is a plea which must necessarily be kept within narrow limits.’ To take an example, the man who in the course of his business signs a pile of documents without checking them takes the responsibility for them by appending his signature. It would be surprising if he was allowed to repudiate one of those documents on the ground of non est factum.”

20. Lord Reid at p 1016D–G said:

“The plea cannot be available to anyone who was content to sign without taking the trouble to try to find out at least the general effect of the document. Many people do frequently sign documents put before them for signature by their solicitor or other trusted advisers without making any inquiry as to their purpose or effect. But the essence of the plea non est factum is that the person signing believed that the document he signed had one character or one effect whereas in fact its character or effect was quite different. He could not have such a belief unless he had taken steps or been...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT