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Excel Jumbo International Ltd v Cybernaut Greentech Investment Holding (Hk) Ltd And Others

Judgment Cited authorities 1 Cited in Precedent Map Related
Vincent
JurisdictionHong Kong
Judgment Date25 November 2022
Neutral Citation[2022] HKCFI 3555
Subject MatterMiscellaneous Proceedings
CourtCourt of First Instance (Hong Kong)
Judgement NumberHCMP222/2022
HCMP222/2022 EXCEL JUMBO INTERNATIONAL LTD v. CYBERNAUT GREENTECH INVESTMENT HOLDING (HK) LTD AND OTHERS

HCMP 222/2022

[2022] HKCFI 3555

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 222 OF 2022

________________________

IN THE MATTER OF CYBERNAUT GREENTECH INVESTMENT HOLDING (HK) LIMITED (賽伯樂綠科投資控股(香港)有限公司)

and

IN THE MATTER of Sections 732 and 733 of the Companies Ordinance (Cap 622)

________________________

BETWEEN

EXCEL JUMBO INTERNATIONAL LIMITED
(思寶國際有限公司)		 Plaintiff
and
CYBERNAUT GREENTECH INVESTMENT HOLDING (HK) LIMITED
(賽伯樂綠科投資控股(香港)有限公司)		 1st Defendant
and
SHANGHAI GANG MEI INFORMATION TECHNOLOGY CENTER (LIMITED PARTNERSHIP)
(上海港美信息科技中心(有限合伙))		 2nd Defendant
and
WU MENGJIE (吴勐劼) 3rd Defendant

________________________

Before: Deputy High Court Judge Jonathan Chang SC in Chambers

Date of Hearing: 26 August 2022

Date of Judgment: 25 November 2022

________________________

J U D G M E N T

________________________


A. INTRODUCTION

1. This is the hearing of two applications by the Plaintiff (“P”):

(1) By an Amended Originating Summons filed on 19 April 2022 (re-amended with leave granted by this Court at the hearing on 26 August 2022) (“OS”), P seeks leave to commence a statutory derivative action (“Intended Action”) in the name of the 1st Defendant (“Company”) pursuant to ss.732 and 733 of the Companies Ordinance (Cap 622) (“CO”) against the four intended defendants (“Intended Defendants”) named in the draft Statement of Claim annexed to the OS (“Draft SOC”); and

(2) By a Summons filed on 23 February 2022 (“Injunction Summons”), P seeks an interlocutory injunction (“Injunction”) to restrain the 1st Intended Defendant in the Intended Action, namely Power Investment Holding Limited (“PIL”), from proceeding with a Hong Kong arbitration administered under the rules of the China International Economic and Trade Arbitration Commission (“CIETAC”) (Case No. HKB20210017) (“Arbitration”), until the determination of the Intended Action or further order of the Court.

2. At the heart of the Intended Action is P’s allegation that the Intended Defendants have conspired to strip the Company of its assets by fabricating corporate and contractual documentation, with the Arbitration being part of the alleged conspiracy (“Alleged Conspiracy”).

3. As will be seen below, whether I should grant relief in the OS and the Injunction Summons largely turns on my assessment of the merits of the Intended Action. Having considered the available evidence, and notwithstanding the able submissions advanced by counsel for the 2nd and 3rd Defendants in the OS (“D2” and “D3”) (Ms Sabrina Ho and Ms Cherry Xu) and counsel for PIL (Mr Jason Yu and Mr Billy Liu), I am satisfied that the Intended Action raises serious issues to be tried and justifies relief to be granted on the terms set out in [65] and [66] of this Judgment.

4. At the outset, I should mention that, since the hearing on 26 August 2022, PIL has been wound up by the Hong Kong Court and the Official Receiver (“OR”) has been appointed as its provisional liquidator. Nevertheless, as will be seen in my judgment below, I would have acceded to P’s applications whether or not PIL is in liquidation.

B. FACTUAL BACKGROUND

5. P is a British Virgin Islands company holding 50% shares in the Company. It is P’s case that P is and was at all material times indirectly wholly-owned by Ms Ren Ming Hong (任明紅) (“Ms Ren”).

6. D2 is a limited partnership established in the People’s Republic of China (“PRC”), holding the other 50% shares in the Company. D2 belongs to a group of companies (“Cybernaut Group”) held by Beijing Cybernaut Green-Tech Investment Management Company Limited (北京賽伯樂綠科投資管理有限公司) (“Beijing Cybernaut”), a PRC company.

7. The Company was incorporated in Hong Kong on 8 November 2016:

(1) At the time of the Company’s incorporation, D2 was its sole shareholder. On 26 May 2017, D2 transferred 50% of its shareholding in the Company to P. Since then, P and D2 have been equal shareholders of the Company.

(2) Between 17 March 2017 and 14 April 2020, the two directors of the Company were Mr Zeng Shan (曾山) (nominated by D2) (“Mr Zhen”) and Ms Wang Naifan (王乃范) (nominated by P) (“Ms Wang”). On 14 April 2020, Mr Zeng was replaced by D3, Mr Wu Mengjie (吳勐劼) (“Mr Wu”), as D2’s nominated director. Mr Zhen and Mr Wu are the 3rd and 4th Intended Defendants in the Intended Action. From 14 April 2020 up till the present, Mr Wu and Ms Wang are the two directors of the Company.

8. L’sea Resources International Holdings Limited (利海資源國際控股有限公司) (“L’sea”), now known as Greentech Technology International Limited (綠科科技國際有限公司), is a company listed on the Main Board of the Hong Kong Stock Exchange (“HKSE”) (stock code: 195). At the material times, Mr Xie Haiyu (謝海榆) (“Mr Xie”) was a substantial shareholder of L’sea.

9. PIL is a company incorporated in Hong Kong:

(1) Mr Yang Jie (楊杰) (“Mr Yang”) is the sole director of PIL, having been appointed on 12 July 2021. Mr Yang is the 2nd Intended Defendant in the Intended Action.

(2) On 12 October 2022, PIL was wound up by the Hong Kong Court and the OR has been appointed as its provisional liquidator.

10. On 29 April 2015, Beijing Cybernaut and L’sea entered into a non-binding Memorandum of Understanding (“MOU”) setting out their preliminary understanding as to a possible subscription by Beijing Cybernaut of not less than 6,000,000,000 new shares in L’sea at HK$0.25 per share (or convertible bonds of equivalent value) (“Possible Subscription”).

11. During the negotiation over the terms of the Possible Subscription, Beijing Cybernaut designated PIL as the vehicle to enter into any subscription agreement which might materialise. This was recorded in a circular published by L’sea via the HKSE on 22 May 2017 (“Circular”).

12. On 16 March 2016, PIL entered into a loan agreement (“Loan Agreement”) with L’sea as borrower and Mr Xie as guarantor, whereby PIL agreed to lend HK$176,400,000 (“Loan”) to L’sea. L’sea needed the Loan to redeem outstanding convertible bonds in the same amount due on 17 March 2016.

13. Broadly speaking, the effect of the Loan Agreement was that: (1) should the Possible Subscription materialise, the Loan would be treated as part of the share subscription monies payable by PIL to L’sea; and (2) should the Possible Subscription fail to come to fruition, the Loan would be repayable by L’sea to PIL with interest.

14. At the time of the Loan Agreement, by a power of attorney with effect from 16 March 2016, PIL was under the control of Beijing Cybernaut, and was a member of the Cybernaut Group. These facts were recorded in the Circular.

15. On 17 March 2016, L’sea received the Loan from PIL and applied the proceeds to fully redeem its convertible bonds.

16. On 6 December 2016, L’sea announced that the MOU had lapsed. As a result, the Possible Subscription had failed to materialise, and the Loan became repayable to PIL (with interest) under the Loan Agreement.

17. On 29 March 2017, L’sea, Mr Xie, the Company and PIL entered into four agreements in respect of the capitalisation and repayment of the Loan (“Four Agreements”). For present purposes, a broad summary of their effects suffices:

(1) By a loan capitalization agreement (資本化協議) (“LCA”) between the Company and L’sea, L’sea agreed to allot 1,700,000,000 new shares to the Company for the price of HK$136,000,000 to be offset against the Loan.

(2) By a loan assignment agreement (貸款權益轉讓協議) (“LAA”) between PIL (as the assignor), the Company (as the assignee), L’sea (as the debtor) and Mr Xie (as the guarantor), PIL agreed to assign all its rights and obligations under the Loan Agreement to the Company.

(3) By an amended and restated loan agreement (修改及重述借款合同) and a supplemental loan agreement (借款合同之補充協議) between the Company (as the new lender), L’sea (as the borrower) and Mr Xie (as the guarantor), the parties agreed that HK$136,000,000 of the Loan would be capitalised in accordance with the LCA, and the remaining outstanding sum (being HK$40,400,000 as principal, together with accrued interest) would be repayable by L’sea (as the borrower) and Mr Xie (as the guarantor) to the Company.

18. At this juncture, it should be noted that the terms of the LAA are the focal point of the Intended Action, for two versions of that agreement with different terms have been produced in the evidence.

19. Central to the Intended Action is P’s allegation that the version produced by D2/D3 and PIL (“Ds’ LAA”) is fabricated whereas P’s version (“P’s LAA”) is genuine. The major differences between P’s LAA and Ds’ LAA may be summarised as follows:

(1) P’s LAA shows the signature of Ms Wang (who signed on behalf of the Company) at the bottom of each of the first 3 pages, whereas Ds’ LAA does not show such signatures.

(2) Clause 2 of P’s LAA states that the assignment was to be at nil consideration, whereas Ds’ LAA contains a consideration clause (which provided for consideration in the sum of the Loan plus interest at 8% per annum) (“Consideration Clause”):

權益轉讓價款：[PIL]及[the Company]一致確定上述權益轉讓價款計算為：借款本金x (1 + n x 8%) (其中：n = 2016年3月16日放款日至轉讓價款支付日之間的日曆天數 ÷ 365，8%為資金佔用約定的年利率

(3) Clause 4 of P’s LAA states that the Company may pursue L’sea and Mr Xie for breach should L’sea fail to repay the Loan on time, whereas Ds’ LAA states that, if the Company fails to pay the assignment consideration on time, it shall be liable to pay 2% of the assignment consideration per day for its default.

20. On 15 June 2017, L’sea allotted 1,700,000,000 new shares (“Shares”) to the Company pursuant to the LCA. Immediately after the allotment, the Company’s assets comprised the Shares and its receivable of HK$40,400,000 owed by L’sea (“Sum”).

21. On 8 December 2021...

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