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Jiangxi Qianxi Cheng Real Estate Co Ltd v Cheung Leung Sum And Others

Judgment Cited authorities 15 Cited in Precedent Map Related
Vincent
Judgment Date26 March 2015
Subject MatterCivil Action
Judgement NumberHCA503/2010
CourtHigh Court (Hong Kong)
HCA503/2010 JIANGXI QIANXI CHENG REAL ESTATE CO LTD v. CHEUNG LEUNG SUM AND OTHERS

HCA 503/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 503 OF 2010

________________________

BETWEEN
JIANGXI QIANXI CHENG REAL ESTATE CO LTD Plaintiff
and
CHEUNG LEUNG SUM 1st Defendant
NG CHAU PING 2nd Defendant
CHEUNG WA
(also known as Ding Shao Hua)		 3rd Defendant
CHEUNG LIK HUNG 4th Defendant
TUBAN TIA (HONG KONG) LIMITED 5th Defendant
TUBAN TAI INTERNATIONAL HOLDING LIMITED 6th Defendant

_______________________

Before: Deputy High Court Judge B Chu in Court
Date of Hearing: 5 – 7, 10 – 11 November, 11, 17 December 2014
Date of Judgment: 26 March 2015

_________________

J U D G M E N T

_________________

Introduction

1. The plaintiff’s claim against the defendants was based mainly on conspiracy to injure by unlawful means and was in essence for the return of 4 sums of money totaling RMB 22.1m.

Dramatis Personae

2. The plaintiff 江西仟禧城置業有限公司 (“P”) is a limited company incorporated under the laws of Mainland China (“PRC”), and said to be engaged in property development in Jiangxi Province. There had been 5 directors on the board in 2001, of which Madam Wu Kan Jun 吳侃君 (“Wu’) was one of them. According to Wu, P’s shareholders had always been 江西智源産業發展有限公司, and 香港保成國際投資有限公司. Initially, there were 5 directors but after re-structuring of the board in August 2006, there were only 4 directors with Wu becoming the chairman of the board and the legal representative/法定代表人.

3. Wu’s husband is one An Guang Bao 晏廣保 (“An”). Both Wu and An reside and were at all material times resided in Nanchang city in Jiangxi Province.

4. The 1st defendant 張良琛 (“D1”), an Indonesian Chinese, and the 2nd defendant Ng Chau Ping 吳秋萍 (“D2”) are husband and wife and are/were at all material times the only two directors and shareholders of the 5th defendant杜邦帝亞(香港)有限公司, a limited company incorporated under laws of Hong Kong (“Tuban Tia HK”). D1 and D2 reside in Hong Kong.

5. The 3rd defendant Cheung Wa (also known as Ding Shao Hua)章華 (又名丁少華) (“D3”) and 4th defendant Cheung Lik Hung 張力虹(“D4”) are husband and wife and are/were at all material times, same for a period 2005/2006, the directors and shareholders of the 6th defendant杜邦帝亞國際控股有限公司, a limited company incorporated under laws of Hong Kong (“Tuban Tia International”).

6. D3 and D4 are respectively the son-in-law and daughter of D1 and D2 and they are both residents of Hong Kong, although D3 was frequently in PRC.

7. D3’s father is one Ding Xin Fa 丁鑫發 (“Ding”) who, in about 2001 was the Head of the Jiangxi Province People’s Prosecution Department 江山省人民檢察院院長.

8. Jiangxi Zhong Shun International Hotel Co Ltd 江西中順國際大酒店有限公司 (“Zhong Shun”) was formerly a company set up under laws of PRC with foreign capital from a Taiwanese investor. Tuban Tia HK acquired 100% shareholding in the company and renamed it Zhong Shun in January 2002. Subsequently in 2004, the 100% shareholding of Tuban Tia HK in Zhong Shun was transferred to Tuban Tia International.

Brief Background

9. D3 and An were both from Nanchang in Jiangxi, and it was not really disputed that they were close friends in 2001. D1 had said he first met An in 2001 or may be earlier through D3, but only met Wu the first time when she and An were on a holiday trip to Indonesia in 2001.

10. According to Wu, it was while she and An were in Jakarta that D1 had invited them to visit his family’s factory there and they met D1’s elder brother. This was denied by D1 who said he only accompanied An and Wu to lunch and shopping in Jakarta for one day. Anyway, it was Wu’s evidence that she was given to understand that D1’s family had many businesses, including a tyre factory, and also a bank.

11. It was also Wu’s evidence that she was first approached by D1 at about end of 2001 for a short term loan from P, since it would take time for D1’s remittances from Indonesia to PRC to be approved by the PRC Foreign Exchange Bureau. Wu said it was from then on that P started to lend money to D1 and D3, and that very often D1 asked D3 to approach P, and thus the loans were often paid to D3’s company 江西華强消防安技系統工程有限公司 (“Hua Qiang”) of which D3 was the legal representative, and that such loans reached over RMB 80m at one stage[1].

12. D1’s evidence was however in 2001, An approached him to ask him to take over, from the former Taiwanese investor, a PRC foreign investment company which was involved in developing a 5 star hotel called Jianngxi Zhong Shun International Hotel 江西中順國際大酒店(“Hotel Project”), and that it was An who had offered to lend money for the Hotel Project through P.

13. What was not disputed was that it was on 11 January 2002 the PRC foreign investment company bought by Tuban Tia HK was renamed Zhong Shun. D1 became the chairman of the board of directors of Zhong Shun, the sole business of which was the Hotel Project.

14. The 5 star hotel was on a prime site and was considered to be a major foreign investment at the time, and there was wide media publicity about the Hotel Project.

15. Whether the loans had at one stage reached RMB 80m or not, what was clearly not disputed was that prior to the payment of the subject amount of RMB 22.1m, there had been loans made by P, whether at D1’s request or D3’s request, to Zhong Shun, the principal of which had been repaid.

16. It was Wu’s case that around 19 April 2004, D3 telephoned again to request a loan for urgent use, and that he agreed that the loan was to be made in D1’s name, and that D3 and Tuban Tia HK would be the guarantors, and further he asked the loan amount to be remitted to the bank account of a company in Zhuhai called Peng Cheng Trading Co Limited 鵬程貿易有限公司 (“Peng Cheng”).

17. According to Wu, she had insisted on D1 going to Nanchang to sign the loan documentation, but D3 said both he and D1 were busy, and asked Wu to arrange for P to remit the money first. Wu said in light of past transactions and the fact that there had been repayments, P agreed to advance the loan first.

18. As a result thereof, P remitted 4 sums of money on 13 and 14 April 2004 totaling RMB 22.1m from P’s bank accounts to the bank accounts of Peng Cheng in Zhuhai (“Zhuhai Payment”).

19. D3 gave a different version of events leading up to the Zhuhai Payment. According to him, in late 2003, D1’s physical health condition was deteriorating and D1 also had disagreement with D3 and Zhong Shun’s management team over business investment and operational strategy. D3 said he had discussed this matter with An who had great interest in the Hotel Project. An had encouraged him to acquire the Hotel Project from D1 and promised to support D3 financially to complete the later stage of the Hotel Project.

20. According to Ds, subsequently on about 10 March 2004, D1, D2 and Tuban Tia HK agreed to assign their 100% interest in Zhong Shun to Tuban Tia International at no consideration (“Shareholding Transfer”). The board of directors of Zhong Shun passed a resolution to approve the Shareholding Transfer on 8 April 2004, and an agreement dated 25 April 2004 was later entered into by Tuban Tia HK and Tuban Tia International for the Shareholding Transfer.

21. D3 said when An was told that D1, D2 and Tuban Tia HK had agreed to the Shareholding Transfer to D3’s company Tuban Tia International at no cost, An was very pleased and he agreed to inject part of the investment money into Zhong Shun, and D3 agreed to allot P shareholding in Zhong Shun when all registration formality of the Shareholding Transfer had been completed. D3 had explained as Zhong Shun was a foreign owned company in Jiangxi, all investment money would have to be remitted from Hong Kong into Zhong Shun’s bank account in PRC. That was why the Zhuhai Payment had to be made through the conduit Peng Cheng, which was converted into Hong Kong Dollars and remitted to the account of Tuban Tia International in Hong Kong, in order for Tuban Tia International to make the formal remittance into Zhong Shun, to complete the formality.

22. In short, D3’s evidence was that the Zhuhai Payment was in fact investment capital from P into Zhong Shun, for the Hotel Project.

23. P’s case was that it was not aware of the Shareholding Transfer at the time of making the Zhuhai Payment. P had alleged that the Shareholding Transfer was a “sham” transfer for the “false reason” that the transfer was necessary for the intended listing on the Hong Kong Stock Exchange. P further alleged that it subsequently discovered that Tuban Tia International was merely a bare shell company.

24. What was not denied was that after the Zhuhai Payment, D3 had signed a Chinese letter of undertaking承諾書 dated 30 April 2004 to P, in which D3 undertook to repay the Zhuhai Payment with interest at 1% per month if the Zhuhai Payment had not been repaid with interest within 3 months (“Undertaking Letter”)[2]. D3’s explanation for providing the Undertaking letter was to assure An that the Zhuhai Payment would be safely be remitted back to Zhong Shun’s bank account in PRC, and to “calm down” An’s “nervousness”, and also to facilitate him “to calm down his stakeholders”[3]. It was further D3’s case that upon the Zhuhai Payment having duly been remitted to Zhong Shun, the Undertaking Letter became void and “retired accordingly”.

25. Wu said P was not satisfied with the Undertaking Letter signed only by D3, and that P had continued to remind D1 to go and sign loan documentation and a letter of undertaking, but D1 never turned up. Then, according to Wu on 15 May 2004, D3 sent to P a Chinese letter dated 15 May 2004 issued by Zhong Shun confirming that the Zhuhai Payment had been used in the...

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