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Xu Liu Chun v Wu Chang Jiang And Another

Judgment Cited authorities 3 Cited in Precedent Map Related
Vincent
Judgment Date27 June 2019
Neutral Citation[2019] HKCFI 1640
Judgement NumberHCMP3166/2014
CourtHigh Court (Hong Kong)
Subject MatterMiscellaneous Proceedings
HCMP3166C/2014 XU LIU CHUN v. WU CHANG JIANG AND ANOTHER

HCMP 3166/2014

[2019] HKCFI 1640

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 3166 OF 2014

_______________

IN THE MATTER of JIANG YUAN INTERNATIONAL DEVELOPMENT LIMITED

and
IN THE MATTER of section 724 of the Companies Ordinance (Cap 622)

_______________

BETWEEN
XU LIU CHUN Petitioner

and
WU CHANG JIANG (吳長江) 1st Respondent
JIANG YUAN INTERNATIONAL DEVELOPMENT LIMITED
(江源國際發展有限公司)		 2nd Respondent

_______________

Before: Deputy High Court Judge Patrick Fung SC in Chambers

Date of Written Submission by the 1st Respondent: 23 May 2019

Date of Written Submission by the Petitioner: 3 June 2019

Date of Decision: 27 June 2019

______________

DECISION

______________

INTRODUCTION

1. I refer to my Judgment herein handed down on 23 April 2019 (“the Judgment”). In this Decision, I shall use the same abbreviations as in the Judgment. In paragraph 34(1) of the Judgment, I made an Order in the following terms (“my Order”):

“ (1) R [the 1st respondent] do make payment into court in the sum of US$1.2 million within 21 days from the date hereof as an interim payment on account of the purchase money to be paid to P [the petitioner] for the purchase of the shareholding of P in the Company [the 2nd respondent] pursuant to the Order of DHCJ Lee herein dated 13 July 2018 whereby the learned Judge ordered that R do purchase the 12,000 shares (ie 40% of shareholding) of US$100 each in the capital of the Company presently registered in the name of P at a price to be determined by the Court if not agreed, on the following terms:

(i) the certificates of the said 12,000 shares registered in the name of P together with all the necessary transfer documents shall be lodged with a stakeholder to be agreed between the lawyers for the parties or, failing such agreement, to be appointed by the court;

(ii) upon the lodging pursuant to (i) above being completed and upon the cross-appeal by R in CACV 380/2018 being dismissed by the Court of Appeal, the said sum of US$1.2 million shall be paid out of court to P on account of the purchase price to be paid by R to him for the purchase of the said 12,000 shares.”

2. R has not made the payment pursuant to my Order set out above within the specified time or at all.

3. Furthermore, despite the putting forward by P of two alternative firms of solicitors proposed to be appointed as the stakeholder pursuant to my Order, R has failed or refused to agree to the proposed appointment nor has R put forward the name of any stakeholder proposed to be appointed.

4. As can be seen from paragraphs 2 – 9 of the Judgment, the proceedings before me had arisen out of a Judgment by DHCJ Lee (as he then was) herein handed down on 13 July 2018. At the time of the hearing before me, there was an appeal by P and a cross-appeal by R in the Court of Appeal against the Judgment of DHCJ Lee under CACV 380/2018. The appeal and cross-appeal had been heard by the Court of Appeal and its judgment had been reserved.

5. Subsequently, by its Judgment in CACV 380/2018 dated 18 April 2019, the Court of Appeal dismissed both the appeal by P and the cross-appeal by R. Hence, the Judgment of DHCJ Lee remains in full force.

THE PRESENT APPLICATIONS

6. There are a number of applications before me now about which the parties have agreed that I should dispose of on paper without a hearing. They are as follows:

(i) An application by summons issued by R on 6 May 2019 for:

(a) leave to appeal against the Judgment and my Order;

(b) a stay of my Order pending appeal.

(ii) An application by P by letter for directions relating to the appointment of the stakeholder under my Order.

(iii) Applications for costs in relation to the matters now before me.

7. I shall deal with the applications in turn below. It is only logical that I should deal with the application for leave to appeal first.

APPLICATION FOR LEAVE TO APPEAL

8. An application for leave to lodge an interlocutory appeal is governed by section 14AA of the High Court Ordinance, Cap 4 (“Cap 4”), the relevant parts of which read as follows:

“ 14AA. Leave to appeal required for interlocutory appeals

(1) Except as provided by rules of court, no appeal lies to the Court of Appeal from an interlocutory judgment or order of the Court of First Instance in any civil cause or matter unlessleave to appeal has been granted by the Court of First Instance or the Court of Appeal.

…

(4) Leave to appeal for the purpose of subsection (1) shall not be granted unless the court hearing the application for leave is satisfied that—

(a) the appeal has a reasonable prospect of success; or

(b) there is some other reason in the interests of justice why the appeal should be heard.”

9. R submits that he has satisfied both limbs in subsection (4) of section 14AA of Cap 4.

(A) Lack of jurisdiction

10. The first challenge by R to the Judgment both in the draft notice of appeal and in the submission by his counsel, Ms Au, is that I had erred in law in holding that I had jurisdiction in making an order for interim payment on account in a case of an order for buying out shares but before the determination of the purchase price and without the parties’ agreement.

11. The gist of R’s argument can be summarized as follows:

(i) Order 29, rule 12(c) of the Rules of the High Court (“RHC”) does not cover the situation in the present case. It only covers a “money judgment” under which a party is directed to make an “outright unilateral payment”. It does not cover a payment in the nature of a payment of the purchase price in a bilateral transaction of sale and purchase.

(ii) Although section 725(2)(a)(iv)(D) of Cap 622 seems to give the court wide power in making an order “for any other purpose”, it does not expressly refer to an order for interim payment of the purchase price in a buy-out order scenario. Hence, the court has no jurisdiction in making such an order.

(iii) Further, the concept of an “irreducible minimum” should not be elevated to the status of a general principle.

12. R further argues that, in any event, the issue as to “whether the Court has jurisdiction to order interim payment of purchase price of shares after the conclusion of a trial on a s 724 petition but before such purchase price is determined or agreed” “involves a novel question of general principle,or a question of importance such that argument and decision of the Court of Appeal would be to the public advantage”. (See paragraph 6 of R’s Skeleton Submissions). In this regard, it is to be noted that my Order is not just to make an interim payment but an interim payment on account of the purchase price.

13. I do not agree with the arguments of R as set out above.

14. First of all, after having considered the wording of sections 724 and 725 of Cap 622 and Order 29, rules 9, 10, 12 and 13 as set out in paragraphs 11 and 12 of the Judgment, in paragraph 13 of the Judgment, I stated my conclusion that those statutory provisions were wide enough to enable me to make an order for interim payment in a situation such as that in the present case. Irrespective of any case authority, my view on the interpretation of those statutory provisions has not changed.

15. In paragraphs 14 – 17 of the Judgment, I made reference to case authorities in Hong Kong and in England: Re Hang Sang Engineering Factory Ltd and Ferguson,as being authority in support of the existence of such jurisdiction. In addition, there is also the Lam Yuk Hon case which is referred to later on in the Judgment.

16. My attention has now been drawn by Mr Suen, counsel for P, to the case of Re Annacott Holdings Ltd [2011] EWHC 3180 (Ch), a decision by HH Judge Hodge QC sitting as a deputy judge in the Chancery Division. In that case, the learned Judge had made an order for one of the respondentsto buy out the shares of the petitioner in the company, based on a...

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