Yu Mengying v Skyhigh Investment Ltd

CourtCourt of First Instance (Hong Kong)
Judgment Date01 June 2020
Neutral Citation[2020] HKCFI 913
Subject MatterCivil Action
Judgement NumberHCA1434/2019
HCCT29/2019 SKYHIGH INVESTMENT LTD v. YU JUN AND OTHERS

HCCT 29/2019
HCA 1434/2019
(heard together)

[2020] HKCFI 913

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 29 OF 2019

______________

IN THE MATTER of Section 21L of the High Court Ordinance, Cap 4

and

IN THE MATTER of Section 45 of the Arbitration Ordinance, Cap 609

and

IN THE MATTER of an arbitration agreement made between, amongst others, the Plaintiff and the 1st to 3rd Defendants in an Amended and Restated Shareholders Agreement dated 13 October 2014

________________________

BETWEEN
SKYHIGH INVESTMENT LIMITED Plaintiff

and

YU JUN 1st Defendant
YU MENGYING 2nd Defendant
YUJIME INVESTMENT MANAGEMENT LIMITED 3rd Defendant

________________________

AND

HCA 1434/2019

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1434 of 2019

____________

BETWEEN
YU MENGYING Plaintiff

and

SKYHIGH INVESTMENT LIMITED Defendant

____________

(Heard Together)

Before: Hon Mimmie Chan J in Chambers (open to public)

Date of Hearing: 22 May 2020

Date of Decision: 1 June 2020

______________

D E C I S I O N

______________

Background

1. On 4 June 2019, Skyhigh Investment Limited (“Skyhigh”) applied ex parte for worldwide injunction orders and disclosure orders against 3 defendants, Mr Yu Jun (“Yu”), Ms Yu Mengying (“Daughter”) and Yujime Investment Management Limited (“YJM”). HCCT 29/2019 was issued by Skyhigh (“HCCT 29”), whereby the injunction and disclosure orders were sought against the defendants in aid of an arbitration to be commenced by Skyhigh against the 3 defendants (“Arbitration”), for breach of their respective obligations owed to Skyhigh under an Amended and Restated Shareholders Agreement dated 13 October 2014 and pursuant to the arbitration agreement contained therein. The Mareva injunction and disclosure orders were granted against Yu and YJM, but not the Daughter. An inter partes summons was issued by Skyhigh on 5 June 2019 (“HCCT Summons”), to seek the orders against the Daughter on inter partes basis, and for the orders made against Yu and YJM to be continued.

2. The Arbitration against Yu, the Daughter and YJM was commenced by Skyhigh on 14 June 2019.

3. On 19 June 2019, the Daughter gave an undertaking, expressed to be pending the determination of the HCCT Summons, not to dispose of or deal with a property in Shatin in the New Territories which is registered in her sole name (“Property”), without giving Skyhigh at least 14 days’ advance notice in writing (“Undertaking”).

4. The hearing of the HCCT Summons was adjourned on 20 June 2019 for substantive argument of Skyhigh’s application against the Daughter. The injunction orders against Yu and YJM have since been continued.

5. On 8 August 2019, the Daughter commenced HCA 1434/2019 against Skyhigh (“HCA 1434”), to seek a declaration and a final injunction to restrain Skyhigh from continuing the Arbitration or commencing any arbitration against her. The claim made by the Daughter in HCA 1434, and her defence to the claims made against her in the Arbitration, is that she did not sign and was not a party to any of the agreements relied upon by Skyhigh in the Arbitration (“Contractual Documents”), in respect of which Skyhigh claimed that she was in breach of contract, and pursuant to which the Arbitration was brought. She claims that the signatures on the relevant Contractual Documents were not hers, and had been forged.

6. On 15 January 2020, Skyhigh issued a summons in HCA 1434 (“HCA Summons”), seeking essentially the same relief as that sought in the HCCT Summons, as an alternative to the orders sought by the HCCT Summons. In the HCA Summons, Skyhigh seeks an additional injunction to restrain the Daughter from disposing of or dealing with the Property specifically.

7. The HCCT Summons and the HCA Summons were opposed by the Daughter, and were heard together on 22 May 2020. On behalf of Skyhigh, Leading Counsel explained that the orders sought against the Daughter under the Summonses are for Mareva injunctive relief and alternatively, pursuant to the Court’s Chabra jurisdiction.

8. On behalf of the Daughter, it was confirmed that her Undertaking would be extended until the final determination of HCA 1434. The Daughter maintains however that the HCA Summons and the HCCT Summons should be withdrawn, with costs in the cause or reserved to the trial judge, as Skyhigh has no case under the Summonses. On its part, Skyhigh maintains that it is wrong for the Summonses to be withdrawn, and since Skyhigh had offered in October 2019 that the matter should be resolved by the Undertaking being continued until the determination of HCA 1434 and HCCT 29, which offer was not then accepted by the Daughter, she should bear the costs incurred.

9. The dispute before the Court is whether the HCA Summons and the HCCT Summons should be dismissed for failure to show a case for the injunction, and where the costs should fall.

10. The Daughter’s case is that Skyhigh’s application for the injunctions should be dismissed, as it has failed to show a good arguable case against the Daughter in respect of any liability under the Contractual Documents, and also failed to establish any risk of dissipation of assets on the Daughter’s part.

11. Specifically in relation to HCCT 29, Leading Counsel for the Daughter highlighted the fact that Skylight is no longer pursuing the Arbitration against the Daughter. As such, there is no need to have the injunctive and disclosure orders in aid of the Arbitration, as originally sought under the Arbitration Ordinance.

12. On behalf of Skyhigh, Leading Counsel pointed out that Skyhigh has throughout made it clear that, in view of the allegations and claims made by the Daughter in relation to the Contractual Documents, Skylight agreed not to proceed with the Arbitration against the Daughter for the time being, and only pending the Court’s determination of HCA 1434. Skyhigh has counterclaimed in HCA 1434 in respect of the same breach of contract as it alleged in the Arbitration, and if the Daughter’s claims of forgery and of her not being a party to the contracts relied upon by Skyhigh are dismissed by the Court in HCA 1434, Skyhigh’s counterclaim will be resolved in the same action, or alternatively in the Arbitration. The application made by the HCA Summons is under the High Court Ordinance and the inherent jurisdiction of the Court. The injunctive relief sought should be granted under section 21L of the High Court Ordinance, and under the Chabra jurisdiction of the Court.

13. The claims made by Skyhigh against the Daughter are on the basis of her being a signatory and party to a Share Subscription Agreement dated 17 July 2013 (“SS Agreement”), and an Amended and Restated Shareholders Agreement (“SA”) made between her, Yu, YJM and Skyhigh. Skyhigh claims that pursuant to the SA, it is entitled to exercise its right to issue a Repurchase Notice upon the occurrence of a trigger event as defined in the SA, requiring the Daughter, Yu and YJM to repurchase its shares in Guocui Flowers Holdings Limited (“Company”). As evidence, Skyhigh has produced these subject agreements, which bear the signatures of the parties, and are part of a series of contracts entered into between Skyhigh as investor on the one part, and Yu, the Daughter and YJM described in the SS Agreement as the “Founder Parties” of the Company on the other part.

14. YJM at all material times held a 50% interest in Guangzhou Guocui Flowers Trading Co Ltd (“G Flowers”), which is a company incorporated on the Mainland engaged in the business of flowers and potted plants. Yu was at the material time the chairman, director and legal representative of G Flowers, and the registered shareholder of 90% of the shares in YJM. The Daughter was at the material time the registered holder of the remaining 10% of the shares of YJM. Yu and the Daughter together own YJM, and in turn, YJM owns 100% of the share capital of the Company.

15. The SS Agreement and the subsequent Contractual Documents were all for Skyhigh’s subscription of over 26 million shares in the Company for US$65 million, with the rights and obligations of the shareholders of the Company being governed by a Shareholders Agreement, as later amended by the SA. The Company was to be listed on the Hong Kong Stock Exchange, and a trigger event occurred under the SA, when the IPO of the Company did not materialize by 26 September 2017. Skyhigh claims that the Daughter was in breach of the SA, by failing to purchase from Skyhigh the shares which were the subject matter of the Repurchase Notice it issued on 4 January 2019.

16. The Daughter’s defence is that she was not aware of the fact that she was the holder of 10% of the shares in YJM, that she had no involvement in YJM, had never received or signed any documents relating to YJM to subscribe for shares or otherwise, and that she had not authorized anyone to sign any such documents. In HCA 1434, she seeks a declaration that she was not a party to the Contractual Documents relied upon by Skyhigh, and that the said documents were null and void, invalid and unenforceable as against her.

17. In opposition to Skyhigh’s application for the injunction orders, the Daughter claims in her evidence that the signatures purported to be hers on the Contractual Documents were all forgeries. She stated in her affirmation that her belief was that “somebody else” signed in her name without her knowledge or consent, but she had no knowledge as to who might have done so. The Daughter produced various banking and other documents signed by...

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