KZF INVESTMENT LTD v. VINCENT CHOU WEN-PIN

HCA784/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.784 OF 2009

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BETWEEN

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J U D G M E N T

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1.  I agree with the decision of Master de Souza on 8 June 2009, discharging the Prohibition Order made ex parte against the defendant. I therefore dismiss the appeal from the Master.

2.  I accept that there are two main points of material non-disclosure here. As pointed out and submitted by Mr Newman Lam, counsel for the defendant, they are as follows :

(1) When the defendant, (a resident of Shanghai), came to Hong Kong earlier, he came to attend a meeting to discuss the refinancing of IGO which is the company invested by investors including the plaintiff and the defendant. The meeting was actually arranged by one Laurie Kan of the holding company of the plaintiff. It cannot be said that this is not related to the guarantee. The guarantee was made by the defendant pursuant to a Put Option Agreement. Its effect was to operate as a repurchase of the plaintiff’s shareholding in IGO. This has to be disclosed to the Master hearing the ex-parte application on 12 May 2009. (Although it is true, according to authorities, that there is also a continuing duty to disclose, I however do not find that the e-mail exchanges on 14 and 15 May which was two and three days after the ex-parte application on 12 May should also be disclosed to the Master immediately as the same was mentioned in the defendant’s affirmation filed shortly afterwards. This to my mind, would not form part of the material non-disclosure.)

(2) The other item of material non-disclosure was the letter of 18 May from the defendant’s solicitors offering the defendant’s undertaking to attend any examination as a judgment debtor on a date to be fixed after judgment is entered against him.

3.  It is also incorrect for the plaintiff to say that after the Exercise Notice dated 27 February 2009 and the Demand Letter dated 6 March 2009 were sent to the defendant address in Shanghai and since there is no response from the defendant, the plaintiff is entitled to say that “the defendant could not be located”. He simply had not responded to the Notice and the Letter.

4.  By now it is quite clear that the defendant accepted all along his liability under the guarantee. He is just saying that he is in no position to pay the plaintiff under the guarantee now. No response from him does not mean that he could not be located and his address in Shanghai is still a good address for service. He could also be located through e-mail and had been invited by the plaintiff through Laurie to come to Hong Kong to discuss refinancing or any other matter with one Laurie of the plaintiff’s holding company, i.e. one of the investors.

5.  In my view there is no point of keeping the defendant in Hong Kong. It will be weeks if not months before judgment is entered and a date is fixed for examination of the defendant as the judgment debtor. I consider in the end that the plaintiff has not satisfied the requirement of Order 44A, rule 2 and that is the defendant will obstruct or delay any judgment that may be given against him in future. Further, by reason of the plaintiff’s material non-disclosure as aforesaid, the prohibition order should be discharged on this ground alone.

6.  Accordingly, this appeal is dismissed with costs to the defendant on party and party basis to be taxed if not agreed.