CHEUNG KONG PROPERTY (BUSINESS DEVELOPMENT) LTD v. GOLD BRILLIANT INVESTMENT LTD AND ANOTHER

HCA 280/2021

[2021] HKCFI 603

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 280 OF 2021

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DECISION

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INTRODUCTION

1.  Having heard and been much assisted by counsel for both sides this morning, this is my decision on the Plaintiff’s (“Cheung Kong’s”) summons for an interlocutory injunction filed on 1 March 2021.

2.  Put very simply, Cheung Kong seeks to restrain the Defendants from proceeding with certain heads of agreement that the latter entered into with Great Eagle Holdings Limited (“Great Eagle”) on 9 February 2021 (“the GE Heads of Agreement”), without honouring what on Cheung Kong’s case is essentially a right of first refusal under an earlier Deed between Cheung Kong and the Defendants dated 9 February 2020.

3.  All this relates to what is by all accounts a highly valuable development opportunity in respect of a piece of Ho Man Tin land owned by the MTR Corporation Limited (“MTRC”).

4.  It will be obvious from this summary that a range of third party interests are in play, and in particular those of MTRC and Great Eagle. As a reflection of that, Great Eagle was today represented by Mr Jat Sew-Tong SC leading Miss Natalie So, who were given leave to appear at the hearing to assist the court with any matters that might touch upon their client’s interests.

B.     DISCUSSION

5.  As I said at the start of today’s hearing, ifMr Mok SC is right about the facts on the ground as advanced in the Affirmation of Mr Pan Sutong (the 2^nd Defendant) filed late yesterday (“Pan’s Affirmation”), then that may well provide strong grounds for refusing any interim injunction pending trial of Cheung Kong’s claim. I had particularly in mind the alleged facts that the GE Heads of Agreement have by now been completed, and that all relevant rights and liabilities of the Defendants have already been fully novated to Great Eagle following a series of steps completed on 24 February 2021.

6.  My initial view proceeding from that point was that Cheung Kong should have the opportunity to file evidence in response to the picture put forward by the Defendants, rather than be finally shut out – as the Defendants proposed – essentially on the basis of the Defendants’ very recently filed evidence.

7.  This morning Mr Manzoni put forward an alternative proposal in the light of the Defendants’ materials filed yesterday, and indeed the further array of materials provided by the Defendants this morning.

8.  Cheung Kong’s present proposal is simply to have time to verify whether the Defendants’ assertions as to the GE Heads of Agreement completion and novation are factually and legally sound, and for that time period to be limited to one week.

9.  Having considered the very clear and cogent submissions on both sides, I am prepared to grant a one week interim order for that specific purpose and limited to that duration.

10.  I do so having regard to, and balancing between, a range of factors. Without seeking to be exhaustive for present purposes, the main factors include the following.

11.  First, the fact that the affirmation and underlying exhibits which the Defendants rely upon in seeking to dismiss Cheung Kong’s summons were filed very late in the day, together with the Defendants’ (very helpful) skeleton submissions.

12.  I agree with Mr Manzoni SC’s submission that, given the substantial stakes involved in the development, fairness dictates that his client, and the court, should have a proper chance to be satisfied that a full and accurate picture of the present position has indeed been presented. Mr Manzoni SC has in particular pointed to various gaps in the evidential picture due to significant redactions in the key documents, and he complains also that some documents of potential relevance to the question of novation have simply not been provided.

13.  At this stage, I make no criticism of the Defendants as to the alleged gaps in the evidence, and I do not assume that the gaps if filled would necessarily change the essential picture. But what is plain is that there are literal gaps (in the form of extensive redactions) in the evidence, and that it is fair to assume that these documents (having been exhibited) are relevant or potentially relevant to the critical question of novation.  

14.  Secondly, in terms of prejudice, I take Mr Mok SC’s point that any cloud of uncertainty as to the status of the development is undesirable. That said, it seems to me that any such uncertainty is to an extent inherent in the present situation and has been explicitly recognised by those involved, as perhaps reflected in some of the indemnities provided to Great Eagle in documents highlighted by Mr Manzoni this morning. 

15.  Beyond this general concern, which I give some albeit limited weight to on the evidence before me, neither the Defendants nor any others have identified any fundamental or threshold matter in relation to the intended development as of today, and for the coming few days, that would result in significant prejudice to the Defendants or others if subject to a one-week interim restraint. It will also be noted in this regard that the proposed restraint directly applies only to the Defendants, and does not seek to bind any other parties, be it Great Eagle or others.

16.  With these factors and the overall circumstances before me in view, I will grant interim relief on the very limited basis proposed by Cheung Kong this morning.

17.  As further measures to best cater for and balance the various interests involved, I will reserve a hearing slot next Friday 12 March 2021 back before me, should it be necessary to address the position beyond that date.

18.  I emphasise that on present materials, there is in my view a credible case that novation has taken place as alleged and to some extent publicly proclaimed by the various entities involved.

19.  On behalf of Cheung Kong, Mr Manzoni SC has assured me that his client intends to take a fair and realistic view on whether to proceed further with the injunction application having had more time with the materials provided, and with the benefit of the production order sought in the draft order handed up earlier this morning, which subject to counsels’ submissions on this specific matter, I am inclined to give.

20.  Given Mr Manzoni’s assurance, I certainly expect that a realistic approach will indeed be taken, and will subject any claims that novation has not occurred despite the Defendants’ sworn evidence and the various public statements I have seen to very close scrutiny.

21.  As a further safety mechanism, for the period between today and next Friday, I will give the parties liberty to apply and come back before me at the first available opportunity if something truly urgent arises that may compel the court to revisit whether to maintain the interim restriction.

C.     DISPOSITION

22.  I order as follows:

(1)  The Summons be adjourned to 12 March 2021 at 10 am with 3 hours reserved.

(2)  The 1^st and 2^nd Defendants be restrained until 12 March 2021 or until further order of the Court in the meantime (whether by itself/himself or by its/his directors, officers, servants or agents or otherwise howsoever) from:

(a)  proceeding with or taking any steps in furtherance of the GE Heads of Agreement and the GE Transaction (as defined in the SOC), and/or procuring Goldin Properties Holdings Limited (“GPHL”) to do so;

(b)  proceeding with or taking any steps in furtherance of the “Definitive Agreement” between the Defendants, GPHL, Magic Energy Limited and Great Eagle Holdings Limited referred to in paragraph 35 of the Affirmation of Pan Sutong filed on 4 March 2021 and any other agreements entered into by the Defendants/GPHL in relation to the novation of the 1^st December’s right under the MTRC Development Agreement (as defined in the SOC) to Great Eagle and/or Magic Energy Limited (together the “Novation Agreements”), and/or procuring GPHL to do so;

unless and until (i) the Plaintiff has been served with a Proposal Notice in respect of the GE Transaction and/or the Novation Agreement (as the case may be) pursuant to Clause 2.02 of the Deed of Right of First Refusal dated 1 September 2020 entered into between the Plaintiff, the 1^st and 2^nd Defendants and others (the “ROFR Deed”); and (ii) the Plaintiff fails to deliver a Grantee Election Notice pursuant to Clause 2.03 of the ROFR Deed or notifies the 1^st and 2^nd Defendants in writing that it does not wish to exercise its right of first refusal in respect of the GE Transaction and/or the Novation Agreements (as the case may be) pursuant to Clause 2.05 of the ROFT Deed.

(3)  The 1^st and 2^nd Defendants do produce to the Plaintiff full copies of the documents as sworn referred to at Exhibit “PST-1” of Pan’s Affirmation, including in particular, items 10, 11, 22, 23, 24, 29 and 30 thereof, by 4pm on 8 March 2021.

(4)  There be liberty to apply.

(5)  Costs be reserved.