GOLDEN TALENT (HK) TECHNOLOGY CO LTD v. CAPITAL PILOT LTD

HCA 823/2021

[2021] HKCFI 1624

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 823 OF 2021

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BETWEEN

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D E C I S I O N

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1.  The Plaintiff’s claims for the delivery orders are mandatory in nature and the injunctions sought are likely to have a dispositive effect on the entire action.

2.  There is dispute between the parties as to the meaning and effect of the Memorandum and the Authorization Agreement signed on 20 January 2021, and the claim for the preservation orders will have to be argued at a substantive hearing.  With the undertakings furnished by the Defendant, I am not satisfied that further interim-interim relief in relation to the exercise of voting rights in the Shares is justified pending the determination of the Plaintiff’s Summons.

3.  I am not satisfied that the Plaintiff’s claims for relief are likely to succeed at trial, since the implied terms contended by the Plaintiff are contradictory to the express terms of the Memorandum and the Authorization Agreement, under which the voting rights were irrevocably granted to the Defendant.

4.  On the evidence available at this stage, I am not satisfied that under the settlement agreement evidenced by the Memorandum and the Authorization Agreement, the grant of voting rights to the Defendant was limited only to the period until the outstanding loan is repaid by the Plaintiff.  By its express terms, the Authorization Agreement provides for the grant of voting rights for a specified term of 42 months, and the grant was stated to be irrevocable and the Authorization was said to remain valid during the term of 42 months.  On the Defendant’s case, this was in consideration of or part of its agreement to suspend the sale of the Shares it had already entered into with a third party in January 2021, upon and after the Plaintiff’s default in payment of the debt due in December 2020. 

5.  If I am not satisfied that the Memorandum and Authorization Agreement were merely to secure payment of the outstanding debt, then the Plaintiff’s payment of the outstanding balance into court does not adequately safeguard the Defendant’s rights and interests, when the risks of injustice are balanced in the case.

6.  Nor am I satisfied that the Plaintiff is entitled on the ground of urgency to the interim-interim relief sought, when the Authorization Agreement conferring the specified rights on the Defendant had been signed on 20 January 2021, and the Plaintiff has not raised any complaint as to its effect or contents, until 5 May 2021 when it asked for the Defendant’s undertaking concerning the exercise of voting rights in the Shares at the AGM to be held on 28 June 2021.  The debt owing by the Plaintiff to the Defendant was originally due on 31 December 2020, and the Plaintiff had undertaken under the Memorandum in settlement to make full repayment within 5 days, by 25 January 2021.  No payment was made on either dates.  From early February 2021, the Defendant had confirmed the amounts outstanding and due from the Plaintiff, and had also confirmed that upon payment of the outstanding debt, the Shares would be returned.  The Plaintiff chose neither to make payment of the outstanding balance of the debt, nor to dispute the amounts or interest due (until late May/June 2021), nor to take action in relation to its alleged entitlement to exercise the voting rights in the Shares, in the interim from February to 31 May 2021.  The AGM had been convened by notice dated 21 April 2021, was originally scheduled to be held on 21 May 2021 and by announcement on 9 May 2021, was adjourned to 28 June 2021.  Any urgency, as the Defendant pointed out, is self-engineered by the Plaintiff.

7.  Any injunction to restrain the exercise of voting rights at the forthcoming meeting on 28 June 2021, inconsistent with the express provisions of the Memorandum and the Authorization Agreement which conferred such rights on the Defendant for a term of 42 months, would cause irreparable damage to the Defendant, and is irreversible, if it should be proved after trial to have been wrongly granted.

8.  The status quo ante any alleged breach should in my view be maintained pending the determination of the Summons.  In the present context, “status quo” should mean the position prevailing prior to the conduct complained of which is the subject of claim in the proceedings (Metric Resources Corp v Leasemetrix Ltd [1979] FSR 571, 582).  Whether it should be April 2021 when the Plaintiff claims the Defendant failed to provide the necessary information to enable it to make payment, or May 2021, when it asked the Defendant to undertaking to revoke the Authorization Letter upon the Plaintiff’s payment and the Defendant failed so to undertake, preservation of the status quo would mean that the position provided for under the Authorization Agreement be maintained, and would not justify the grant of the injunctions sought.

9.  The application for interim-interim relief is declined, and paragraphs 1 and 2 of the Summons for interlocutory relief is adjourned for argument on a date to be fixed before any judge, with estimated length of one day.  The Defendant has 14 days to file any evidence in opposition, and the Plaintiff has 14 days thereafter to file any evidence in reply.