MING YANG INTERNATIONAL OPPORTUNITIES FUND SPC acting solely for the account of MING YANG INTERNATIONAL OPPORTUNITIES FUND SP5 (also known as MING YANG INTERNATIONAL OPPORTUNITIES FUND SP5) v. BLOSSOM INTERNATIONAL INVESTMENT HOLDINGS LTD

HCA 2484/2024

[2026] HKCFI 1037

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2484 OF 2024

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DECISION

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INTRODUCTION

1.  This is my decision on P’s summons filed on 11 August 2025 for the following (“Summons”):

(a)     summary judgment be entered against D for inter alia specific performance of the agreement between P (as Seller) and D (as Purchaser) dated 23 June 2023 (“SPA”) for the sale and purchase of 12,858.9247 Class A participating shares in Sigma Alternatives Portfolio SPC – Gawain Multi Sector Fund SP (“Shares”); 

(b)     alternatively, if the Court does not see fit to order specific performance or D fails to comply with the order for specific performance above by the New Completion Date, D be ordered to pay damages to P for its losses occasioned by D’s breach of the SPA, to be assessed;

(c)     further, or alternatively, determination of the true construction of clause 3 of the SPA, such that on such construction:

(i)     D agreed to fully pay the consideration of HK$100,159,332.57 for the sale and purchase of the Shares under the SPA on or before 30 June 2023 (as contended by P); and

(ii)     D does not have (as it contends) the sole discretion to decide when to pay the consideration of HK$100,159,332.57 for the sale and purchase of the Shares under the SPA.

2.  In support of the Summons, P filed the 2^nd and 3^rd Affirmations of Yuan Tianfu dated 8 August 2025 and 29 December 2025 respectively.  D filed the Affirmation of Tsoi Ting Jessica dated 26 November 2025 in opposition to the Summons. 

BACKGROUND

3.  P is at all material times a segregated portfolio company incorporated in the Cayman Islands. 

4.  For the purposes of this Action, it acts solely for the account of Ming Yang International Opportunities Fund SP5, which is its segregated portfolio.

5.  D is at all material times a company incorporated in the British Virgin Islands.  Madam Fang Yang is the sole director and shareholder of D.  Mr Zhiyi Ding is the President and CEO of D.  D through wholly-owned subsidiaries is the sole owner of Sigma Alternatives Portfolio SPC. Madam Fang Yang and Mr Zhiyi Ding are directors of Sigma Alternatives Portfolio SPC. 

6.  Sigma Alternatives Portfolio SPC is the 100% owner of the segregated portfolio Sigma Alternatives Portfolio SPC - Gawain Multi Sector Fund SP (also understood as acting solely for the account of Gawain Multi-Sector Fund SP) (“Company” or “Fund”).  The Company is an exempted limited company incorporated in the Cayman Islands.

7.  In mid-December 2022, P entered into a subscription agreement with the Company to pay HK$97,087,378.64 (subscription price) and HK$2,912,621.36 (subscription fee) for a total of HK$100 million to subscribe for the Shares.

8.  HK$100 million was duly advanced to D, and D issued the Shares to P in December 2022. 

9.  Around April to June 2023, it is P’s position that P began contemplating an exit from its investment in the Company by redemption of the Shares.  Thereafter from April 2023 onwards, P repeatedly demanded that D effect its exit from the investment through the redemption of the Shares, and sent an email to Mr Kelvon Guo of D requesting redemption. 

10.  In around June 2023, it was then proposed that D would buy out P instead of going through the redemption process, with the consideration being the same amount invested by P.  Eventually it was agreed that the parties would enter into a sale and purchase agreement for D to buy out the shares of P in the fund allowing a complete exit by 30 June 2023, being the Completion Date according to P’s case, and the Indicative Completion Date according to D’s case.

11.  On 23 June 2023, P as Seller and D as Purchaser entered into the SPA for a consideration of HK$100,159,332.57 (“Consideration”) for the sale and purchase of the Shares to effect P’s exit from the investment. 

12.  D failed to pay the Consideration to P on or before the Completion Date, save and except for the partial payment of HK$2,459,332.57 on 27 June 2023.  HK$97,700,000 of the Consideration remained unpaid on the Completion Date.

13.  Between 8 July 2023 and 10 August 2023, D made further partial payments totaling HK$18,000,000 towards the Consideration, leaving a balance of HK$79,700,000. 

P’s claim

14.  P’s claim is for the outstanding principal, accrued interest, minus the partial payments made by D, up to the date of the Writ, are set out in the table at §12 of the SOC totaling HK$100,900,794.52 (“Outstanding Principal”).

15.  P claims for the following:

(a)     Specific performance of the SPA by an order that:

(i)     Pursuant to and subject to the terms of clause 4 of the SPA, there be Completion (as defined therein) on a date to be determined (the “New Completion Date”).

(ii)     Pursuant to clause 3 of the SPA, on or before the New Completion Date, D does pay the Outstanding Principal, together with default interest from 1 July 2023 at the rate of 18% per annum up to the date of payment.

(b)     Further and/or alternative to (a) above, damages in addition to, or in lieu of, specific performance of the SPA.

(c)     Damages to be assessed.

D’s defence

16.  As set out in its Amended Defence and Counterclaim (“AD&C”), D raises the following defences:

17.  Despite clause 3 of the SPA purportedly defining the term “Completion Date” as being 30 June 2023 (the “Indicative Completion Date”), such definition is contrary to and irreconcilable with the definition of “Completion Date” as defined in clause 1.1 of the SPA.

18.  On a true and proper construction of the SPA, clause 3 of the SPA (which shall be read and construed together with clause 4 of the SPA and the definitions set out in clause 1.1 of the SPA) allows for flexibility in respect of the timing of Completion (as defined in clause 1.1 of the SPA) taking place, provided that:-

(a)     If the Consideration is paid by D in full at or before 4:00 p.m.  on 30 June 2023, completion shall take place on the Indicative Completion Date and P shall be obliged to deliver, or cause to be delivered, to D an instrument of transfer (ie the “Share Transfer Form” as defined in clause 4.2 of the SPA) dated 30 June 2023 as the transfer date; or

(b)     If the Consideration is not paid by D in full at or before 4:00 p.m. on 30 June 2023, completion shall take place on such date when D pays the outstanding portion of the Consideration (ie the Outstanding Principal as defined at §12 of the SOC) together with interest at the rate of 18% per annum on the Outstanding Principal accrued from 1 July 2023 (collectively the “Enhanced Consideration”).

19.  Schedule 2 of the SPA sets out the “Warranties” given by P (as Seller) in favour of D (as Purchaser). D claims that P breached clause 1.3 of Schedule 2 (“No-Consent Warranty”) in that P, as the legal and beneficial owner of the Shares, required the consent of the directors of the segregated portfolio in order to transfer the Shares. 

20.  P did not, whether at the time of execution of the SPA or at any other time, seek (or obtain) the consent of the directors of Sigma Alternatives Portfolio SPC to sell or transfer the Shares to D pursuant to the SPA.  In the absence of a completed transfer request, P was not in a position to transfer the Shares to D in any event, and therefore not ready, willing, and/or able to complete the SPA.

21.  It is D’s case that damages would be an adequate remedy for P as:

(a)     there is an available market for the disposal of the Shares amongst inter alia, private investors;

(b)     the value of the Shares is readily ascertainable with reference to inter alia (a) the Consideration payable for the sale of the Shares pursuant to clause 3 of the SPA (HK$100,159,332.57); (b) the formulae for assessing the NAV of the Company pursuant to the terms of the PPM (under the rubric “Net Asset Value”); and/or

(c)     By reason of the matters pleaded, P was itself not ready and/or able to perform its obligations under the SPA in order to seek specific performance by D and sue for the agreed sum.

22.  D counterclaims against P for breach of the No-Consent Warranty. 

Legal principles – summary judgment

23.  I bear in mind that in an Order 14 application, the court should not conduct a mini trial on affidavits.  The approach is to ask the following:- (i) whether the plaintiff has established a prima facie sustainable case on their claim; and if so, (ii) whether the defendant has discharged their burden to show there are triable issues.

24.  In considering whether there are triable issues, the court will not take the alleged defence at face value but to test it against inherent probability, contemporaneous documents, parties’ contemporaneous conduct, as well as matters which are undisputed or beyond reasonable dispute.

25.  The defendant bears the burden to show, by condescending upon particulars, that they have a fair or reasonable opportunity of showing a fair or bona fide defence. In assessing the credibility of the factual evidence, the focus is on whether it is capable of being believed, and not whether it is to be believed.

DISCUSSION

(A)      Whether P has established a prima facie sustainable case on its claim

26.  I have carefully reviewed the SOC, the SPA, and the 2^nd and 3^rd Affirmations of Yuan Tianfu.

27.  Clause 2.1 of the SPA provides that at Completion P shall sell and D shall purchase the Shares. Clause 3 provides that the Consideration payable by D for the Shares shall be payable on or before the Completion Date.  Clause 4.1 provides that Completion shall take place on the Completion Date.  Clause 4.5 provides that on Completion, D shall pay to P the Consideration into such account and with such financial institution as P may notify to D.  In breach of clauses 3 and 4.5 of the SPA, D failed to pay the Consideration to P on or before the Completion Date, save and except the sum referred to above at §12.

28.  I am satisfied that P has established a prima facie sustainable case for its claim. 

(B)      Whether D has discharged its burden to show there are triable issues

29.  Before I analyse D’s defences as to whether D has discharged its burden to show there are triable issues, given D’s defences concern contractual interpretation, it is useful to set out the general principles of construction as observed by Kwan VP in Achieve Goal Holdings Ltd v Zhong Xin Ore-Material Holding Company Ltd [2020] HKCA 51 at §16:

“(1) The construction of a contract is an attempt to discover what a reasonable person would have understood the parties to have meant. This is done by identifying the meaning of the relevant words, (a) in light of the natural and ordinary meaning of those words, the overall purpose of the contract, any other provisions of the contract, the facts known or assumed by the parties at the time at the time the contract was made, and common sense, but (b) ignoring subjective evidence of any party’s intentions. (Marley v Rawlings [2015] AC 129 at §19, per Lord Neuberger of Abbotsbury, PSC)

(2) The background knowledge which would reasonably have been available to both parties in the situation in which they were at the time of the contract includes anything which would have affected the way in which the language of the document would have been understood by a reasonable man. (Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 at 912H to 913A, per Lord Hoffmann; Arnold v Britton [2015] AC 1619 at §21, per Lord Neuberger of Abbotsbury, PSC)

(3) Reliance placed on commercial sense and surrounding circumstances should not be invoked to undervalue the importance of the language of the provision which is to be construed. Except in a very unusual case, the parties have control over the language they use in a contract and must have been specifically focussing on the issue covered by the provision when agreeing the wording of that provision. A court should be very slow to reject the natural meaning of a provision as correct simply because it appears to be a very imprudent term for one of the parties to have agreed, even ignoring the benefit of wisdom of hindsight. (Arnold v Britton at §§17 and 20, per Lord Neuberger of Abbotsbury, PSC)

(4) Interpretation is a unitary exercise. Where there are rival meanings, the court can give weight to the implications of rival constructions by reaching a view as to which construction is more consistent with business common sense. But in striking a balance between the indications given by the language and the implications of the competing constructions, the court must consider the quality of drafting of the clause (the poorer the quality of the drafting, the less willing the court should be to be driven by semantic niceties to attribute to the parties an improbable and unbusinesslike intention), and it must be alive to the possibility that one side may have agreed to something which with hindsight did not serve his interest. (Wood v Capita Insurance Services Ltd [2017] AC 1173 at §11, per Lord Hodge JSC; Gan Insurance Co Ltd v Tai Ping Insurance Co Ltd (No 2) [2001] 2 All ER (Comm) 299 at §16, per Mance LJ)

(5) Where the disputed provision is open to two possible interpretations, the unitary exercise involves an iterative process, by which each suggested interpretation is checked against the provisions of the contract and its commercial consequences are investigated. Once one has read the language in dispute and the relevant parts of the contract that provide its context, it does not matter whether the more detailed analysis commences with the factual background and the implications of rival constructions or a close examination of the relevant language in the contract, so long as the court balances the indications given by each. (Wood v Capita Insurance Services Ltd at §12, per Lord Hodge JSC; In re Sigma Finance Corpn [2010] 1 All ER 571 at §12, per Lord Mance JSC)

(6) In construing a contract, all parts of it must be given effect where possible, and no part of it should be treated as inoperative or surplus.  Whilst the presumption against surplusage is unlikely to be useful in interpreting a standard form contract, it is a relevant consideration in a bespoke contract drafted by the parties to meet the exigencies of a particular and significant commercial arrangement. (Secretary of State for Defence v Turner Estate Solutions Ltd [2015] EWHC 1150 (TCC) at §62, per Coulson J).”

30.  In order to arrive at the true interpretation of a document, a clause must not be considered in isolation, but must be considered in the context of the whole of the document: Lewison, The Interpretation of Contracts, 8^th ed (2023) at §§7.07-7.23. 

31.  Mr Ng drew my attention to the decision of Le Pichon DHCJ in CMF Global Quantitative Multi-Asset SPC - CMF Chaos China Growth SP v Blossom International Investment Holdings Limited [2025] HKCFI 5086 (“CMF case”).  That case involved D’s appeal of Master KW Wong’s Order which allowed for CMF Global Quantitative Multi-Asset SPC-CMF Chaos China Growth SP (“CMF”)’s application for summary judgment.  CMF was another investor that subscribed for shares in the Company.  D seeks to resist summary judgment in this case on the same grounds that it relied on in the CMF case.  Le Pichon DHCJ dismissed D’s appeal against the Order for summary judgment in the CMF case. 

32.  Mr Ng submitted that the SPA in the CMF case is identical to the SPA in this case.  I note that both investors, CMF and P, liaised with each other and D during the time of their redemption requests and the review of the draft SPA.  For example, an email dated 9 June 2023 from Mr Lin Rongsen (Johnson) of Rich and Honor Management Ltd. (“R&H”) (the company that procured investors such as P and CMF to subscribe for shares in the Company) to Mr Kelvon Guo of D stated “[a]fter internal review [of the draft SPA], we believe that the SPA (CMF Fund) requires necessary revisions.  Please refer to the revisions highlighted in red in the attachment.  This amendment applies to both the CMF Fund SPA and SP5 Fund (ie P’s) SPA.” 

33.  Ms Wong submitted that I should be cautious in relying on the CMF case, given I am not privy to all the evidence and arguments before the court in that case. 

34.  I agree.  The SPA in the CMF case has not been disclosed in these proceedings, and there is no evidence before me that the SPAs are identical.  However, the judgment in the CMF case is useful for general principles of contractual interpretation on the disputed clauses. 

Lack of board approval for the Share Transfer

35.  The main argument advanced by D at the hearing is that P was not able to perform its obligations under the SPA to effect a transfer of the Shares, and P is in breach of the No-Consent Warranty in clause 1.3 of Schedule 2 which provides as follows:

“The Seller is entitled to sell and transfer full legal and beneficial ownership in the Shares to the Purchaser without the consent of any other person.” (my emphasis).

36.  D alleges that P has never, whether at the time of executing the SPA or otherwise, even attempted to seek the consent of the Sigma Alternatives Portfolio SPC’s  directors (ie Madam Fang Yang and Mr Zhiyi Ding) to transfer the Shares pursuant to the SPA.  As such the No-Consent Warranty purportedly proffered by P under the Schedule 2 to the SPA is in fact untrue and incorrect (§27.2 of Tsoi Ting Jessica’s affirmation).  

37.  Under the Private Offering Memorandum issued by Sigma Alternatives Portfolio SPC  in October 2022 (“PPM”) under the heading “Redemption and Transfer of Participating Shares”:

“Participating Shares may not be transferred without the prior written consent of the Directors [of Sigma Alternatives Portfolio SPC]. The Directors may withhold their consent without giving any reason for doing so.

Shareholders wishing to transfer Participating Shares must complete a transfer request, which shall be in such form as the Directors may from time to time approve. The completed transfer request, duly stamped, if applicable, together with such evidence as the Directors may require to show the right of the transferor to make the transfer, must be sent to the Fund.

… … …

The Directors may decline to register a transfer without giving any reason for doing so.”

38.  D is the indirect 100% owner of Sigma Alternatives Portfolio SPC, which has complete control over the Company. 

39.  As stated in the PPM, the directors of Sigma Alternatives Portfolio SPC are:

(a)     Madam Fang Yang, who at the time was a director and the sole shareholder of D, indirectly wholly owning all of the Blossom companies and the Company; and

(b)     Mr Zhiyi Ding, who at the time was the President and CEO of D.

40.  The two directors sitting on the Sigma Alternatives Portfolio SPC board are also in control of D. 

41.  Under clause 2 of Schedule 3 “Purchaser’s Warranties” of the SPA, D has warranted that it has: (a) the requisite power and authority to enter into and perform its obligations under this Agreement; and (b) taken all necessary corporate or other action to authorize the execution and performance of its obligations under this Agreement (my emphasis).

42.  I do not think that P has given a warranty that P can transfer the Shares without approval from the directors.  Applying the principles of construction as set out in §§29-30 above, that would be inconsistent with clause 4.3 of the SPA that P shall procure the passing of the following resolutions of the directors of the Company: (a) that the transfer of the Shares to D shall be approved for registration; and (b) that the Administrator of the Company will be instructed to update the register of participating shareholders of the Company to reflect the above transfer. 

43.  In the premises, the No-Consent Warranty must mean that P is entitled to sell and transfer full legal and beneficial ownership in the Shares to D without the consent of any third party (excluding the directors of Sigma Alternatives Portfolio SPC, which effectively control D). 

44.  Further, it would be absurd that the No-Consent Warranty encompasses the consent of D, given that the two people sitting on the Sigma Alternatives Portfolio SPC board are also in control of D.   

45.  D’s Madam Fang Yang signed the SPA on behalf of D.  It would make no commercial sense that after signing the SPA, the same people that are in control of D could turn around and refuse to allow the transfer of Shares as Sigma Alternatives Portfolio SPC’s board, to frustrate the SPA that they approved. 

46.  After the signing of the SPA, it was within the contemplation of the parties that D would cause the directors of the Sigma Alternatives Portfolio SPC, who were wholly within their control, as they were the same directing minds and wills of D, to approve of a transfer of its subsidiary’s assets to itself.

47.  This also accords with clause 2 of Schedule 3 “Purchaser’s Warranties” of the SPA, which D has warranted that it has taken all necessary corporate or other action to authorize the execution and performance of its obligations under this Agreement.  This necessarily includes procuring the Sigma Alternatives Portfolio SPC board to approve the share transfer.   

48.  D’s defence that consent is required under the No-Consent Warranty from the directors of Sigma Alternatives Portfolio SPC to proceed with the Share Transfer is unarguable. 

49.  The SPA should not be interpreted in a way to allow one party to take advantage of their own wrongdoing: Lewison, The Interpretation of Contracts, 8^th ed (2023) at §§7.108 – 7.118.  The No-Consent Warranty should be interpreted so as to exclude from its meaning circumstances where consent is required from the directors of Sigma Alternatives Portfolio SPC, which effectively control D.  It would allow D and its directing minds and wills, which are the same as that of the Sigma Alternatives Portfolio SPC board, to escape its obligations under the SPA such as the failure to pay the Consideration, by refusing to approve the transfer. D’s Madam Fang Yang and Mr Zhiyi Ding control the whole consent process. 

50.  This is a rule of construction.  In the absence of clear language to the contrary, the parties would not have intended a contractual provision to enable a party to take advantage of its own breach of contract.

51.  Further, by clauses 3 and 4.2 of the SPA, at Completion and subject to the receipt by P of the Consideration and all outstanding interest due and owing, P shall deliver, or cause to be delivered, to D an instrument of transfer.  D’s obligation to pay the Consideration and all outstanding interest is a condition precedent to P’s obligation to transfer the shares (my emphasis).    

52.  P was ready, willing and able to complete the SPA by transferring the Shares to D pursuant to and in accordance with clause 4.2 of the SPA.  The No-Consent Warranty contained in clause 1.3 of Schedule 2 of the SPA was not breached. 

53.  This defence is unarguable and does not raise a triable issue. 

CompletionDate

54.  Under clause 3 of the SPA, the Consideration is payable on or before the Completion Date.  If any part of the Consideration is not paid by D by the Completion Date, interest at the rate of 18% per annum shall apply to the outstanding amount from 1 July 2023.

55.  The ordinary meaning of “Completion Date” in clause 3 is obvious.  It indicates that completion is to happen on that date.  This is mandatory, and not an optional Completion Date.

56.  Under clause 15.7 of the SPA, time is of the essence, which made timely performance a condition of the contract: Lombard North Central Plc v Butterworth [1987] QB 527 at p 535F-G.

57.  In clause 4.1 of the SPA, the use of the singular identifier of the Completion Date (ie 30 June 2023) and the mandatory phrase “shall take place” indicates that Completion is to take place at a singular moment in time, being the Completion Date.

58.  Clause 2.1 also envisages that Completion should happen at a definite and defined point in time: “[a]t Completion [P] shall sell and [D] shall purchase the Shares on and with effect from Completion...” (my emphasis). 

59.  Clause 4.5 also suggests a mandatory and not an optional obligation for the Completion Date: “[o]n Completion, [D] shall pay to [P] the Consideration into such account ….”.  “Shall” payis usedas opposed to use of the word “may”, which is permissive.

60.  D labels the payment of interest, together with the outstanding principal, as “Enhanced Consideration.” Upon payment of the Enhanced Consideration, P shall be obliged to deliver, or cause to be delivered, to D the Share Transfer Form with the date of payment of the Enhanced Consideration as the transfer date (§6.5.2 of D’s AD&C). 

61.  I reject D’s construction of clause 3 for the reasons above.  As a matter of construction of the SPA, the Consideration is immediately due and payable on the Completion Date and the Completion Date is not extended by the payment of interest at 18% on the outstanding amount.  The payment of interest under clause 3 is in substance, default interest to enable P to recover damages arising from D’s default in payment of the Consideration on the Completion Date.  It does not mean that D does not have to pay the Consideration on the Completion Date. 

62.  An obligation to pay interest at a specified rate (18% per annum) in the event of non-payment of the Consideration on the Completion Date does not absolve D from the primary obligation to pay the Consideration on the Completion Date.  The payment of interest is simply a secondary obligation which arises upon breach of the primary obligation, which is to pay the Consideration on the Completion Date. 

63.  Further, it would present a very commercially unattractive and uncertain outcome for P.  D’s interpretation that it can indefinitely delay payment by paying interest until it has paid the Enhanced Consideration is at odds with time being of the essence under clause 15.7 of the SPA.  Such a construction would not be workable or reasonable among sophisticated investors and does not accord with commercial common sense. 

64.  The ordinary and natural meaning of the words used in clauses 2.1, 3, 4.1 and 4.5 of the SPA create a mandatory and enforceable obligation on D to pay the Consideration on the Completion Date.  If D fails to pay the Consideration by the Completion Date, then it is in breach of the SPA. 

65.  This defence is unarguable and does not raise a triable issue. 

Specific performance

66.  Specific performance of contractual obligations should ordinarily be refused where damages would be an adequate remedy.  The minimum condition for an order of specific performance is that the innocent party should have a legitimate interest extending beyond pecuniary compensation for the breach, for eg, the purchase of land or certain chattels such as ships, which the law recognises as unique.  Due to their uniqueness, the purchaser’s interest extends beyond the mere award of damages as a substitute for performance: Cavendish Square Holding BV v Makdessi [2015] UKSC 67, per Lord Neuberger and Lord Sumption at §30.

67.  Chitty on Contracts 36^th ed (2025) at §31-024 provides that:

“[d]amages are considered to be an adequate remedy where the claimant can readily get the equivalent of what they contracted for from another source … On the other hand, a contract to subscribe for shares in a company is specifically enforceable; and so is a contract to buy shares which are not readily available in the market, even (it seems) although the directors of the company have a discretion to refuse to register the transfer.”

68.  Ms Wong referred me to Avonwick Holdings Limited v Azitio Holdings Limited [2020] EWHC 1844 (Comm) in which Picken J observed that specific performance should only be awarded in respect of a payment obligation where an action in damages or debt would not properly vindicate the claimant’s right (at §1039).  However, even in Avonwick, counsel accepted in principle that specific performance was available in respect of entitlement to shares in a company on the basis that they are shares in a private company which are not widely traded on the market (at §1036). 

69.  The background of the SPA is that P wanted to exit its investment in the Company from April to June 2023.  Jarvis from CMF had also sought to exit its investment in the Company through a redemption of their shares at the same time. 

70.  P had requested D to provide the redemption request form, but this was not provided, along with the Net Asset Value reports.  For example, a WeChat message from Mr Lin Rongsen (Johnson) of R&H on 5 June 2023 states “[w]e have been urging [D] for the net asset value reports for two months.”  Another WeChat message from Mr Sun Yu Alex (of CMF) on 5 June 2023 states “[D] hasn’t given us the redemption agreement yet; we can only send an email to them stating that we want to redeem all our shares and ask [D] to process as soon as possible.” 

71.  According to P’s evidence:

(a)     The Shares are in a segregated portfolio of a fund incorporated in the Cayman Islands, which have no public market.  It would be difficult to determine their actual value and hence quantify the damages suffered by P (§6.5 of 3^rd Affirmation of Yuan Tianfu). 

(b)     D is unable to show there is a market.  Had there been such a market, D would have been able to produce a third party purchaser in the first place (§6.4 of 3^rd Affirmation of Yuan Tianfu).

(c)     It is simply not possible for the Shares to be valued in any commercially realistic way.  There is no market valuation, nor are there any discernible Net Asset Value that one can usefully refer to – not to mention that P is unable to see the underlying asset of the fund (§7.2 of 3^rd Affirmation of Yuan Tianfu).  In this regard, I note that D refused to provide the assessment of the Company’s Net Asset Value (§19 of 2^nd Affirmation of Yuan Tianfu). 

72.  D alleges that there is an available market for the sale of the Shares and that damages would be an adequate remedy for P.  However, D was unable to identify any other potential investors for the Shares in the Affirmation of Tsoi Ting Jessica.

73.  D’s own document shows that the Shares are illiquid, there is no public market for the Shares, nor is a public market expected to develop in the future.

74.  In the PPM under “Risks”:

“Investment in a Segregated Portfolio carries substantial risk. There can be no assurance that the investment objective of a Segregated Portfolio will be achieved and investment results may vary substantially over time.

… … …

There is no public market for the Participating Shares, nor is a public market expected to develop in the future.” (my emphasis).

75.  Under the heading “Certain Risk Factors” in the PPM, the risks associated with the structure of the Fund were identified, including the following:

“Illiquidity of Participating Shares. It is not anticipated that there will be an active secondary market for the Participating Shares and it is not expected that such a market will develop. Participating Shares are not transferable without the approval of the Directors. Consequently, Shareholders may not be able to dispose of their Participating Shares except by means of redemption. Redemptions may be suspended in certain circumstances. The Fund may effect redemptions in specie or may establish a liquidating trust, account or entity to hold the relevant investments until they are liquidated at a later date. As such, a Shareholder may not receive cash proceeds on redemption or in the event that the Fund is terminated or may not receive cash proceeds in a timely manner.” (my emphasis).

76.  In my view, P has shown from the PPM that there is no available market for the Shares.  The PPM warned investors that shareholders may not be able to dispose of their Participating Shares except by means of redemption.  D’s assertion that there is an available market is not supported by any evidence and contradicts the risk disclosures in the PPM.  It is a bare assertion.  There is no triable issue.   

77.  An award of damages would not be an adequate remedy in this case.  Specific performance is appropriate.

78.  There is no arguable defence to P’s claim and summary judgment should be ordered. 

INTEREST

79.  P claims default interest of 18% per annum on the unpaid portion of the Consideration from 1 July 2023 up to the date of full payment. 

80.  I am unwilling to apply the contractual rate of interest post judgment. No submissions have been provided by P as to why I should exercise my discretion to award the contractual rate of interest post judgment until payment under section 49(1)(a) of the High Court Ordinance, as opposed to the default position in section 49(1)(b) of the High Court Ordinance.  In practice, the courts are normally content to award interest at the judgment rate for the sake of consistency and certainty: Lo Yuk Sui v Fubon Bank (Hong Kong) Ltd [2016] HKEC 2909 per Ng J at §§50, 55, and 60.

81.  It is possible for the contractual rate of interest to apply post judgment but such a clause must state specifically that any judgment obtained for recovery of the debt shall carry interest at a specified rate per annum and the higher rate until payment should form part of the judgment: Hong Kong Civil Procedure 2026 at §42/1/17. Clause 3 of the SPA does not provide for this.

COUNTERCLAIM

82.  Given that I have ruled above that the No-Consent Warranty has not been breached and there is no triable issue, the counterclaim based on the No-Consent Warranty must be struck out. 

DISPOSITION

83.  For all the reasons above, summary judgment shall be granted.  I formally make an order in terms of §§1.1(a), (b), (c), (e), and 2 of the Summons, save that (b) be amended to “default interest of 18% per annum on the unpaid portion of the Consideration from 1 July 2023 to the date of this judgment, and thereafter at judgment rate to the date of full payment.  The New Completion Date shall be 14 days from the date of this judgment. 

84.  I order that the costs of this action, including the costs of this Summons, be paid by D to P, with certificate for counsel, to be summarily assessed.  

85.  For the purposes of the summary assessment of costs, I direct that:-

(a)     P do lodge its Statement of Costs within 3 days of the date hereof;

(b)     D do lodge its List of Objections to P’s Statement of Costs within 4 days thereafter; and

(c)     Assessment of costs shall be conducted on the papers.

86.  I thank Mr Ng and Ms Wong for their helpful submissions.