CHEUNG TSUN YUNG, THOMAS AND ANOTHER v. MILLION VISION INVESTMENTS LTD AND ANOTHER

HCMP 2227/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2227 OF 2009

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BETWEEN

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D E C I S I O N

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1.  These are proceedings by the 2nd plaintiff for redemption of the only share of the 2nd defendant from the 1st defendant and by the 1st plaintiff to exercise a call option to purchase the share of the 2nd defendant from the 1st defendant.

2.  The plaintiffs have also issued a summons for interlocutory injunction to restrain the defendants from disposing of the only share of the 2nd defendant as held by the 1st defendant or disposing of a housing project in Beijing which is owned by the 2nd defendant.

3.  The plaintiffs have applied to move the proceedings to the Commercial List. They also apply to adjourn the hearing of the summons for interlocutory injunction to 30 November 2009 to the Commercial Court. There is no interlocutory injunction yet. The defendants oppose the application to adjourn.

4.  The plaintiffs say that they want the adjournment to seek a further valuation report on the value of the property project. At present the defendants’ valuation says that the project has a market worth of RMB110 million. At a forced sale, it would worth RMB55 to RMB66 million. There is a prior encumbrance of RMB100 million. At a market value sale, the defendants will get the balance of RMB10 million. On a forced sale, they would get nothing.

5.  The plaintiffs’ valuation, however, says that the project has a market worth of RMB293 million and a forced sale value of RMB210 million. The plaintiffs say that the sum for redemption is RMB40 million-odd, whilst the sum payable for the call option is some RMB30 million-odd. Both values will place the defendants in a better position than a sale at the defendants’ market value or forced sale value.

6.  In the light of the huge difference in valuation, the plaintiffs would like to obtain a further valuation, as such evidence may effect the court’s balancing of the convenience and the resolution of the issue of fortification of undertaking for damages. The plaintiffs emphasise that there is not yet any injunction in place and the adjournment sought is short.

7.  The defendants argue that the plaintiffs’ claim for redemption has no merit as no money has been tendered or paid into court. On the call option, there is also no payment. However, I note that the 1st defendant has all along refused the 1st plaintiff’s purported exercise of the call option. I wonder if, in such circumstances, the 1st defendant can criticise the 1st plaintiff for not tendering the exercise money.

8.  On the amount to be paid for redemption or exercise of the option, the defendants also say that the sums in question range between RMB80-odd million to RMB90-odd million, vis-à-vis the sums suggested by the plaintiffs being between some RMB30-odd million to RMB40-oddmillion.

9.  The defendants say that the summons for interlocutory injunction is a Damocles’ sword over their heads and the matter is urgent. However, the real Damocles’ sword is the originating summons, not the summons for interlocutory injunction. Even if the summons for injunction is dismissed, the originating summons will remain. A dismissal of the summons today will also not solve the question of urgency either. This question of urgency has also not prompted the defendants’ to apply for the striking out of the originating summons.

10.  Mr Neoh SC also submitted, for the defendants, that the plaintiffs have tendered no payment and they should not be allowed to continue the summons for injunction, but the same applies to the originating summons. I am not convinced that this argument should deter me from granting the adjournment.

11.  On the question of availability of money, Mr Westbrook SC, for the plaintiffs, told me that there is a sum of RMB49 million sitting in an escrow account of a firm of solicitors. That sum of money is earmarked for the redemption/exercise of the option. But I do not know whether there is any condition attached to the use of such money.

12.  Mr Neoh suggested that this sum should be paid into court in return for the grant of the adjournment of the summons if I should indeed agree to adjourn it. I, however, think that this is too draconian a condition to be attached for the grant of such a short adjournment.

13.  In the light of the huge difference on valuation, I am prepared to accede to the plaintiffs’ summons to adjourn. In the event that the plaintiffs, or either of them, should be able to prove a serious question to be tried, the valuation evidence may be important for the court’s consideration of what relief to grant, if any.

14.  I therefore make an order in terms of paragraph 1 of the plaintiffs’ summons issued on 18 November 2009 to adjourn the hearing of the summons issued on 30 October 2009 to 30 November 2009 at 9.30 before the Commercial Court.

(Discussion re costs)

15.  The plaintiffs do pay the defendants the costs of the application to adjourn save and except that the defendants do pay the plaintiffs the costs of today’s argument. I also order that there be certificates for two counsel.