CHINA CRUISE LINE LTD AND OTHERS v. STAR YIELD CORPORATION LTD AND ANOTHER

CHINA CRUISE LINE LTD AND OTHERS v. STAR YIELD CORPORATION LTD AND ANOTHER

Court found the Defendants had made fraudulent misrepresentations inducing the JV Agreement and the US$1,000,000 Upfront Payment and repudiated the contract by failing to procure the Loan. No rescission had been validly effected by the Plaintiffs, so a constructive trust over the Upfront Payment could not be imposed solely on the basis of fraud prior to rescission; however Plaintiffs were entitled to recover the Upfront Payment by contractual claim against Star Yield with interest and by restitution for unjust enrichment against Lau, and were entitled to declarations transferring the defendant's registered shares back to the Plaintiffs and to an indemnity for losses under the Consulting...

Citation
[2021] HKCFI 2970
Parties
1st Plaintiff: China Cruise Line Ltd; 2nd Plaintiff: Fordden International Holdings Company Limited; 3rd Plaintiff: First Choice Investment (HK) Limited; 4th Plaintiff: China International Cruise Development Limited; 1st Defendant: Star Yield Corporation Ltd; 2nd Defendant: Lau Long Ming
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
11 October 2021
Case Number
HCA798/2019
Procedural Posture
Civil — Contract and Tort (fraud, Restitution, Equity) / Judgment After Trial (court of First Instance)
Outcome
Judgment for Plaintiffs on primary claims
Legal Topics
Fraudulent Misrepresentation, Constructive Trust, Quistclose Trust, Unjust Enrichment, Rescission, Dishonest Assistance/knowing Receipt, Indemnity, Mareva Injunction
Source Language
EN
Contract Tort Equity Restitution Injunctions Procedural Law (mareva) Fraudulent Misrepresentation Constructive Trust +6 more

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Parties

China Cruise Line Ltd

1st Plaintiff

Fordden International Holdings Company Limited

2nd Plaintiff

First Choice Investment (HK) Limited

3rd Plaintiff

China International Cruise Development Limited

4th Plaintiff

Star Yield Corporation Ltd

1st Defendant

Lau Long Ming

2nd Defendant

Procedural Posture

Civil — Contract and Tort (fraud, Restitution, Equity) / Judgment After Trial (court of First Instance)

Legal Issues

  1. 1 Whether the Defendants made fraudulent misrepresentations inducing the JV Agreement and Upfront Payment
  2. 2 Whether Star Yield or Lau hold the Upfront Payment or China International Cruise shares on constructive trust
  3. 3 Whether the Plaintiffs had validly rescinded the JV Agreement and the consequences of non-rescission

Ratio Decidendi

Court found the Defendants had made fraudulent misrepresentations inducing the JV Agreement and the US$1,000,000 Upfront Payment and repudiated the contract by failing to procure the Loan. No rescission had been validly effected by the Plaintiffs, so a constructive trust over the Upfront Payment could not be imposed solely on the basis of fraud prior to rescission; however Plaintiffs were entitled to recover the Upfront Payment by contractual claim against Star Yield with interest and by restitution for unjust enrichment against Lau, and were entitled to declarations transferring the defendant's registered shares back to the Plaintiffs and to an indemnity for losses under the Consulting...

Court Disposition

Judgment for Plaintiffs on primary claims

Orders

  • Declaration that the 1st Defendant holds 4,050 shares of the 4th Plaintiff on trust for and on behalf of the 2nd Plaintiff
  • Declaration that the 1st Defendant holds 450 shares of the 4th Plaintiff on trust for and on behalf of the 3rd Plaintiff