VELATEL GLOBAL COMMUNICATIONS, INC. AND ANOTHER v. CHINACOMM LTD AND OTHERS

VELATEL GLOBAL COMMUNICATIONS, INC. AND ANOTHER v. CHINACOMM LTD AND OTHERS

Defendants repudiated the JV/TCPSSA by failing to procure licence extensions fundamental to the deal and by conduct (secret revocation of joint-signature mandate and unilateral transfer of trust-designated funds) evidencing intention not to perform; the US$5,000,000 and US$4,749,599 were impressed with Quistclose-type trusts for specified project purposes and were misapplied; the US$4.5M transfer was effected in furtherance of a sham surety/loan scheme and constituted unlawful means in a conspiracy with D10; accordingly plaintiffs (P1 and P2 as appropriate) were entitled to restitution and damages in the sums awarded and ancillary relief including continuation of injunctions, interest and...

Citation
[2018] HKCFI 2288
Parties
1st Plaintiff: VELATEL GLOBAL COMMUNICATIONS, INC.; 2nd Plaintiff: TRUSSNET CAPITAL PARTNERS (HK) LTD.; 1st Defendant: CHINACOMM LIMITED; 2nd Defendant: THRIVE CENTURY INTERNATIONAL LIMITED; 3rd Defendant: NEWTOP HOLDINGS LIMITED; 4th Defendant: SMART CHANNEL DEVELOPMENT LIMITED; 5th Defendant: MONG SIN; 8th Defendant: CECT CHINACOMM COMMUNICATIONS CO LTD; 9th Defendant: CECT CHINACOMM SHANGHAI CO LTD; 10th Defendant: FENG XIAO MING
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
11 October 2018
Case Number
HCA1978/2011
Procedural Posture
Civil Commercial Dispute (contract, Trust, Conspiracy) / Judgment (trial Concluded)
Outcome
Judgment for plaintiffs in part; defendants found liable for breach of contract, breach of trust, conspiracy to injure and unjust enrichment; injunctions continued in part; certain defendants' claims dismissed
Legal Topics
Quistclose Trust, Repudiation/renunciation of Contract, Subsequent Payment/condition Precedent, Misappropriation of Trust Funds, Sham Transactions, Share Pledge/ownership Disputes
Source Language
EN
Contract Law Trust Law Tort: Conspiracy Unjust Enrichment Company/shareholders Law Injunctions/mareva Quistclose Trust Repudiation/renunciation of Contract +4 more

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Parties

VELATEL GLOBAL COMMUNICATIONS, INC.

1st Plaintiff

TRUSSNET CAPITAL PARTNERS (HK) LTD.

2nd Plaintiff

CHINACOMM LIMITED

1st Defendant

THRIVE CENTURY INTERNATIONAL LIMITED

2nd Defendant

NEWTOP HOLDINGS LIMITED

3rd Defendant

SMART CHANNEL DEVELOPMENT LIMITED

4th Defendant

MONG SIN

5th Defendant

CECT CHINACOMM COMMUNICATIONS CO LTD

8th Defendant

CECT CHINACOMM SHANGHAI CO LTD

9th Defendant

FENG XIAO MING

10th Defendant

Procedural Posture

Civil Commercial Dispute (contract, Trust, Conspiracy) / Judgment (trial Concluded)

Legal Issues

  1. 1 Whether defendants repudiated/renounced the TCPSSA and related subscription agreements by failing to secure extension of the 3.5GHz licences for the 29 cities and by conduct undermining the JV project
  2. 2 Whether funds paid by plaintiffs (US$5,000,000 and US$4,749,599) were held on Quistclose or similar trusts and were misapplied
  3. 3 Whether the transfer of US$4,500,000 to a third party account and subsequent payments constituted an unlawful means conspiracy and unjust enrichment

Ratio Decidendi

Defendants repudiated the JV/TCPSSA by failing to procure licence extensions fundamental to the deal and by conduct (secret revocation of joint-signature mandate and unilateral transfer of trust-designated funds) evidencing intention not to perform; the US$5,000,000 and US$4,749,599 were impressed with Quistclose-type trusts for specified project purposes and were misapplied; the US$4.5M transfer was effected in furtherance of a sham surety/loan scheme and constituted unlawful means in a conspiracy with D10; accordingly plaintiffs (P1 and P2 as appropriate) were entitled to restitution and damages in the sums awarded and ancillary relief including continuation of injunctions, interest and...

Court Disposition

Judgment for plaintiffs in part; defendants found liable for breach of contract, breach of trust, conspiracy to injure and unjust enrichment; injunctions continued in part; certain defendants' claims dismissed

Orders

  • Judgment for P2 against D1, D6, D7 and D8 jointly and severally for breach of contract and for breach of trust by D1, D6 and D7: US$9,749,599
  • Judgment for P1 against D1, D6, D7 and D8 jointly and severally for breach of contract and for breach of trust by D1, D6 and D7: US$4,749,599