YIP KWAI CHOR v. KING FUNG CONSTRUCTION WORK CO LTD AND ANOTHER

YIP KWAI CHOR v. KING FUNG CONSTRUCTION WORK CO LTD AND ANOTHER

The court held that the petition date (29 July 2004) is the appropriate date for valuation because the respondent failed to show good grounds to displace that date; a certified public accountant (CPA) experienced in asset valuation is the appropriate valuer (with liberty to consult a quantity surveyor); the valuer must include future profit prospects and honour the established 50% profit‑sharing entitlement in valuing the petitioner’s shares; no minority discount is to be applied; specific directions were given to account for identified repayments and diverted contract sums (including repayment of HKD 13,759,670 and recovery under the West Kowloon contract subject to documented expenses);...

Citation
YIP KWAI CHOR v. KING FUNG CONSTRUCTION WORK CO LTD AND ANOTHER
Parties
Petitioner / 1st Defendant: Yip Kwai Chor; 1st Respondent / Plaintiff: King Fung Construction Work Company Limited; 2nd Respondent: Lau Kai Yan; 2nd Defendant: Sing Yip Construction Engineering Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
18 October 2007
Case Number
HCMP375/2005
Procedural Posture
Company Petition Under Section 168 a Companies Ordinance (hcmp 375/2005) and Related Civil Action HCA 2183/2004 / Post Trial Decision on Relief, Determination of Valuation, Appointment of Valuer and Consequential Orders
Outcome
Relief granted in part: 2nd Respondent ordered to purchase Petitioner’s 3,000 shares at a value to be fixed by a CPA valuer as at 29 July 2004; directions on valuation items, repayment obligations and production of documents; in HCA 2183/2004 the 2nd Defendant (Sing Yip) ordered to pay HKD 3,247,828 to the Plaintiff...
Legal Topics
Section 168 a Companies Ordinance, Buy Out of Minority Shares, Valuation Date of Shares, Fiduciary Duties of Directors, Admissibility of Fresh Evidence, Interest on Purchase Price, Costs Orders
Source Language
EN
Company Law Equity Civil Procedure Contract Section 168 a Companies Ordinance Buy Out of Minority Shares Valuation Date of Shares Fiduciary Duties of Directors +3 more

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Parties

Yip Kwai Chor

Petitioner / 1st Defendant

King Fung Construction Work Company Limited

1st Respondent / Plaintiff

Lau Kai Yan

2nd Respondent

Sing Yip Construction Engineering Limited

2nd Defendant

Procedural Posture

Company Petition Under Section 168 a Companies Ordinance (hcmp 375/2005) and Related Civil Action HCA 2183/2004 / Post Trial Decision on Relief, Determination of Valuation, Appointment of Valuer and Consequential Orders

Legal Issues

  1. 1 What is the correct date for valuation of the petitioner’s shares?
  2. 2 Who is the appropriate valuer and what is the scope of valuation?
  3. 3 Whether future profits and the agreed profit‑sharing arrangement should be reflected in valuation

Ratio Decidendi

The court held that the petition date (29 July 2004) is the appropriate date for valuation because the respondent failed to show good grounds to displace that date; a certified public accountant (CPA) experienced in asset valuation is the appropriate valuer (with liberty to consult a quantity surveyor); the valuer must include future profit prospects and honour the established 50% profit‑sharing entitlement in valuing the petitioner’s shares; no minority discount is to be applied; specific directions were given to account for identified repayments and diverted contract sums (including repayment of HKD 13,759,670 and recovery under the West Kowloon contract subject to documented expenses);...

Court Disposition

Relief granted in part: 2nd Respondent ordered to purchase Petitioner’s 3,000 shares at a value to be fixed by a CPA valuer as at 29 July 2004; directions on valuation items, repayment obligations and production of documents; in HCA 2183/2004 the 2nd Defendant (Sing Yip) ordered to pay HKD 3,247,828 to the Plaintiff...

Orders

  • 2nd Respondent to purchase the 3,000 ordinary shares of HKD 1.00 each registered in the Petitioner’s name at a price fixed by a valuer who shall be a certified public accountant to be agreed within 14 days or appointed by HKICPA president
  • Valuer to value shares by reference to assets, profitability and future prospects of 1st Respondent as at 29 July 2004 and without discount for minority holding