LIEU TSENG VAN v. JIUZHOU DEVELOPMENT CO LTD

LIEU TSENG VAN v. JIUZHOU DEVELOPMENT CO LTD

The Framework Agreement and the parties' subsequent conduct extended the time for due diligence and the life of the Framework Agreement; the earnest money was not a forfeitable deposit but repayable on demand; JZD validly demanded repayment (27 May 2009) and, after Lieu and Chen failed to repay, an event of default arose under the share charge entitling JZD to enforce the share charge, appoint receivers and enforce the Loan Assignment; accordingly JZD wins on its counterclaim and Lieu's confidentiality damages claims fail.

Citation
LIEU TSENG VAN v. JIUZHOU DEVELOPMENT CO LTD
Parties
Plaintiff (original Action); 1st Defendant (counterclaim): Lieu Tseng Van; Defendant (original Action); Plaintiff (counterclaim): Jiuzhou Development Company Limited; 2nd Defendant (counterclaim): Chen Siu Ling (also known as Chen Siu Ling Shirley); 3rd Defendant (counterclaim): Super Cruise Limited; 4th Defendant (counterclaim): Van Shipping Company Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
19 June 2012
Case Number
HCA1645/2009
Procedural Posture
Action and Counterclaim Arising From Failed Share Sale Negotiation, Confidentiality Undertaking, Enforcement of Security (share Charge and Loan Assignment) / Court of First Instance — Reasons for Judgment (judgment Delivered)
Outcome
Judgment for Jiuzhou Development Company Limited on its counterclaim; claims by Lieu for breach of confidentiality and related relief dismissed; orders made for repayment, enforcement of security, delivery up of company documents, assessment of damages and indemnity costs.
Legal Topics
Breach of Confidentiality Undertaking, Earnest Money / Deposit Characterisation, Forfeiture, Due Diligence and Deemed Satisfaction, Share Charge Enforcement, Loan Assignment Enforcement, Appointment of Receivers, Estoppel and Election, Damages and Indemnity, Costs Assessment
Source Language
EN
Contract Law Equity Company Law Property Law Civil Procedure Confidentiality Law Breach of Confidentiality Undertaking Earnest Money / Deposit Characterisation +8 more

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Parties

Lieu Tseng Van

Plaintiff (original Action); 1st Defendant (counterclaim)

Jiuzhou Development Company Limited

Defendant (original Action); Plaintiff (counterclaim)

Chen Siu Ling (also known as Chen Siu Ling Shirley)

2nd Defendant (counterclaim)

Super Cruise Limited

3rd Defendant (counterclaim)

Van Shipping Company Limited

4th Defendant (counterclaim)

Procedural Posture

Action and Counterclaim Arising From Failed Share Sale Negotiation, Confidentiality Undertaking, Enforcement of Security (share Charge and Loan Assignment) / Court of First Instance — Reasons for Judgment (judgment Delivered)

Legal Issues

  1. 1 Whether defendant breached confidentiality undertaking and whether claimant suffered recoverable loss
  2. 2 Whether earnest money was a forfeitable deposit or repayable on demand
  3. 3 Whether parties extended time for due diligence and Framework Agreement by conduct and whether JZD validly demanded repayment

Ratio Decidendi

The Framework Agreement and the parties' subsequent conduct extended the time for due diligence and the life of the Framework Agreement; the earnest money was not a forfeitable deposit but repayable on demand; JZD validly demanded repayment (27 May 2009) and, after Lieu and Chen failed to repay, an event of default arose under the share charge entitling JZD to enforce the share charge, appoint receivers and enforce the Loan Assignment; accordingly JZD wins on its counterclaim and Lieu's confidentiality damages claims fail.

Court Disposition

Judgment for Jiuzhou Development Company Limited on its counterclaim; claims by Lieu for breach of confidentiality and related relief dismissed; orders made for repayment, enforcement of security, delivery up of company documents, assessment of damages and indemnity costs.

Orders

  • Declare earnest money not forfeited and repayable
  • Order Lieu Tseng Van, Chen Siu Ling and Van Shipping Company Limited to pay Jiuzhou Development Company Limited the Hong Kong dollars equivalent of RMB 26,000,000 with interest at the best lending rate of the Hong Kong bank from 27 May 2009 to 7 June 2012