ASIALAND LTD AND ANOTHER v. LAM YIU CHO AND OTHERS

ASIALAND LTD AND ANOTHER v. LAM YIU CHO AND OTHERS

The court struck out the pleaded fraudulent/reckless misrepresentation claims against Lam and New Rainbow because the pleaded facts and contract terms demonstrated no actionable representation made to Asialand by them (the relevant warranties did not refer to the alleged earlier accounts), the purchaser had contractual non-reliance and inspection rights, and it was impossible for the pleaded case to succeed; the Deloitte forensic report and related correspondence were discoverable because they were commissioned by the company's board prior to and independently of litigation; with the fraud-related defence against Lam and New Rainbow struck out, there remained no defence to their...

Citation
ASIALAND LTD AND ANOTHER v. LAM YIU CHO AND OTHERS
Parties
1st Plaintiff (purchaser): Asialand; 2nd Plaintiff (company Whose Shares Purchased): Advance Pharmaceutical; 1st Defendant (vendor / Seller): Lam Yiu Cho (Mr Lam); 2nd Defendant (vendor / Seller, Mr Lam's Company): New Rainbow Overseas Inc.; 3rd Defendant (vendor / Former Director): Mr Lee; 4th Defendant (vendor): Vigor Overseas (Mr Lee's company); 5th Defendant (vendor): Chang Iok Meng; 6th Defendant (vendor): Chang Iok Wai; 7th Defendant (vendor Entity): Master Sum
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
31 January 2007
Case Number
HCA1944/2005
Procedural Posture
Share Sale and Purchase Dispute (alleged Misrepresentation; Counterclaim for Specific Performance) / Interlocutory/chambers Hearing on Strike Out, Discovery and Specific Performance; Judgment on Interlocutory Applications
Outcome
Application to strike out fraud and related claims against the 1st and 2nd defendants granted; discovery ordered for Deloitte report and related correspondence; specific performance of remaining share transfer ordered in favour of 1st and 2nd defendants; costs nisi to 1st and 2nd defendants on both applications.
Legal Topics
Fraudulent Misrepresentation, Reckless Misrepresentation, Pleading Particulars, Set Off, Specific Performance, Discovery, Legal Professional Privilege, Costs
Source Language
EN
Contract Law Tort (misrepresentation/fraud) Equity (specific Performance) Civil Procedure (strike Out, Discovery, Pleadings) Fraudulent Misrepresentation Reckless Misrepresentation Pleading Particulars Set Off +4 more

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 5 Authorities cited 3 Party arguments 2 Amounts and remedies 7
Sign in to unlock

Parties

Asialand

1st Plaintiff (purchaser)

Advance Pharmaceutical

2nd Plaintiff (company Whose Shares Purchased)

Lam Yiu Cho (Mr Lam)

1st Defendant (vendor / Seller)

New Rainbow Overseas Inc.

2nd Defendant (vendor / Seller, Mr Lam's Company)

Mr Lee

3rd Defendant (vendor / Former Director)

Vigor Overseas (Mr Lee's company)

4th Defendant (vendor)

Chang Iok Meng

5th Defendant (vendor)

Chang Iok Wai

6th Defendant (vendor)

Master Sum

7th Defendant (vendor Entity)

Procedural Posture

Share Sale and Purchase Dispute (alleged Misrepresentation; Counterclaim for Specific Performance) / Interlocutory/chambers Hearing on Strike Out, Discovery and Specific Performance; Judgment on Interlocutory Applications

Legal Issues

  1. 1 Whether the pleaded allegations of fraudulent or reckless misrepresentation against the 1st and 2nd defendants were sufficiently particularised and sustainable
  2. 2 Whether the 1st and 2nd defendants could be held liable for breaches of agreements to which they were not parties
  3. 3 Whether the Deloitte forensic report and related correspondence were discoverable or privileged

Ratio Decidendi

The court struck out the pleaded fraudulent/reckless misrepresentation claims against Lam and New Rainbow because the pleaded facts and contract terms demonstrated no actionable representation made to Asialand by them (the relevant warranties did not refer to the alleged earlier accounts), the purchaser had contractual non-reliance and inspection rights, and it was impossible for the pleaded case to succeed; the Deloitte forensic report and related correspondence were discoverable because they were commissioned by the company's board prior to and independently of litigation; with the fraud-related defence against Lam and New Rainbow struck out, there remained no defence to their...

Court Disposition

Application to strike out fraud and related claims against the 1st and 2nd defendants granted; discovery ordered for Deloitte report and related correspondence; specific performance of remaining share transfer ordered in favour of 1st and 2nd defendants; costs nisi to 1st and 2nd defendants on both applications.

Orders

  • Strike out of the allegations of fraudulent or reckless misrepresentation and related claims against the 1st and 2nd defendants in terms of clauses 1(a),(b) and (c) of the application of 3 October 2006
  • Order for specific discovery in terms of clause 1(b) of the application of 23 August 2006 (Deloitte report and related correspondence and specified accounting records)