INDUSTRY AUTOMATION LDC v. UNI LINK LTD AND OTHERS

INDUSTRY AUTOMATION LDC v. UNI LINK LTD AND OTHERS

Clause 2.1 required only appointment of Ernst & Young to carry out an audit, not a guarantee to procure completion; no term compelling procurement of completion could be implied as necessary; Plaintiff, having continued to exercise shareholder rights and press for performance after any repudiatory breach, affirmed the Agreement and lost the right to terminate; the Agreement was not frustrated because a usable audited result (including qualified reports) or alternative means of calculation were available or contemplated; consequential claims dismissed.

Citation
INDUSTRY AUTOMATION LDC v. UNI LINK LTD AND OTHERS
Parties
Plaintiff: Industry Automation LDC; 1st Defendant: Uni Link Limited; 2nd Defendant: Cheung Kwai Lan; 3rd Defendant: Ng Kim Ming; 4th Defendant: Huang Wei Xing; 5th Defendant: Tarxen Promotion Company Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
30 January 2008
Case Number
HCA12467/1998
Procedural Posture
Contract (share Subscription) / Trial Judgment (court of First Instance)
Outcome
Action dismissed; judgment for the defendants (2nd and 5th Defendants)
Legal Topics
Implied Terms, Repudiatory Breach, Frustration of Contract, Contract Interpretation, Affirmation of Contract, Audit Obligations, Remedies and Costs
Source Language
EN
Contract Law Commercial Law Company and Shareholders Law Implied Terms Repudiatory Breach Frustration of Contract Contract Interpretation Affirmation of Contract +2 more

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Parties

Industry Automation LDC

Plaintiff

Uni Link Limited

1st Defendant

Cheung Kwai Lan

2nd Defendant

Ng Kim Ming

3rd Defendant

Huang Wei Xing

4th Defendant

Tarxen Promotion Company Limited

5th Defendant

Procedural Posture

Contract (share Subscription) / Trial Judgment (court of First Instance)

Legal Issues

  1. 1 Whether clause 2.1 obliged the Company to procure completion of the 1996 audit
  2. 2 Whether a term should be implied obliging the Company to ensure completion of the audit
  3. 3 Whether the alleged failure to obtain audited accounts amounted to repudiatory breach and whether the Plaintiff accepted it or affirmed the contract

Ratio Decidendi

Clause 2.1 required only appointment of Ernst & Young to carry out an audit, not a guarantee to procure completion; no term compelling procurement of completion could be implied as necessary; Plaintiff, having continued to exercise shareholder rights and press for performance after any repudiatory breach, affirmed the Agreement and lost the right to terminate; the Agreement was not frustrated because a usable audited result (including qualified reports) or alternative means of calculation were available or contemplated; consequential claims dismissed.

Court Disposition

Action dismissed; judgment for the defendants (2nd and 5th Defendants)

Orders

  • Plaintiff's action dismissed
  • Costs order nisi: Plaintiff to pay the costs of the Action to the 2nd and 5th Defendants on a party and party basis; costs to be taxed if not agreed