SKY JOY INVESTMENT LTD v. ZHENG DUNMU AND ANOTHER

SKY JOY INVESTMENT LTD v. ZHENG DUNMU AND ANOTHER

Li failed to demonstrate a sufficiently arguable case or real prospect of success because the plaintiff acquired an equitable interest by way of the Share Charge on 30 September 2015 which predated any equitable interest Li obtained upon exercise of options in September/November 2016; accordingly the default judgment insofar as it declared legal title and validated the contested new share certificates could not stand without evidence and was set aside and limited to a declaration of equitable interest only.

Citation
SKY JOY INVESTMENT LTD v. ZHENG DUNMU AND ANOTHER
Parties
Plaintiff: Plaintiff; 1st Defendant: 1st Defendant; 2nd Defendant: Pure Sheen Limited; Interested Party: Li Chiu Yue
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
16 August 2017
Case Number
HCA395/2016
Procedural Posture
Application to Set Aside Default Judgment and Joinder / Hearing on Summons to Join Interested Party and to Set Aside Parts of Default Judgment
Outcome
Summons partly granted: Li joined as interested party; paragraph 4 and paragraph 5 of the Default Judgment set aside and paragraph 4 replaced with declaration limited to equitable interest; costs awarded to plaintiff against Li with specified exceptions.
Legal Topics
Share Charge, Default Judgment, Declaratory Relief, Equitable Interest, Priority of Equitable Interests, Forgery of Share Certificates, Joinder
Source Language
EN
Company Law Equity Civil Procedure Securities Law Contract Share Charge Default Judgment Declaratory Relief +4 more

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Parties

Plaintiff

Plaintiff

1st Defendant

1st Defendant

Pure Sheen Limited

2nd Defendant

Li Chiu Yue

Interested Party

Procedural Posture

Application to Set Aside Default Judgment and Joinder / Hearing on Summons to Join Interested Party and to Set Aside Parts of Default Judgment

Legal Issues

  1. 1 Whether the interested party (Li) has an interest that prevails over the plaintiff's equitable interest
  2. 2 Whether the default judgment declaring legal title and validity of new share certificates should be set aside
  3. 3 Whether the plaintiff obtained an equitable interest in the shares despite allegedly forged share certificates

Ratio Decidendi

Li failed to demonstrate a sufficiently arguable case or real prospect of success because the plaintiff acquired an equitable interest by way of the Share Charge on 30 September 2015 which predated any equitable interest Li obtained upon exercise of options in September/November 2016; accordingly the default judgment insofar as it declared legal title and validated the contested new share certificates could not stand without evidence and was set aside and limited to a declaration of equitable interest only.

Court Disposition

Summons partly granted: Li joined as interested party; paragraph 4 and paragraph 5 of the Default Judgment set aside and paragraph 4 replaced with declaration limited to equitable interest; costs awarded to plaintiff against Li with specified exceptions.

Orders

  • Li Chiu Yue is joined as an interested party to the proceedings
  • Paragraph 4 of the Default Judgment is set aside and replaced with: A declaration that the Share Pledge and related documents delivered were effective in transferring and did transfer to the Plaintiff the equitable right, title and interest in the 150,000,000 shares of Changgang Dunxin Enterprise Company Limited