CHINASCREEN LTD. v. CHINA SILK ENTERPRISE LTD. AND OTHERS

CHINASCREEN LTD. v. CHINA SILK ENTERPRISE LTD. AND OTHERS

The Court found that binding contracts existed between Chinascreen and Otto Kern; Otto Kern's cancellation was not justified and amounted to breach; Mr Ting and Goldyork procured that breach by enticing Chinascreen's merchandisers to defect, and Mr Ting breached his fiduciary duties as director; Goldyork, controlled by Mr Ting, was imputed with his knowledge and must account as constructive trustee for profits derived; conspiracy involving China Silk was not established; quantification: damages for procurement were fixed at $3,206,824 or, alternatively, account of profits for Spring 1992 of $2,406,171 and post-Spring 1992 profits of $4,537,848, with interest and costs as ordered.

Citation
CHINASCREEN LTD. v. CHINA SILK ENTERPRISE LTD. AND OTHERS
Parties
Plaintiff by Counterclaim: Chinascreen Limited; 1st Defendant: China Silk Enterprise Limited; 2nd Defendant by Counterclaim: Goldyork Development Limited; 3rd Defendant by Counterclaim: Ting Hin Shun; 4th Defendant by Counterclaim: Goldwin International Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
16 July 1999
Case Number
HCA2411/1992
Procedural Posture
Commercial Litigation: Contract and Tort (procurement of Breach, Conspiracy, Breach of Fiduciary Duty, Account of Profits) / Final Judgment at Trial (court of First Instance)
Outcome
Counterclaim allowed in part against Mr Ting (3rd Defendant) and Goldyork (2nd Defendant); China Silk settled and was not further before the court; Goldwin not held liable on procurement
Legal Topics
Procurement of Breach of Contract, Conspiracy to Use Unlawful Means, Breach of Fiduciary Duty by Director, Constructive Trust, Account of Profits, Measure of Damages, Misappropriation of Corporate Opportunity
Source Language
EN
Contract Tort Company Law Equity/trusts Commercial Law Procurement of Breach of Contract Conspiracy to Use Unlawful Means Breach of Fiduciary Duty by Director +4 more

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Parties

Chinascreen Limited

Plaintiff by Counterclaim

China Silk Enterprise Limited

1st Defendant

Goldyork Development Limited

2nd Defendant by Counterclaim

Ting Hin Shun

3rd Defendant by Counterclaim

Goldwin International Limited

4th Defendant by Counterclaim

Procedural Posture

Commercial Litigation: Contract and Tort (procurement of Breach, Conspiracy, Breach of Fiduciary Duty, Account of Profits) / Final Judgment at Trial (court of First Instance)

Legal Issues

  1. 1 Whether binding contracts existed between Chinascreen and Otto Kern
  2. 2 Whether Otto Kern's cancellation amounted to breach of contract
  3. 3 Whether Mr Ting/Goldyork procured the breach

Ratio Decidendi

The Court found that binding contracts existed between Chinascreen and Otto Kern; Otto Kern's cancellation was not justified and amounted to breach; Mr Ting and Goldyork procured that breach by enticing Chinascreen's merchandisers to defect, and Mr Ting breached his fiduciary duties as director; Goldyork, controlled by Mr Ting, was imputed with his knowledge and must account as constructive trustee for profits derived; conspiracy involving China Silk was not established; quantification: damages for procurement were fixed at $3,206,824 or, alternatively, account of profits for Spring 1992 of $2,406,171 and post-Spring 1992 profits of $4,537,848, with interest and costs as ordered.

Court Disposition

Counterclaim allowed in part against Mr Ting (3rd Defendant) and Goldyork (2nd Defendant); China Silk settled and was not further before the court; Goldwin not held liable on procurement

Orders

  • Payment of $3,206,824 from the 2nd and 3rd Defendants by Counterclaim as damages for procurement of breach of contract, OR alternatively payment of $2,406,171 from the 2nd Defendant by Counterclaim as the sum found due on an account of profits for the Spring 1992 orders
  • Payment of $4,537,848 from the 2nd Defendant by Counterclaim being the sum found due on the taking of the account of profits for the post-Spring 1992 orders