TAN MAN KOU AND ANOTHER v. CHIME CORPORATION LTD AND OTHERS

TAN MAN KOU AND ANOTHER v. CHIME CORPORATION LTD AND OTHERS

The court has jurisdiction to entertain the summons because the Security Agreement was entered pursuant to a court order and the Heads of Agreement expressly preserved review by the court; the Security Agreement's provisions do not require conversion of sale proceeds into Hong Kong dollars and therefore proceeds in pounds sterling equating to the Required Value may be held as replacement security; the court rejects the Joint Administrators' demand to increase the buffer from the previously accepted 5% to 20%; costs of the Joint Administrators up to release of the proceeds, including the costs of the summons, are recoverable under clause 10 of the Security Agreement.

Citation
TAN MAN KOU AND ANOTHER v. CHIME CORPORATION LTD AND OTHERS
Parties
Joint Administrators Pendente Lite of the Estate of Wang Teh Huei (petitioners): Tan Man Kou and Cheung Yat Ming; 1st Respondent: Chime Corporation Limited; 2nd Respondent: Nina Kung alias Nina T H Wang; 3rd Respondent: Kung Yan Sum (formerly known as Gong Xian Xin); 4th Respondent: Forum Ever Limited; 5th Respondent: Focus Profit Limited; 6th Respondent: Liu Yuan Chun; 7th Respondent: Joseph Wing Kong Leung; 8th Respondent: Chan Kam Por; 9th Respondent: Kwok Ki Li
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
11 May 2004
Case Number
HCMP4146/2001
Procedural Posture
Companies Ordinance Security for Dividends and Replacement Security Dispute / Summons for Declaration of Replacement Security Under Inherent Jurisdiction (interim Application)
Outcome
Summons allowed in part; Mrs Wang's proposed sterling-denominated replacement security with the previously accepted 5% buffer was approved; Joint Administrators' demand for a 20% buffer was rejected; costs awarded under clause 10 up to release of proceeds including summons costs.
Legal Topics
Replacement Security, Security Agreement Interpretation, Foreign Currency Deposits, Court Review of Security, Costs Indemnity
Source Language
EN
Companies Law Contract Law Civil Procedure Security and Charges Inherent Jurisdiction Replacement Security Security Agreement Interpretation Foreign Currency Deposits +2 more

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Parties

Tan Man Kou and Cheung Yat Ming

Joint Administrators Pendente Lite of the Estate of Wang Teh Huei (petitioners)

Chime Corporation Limited

1st Respondent

Nina Kung alias Nina T H Wang

2nd Respondent

Kung Yan Sum (formerly known as Gong Xian Xin)

3rd Respondent

Forum Ever Limited

4th Respondent

Focus Profit Limited

5th Respondent

Liu Yuan Chun

6th Respondent

Joseph Wing Kong Leung

7th Respondent

Chan Kam Por

8th Respondent

Kwok Ki Li

9th Respondent

Procedural Posture

Companies Ordinance Security for Dividends and Replacement Security Dispute / Summons for Declaration of Replacement Security Under Inherent Jurisdiction (interim Application)

Legal Issues

  1. 1 Whether the court has jurisdiction to entertain the summons under its inherent jurisdiction given the Security Agreement executed post-order
  2. 2 Whether the Security Agreement requires proceeds of sale of charged shares to be converted into Hong Kong dollars
  3. 3 Whether the proposed sterling-denominated replacement security varies the Security Agreement

Ratio Decidendi

The court has jurisdiction to entertain the summons because the Security Agreement was entered pursuant to a court order and the Heads of Agreement expressly preserved review by the court; the Security Agreement's provisions do not require conversion of sale proceeds into Hong Kong dollars and therefore proceeds in pounds sterling equating to the Required Value may be held as replacement security; the court rejects the Joint Administrators' demand to increase the buffer from the previously accepted 5% to 20%; costs of the Joint Administrators up to release of the proceeds, including the costs of the summons, are recoverable under clause 10 of the Security Agreement.

Court Disposition

Summons allowed in part; Mrs Wang's proposed sterling-denominated replacement security with the previously accepted 5% buffer was approved; Joint Administrators' demand for a 20% buffer was rejected; costs awarded under clause 10 up to release of proceeds including summons costs.

Orders

  • Declaration that proceeds of sale in pounds sterling up to the Required Value (HK$592,500,000) may be held by the Joint Administrators/HSBC as replacement security without mandatory conversion to Hong Kong dollars
  • The sterling proceeds shall be held on terms permitting top-ups and reductions to address currency fluctuation consistent with the arrangement previously accepted by the court (105% mechanism with 5% buffer as per prior order)