LIN SAN JIH AND OTHERS v. CHAI ZHEN ZHONG AND OTHERS

LIN SAN JIH AND OTHERS v. CHAI ZHEN ZHONG AND OTHERS

On the balance of probabilities the Court found D1 represented to the plaintiffs that he acted for the Fund (D6) when the ETA was entered, that a contemporaneous SETA did exist and recorded the agreed return of shares, and that the ETA and SETA were induced by the defendants' misrepresentation; accordingly the ETA and SETA were rescinded, related board resolutions and allotment were declared void and the register/Companies Record ordered rectified; D1 lacked authority to bind D6 and D6 was unaware of the transactions.

Citation
LIN SAN JIH AND OTHERS v. CHAI ZHEN ZHONG AND OTHERS
Parties
1st Plaintiff: LIN SAN JIH; 2nd Plaintiff: LU LIN HSIU LUAN; 3rd Plaintiff: CHEN LIN SHOU; 4th Plaintiff: HONG CHENG PI CHEN; 1st Defendant: CHAI ZHEN ZHONG; 2nd Defendant: LI HSU PENG; 3rd Defendant: LI BIN NING; 4th Defendant: SINO MASTER INTERNATIONAL GROUP LIMITED; 5th Defendant: FORTUNE INTERNATIONAL DEVELOPMENT ENTERPRISE COMPANY LIMITED; 6th Defendant: GO-TO-ASIA INVESTMENT LIMITED
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
14 September 2011
Case Number
HCMP1197/2005
Procedural Posture
Company/share Dispute Under S349 Companies Ordinance and Inherent Jurisdiction / Judgment (high Court Court of First Instance)
Outcome
Relief granted to plaintiffs in part: rescission of ETA and SETA; declarations voiding specified board resolutions and allotment; rectification orders; payment into court ordered; costs orders nisi
Legal Topics
Rescission, Ostensible Authority, Misrepresentation, Duress, Undue Influence, Rectification of Register, Counterclaim, Quantum Meruit
Source Language
EN
Company Law Contract Law Equity and Remedies Civil Procedure Misrepresentation Rescission Ostensible Authority Duress +4 more

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Parties

LIN SAN JIH

1st Plaintiff

LU LIN HSIU LUAN

2nd Plaintiff

CHEN LIN SHOU

3rd Plaintiff

HONG CHENG PI CHEN

4th Plaintiff

CHAI ZHEN ZHONG

1st Defendant

LI HSU PENG

2nd Defendant

LI BIN NING

3rd Defendant

SINO MASTER INTERNATIONAL GROUP LIMITED

4th Defendant

FORTUNE INTERNATIONAL DEVELOPMENT ENTERPRISE COMPANY LIMITED

5th Defendant

GO-TO-ASIA INVESTMENT LIMITED

6th Defendant

Procedural Posture

Company/share Dispute Under S349 Companies Ordinance and Inherent Jurisdiction / Judgment (high Court Court of First Instance)

Legal Issues

  1. 1 Whether D1 purported to represent D6 when entering the Equity Transfer Agreement (ETA)
  2. 2 Whether a Supplemental Equity Transfer Agreement (SETA) was entered contemporaneously with the ETA
  3. 3 Interpretation and validity of the ETA and purported SETA

Ratio Decidendi

On the balance of probabilities the Court found D1 represented to the plaintiffs that he acted for the Fund (D6) when the ETA was entered, that a contemporaneous SETA did exist and recorded the agreed return of shares, and that the ETA and SETA were induced by the defendants' misrepresentation; accordingly the ETA and SETA were rescinded, related board resolutions and allotment were declared void and the register/Companies Record ordered rectified; D1 lacked authority to bind D6 and D6 was unaware of the transactions.

Court Disposition

Relief granted to plaintiffs in part: rescission of ETA and SETA; declarations voiding specified board resolutions and allotment; rectification orders; payment into court ordered; costs orders nisi

Orders

  • Rescission of the ETA and SETA
  • Declaration that the 1st and 2nd Board Resolutions are void