MA MAOGEN v. GAO HAIYAN AND ANOTHER

MA MAOGEN v. GAO HAIYAN AND ANOTHER

The court found the alleged 2010 Oral Agreement and the May Agreement to be fabricated by Ma; Ma materially breached the STAs (failure to pay RMB18m balance, improper withholding without tax reporting/payment, assignment to Zi Rong without written consent, secret settlement with Zhang and obstruction of enforcement) and those breaches, taken cumulatively, were repudiatory; Gao and Xie validly accepted repudiation (pleaded and relied upon), STAs were terminated as of 26 November 2013, Ma liable to pay contractual sums, interest and legal costs, and plaintiffs in HCA1315/2009 entitled to recover Bai Jun shares because recipients were not bona fide purchasers for value without notice.

Citation
MA MAOGEN v. GAO HAIYAN AND ANOTHER
Parties
Plaintiff (hca 1315/2009); Defendant (hca 466/2012): Gao Haiyan; Plaintiff (hca 1315/2009); Defendant (hca 466/2012): Xie (co-plaintiff); Plaintiff (hca 466/2012); Defendant (counterparty Under Stas): Ma (Ma Sh...); Defendants (hca 1315/2009) / Assets Alleged Acquired by Ma: Keeneye Group (Keeneye Holdings Ltd, New Purple, Daynew, Far Orient); Third Party / Purchaser of Keeneye Interest (source of Subsequent Transfers): Zhang Xintian
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
11 August 2016
Case Number
HCA466/2012
Procedural Posture
Civil (contract, Equity and Proprietary Disputes) / Trial Judgment (judgment Delivered After Full Trial)
Outcome
Ma's claims dismissed; counterclaims by Gao and Xie upheld; STAs terminated for repudiation; recovery and costs orders granted to Gao and Xie; plaintiffs in HCA1315/2009 entitled to recovery of Bai Jun shares
Legal Topics
Specific Performance, Repudiatory Breach, Assignment and Consent, Restoration/restitution, Bona Fide Purchaser for Value, Oral Modification Vs Clause Requiring Written Amendment, PRC Individual Income Tax – Applicability
Source Language
EN
Contract Law Equity and Trusts Company Law Property and Proprietary Remedies Arbitration Enforcement International/prc Taxation Issues Specific Performance Repudiatory Breach +5 more

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Parties

Gao Haiyan

Plaintiff (hca 1315/2009); Defendant (hca 466/2012)

Xie (co-plaintiff)

Plaintiff (hca 1315/2009); Defendant (hca 466/2012)

Ma (Ma Sh...)

Plaintiff (hca 466/2012); Defendant (counterparty Under Stas)

Keeneye Group (Keeneye Holdings Ltd, New Purple, Daynew, Far Orient)

Defendants (hca 1315/2009) / Assets Alleged Acquired by Ma

Zhang Xintian

Third Party / Purchaser of Keeneye Interest (source of Subsequent Transfers)

Procedural Posture

Civil (contract, Equity and Proprietary Disputes) / Trial Judgment (judgment Delivered After Full Trial)

Legal Issues

  1. 1 Existence and effect of the alleged May Agreement (May 2011)
  2. 2 Existence and effect of the alleged 2010 Oral Agreement (withholding RMB13m and set‑off RMB5m)
  3. 3 Whether Ma breached the Share Transfer Agreements (STAs) and supplemental STAs

Ratio Decidendi

The court found the alleged 2010 Oral Agreement and the May Agreement to be fabricated by Ma; Ma materially breached the STAs (failure to pay RMB18m balance, improper withholding without tax reporting/payment, assignment to Zi Rong without written consent, secret settlement with Zhang and obstruction of enforcement) and those breaches, taken cumulatively, were repudiatory; Gao and Xie validly accepted repudiation (pleaded and relied upon), STAs were terminated as of 26 November 2013, Ma liable to pay contractual sums, interest and legal costs, and plaintiffs in HCA1315/2009 entitled to recover Bai Jun shares because recipients were not bona fide purchasers for value without notice.

Court Disposition

Ma's claims dismissed; counterclaims by Gao and Xie upheld; STAs terminated for repudiation; recovery and costs orders granted to Gao and Xie; plaintiffs in HCA1315/2009 entitled to recovery of Bai Jun shares

Orders

  • Claim by Ma dismissed in HCA 466/2012 with costs
  • Declaration that the Share Transfer Agreement (as amended by 1st and 2nd Supplemental STAs) was terminated and ceased to have effect as of 26 November 2013