In Huen Wai Kee v Choy Kwong Wan Christopher ([2013] HKEC 1784, CFI) H and C were the shareholders of P Ltd. C agreed to buy H’s shares for HK$40 million. C agreed that property (‘the property’) owned by R Ltd (a company controlled by C and his wife) would be security for C’s payment obligations under the share sale agreement. R Ltd entered into an agreement to sell the property to CG Ltd (a company controlled by H for HK$38.4 million). Any amount unpaid by C in respect of the shares would be set off against the price to be paid by CG Ltd. C failed to pay the full purchase price.
H and CG Ltd brought proceedings against C and R Ltd. H / CG Ltd sought the amount unpaid under the share sale agreement and in respect of dishonoured cheques and specific performance of R Ltd’s agreement to sell the property to CG Ltd.
They obtained an order for the payments to be made and, in the alternative, for specific performance of the agreement to sell the property to CG Ltd (with the amount owed by C being deducted from the purchase price of the property).
The order was registered at the Land Registry. C then entered into an agreement to sell the property to a third party for much more than the price payable by CG Ltd. C and R Ltd sought the vacation of the registration of the writ under section 19 of the Land Registration Ordinance.
They failed. The court’s intention was that it was H and CG Ltd who, under the terms of the order that had been made, had the option as to whether or not to insist on specific performance.
This hearing was not the occasion on which to argue that the order should not have been made.
Michael Lower
