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ABCDEFGHIJKLMNOPQRSTUV由此ABCDEFGHIJKLMNOPQRSTUVHCA1221/2006INTHEHIGHCOURTOFTHEHONGKONGSPECIALADMINISTRATIVEREGIONCOURTOFFIRSTINSTANCEACTIONNO.1221OF2006____________BETWEENPINEENTERPRISESLIMITEDPlaintiffandCYBERSTRATEGYLIMITED1stDefendantLECTUREKITCOMPANYLIMITED2ndDefendantandWOOPAKHAYEDWARD1stThirdPartyLAWSHIUKAIANDREW2ndThirdParty____________HCCW593/2005INTHEHIGHCOURTOFTHEHONGKONGSPECIALADMINISTRATIVEREGIONCOURTOFFIRSTINSTANCECOMPANIESWINDING-UPPROCEEDINGSNO.593OF2005____________INTHEMATTERofUnionResources(EducationalDevelopment)LimitedANDINTHEMATTERofSections168Aand177(1)(f)oftheCompaniesOrdinance(Cap32)-2-ABCDEFGHIJKLMNOPQRSTUVABCDEFGHIJKLMNOPQRSTUV由此BETWEENPINEENTERPRISESLIMITEDPetitionerandLECTUREKITCOMPANYLIMITED1stRespondentUNIONRESOURCES2ndRespondent(EDUCATIONALDEVELOPMENT)LIMITED____________(HCA1221/2006andHCCW593/2005areheardandtriedtogetherpursuanttotheorderofHighCourtJudgePoondated31July2007)Before:DeputyHighCourtJudgeToinCourtDatesofHearing:17-21,24-25,27-28September2007,2-3October2007,5-6,8-9,12-14November2007,4,7-8,14,30-31January2008and1,4February2008DateofJudgment:14March2008_______________JUDGMENT_______________INTRODUCTION1.Thisisatrialoftwoactions,namelyHCCW593/2005andHCA1221/2006,orderedtobetriedtogetherpursuanttotheorderofPoonJ.ThedisputearoseoutoffouragreementsinconnectionwiththesalebyPineEnterprisesLimited(“Pine”)ofitssharesinUnionResources(EducationalDevelopment)Limited(“URLimited”)toLectureKit-3-ABCDEFGHIJKLMNOPQRSTUVABCDEFGHIJKLMNOPQRSTUV由此CompanyLimited(“LectureKit”).ThesharesinURLimitedweredulytransferredtoLectureKiton13May2003.Pinecomplainedofbreachoftheagreements.On1August2005,PinepetitionedforthewindingupofURLimitedonjustandequitablegroundunderHCCW593/2005.On7June2006,PinealsocommencedactionHCA1221/2006againstLectureKitanditsparentcompanyCyberStrategyLimited(“CyberStrategy”)forbreachofagreement.CyberStrategyandLectureKitcounterclaimedagainstthe1stand2ndThirdPartiesforfalserepresentation.IconsiderthemainactionisHCA1221/2006.2.ThePlaintiffandthe1stThirdPartyarerepresentedbyMrPoonSCandMsLindaChan.TheDefendantsarerepresentedbyMissAngelaGwiltandMrCYLiwhojoinedinasleadingcounselonthe12thdayoftrial.The2ndThirdParty,whoisapractisingsolicitor,appearedinpersonexceptforthelastdayofthetrialwhenheisrepresentedbyMsElsieYiu.3.Bytheseventhdayofthetrial,thepartieswerestillentangledinpre-trialmatters.Ratherthantohavebothactionsadjournedandre-fixed,Iconsidereditinthebestinterestofallpartiestocontinuehearingthemainactionandtoadjournthewindingupaction.Hence,onmyownmotion,IadjournedHCCW593/2005toadatetobefixedandcontinuedhearingHCA1221/2006.Iamgladtohavetakenthatcourse,becauseastheevidenceunfolds,itbecameobviousthattheevidenceinthewindingupactionwouldbehighlyprejudicialtotheDefendantsinthemainactionandtheevidenceinthemainactionwouldalsobeprejudicialtotheRespondentsinthewindingupaction.Inthisjudgment,IshallrefertosomeoftheevidenceinthewindingupactionforthepurposeofsettingoutthebackgroundinwhichthematerialissueswhichIhavetodecideinthe-4-ABCDEFGHIJKLMNOPQRSTUVABCDEFGHIJKLMNOPQRSTUV由此mainactionarose.Idonotrelyonanyofthoseevidenceinmyassessmentofcredibilityofwitnessesorfindingoffactinthemainaction.Imakenofindingoffactinrespectofthewindingupactioneither,notevenaprovisionalview.4.Onthe13thdayoftrial,shortlyafteropeningthedefencecase,theDefendantsofferedtodiscontinuethethirdpartyproceedingsagainstthe2ndThirdParty,AndrewLaw,withcosts.Theofferwasnotacceptedbecauseofdisagreementonthescaleofcosts.AndrewLawcontinuedasathirdparty.Butforallpracticalpurposes,theDefendantshaveabandonedtheirclaimagainstAndrewLaw.TheissueasbetweentheDefendantsandAndrewLawiswhetherAndrewLawisentitledtohavehiscostsonindemnitybasis.5.Thedisputeisabouttwoofthefouragreements.On12April2003,Pine,CyberStrategyandLectureKitenteredintothreeagreementsinconnectionwiththesaleandpurchaseofsharesinURLimited.Onthesameday,theyalsoenteredintoafourthagreementwithURLimitedtoregulatetheirmanagementofURLimited.6.UndertheSaleandPurchaseAgreement,LectureKitpurchasedfromPine51%ofitssharesinURLimited(i.e.510,002shares)andPinepurchasedfromCyberStrategy20%ofitssharesinLectureKit(i.e.1,000shares).Inessence,thatwasashareswapagreement.TheprincipalassetofURLimitedwas,andstillis,itswhollyownedsubsidiary,UnionResourcesLimitedEducationalDevelopment(Yanjiao)CompanyLimited(“UREDY”)whichownsapieceofland(“theCampus”)inthePeople’sRepublicofChina(“PRC”).-5-ABCDEFGHIJKLMNOPQRSTUVABCDEFGHIJKLMNOPQRSTUV由此7.UndertheLectureKitShareholders’Agreement,CyberStrategyagreedtorepurchasePine’s1,000sharesinLectureKitatHK$12.5millionifLectureKitisnotlistedby12April2005andCyberStrategyagreedtodepositits510,002sharesinURLimitedwithMessrsAndrewLaw&FrankiHoascustodian.8.UndertheOptionAgreement,LectureKitgrantedanirrevocableoptiontoPinetocalluponLectureKittoissueaconvertiblenoteforHK$20millionwithinterest,inconsiderationofPine’sagreementtoprocureEdwardWootowaivehisdirector’sloantoURLimited.Pursuanttothisagreement,EdwardWoosignedaletterofreleaseconfirminghisagreementtoreleaseanddischarge“allloa