The High Court entered judgment of over HK$898 million (plus substantial interest bringing the total to over HK$1 billion) against the Chairman and Chief Executive Officer of a listed company in Hong Kong, Mr. Ji Changqun (“D”), who was ranked in the Forbes’ World’s Billionaires List with an estimated wealth of USD2.4 billion.
The Plaintiffs (“Ps”) sued D on a memorandum of understanding (“MOU”) for payment and purchase of Ps’ interests in two funds (albeit structured as limited partnership). D alleged inter alia that the MOU was unenforceable due to alleged misrepresentation, lack of intention to create legal relationship, and want of consideration (alleging that the funds gave rise to no actionable debt). D further sought to argue that a sum of HK$520 million is not covered on proper construction of the MOU.
The Court rejected D’s arguments.
- On misrepresentation, it was held that “he who alleges must prove the allegation with evidence” and adverse inferences were drawn against D for failing to testify.
- The Court held that sufficient consideration existed by virtue of (i) the promise to sell Ps’ interests in the funds and (ii) forbearance to sue. On the latter, the Court stressed that it suffices if it can be shown that there has been in existence a bona fide dispute or claim, which the litigant agreed to forbear from enforcing or did actually forbear from enforcing.
- The Court further rejected D’s contractual interpretation by reference to definitions of the MOU whilst disregarding subsequent correspondence as being incapable of altering objective contractual intention.
This judgment underscores the Court’s commercial approach in holding parties to their contractual bargains, irrespective of whether the underlying document is styled as a MOU.
The full judgment is available at: https://legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=175693&currpage=T
Jenkin Suen SC, Ebony Ling and Adrian Lee, instructed by YTL LLP, acted for the 1st and 2nd Plaintiffs.
