CSL Limited v Chow - [2021] NZHC 2137

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-000503

[2021] NZHC 2137

BETWEEN
CSL LIMITED

Plaintiff

AND

JOHN CHOW (aka KA YU CHOW) and MICHAEL CHOW (aka KA MING CHOW)

as trustees of the JOHN CHOW
INVESTMENT TRUST and the MICHAEL CHOW INVESTMENT TRUST

Defendants

Hearing: 28 July 2021

Appearances:

P J Napier for Plaintiff S Moore for Defendants

Judgment:

17 August 2021

JUDGMENT OF ASSOCIATE JUDGE P J ANDREW

This judgment was delivered by Associate Judge Andrew on17 August 2021 at 3.30 pm
pursuant to r 11.5 of the High Court Rules Registrar / Deputy Registrar

Date …………………………..

CSL LTD v CHOW [2021] NZHC 2137 [17 August 2021]

Introduction

[1] The plaintiff, CSL Limited,1 is a financial management services company. The defendants are Ka Yu (John) Chow and Ka Ming (Michael) Chow, as trustees of the John Chow Investment Trust and the Michael Chow Investment Trust.2

[2] By share option deed of 2015,3 the defendants were granted an option entitling them to purchase CSL’s shares in INNO Capital Management Ltd, being 12 per cent of the shares in that company.4

[3] By call option exercise notice dated October 2017,5 the defendants irrevocably exercised the call option. In that call option exercise notice the defendants nominated either Deloitte or Ernst & Young (EY) to determine the economic equity value of the Shares.

[4] CSL seeks, by way of summary judgment,6 orders for specific performance, requiring the defendants to complete the valuation process and make payment for the Shares.

[5] CSL does not have a signed copy of the Deed and none of the parties produced a signed copy in evidence. CSL thus seeks summary judgment on the basis of an unsigned copy of the Deed.

[6] The defendants say that the unsigned copy is not the final version of the Deed and that the terms of the signed Deed are materially different to the unsigned version produced by CSL.

[7] In addressing the ultimate issue of whether CSL has established that the defendants have no defence,7 I must resolve the following questions:

1      CSL.
2      The Trusts.
3      The Deed.
4      The Shares.
5      The Notice.
6      Under pt 12 of the High Court Rules 2016.
7      High Court Rules, r 12.2(2).

(a)Is the absence of a signed copy of the Deed an evidential deficiency casting real doubt on CSL’s claimed right to specific performance?

(b)Is this an appropriate case for the Court to exercise its residual discretion to decline summary judgment on the basis that discovery is necessary?

(c)Has there been proper confirmation of the appointment of a valuer pursuant to the Notice?

(d)Is the economic equity value under the Deed to be determined at the date of the Notice or at another time?

[8] This judgment also contains my reasons for declining the defendants’ application that I recuse myself on the basis of a reasonable apprehension of bias.

Background facts

[9] In about October 2017, the parties entered…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] NZHC 2137
Decision Date: 17 August 2021

CaseChat Overview and Summary

CSL Limited, a financial management services company, sued the Chow brothers, John and Michael, who acted as trustees for two investment trusts, over the purchase of shares in INNO Capital Management Ltd. CSL sought summary judgment to compel the defendants to complete the valuation process and make payment for the shares in accordance with a Share Option Deed that was executed in 2015. The defendants argued that the unsigned copy of the Deed produced by CSL was not the final version of the Deed and that the terms of the signed Deed were materially different to the unsigned version. Associate Judge Andrew dismissed the defendants' arguments, finding that there was no evidential deficiency casting real doubt on CSL’s claimed right to specific performance and that there was no basis to decline an order for specific performance. The Judge also rejected the defendants’ application that he recuse himself on the basis of a reasonable apprehension of bias. The Judge made an order for specific performance of the defendants’ obligations under the Share Option Deed, including instructing EY to determine the economic equity value of the shares as at the date of the notice of the call option exercise. The defendants were also ordered to pay CSL interest on the economic equity value from 4 January 2018. Leave was granted to the parties to apply in respect of further orders relating to implementation of any of the above orders. The defendants were to pay costs to CSL on a 2B basis plus disbursements.

Orders