Ann: Unsolicited Approach to Greentech, page-25

Litigation Background...
22 Greentech Technology International LimitedAnnual Report 2022
MANAGEMENT DISCUSSION AND ANALYSIS(CONTINUED)
LITIGATION
HCA 1357/2011
The legal proceedings involves the disputes regarding the sale and purchase agreement dated 13 July 2010 (“Parksong
S&P Agreement”) in relation to the sale and purchase of the entire issued share capital of Parksong Mining and Resource
Recycling Limited (“Parksong”) signed between Mr. Chan Kon Fung (“Mr. Chan”) as the vendor, Gallop Pioneer Limited
(“GPL”) as the purchaser and the Company being GPL’s parent company as the guarantor. The completion of the
acquisition of Parksong took place on 4 March 2011 (“Completion Date”).
GPL and the Company were named as 1st Defendant and 2nd Defendant in a writ of summons with a Statement of Claim
dated 11 August 2011 filed by Mr. Chan under High Court Action number 1357 of 2011 (“HCA 1357 Action”) (which was
subsequently amended).
Under the Statement of Claim, Mr. Chan alleged that GPL and the Company have breached the Parksong S&P Agreement
by failing to make payment of AUD15,143,422.44 (equivalent to approximately HK$85,736,000), being the alleged amount
of the “Receivables” which Mr. Chan alleged is entitled under the Parksong S&P Agreement (“Mr. Chan’s Claim”).
GPL and the Company denied Mr. Chan’s Claim and have made counterclaim against Mr. Chan for his breach of the
respective terms and/or guarantees and/or warranties in the Parksong S&P Agreement. GPL and the Company filed their
Defence and Counterclaim on 11 October 2011 which has subsequently been amended (“GPL and the Company D&C”).
Under GPL and the Company D&C, GPL and the Company sought to, amongst others, claim against Mr. Chan by way of
counterclaim and set-off and stated that GPL has suffered loss and damage by reason of the following: (1) Mr. Chan has
failed to make a payment to GPL in settlement of payables under the Parksong S&P Agreement (“Payables”) (apart from
the amount of AUD476,393 under (2) below); (2) GPL and the Company are disputing that Mr. Chan is entitled to claim
the amount of AUD3,048,387.10 forming part of the Receivables and claim Mr. Chan for the sum of AUD476,393 forming
part of the Payables in respect of cut-off of called cash payment as at the Completion Date (“Called Sum Issue”); (3) Mr.
Chan has prepared 3 sets of documents which showed a conflicting picture as to who was the owner of an advanced
sum of AUD16.3 million (“AUD16.3 Million Issue”) to Yunnan Tin Hong Kong (Holding) Group Co. Ltd. (“Yunnan Tin HK”),
a majority-owned subsidiary of Parksong, before the completion of the acquisition; and/or further the said advanced sum
of AUD16.3 million may be an amount owed to one of its shareholder, Yunnan Tin Group (Holding) Company Limited
(“Yunnan Tin PRC”), by Yunnan Tin HK which is not recorded in the relevant accounts (and thus amounting to an additional
amount under the Payables (as defined above)) which Mr. Chan is liable to compensate GPL for the said advanced sum of
AUD16.3 million; (4) Mr. Chan unilaterally caused an Australian subsidiary of Yunnan Tin HK, YT Parksong Australia Holding
Pty Limited, to enter into a tin concentrate package purchase underwriting agreement and a management agreement
with Yunnan Tin Australia TDK Resources Pty Ltd. for the period of the life of the mine on 1 December 2010, without the
consent of GPL (“December Agreement Issue”); and (5) the claimed sum of AUD5,496,266 due to production shortfall of
contained tin in concentrate from the mine in Australia for the first anniversary after the Completion Date and compensation
for each of the second and third anniversaries (“Production Shortfall Issue”). On 23 December 2021, GPL and the Company
gave notice to Mr. Chan that GPL shall discontinue its counterclaim on the December Agreement Issue. Therefore, the
present claims of GPL and the Company are the respective sums of AUD4,728,558, AUD476,393, AUD16,300,000,
AUD5,496,266, totaling AUD27,001,217 (approximately of HK$152,870,000 in total) and damages etc.
22 Greentech Technology International Limited
Annual Report 2022
MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)
Save and except that Mr. Chan has admitted in his Reply and Defence to Counterclaim dated 9 December 2011 and
subsequently amended (“R&DC”) that, amongst others, (1) the third set of documents as pleaded in GPL and the Company
D&C reflected the correct position and understanding of Mr. Chan, GPL and the Company in making the Parksong S&P
Agreement, and (2) that the Payables due under the Parksong S&P Agreement was at the sum of AUD3,244,520.24, Mr.
Chan has denied the claims made in GPL and the Company D&C.
For the Production Shortfall Issue, compensation is based on Mr. Chan’s production guarantee of 6,500 tonnes of
contained tin in concentrate for each of the three anniversaries from the Completion Date under the Parksong S&P
Agreement. The actual figures of tin production shortfall were confirmed to be approximately 1,520.8 tonnes, 340.6 tonnes
and 487.5 tonnes (totaling 2,348.9 tonnes). GPL stated the claim for compensation for the 3-anniversary production
shortfall is in the sum of approximately AUD5,496,266 (approximately HK$31,118,000).
For the AUD16.3 Million Issue, an application for joinder of parties to engage Yunnan Tin PRC and Yunnan Tin HK was
made in July 2014. By a court order dated 19 December 2017, Yunnan Tin PRC and Yunnan Tin HK were joined into
the HCA1357 Action as 3rd Defendant and 4th Defendant. Subsequently on 19 March 2018, Yunnan Tin PRC served its
Defence and Counterclaim (which was amended on 26 July 2018) in HCA 1357 Action (“Yunnan Tin PRC D&C”) under
which Yunnan Tin PRC counterclaims against each of Mr. Chan, Parksong, Yunnan Tin HK and GPL for damages and/
or the sum of AUD16.3 million and/or to join in a re-assignment of the sum of AUD16.3 million to Yunnan Tin PRC and/or
rectification of accounts of Yunnan Tin HK to recognise the sum of AUD16.3 million as being due to Yunnan Tin PRC. From
May 2018 to March 2019, Mr. Chan, Parksong, Yunnan Tin HK and GPL also filed its respective defence(s) to Yunnan Tin
PRC’s counterclaim; Parksong, Yunnan Tin HK and GPL also made further counterclaims against Mr. Chan.
Further, an application for expert evidence on the AUD16.3 Million Issue, Called Sum Issue and Production Shortfall Issue
was made by GPL and the Company in August 2014. Expert evidence on AUD16.3 Million Issue, Called Sum Issue,
Production Shortfall Issue was made by GPL and the Company and Mr. Chan. Yunnan Tin PRC also prepared expert report
on AUD16.3 Million Issue in September 2020. Joint Report/Statement by the experts were also made in respect of these
issues in April 2021.
A hearing of case management conference took place on 18 October 2021 and a direction was made to set the case down
for trial with 41 days reserved which shall commence on 6 May 2024.
Mr. Chan and GPL and the Company attended a mediation on 16 August 2012 in relation to the disputes in the legal
proceedings. In or about December 2021, GPL and the Company attempted mediation with Mr. Chan but Mr. Chan
indicated that he did not wish to do mediation again at that moment and might re-consider the same should there be
change of circumstances. At present, no settlement has been reached by the parties. The parties are proceeding with the
legal proceedings
MANAGEMENT DISCUSSION AND ANALYSIS(CONTINUED)
HCA 3132/2016
A writ of summons with general endorsements under High Court Action number 3132/2016 (“HCA 3132 Action”) was
issued by Yunnan Tin PRC against Parksong, Yunnan Tin HK and Mr. Chan on 30 November 2016. Under HCA 3132
Action, Yunnan Tin PRC has made various claims which relates to the AUD16.3 Million Issue. The writ of summons was
eventually served in November 2017. At the hearing on 19 December 2017 under HCA 1357 Action, both Mr. Chan and
Yunnan Tin PRC indicated their understanding that the matters under HCA 3132 Action shall be more conveniently dealt
with under HCA 1357 Action and it indicated that HCA 3132 Action should be discontinued in due course. On 10 April
2019, order was given by the Court that HCA 3132 Action be stayed pending the determination of all the disputes in HCA
1357 Action.
HCA 492/2017
By an amended writ of summons dated 3 March 2017, the Company, GPL, Parksong and Yunnan Tin HK as 4 plaintiffs
have issued the writ with general endorsements under High Court Action number 492 of 2017 (“HCA 492 Action”) under
which, amongst others, GPL and the Company made various claims against Mr. Chan as defendant including a declaration
that Mr. Chan shall indemnify GPL and the Company for damages and loss suffered as a consequence of the claims of
Yunnan Tin PRC under HCA 3132 Action and for the sum of AUD16.3 million for breach of the Parksong S&P Agreement.
Under HCA 492 Action, Parksong and Yunnan Tin HK have also, without prejudice to any defence or counterclaim they may
have against Yunnan Tin PRC, made claims against Mr. Chan as defendant for breach of fiduciary duty/director’s duty while
Mr. Chan was acting as a director of Parksong and Yunnan Tin HK for, amongst others, matters arising from HCA 3132
Action. On 13 March 2018, Mr. Chan’s legal advisor acknowledged service to the amended writ of summons of HCA 492
Action. In March 2018, the plaintiffs made an application for extension to file a full statement of claim and the matter has
been adjourned to be heard for directions at the hearing on 10 April 2019. It is intended that the matters under HCA 492
Action shall be dealt with under HCA 1357 Action. On 10 April 2019, order was given by the Court that HCA 492 Action be
stayed pending the determination of all the disputes in HCA 1357 Action.