Read the full judgment text of HCCW 170/2016, HCCW 171/2016, HCCW 172/2016, HCA 2225/2016, HCA 2078/2017, HCA 2998/2017, HCA 2999/2017, HCA 3000/2017, HCA 133/2018, HCA 136/2018, HCA 1291/2018 on BabelCite. This Court of First Instance judgment was delivered on 23 January 2020 before K Yeung J.
Companies – winding-up – just and equitable ground – consolidated proceedings – strike out – summary judgment – common law derivative action – assumption of fiduciary duties – fraud on minority – alternative remedy – Costs in Civil Proceedings – Company law – family dispute over deceased patriarch's offshore companies – whether ad hoc fiduciary duties assumed by family members to liquidate Asiatic Resources and Luen Fat Investments and distribute proceeds in agreed percentages (1/7 to respondent) under Fung Senior's Trust Arrangement – whether counterclaim discloses reasonable cause of action on basis of assumption of fiduciary duties rather than express trust – striking out principles – disputed facts taken in favour of party sought to be struck out – plain and obvious test – application of Libertarian Investments Ltd v Hall (2013) 16 HKCFAR 681 – transfer or vesting of trust assets not a precondition for fiduciary duty – Snell's Equity §§7-005 to 7-006 – whether 2078 Counterclaim frivolous or vexatious by reason of alleged inconsistency with pleadings in HCA 2225 and HCCW 170 – audio transcripts disclosing parts referable to Agreed Percentages – whether summary judgment under O.14 should be granted for repayment of withdrawals from Maxfortune, Wyse and Premium – disputed oral family arrangement – alleged 'Consensus' under which children could only withdraw with Madam Lai's consent versus alleged 'Withdrawal Agreement' and 'Wyse Agreement' allowing proportionate withdrawals – Duomatic principle – Re Duomatic Ltd [1969] 2 Ch 365 – estoppel – Moulin Global Eyecare and First Laser – informal management of family companies with no audited accounts or board minutes – credibility of witnesses fit for trial – common law derivative action under Foss v Harbottle exceptions – whether winding-up petitions constitute an alternative remedy barring derivative action – Re Chime Corp Ltd (2004) 7 HKCFAR 546 and Waddington Ltd v Chan Chun Hoo (2008) 11 HKCFAR 370 – unfair prejudice proceedings and derivative actions serve different functions – whether 'fraud on the minority' exception established – transfers of US$1,900,000 from Maxfortune and HK$20,000,000 from Samdor to Madam Lai's personal account – whether breach of fiduciary duty qualifies as 'fraud' – Daniels v Daniels [1978] Ch 406 – ratification by wrongdoers ineffective – Cook v Deeks [1916] 1 AC 554 – refusal to account – clean hands defence rejected – prima facie case sufficient for trial – Orders: All 3 sets of appeals dismissed; unconditional leave to defend granted in HCA 2998-3000/2017; costs nisi to Respondent Fung Tin Yau; costs of 2078 appeal borne by Madam Lai and Jenny; costs of 2998-3000 appeals borne by Maxfortune, Wyse and Premium; costs of 133/136 appeals borne by Madam Lai, Jenny and Andy; certificate for two counsel granted (save 20 May 2019 hearing).
Legal issues: Whether the 2078 Counterclaim discloses a reasonable cause of action based on assumption of fiduciary duties · Whether the 2078 Counterclaim is frivolous, vexatious or an abuse of process · Whether summary judgment under O.14 should be granted in HCA 2998-3000 · Whether the Alternative Remedy Ground requires striking out the derivative actions in HCA 133 & 136 · Whether a prima facie case of 'fraud on the minority' is established for the derivative actions in HCA 133 & 136 · Whether the Clean Hands Ground requires striking out the derivative actions in HCA 133 & 136
Outcome: All three sets of appeals dismissed. The 2078 Strike Out Summons appeal, the 2998-3000 O.14 Summonses appeal, and the 133/136 Strike Out Summonses appeal were each dismissed, with the Respondent (Fung Tin Yau) succeeding on all three.
Cited by 33 cases · Cites 6 cases