Read the full judgment text of HCA 007392/1985 on BabelCite. This High Court CFI judgment was delivered on 23 April 1986 before Sears J.
Civil procedure – striking out pleadings – Ord 18 r. 19 – limited role of court on striking out applications – only plain and obvious cases justify summary process – fiduciary duty owed by directors – directors occupy a fiduciary position and must account for profits made in or by reason of that fiduciary position – liability arises from the mere fact of a profit being made, regardless of fraud, absence of bona fides, whether the profit would otherwise have gone to the plaintiff, or whether the plaintiff was damaged – constructive trusts – directors as constructive trustees of profits derived from misuse of their position – limitation period for equitable relief – Limitation Ordinance (Cap 347) s.20(1) exempts from any period of limitation an action by a beneficiary under a trust, whether implied or constructive, to recover from the trustee trust property or its proceeds in his possession or previously received and converted to his use – s.4(2) six-year limitation for actions for an account directed at contractual or legal accounting relationships, while s.4(7) preserves the position for equitable relief – statement of claim by the liquidator of Carrian Investments Limited against four defendants (three individual directors and one corporate director) for breach of fiduciary duty through the use of confidential information acquired as directors to purchase and speculate in shares of the plaintiff company – defendants' amended notice of motion to strike out statement of claim on three grounds – first, whether the fourth defendant was a director – held to be a question of fact for the trial judge, not appropriate for summary determination on conflicting affidavit evidence – second, whether paragraph 4 sufficiently particularised breach – held that essential elements (fiduciary position, breach or use of opportunity/knowledge, profit) were properly pleaded and complaint went only to particulars – third, whether the claim was time-barred by the Limitation Ordinance – held that directors in this context stand in the position of constructive trustees and the action to recover trust property or its proceeds falls within s.20(1), so no period of limitation applies – Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134 and Boardman v Phipps [1967] 2 AC 46 followed; Tito v Waddell (1977) 1 Ch 106 considered – amended notice of motion dismissed, statement of claim to stand.
Legal issues: Whether the claim against the fourth defendant should be struck out on the ground that he was not a director · Whether the statement of claim sufficiently particularises breach of fiduciary duty · Whether the claim is time-barred under the Limitation Ordinance
Outcome: Defendants' application to strike out the statement of claim refused; amended notice of motion dismissed in full