YAN HOW YEE v. YU KIN SANG PAUL AND OTHERS

YAN HOW YEE v. YU KIN SANG PAUL AND OTHERS

The court held that a defendant in a derivative action cannot rely on Order 15 rules 2 or 3 to lodge a counterclaim against the company on whose behalf the derivative claim is brought because the company is a nominal defendant and cannot be treated as the plaintiff; additionally the pleaded counterclaim disclosed no...

Source-derived case information.

Citation
YAN HOW YEE v. YU KIN SANG PAUL AND OTHERS
Parties
Plaintiff/respondent: Madam Yan; 1st Defendant/appellant: Mr Yu; 6th Defendant (nominal Defendant): Haywood; Defendant: 2nd Defendant; Defendant: 3rd Defendant; Defendant: 4th Defendant; Defendant: 5th Defendant
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
4 November 2009
Case Number
HCA1069/2008
Procedural Posture
Derivative Action (shareholder Derivative) / Interlocutory Appeal Against Striking Out of Counterclaim
Outcome
Appeal dismissed; counterclaim struck out
Legal Topics
Derivative Action, Counterclaim, Order 15 Rule 2, Order 15 Rule 3, Jurisdiction, Striking Out, Costs
Source Language
en
Company Law Civil Procedure Equity Restitution Corporate Governance Derivative Action Counterclaim Order 15 Rule 2 +4 more

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Parties

Madam Yan

Plaintiff/respondent

Mr Yu

1st Defendant/appellant

Haywood

6th Defendant (nominal Defendant)

2nd Defendant

Defendant

3rd Defendant

Defendant

4th Defendant

Defendant

5th Defendant

Defendant

Procedural Posture

Derivative Action (shareholder Derivative) / Interlocutory Appeal Against Striking Out of Counterclaim

Legal Issues

  1. 1 Whether a defendant in a derivative action can counterclaim against the company on whose behalf the claim is made under Order 15 rule 2 or 3
  2. 2 Whether the pleaded counterclaim discloses any reasonable cause of action
  3. 3 Whether, if maintainable, the counterclaim should be tried together with or separately from the derivative claim (Order 15 rule 5(2))

Ratio Decidendi

The court held that a defendant in a derivative action cannot rely on Order 15 rules 2 or 3 to lodge a counterclaim against the company on whose behalf the derivative claim is brought because the company is a nominal defendant and cannot be treated as the plaintiff; additionally the pleaded counterclaim disclosed no reasonable cause of action since there was no allegation of authority, ratification or compulsion for the payment to the creditor; accordingly the appeal was dismissed and the counterclaim remains struck out.

Court Disposition

Appeal dismissed; counterclaim struck out

Orders

  • Appeal dismissed
  • Order nisi that the 1st Defendant (Mr Yu) do forthwith pay the Plaintiff (Madam Yan) the costs of and occasioned by this appeal to be taxed if not agreed