CHINA FORESTRY HOLDINGS CO LTD (in official liquidation) v. TOP WISDOM OVERSEAS HOLDINGS LTD AND ANOTHER

CHINA FORESTRY HOLDINGS CO LTD (in official liquidation) v. TOP WISDOM OVERSEAS HOLDINGS LTD AND ANOTHER

The application to strike out was dismissed: in light of FHR and authorities the plaintiff's proprietary claim over the proceeds of the director's sale of shares was at least arguable and not plainly unsustainable; Sinclair does not conclusively preclude such a proprietary remedy and alleged regulatory remedies under the SFO are irrelevant to the strike-out threshold.

Citation
[2021] HKCFI 2761
Parties
Plaintiff (in Official Liquidation): China Forestry Holdings Co Limited; 1st Defendant: Top Wisdom Overseas Holdings Limited; 2nd Defendant: Li Han Chun
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
21 September 2021
Case Number
HCA1089/2016
Procedural Posture
Civil Proprietary/constructive Trust Claim in Liquidation / Interlocutory Strike Out Application (paragraph 1 of Defendants' Summons Dated 9 July 2018)
Outcome
Paragraph 1 of the Defendants' summons dismissed
Legal Topics
Constructive Trust, Proprietary Remedies, Strike Out, Insider Dealing, Secret Commission, Competing Regulatory Remedies
Source Language
EN
Equity Company Law Fiduciary Duties Securities Law Civil Procedure Constructive Trust Proprietary Remedies Strike Out +3 more

Case Brief

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Parties

China Forestry Holdings Co Limited

Plaintiff (in Official Liquidation)

Top Wisdom Overseas Holdings Limited

1st Defendant

Li Han Chun

2nd Defendant

Procedural Posture

Civil Proprietary/constructive Trust Claim in Liquidation / Interlocutory Strike Out Application (paragraph 1 of Defendants' Summons Dated 9 July 2018)

Legal Issues

  1. 1 Whether a constructive trust can be imposed on proceeds of a director's sale of his own shares obtained through breach of fiduciary duty
  2. 2 Whether the Statement of Claim discloses a reasonable cause of action and should be struck out as plainly unsustainable
  3. 3 Interaction between proprietary remedies in equity and statutory remedies under the Securities and Futures Ordinance (SFO)

Ratio Decidendi

The application to strike out was dismissed: in light of FHR and authorities the plaintiff's proprietary claim over the proceeds of the director's sale of shares was at least arguable and not plainly unsustainable; Sinclair does not conclusively preclude such a proprietary remedy and alleged regulatory remedies under the SFO are irrelevant to the strike-out threshold.

Court Disposition

Paragraph 1 of the Defendants' summons dismissed

Orders

  • Paragraph 1 of the Defendants' summons dated 9 July 2018 dismissed
  • Order nisi that costs of and occasioned by the application be to the Plaintiff, to be taxed if not agreed, and paid by the Defendants forthwith, certificate for Leading Counsel