CHAN CHUNG WAI AND OTHERS v. CHEUNG WAI PUI AND OTHERS

CHAN CHUNG WAI AND OTHERS v. CHEUNG WAI PUI AND OTHERS

Master held the court had jurisdiction to grant interim payment in a derivative action and exercised discretion to order payment into the 8th defendant's account with plaintiffs as signatory; accepted plaintiffs' expert methodology and 27.02% gross profit ratio because defendants failed to produce cost and transactional records and thus failed to discharge burden to account; rejected double‑counting objection on the facts and accepted inclusion of goodwill; ordered interim payment of HK$10,170,083 and directed further disclosure and inquiry as per the consent judgment.

Citation
CHAN CHUNG WAI AND OTHERS v. CHEUNG WAI PUI AND OTHERS
Parties
1st Plaintiff: Chan Chung Wai; 2nd Plaintiff: Chan Chung Chun; 3rd Plaintiff: Chan Chung Yin; 4th Plaintiff: Chiu Pui Ching; 1st Defendant: Cheung Wai Pui; 2nd Defendant: Chang Kuo Hsien; 3rd Defendant: Chang Wei Chung; 4th Defendant: Wai Wan Chin; 5th Defendant: Rainbow Come Limited; 6th Defendant: Jin Jiang Trading Co. (H.K.) Ltd.; 7th Defendant: Elegant View Limited; 8th Defendant: Jan Nam Hong Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
13 June 2005
Case Number
HCA8721/1996
Procedural Posture
Derivative Action (company) / Application for Inquiry and Interim Payment (interim Hearing)
Outcome
Application for interim payment granted; interim payment of HK$10,170,083 ordered to be paid into the 8th defendant's account with plaintiffs as signatory; inquiry into full accounts adjourned with directions for further disclosure.
Legal Topics
Derivative Action, Interim Payment (order 29), Account of Profits, Breach of Fiduciary Duty, Expert Accounting Evidence, Intragroup Transaction Elimination (double Counting), Goodwill Valuation
Source Language
EN
Company Law Equity Civil Procedure Accounting Law Derivative Action Interim Payment (order 29) Account of Profits Breach of Fiduciary Duty +3 more

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Parties

Chan Chung Wai

1st Plaintiff

Chan Chung Chun

2nd Plaintiff

Chan Chung Yin

3rd Plaintiff

Chiu Pui Ching

4th Plaintiff

Cheung Wai Pui

1st Defendant

Chang Kuo Hsien

2nd Defendant

Chang Wei Chung

3rd Defendant

Wai Wan Chin

4th Defendant

Rainbow Come Limited

5th Defendant

Jin Jiang Trading Co. (H.K.) Ltd.

6th Defendant

Elegant View Limited

7th Defendant

Jan Nam Hong Limited

8th Defendant

Procedural Posture

Derivative Action (company) / Application for Inquiry and Interim Payment (interim Hearing)

Legal Issues

  1. 1 Whether the court has jurisdiction to order an interim payment in a derivative action to be paid into the company account with the plaintiffs as signatory
  2. 2 Whether Order 29 permits payment into the company account rather than to plaintiffs or into court
  3. 3 Whether the plaintiffs can withdraw funds from the company account

Ratio Decidendi

Master held the court had jurisdiction to grant interim payment in a derivative action and exercised discretion to order payment into the 8th defendant's account with plaintiffs as signatory; accepted plaintiffs' expert methodology and 27.02% gross profit ratio because defendants failed to produce cost and transactional records and thus failed to discharge burden to account; rejected double‑counting objection on the facts and accepted inclusion of goodwill; ordered interim payment of HK$10,170,083 and directed further disclosure and inquiry as per the consent judgment.

Court Disposition

Application for interim payment granted; interim payment of HK$10,170,083 ordered to be paid into the 8th defendant's account with plaintiffs as signatory; inquiry into full accounts adjourned with directions for further disclosure.

Orders

  • Interim payment of HK$10,170,083 (period 1990–2003) to be paid into the 8th defendant's bank account with plaintiffs as one of the signatories
  • Draft order submitted by plaintiffs approved as amended (including directions for payment mechanics and disclosure)