CHEN HA PING HEPBURN also known as CHEN HA PING AND ANOTHER v. LOONG WAN INVESTMENTS LTD AND ANOTHER

CHEN HA PING HEPBURN also known as CHEN HA PING AND ANOTHER v. LOONG WAN INVESTMENTS LTD AND ANOTHER

Leave to pursue derivative claims was granted in respect of the Misappropriation Issue against Daniel for sums belonging to LS and LW because Daniel was in possession of company funds, no valid defence of beneficial ownership of the Loans or lawful set-off was established, the Dividends Issue was resolved by Daniel's undertaking and the Loans Issue was withdrawn by applicants (to be litigated in a separate action by TK); expert reports were admissible by affidavit in the circumstances and costs were apportioned as set out by the court.

Citation
CHEN HA PING HEPBURN also known as CHEN HA PING AND ANOTHER v. LOONG WAN INVESTMENTS LTD AND ANOTHER
Parties
1st Applicant: CHEN HA PING HEPBURN; 2nd Applicant: CHEN TING HOI; 1st Respondent (hcmp 1380/2013): LOONG SAN INVESTMENT COMPANY LIMITED; 1st Respondent (hcmp 1381/2013): LOONG WAN INVESTMENTS LIMITED; 1st Respondent (hcmp 1383/2013): LEELOONG INVESTMENT COMPANY LIMITED; 2nd Respondent: CHEN TING SAN DANIEL
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
30 April 2014
Case Number
HCMP1381/2013
Procedural Posture
Application for Leave to Commence Statutory Derivative Actions Under Companies Ordinance S168 BC / Decision on Applications (reasons for Judgment)
Outcome
Partially granted and partially resolved: leave granted for derivative actions in respect of misappropriation for LS and LW; dividends matter resolved by undertaking; loans issue withdrawn by applicants and not determined here.
Legal Topics
Derivative Action, Misappropriation, Beneficial Ownership of Loans, Set Off, Admissibility of Expert Reports, Costs Orders, Discovery
Source Language
EN
Company Law Corporate Governance Civil Procedure Fiduciary Duties Evidence Derivative Action Misappropriation Beneficial Ownership of Loans +4 more

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Parties

CHEN HA PING HEPBURN

1st Applicant

CHEN TING HOI

2nd Applicant

LOONG SAN INVESTMENT COMPANY LIMITED

1st Respondent (hcmp 1380/2013)

LOONG WAN INVESTMENTS LIMITED

1st Respondent (hcmp 1381/2013)

LEELOONG INVESTMENT COMPANY LIMITED

1st Respondent (hcmp 1383/2013)

CHEN TING SAN DANIEL

2nd Respondent

Procedural Posture

Application for Leave to Commence Statutory Derivative Actions Under Companies Ordinance S168 BC / Decision on Applications (reasons for Judgment)

Legal Issues

  1. 1 Whether expert accountant reports without an O 38 r 37C declaration were admissible
  2. 2 Whether leave should be granted to bring derivative claims in respect of alleged misappropriation
  3. 3 Whether alleged loans recorded in company books were beneficially owned by Daniel or trustee for TK and whether companies should sue to challenge entries

Ratio Decidendi

Leave to pursue derivative claims was granted in respect of the Misappropriation Issue against Daniel for sums belonging to LS and LW because Daniel was in possession of company funds, no valid defence of beneficial ownership of the Loans or lawful set-off was established, the Dividends Issue was resolved by Daniel's undertaking and the Loans Issue was withdrawn by applicants (to be litigated in a separate action by TK); expert reports were admissible by affidavit in the circumstances and costs were apportioned as set out by the court.

Court Disposition

Partially granted and partially resolved: leave granted for derivative actions in respect of misappropriation for LS and LW; dividends matter resolved by undertaking; loans issue withdrawn by applicants and not determined here.

Orders

  • Leave granted to 1st and 2nd applicants to commence derivative actions on behalf of Loong San Investment Co Ltd and Loong Wan Investments Ltd in respect of the misappropriation of HK$11,375,108
  • Costs regarding the Dividends Issue: Daniel to pay 25% of total costs incurred up to and including 10 April 2014, to be taxed if not agreed