PREMIUM MANAGEMENT LTD v. FUNG TIN YAU

PREMIUM MANAGEMENT LTD v. FUNG TIN YAU

The Court dismissed all three sets of appeals: the counterclaim based on assumed fiduciary duties disclosed a reasonable cause of action and was not plainly unsustainable; disputed facts and credibility issues precluded strike out or summary judgment and justified unconditional leave to defend; a prima facie case of fraud on the minority existed in respect of the transfers to the director's personal account, so the derivative claims were not struck out. Accordingly the interlocutory decisions below were upheld and appeals dismissed.

Citation
[2020] HKCFI 252
Parties
Petitioner / Plaintiff / Defendant (various Consolidated Actions): Fung Tin Yau; 1st Respondent / Defendant: Fung Tin Shing; 2nd Respondent / Defendant: Fung Wing See; Plaintiff / 1st Plaintiff: Lai Ng Nui; 2nd Plaintiff: Fung Wing Yan; 3rd Plaintiff: Fung Wing Yin; 3rd Respondent / Company (winding Up Petition): Great Anchor International Limited; 3rd Respondent / Plaintiff / Company: Maxfortune Trading Limited; 3rd Respondent / Plaintiff / Company: Premium Management Limited; Plaintiff / Company: Wyse Investment Limited; Defendant / Company: Samdor Company Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
23 January 2020
Case Number
HCA3000/2017
Procedural Posture
Consolidated Interlocutory Appeals in Companies (winding Up) and Related Civil Actions / Appeal From Masters' Decisions on Strike Out and Order 14 (summary Judgment) Applications; Consolidated Hearing in Chambers Before Companies Judge
Outcome
All three sets of appeals dismissed
Legal Topics
Derivative Actions, Fiduciary Duties (ad Hoc), Strike Out (order 18), Summary Judgment (order 14), Duomatic Principle, Estoppel, Fraud on the Minority / Foss V Harbottle Exception
Source Language
EN
Company Law Equity and Trusts Civil Procedure Insolvency Law Derivative Actions Fiduciary Duties (ad Hoc) Strike Out (order 18) Summary Judgment (order 14) +3 more

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Parties

Fung Tin Yau

Petitioner / Plaintiff / Defendant (various Consolidated Actions)

Fung Tin Shing

1st Respondent / Defendant

Fung Wing See

2nd Respondent / Defendant

Lai Ng Nui

Plaintiff / 1st Plaintiff

Fung Wing Yan

2nd Plaintiff

Fung Wing Yin

3rd Plaintiff

Great Anchor International Limited

3rd Respondent / Company (winding Up Petition)

Maxfortune Trading Limited

3rd Respondent / Plaintiff / Company

Premium Management Limited

3rd Respondent / Plaintiff / Company

Wyse Investment Limited

Plaintiff / Company

Samdor Company Limited

Defendant / Company

Procedural Posture

Consolidated Interlocutory Appeals in Companies (winding Up) and Related Civil Actions / Appeal From Masters' Decisions on Strike Out and Order 14 (summary Judgment) Applications; Consolidated Hearing in Chambers Before Companies Judge

Legal Issues

  1. 1 Whether counterclaim based on assumption of fiduciary duties discloses reasonable cause of action and should be struck out
  2. 2 Whether summary judgment (O.14) was properly refused and whether leave to defend should be conditional
  3. 3 Whether common law derivative actions (multiple derivative) should be struck out for alternative remedy, absence of fraud on minority, or plaintiff's unclean hands

Ratio Decidendi

The Court dismissed all three sets of appeals: the counterclaim based on assumed fiduciary duties disclosed a reasonable cause of action and was not plainly unsustainable; disputed facts and credibility issues precluded strike out or summary judgment and justified unconditional leave to defend; a prima facie case of fraud on the minority existed in respect of the transfers to the director's personal account, so the derivative claims were not struck out. Accordingly the interlocutory decisions below were upheld and appeals dismissed.

Court Disposition

All three sets of appeals dismissed

Orders

  • Appeals dismissed
  • Costs nisi in favour of Respondent for all 3 sets of appeals to be taxed if not agreed; costs borne respectively by named appellants for each set as specified in judgment