CHINA MEDICAL TECHNOLOGIES, INC (IN LIQUIDATION) AND OTHERS v. WU XIAODONG AND OTHERS

CHINA MEDICAL TECHNOLOGIES, INC (IN LIQUIDATION) AND OTHERS v. WU XIAODONG AND OTHERS

The court held that s276 is procedural and does not create an independent cause of action; Rule 58 mandates that s276 applications be commenced by summons in winding up proceedings, therefore pleading a s276 "claim" in a statement of claim discloses no reasonable cause of action and the relevant paragraphs were struck out and the Plaintiffs' O2 r1 Summons dismissed.

Citation
[2019] HKCFI 2957
Parties
1st Plaintiff (in Liquidation): China Medical Technologies, Inc; 2nd Plaintiff: CMED Technologies Ltd; 3rd Plaintiffs (joint and Several Liquidators of China Medical Technologies, Inc (in Liquidation)): Cosimo Borrelli and Yuen Lai Yee; 1st Defendant: Wu Xiaodong; 2nd Defendant: Samson Tsang Tak Yung; 3rd Defendant: Chen Zhong; 4th Defendant: Zhu Feng (Charles); 5th Defendant (in His Personal Capacity and Formerly Trading as Kam Hing Trading Co): Chong Wing Hip; 6th Defendant: Hao Xiaoqing Allan; 7th Defendant: Supreme Well Investments Limited; 8th Defendant: East Hope International Limited; 9th Defendant: Cheer Link International Limited; 10th Defendant: Innovative Technology Investment Limited; 11th Defendant: Dynamic Sense Limited; 12th Defendant: Time Region Holdings Limited; 13th Defendant (in Her Personal Capacity and as Trustee of the Xiao Qiong Bi Trust and the Alisa Wu Irrevocable Trust): Bi Xiaoqiong; 14th Defendant: Worldpro Investments Limited; 15th Defendant: Long Chart Investments Limited; 16th Defendant: Chavis Investments Limited; 17th Defendant: Sinowell International Investment Limited; 18th Defendant: Chengxuan International Ltd; 19th Defendant: Weixiao Medical Technology Limited; 20th Defendant: WB International Holding Pte Ltd; 21st Defendant: Max Prosper Enterprises Limited; 22nd Defendant: Jun Yun Bi; 23rd Defendant: Global Flash Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
10 December 2019
Case Number
HCA3391/2016
Procedural Posture
Company Winding Up Misfeasance/misapplication (s276) Within Civil Proceedings / Chambers Hearing on Strike Out Summons and Plaintiffs' O2 R1 Summons; Judgment on Applications
Outcome
Parts of the Statement of Claim alleging a s276 "claim" struck out; Plaintiffs' O2 r1 Summons dismissed; costs nisi to 2nd Defendant
Legal Topics
Misfeasance S276, Winding Up, Companies (windingup) Rules R58, Strike Out for Disclosure of No Reasonable Cause of Action
Source Language
EN
Company Law Insolvency Law Civil Procedure Misfeasance S276 Winding Up Companies (windingup) Rules R58 Strike Out for Disclosure of No Reasonable Cause of Action

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Parties

China Medical Technologies, Inc

1st Plaintiff (in Liquidation)

CMED Technologies Ltd

2nd Plaintiff

Cosimo Borrelli and Yuen Lai Yee

3rd Plaintiffs (joint and Several Liquidators of China Medical Technologies, Inc (in Liquidation))

Wu Xiaodong

1st Defendant

Samson Tsang Tak Yung

2nd Defendant

Chen Zhong

3rd Defendant

Zhu Feng (Charles)

4th Defendant

Chong Wing Hip

5th Defendant (in His Personal Capacity and Formerly Trading as Kam Hing Trading Co)

Hao Xiaoqing Allan

6th Defendant

Supreme Well Investments Limited

7th Defendant

East Hope International Limited

8th Defendant

Cheer Link International Limited

9th Defendant

Innovative Technology Investment Limited

10th Defendant

Dynamic Sense Limited

11th Defendant

Time Region Holdings Limited

12th Defendant

Bi Xiaoqiong

13th Defendant (in Her Personal Capacity and as Trustee of the Xiao Qiong Bi Trust and the Alisa Wu Irrevocable Trust)

Worldpro Investments Limited

14th Defendant

Long Chart Investments Limited

15th Defendant

Chavis Investments Limited

16th Defendant

Sinowell International Investment Limited

17th Defendant

Chengxuan International Ltd

18th Defendant

Weixiao Medical Technology Limited

19th Defendant

WB International Holding Pte Ltd

20th Defendant

Max Prosper Enterprises Limited

21st Defendant

Jun Yun Bi

22nd Defendant

Global Flash Limited

23rd Defendant

Procedural Posture

Company Winding Up Misfeasance/misapplication (s276) Within Civil Proceedings / Chambers Hearing on Strike Out Summons and Plaintiffs' O2 R1 Summons; Judgment on Applications

Legal Issues

  1. 1 Whether s276 proceedings must be commenced by summons under Rule 58 in the winding up proceedings or may be pleaded as a cause of action in a High Court action
  2. 2 Whether s276 creates an independent cause of action or is purely procedural
  3. 3 Whether the Plaintiffs' attempt to plead s276 in the statement of claim discloses a reasonable cause of action or constitutes an abuse of process

Ratio Decidendi

The court held that s276 is procedural and does not create an independent cause of action; Rule 58 mandates that s276 applications be commenced by summons in winding up proceedings, therefore pleading a s276 "claim" in a statement of claim discloses no reasonable cause of action and the relevant paragraphs were struck out and the Plaintiffs' O2 r1 Summons dismissed.

Court Disposition

Parts of the Statement of Claim alleging a s276 "claim" struck out; Plaintiffs' O2 r1 Summons dismissed; costs nisi to 2nd Defendant

Orders

  • Strike out paragraphs 11.1, 295, 296, 333.4 and paragraph 5 of the Prayer for Relief insofar as they plead a claim under s276 of the Ordinance (order in terms of paragraph 1 of the 2nd Defendant's Strike-Out Summons)
  • Plaintiffs' Summons dated 8 June 2018 under RHC O2 r1 dismissed insofar as it seeks to cure the manner of commencement of s276 claims