RE BONDWOOD DEVELOPMENT LTD.

RE BONDWOOD DEVELOPMENT LTD.

The court found on the balance of probabilities that Mr. Fung had excluded other shareholders, failed to produce proper accounts, diverted substantial sums to related companies and acted fraudulently; his conduct amounted to oppression under s.168A. The court granted injunctive relief restraining Mr. Fung and his companies from managing Bondwood, ordered discovery and tracing of related companies' records, appointed two independent managers (Daniel Kwok and Lawrance Chung) to run and reconstruct the business and entertain claims for rectification of the share register, and awarded costs personally against Mr. Fung on a common fund basis.

Citation
RE BONDWOOD DEVELOPMENT LTD.
Parties
Petitioner: Mutual Power Ltd.; Petitioner: Mutualbest Ltd.; Petitioner: Trade Empire Ltd.; Respondent (company): Bondwood Development Limited (No.224903); Respondent (de Facto Controller): Anthony T.S. Fung (Fung Tak Shing)
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
15 November 1989
Case Number
HCMP1100/1989
Procedural Posture
Section 168 a Petition (companies Ordinance Cap.32) / Final Judgment (high Court)
Outcome
Petition granted in part: injunctions and managerial and discovery relief granted; costs awarded against Mr. Fung personally
Legal Topics
Oppression of Minority Shareholders, Appointment of Manager/receiver, Discovery and Tracing of Assets, Rectification of Share Register, Costs on Common Fund Basis
Source Language
EN
Company Law Corporate Governance Commercial Law Civil Fraud Injunctions and Equitable Relief Oppression of Minority Shareholders Appointment of Manager/receiver Discovery and Tracing of Assets +2 more

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Parties

Mutual Power Ltd.

Petitioner

Mutualbest Ltd.

Petitioner

Trade Empire Ltd.

Petitioner

Bondwood Development Limited (No.224903)

Respondent (company)

Anthony T.S. Fung (Fung Tak Shing)

Respondent (de Facto Controller)

Procedural Posture

Section 168 a Petition (companies Ordinance Cap.32) / Final Judgment (high Court)

Legal Issues

  1. 1 Whether conduct of Mr. Fung constituted oppression under s.168A
  2. 2 Whether alleged share subscriptions by petitioners were paid and should be reflected on register
  3. 3 Whether capitalisation had been fraudulently increased and assets diverted to related companies

Ratio Decidendi

The court found on the balance of probabilities that Mr. Fung had excluded other shareholders, failed to produce proper accounts, diverted substantial sums to related companies and acted fraudulently; his conduct amounted to oppression under s.168A. The court granted injunctive relief restraining Mr. Fung and his companies from managing Bondwood, ordered discovery and tracing of related companies' records, appointed two independent managers (Daniel Kwok and Lawrance Chung) to run and reconstruct the business and entertain claims for rectification of the share register, and awarded costs personally against Mr. Fung on a common fund basis.

Court Disposition

Petition granted in part: injunctions and managerial and discovery relief granted; costs awarded against Mr. Fung personally

Orders

  • Injunction restraining Mr. Fung and companies he controls from exercising any role in the management or affairs of Bondwood Development Ltd.
  • Appointment of Mr. Daniel Kwok and Mr. Lawrance Chung (public accountants) as managers to manage the affairs of the company and to have full access to records.