BASAB INC AND ANOTHER v. SUPERB GLORY HOLDINGS LTD AND OTHERS

BASAB INC AND ANOTHER v. SUPERB GLORY HOLDINGS LTD AND OTHERS

The court struck out the plaintiffs' claims against the 1st and 2nd defendants because the losses alleged derive from the diminution of Accufit's interest (the sale at undervalue of KHL shares) and are therefore reflective of the company's loss; the same causes of action were available to Accufit on the pleaded facts, so the plaintiffs' personal claims are barred by the reflective loss principle and must be dismissed.

Citation
BASAB INC AND ANOTHER v. SUPERB GLORY HOLDINGS LTD AND OTHERS
Parties
1st Plaintiff: BASAB INC.; 2nd Plaintiff: HUI KING CHUN; 1st Defendant: SUPERB GLORY HOLDINGS LIMITED; 2nd Defendant: CHEN LIHUA; 3rd Defendant: FOK HEI YU; 4th Defendant: BATCHELOR, JOHN HOWARD; 5th Defendant: DOUBLE KEY INTERNATIONAL LIMITED; 6th Defendant: CHENG HUNG MUI; 7th Defendant: ZHANG XIAOFENG
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
4 December 2014
Case Number
HCA6/2014
Procedural Posture
Civil Strike Out Application / Hearing and Judgment on Strike Out Application (interlocutory)
Outcome
Plaintiffs' Statement of Claim against the 1st and 2nd defendants struck out; action dismissed as against the 1st and 2nd defendants
Legal Topics
Reflective Loss, Derivative Action, Debenture, Receivership, Breach of Duty, Conspiracy, Strike Out Under Order 18 Rule 19, Abuse of Process, Costs
Source Language
EN
Company Law Equity Civil Procedure Tort Insolvency/receivership Reflective Loss Derivative Action Debenture +6 more

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Parties

BASAB INC.

1st Plaintiff

HUI KING CHUN

2nd Plaintiff

SUPERB GLORY HOLDINGS LIMITED

1st Defendant

CHEN LIHUA

2nd Defendant

FOK HEI YU

3rd Defendant

BATCHELOR, JOHN HOWARD

4th Defendant

DOUBLE KEY INTERNATIONAL LIMITED

5th Defendant

CHENG HUNG MUI

6th Defendant

ZHANG XIAOFENG

7th Defendant

Procedural Posture

Civil Strike Out Application / Hearing and Judgment on Strike Out Application (interlocutory)

Legal Issues

  1. 1 Whether the plaintiffs' claims are barred by the no reflective loss principle
  2. 2 Whether the 1st defendant owed duties to the plaintiffs in relation to the Receivers' sale of KHL shares
  3. 3 Whether the conspiracy claim is maintainable or available to the company

Ratio Decidendi

The court struck out the plaintiffs' claims against the 1st and 2nd defendants because the losses alleged derive from the diminution of Accufit's interest (the sale at undervalue of KHL shares) and are therefore reflective of the company's loss; the same causes of action were available to Accufit on the pleaded facts, so the plaintiffs' personal claims are barred by the reflective loss principle and must be dismissed.

Court Disposition

Plaintiffs' Statement of Claim against the 1st and 2nd defendants struck out; action dismissed as against the 1st and 2nd defendants

Orders

  • Statement of Claim filed 18 March 2014 as against the 1st and 2nd defendants struck out
  • This action, as against the 1st and 2nd defendants, dismissed