FUNG TIN YAU, SUING ON BEHALF OF HIMSELF AS A SHAREHOLDER OF MAXFORTUNE TRADING LTD v. LAI NG NUI AND OTHERS

FUNG TIN YAU, SUING ON BEHALF OF HIMSELF AS A SHAREHOLDER OF MAXFORTUNE TRADING LTD v. LAI NG NUI AND OTHERS

The appeals were dismissed because none of the appellants established that the relevant claims and defences were plainly and obviously unsustainable: the 2078 counterclaim based on assumed fiduciary duties disclosed a reasonable cause of action under the authorities (notably Libertarian and Snell), the 2998-3000 defences raised factual disputes (Withdrawal/Wyse Agreements and Consensus) requiring trial and therefore leave to defend was properly granted, and the derivative actions raised a prima facie case of 'fraud on the minority' so should not be struck out; accordingly summary disposal was inappropriate and the Masters' decisions were upheld.

Citation
[2020] HKCFI 252
Parties
Petitioner; Defendant; Plaintiff; Respondent: Fung Tin Yau; Plaintiff; Defendant: Lai Ng Nui; 1st Respondent; Defendant; 4th Defendant: Fung Tin Shing; 2nd Respondent; Defendant; 5th Defendant: Fung Wing See; 2nd Plaintiff: Fung Wing Yan; 3rd Plaintiff: Fung Wing Yin; 3rd Respondent; Plaintiff; 2nd Defendant: Maxfortune Trading Limited; 3rd Respondent; Plaintiff: Premium Management Limited; Plaintiff; Company Party: Wyse Investment Limited; 3rd Respondent; Company Party: Great Anchor International Limited; 3rd Defendant; Company Party: Samdor Company Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
23 January 2020
Case Number
HCA133/2018
Procedural Posture
Consolidated Companies (winding Up) and Related Shareholder/company Civil Actions / Consolidated Appeals From Masters' Decisions Heard Before the Companies Judge (appeal in High Court)
Outcome
All three sets of appeals dismissed; leave to defend in the O.14 applications upheld; the 2078 counterclaim and derivative actions not struck out and to proceed to trial on disputed facts.
Legal Topics
Winding Up, Derivative Action, Fiduciary Duties, Strike Out (order 18)/summary Judgment (o.14), Duomatic Principle, Estoppel, Constructive Trust, Costs
Source Language
EN
Company Law Equity and Trusts Civil Procedure Insolvency Law Winding Up Derivative Action Fiduciary Duties Strike Out (order 18)/summary Judgment (o.14) +4 more

Case Brief

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Parties

Fung Tin Yau

Petitioner; Defendant; Plaintiff; Respondent

Lai Ng Nui

Plaintiff; Defendant

Fung Tin Shing

1st Respondent; Defendant; 4th Defendant

Fung Wing See

2nd Respondent; Defendant; 5th Defendant

Fung Wing Yan

2nd Plaintiff

Fung Wing Yin

3rd Plaintiff

Maxfortune Trading Limited

3rd Respondent; Plaintiff; 2nd Defendant

Premium Management Limited

3rd Respondent; Plaintiff

Wyse Investment Limited

Plaintiff; Company Party

Great Anchor International Limited

3rd Respondent; Company Party

Samdor Company Limited

3rd Defendant; Company Party

Procedural Posture

Consolidated Companies (winding Up) and Related Shareholder/company Civil Actions / Consolidated Appeals From Masters' Decisions Heard Before the Companies Judge (appeal in High Court)

Legal Issues

  1. 1 Whether the 2078 counterclaim discloses a reasonable cause of action based on assumed fiduciary duties and whether it is frivolous/vexatious or abuse
  2. 2 Whether summary judgment orders (HCA 2998-3000) should have been granted or whether leave to defend should be allowed based on Withdrawal/Wyse Agreements and Consensus
  3. 3 Whether common law derivative actions (HCA 133 & 136) should be struck out for alternative remedy, lack of fraud on the minority, or lack of clean hands

Ratio Decidendi

The appeals were dismissed because none of the appellants established that the relevant claims and defences were plainly and obviously unsustainable: the 2078 counterclaim based on assumed fiduciary duties disclosed a reasonable cause of action under the authorities (notably Libertarian and Snell), the 2998-3000 defences raised factual disputes (Withdrawal/Wyse Agreements and Consensus) requiring trial and therefore leave to defend was properly granted, and the derivative actions raised a prima facie case of 'fraud on the minority' so should not be struck out; accordingly summary disposal was inappropriate and the Masters' decisions were upheld.

Court Disposition

All three sets of appeals dismissed; leave to defend in the O.14 applications upheld; the 2078 counterclaim and derivative actions not struck out and to proceed to trial on disputed facts.

Orders

  • Costs ordered nisi in favour of the Respondent for all three sets of appeals to be taxed if not agreed
  • Costs of the 2078 Strike Out appeal to be borne by Lai Ng Nui and Fung Wing See