YIP SHIU CHING AND ANOTHER v. WAH TAT FUNDATION & ENGINEERING LTD AND ANOTHER

YIP SHIU CHING AND ANOTHER v. WAH TAT FUNDATION & ENGINEERING LTD AND ANOTHER

On the evidence the court found a binding oral profit‑sharing agreement existed (40% to petitioners, 60% to Mr Ng), that Mr Ng diverted Company receipts to related entities and manipulated the bank mandate to exclude joint control, and that his conduct was just and equitable/unfairly prejudicial; the appropriate remedy was ordering purchase of petitioners' shares with valuation reflecting their profit entitlement and adjustment for unpaid share subscriptions.

Citation
YIP SHIU CHING AND ANOTHER v. WAH TAT FUNDATION & ENGINEERING LTD AND ANOTHER
Parties
1st Petitioner: Yip Shiu Ching; 2nd Petitioner: Kung Cheung Fai; 1st Respondent: Wah Tat Foundation & Engineering Limited; 2nd Respondent: Ng Lee Chin
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
14 July 2005
Case Number
HCCW176/2003
Procedural Posture
Companies (winding Up) / Judgment
Outcome
Order that petitioners' shares be purchased by Mr Ng (buy‑out) with valuation to reflect petitioners' entitlement under the Profit Sharing Agreement; order nisi that costs be borne by Mr Ng
Legal Topics
Winding Up (just and Equitable), Unfairly Prejudicial Conduct, Profit Sharing Agreement, Misappropriation/diversion of Corporate Funds, Bank Mandate and Signatory Authority, Share Valuation and Buy Out
Source Language
EN
Company Law Insolvency Law Equity and Fiduciary Duties Contract Law Banking Law Winding Up (just and Equitable) Unfairly Prejudicial Conduct Profit Sharing Agreement +3 more

Case Brief

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Parties

Yip Shiu Ching

1st Petitioner

Kung Cheung Fai

2nd Petitioner

Wah Tat Foundation & Engineering Limited

1st Respondent

Ng Lee Chin

2nd Respondent

Procedural Posture

Companies (winding Up) / Judgment

Legal Issues

  1. 1 Whether an oral profit‑sharing agreement existed between petitioners and Mr Ng in respect of Project 8840
  2. 2 Whether Mr Ng wrongfully diverted the Companys profits to related entities (NLCN/Falcon)
  3. 3 Whether Account No.2 was to be jointly operated and whether signatory instructions were altered without consent

Ratio Decidendi

On the evidence the court found a binding oral profit‑sharing agreement existed (40% to petitioners, 60% to Mr Ng), that Mr Ng diverted Company receipts to related entities and manipulated the bank mandate to exclude joint control, and that his conduct was just and equitable/unfairly prejudicial; the appropriate remedy was ordering purchase of petitioners' shares with valuation reflecting their profit entitlement and adjustment for unpaid share subscriptions.

Court Disposition

Order that petitioners' shares be purchased by Mr Ng (buy‑out) with valuation to reflect petitioners' entitlement under the Profit Sharing Agreement; order nisi that costs be borne by Mr Ng

Orders

  • Petitioners' shares to be purchased by Mr Ng; purchase price to reflect petitioners' entitlement to 40% of net profits of Project 8840 and adjusted for unpaid share subscription
  • Valuation to be undertaken by a certified public accountant jointly appointed by the parties within 14 days, failing agreement appointment by the president of the Hong Kong Institute of Certified Public Accountants on application of either party