ACTIVE PROFIT LTD v. NISSHO IWAI HONG KONG CORPORATION LTD AND OTHERS

ACTIVE PROFIT LTD v. NISSHO IWAI HONG KONG CORPORATION LTD AND OTHERS

The court held the plaintiff's deposits were held on trust (immediate and/or constructive/resulting) and that Nissho Hong Kong and Milemore breached their fiduciary and trust obligations by permitting the Beachshore shares to be transferred back to the vendors and by facilitating the subsequent sale to Sun Hung Kai, thereby depriving Active Profit of its equitable entitlement; Kodera was liable as controller of Milemore and as accessory (knowing assistance/receipt); Cho was liable as constructive trustee/assistant. Remedies include damages and an account of profits based on the Premium Agreement framework.

Citation
ACTIVE PROFIT LTD v. NISSHO IWAI HONG KONG CORPORATION LTD AND OTHERS
Parties
Plaintiff: Active Profit Limited; 1st Defendant: Nissho Iwai Hong Kong Corporation Limited; 2nd Defendant: Milemore Investment Limited; 3rd Defendant: Motoyuki Kodera; 4th Defendant: Yuk Kei Cho (Carlos Cho)
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
30 June 2003
Case Number
HCCL47/1998
Procedural Posture
Commercial Action No.47 of 1998 (court of First Instance) / Judgment (30 June 2003)
Outcome
Judgment for plaintiff. Liability established against 1st and 2nd defendants for breach of trust and fiduciary duty; 3rd defendant liable as principal and accessory; 4th defendant liable as constructive trustee/accessory.
Legal Topics
Breach of Trust, Breach of Fiduciary Duty, Knowing Receipt, Knowing Assistance, Account of Profits, Cancellation of Agreement, Frustration, Implied Terms
Source Language
EN
Equity and Trusts Fiduciary Law Contract Law Property Law Commercial Law Breach of Trust Breach of Fiduciary Duty Knowing Receipt +5 more

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Parties

Active Profit Limited

Plaintiff

Nissho Iwai Hong Kong Corporation Limited

1st Defendant

Milemore Investment Limited

2nd Defendant

Motoyuki Kodera

3rd Defendant

Yuk Kei Cho (Carlos Cho)

4th Defendant

Procedural Posture

Commercial Action No.47 of 1998 (court of First Instance) / Judgment (30 June 2003)

Legal Issues

  1. 1 Whether deposits paid by plaintiff were held on trust
  2. 2 Whether defendants breached fiduciary duties and/or trusts by permitting transfer of Beachshore shares back to vendors and sale to Sun Hung Kai
  3. 3 Whether the Premium Agreement was binding and if it justified cancellation

Ratio Decidendi

The court held the plaintiff's deposits were held on trust (immediate and/or constructive/resulting) and that Nissho Hong Kong and Milemore breached their fiduciary and trust obligations by permitting the Beachshore shares to be transferred back to the vendors and by facilitating the subsequent sale to Sun Hung Kai, thereby depriving Active Profit of its equitable entitlement; Kodera was liable as controller of Milemore and as accessory (knowing assistance/receipt); Cho was liable as constructive trustee/assistant. Remedies include damages and an account of profits based on the Premium Agreement framework.

Court Disposition

Judgment for plaintiff. Liability established against 1st and 2nd defendants for breach of trust and fiduciary duty; 3rd defendant liable as principal and accessory; 4th defendant liable as constructive trustee/accessory.

Orders

  • Liability against Nissho Iwai Hong Kong Corporation Limited and Milemore Investment Limited for breach of trust and fiduciary duty established; damages to be assessed
  • Order for an account of profits to be conducted on the basis of the applicability of the Premium Agreement, with consequential inquiries to determine sums payable to plaintiff