LEE TAK (or TUCK) YAN AND OTHERS v. THE PRUDENTIAL ENTERPRISES LTD AND OTHERS

LEE TAK (or TUCK) YAN AND OTHERS v. THE PRUDENTIAL ENTERPRISES LTD AND OTHERS

The court struck out the 2nd defendant's counterclaim and the Contribution and Amended Third Party Notices because the pleadings failed to disclose a reasonable cause of action: the counterclaim did not establish duties on the executors to investigate the accountant's valuation nor plead knowledge of impropriety; the 2nd defendant lacked locus standi and the claim was contingent and speculative; the Contribution and Third Party Notices failed to plead conspiracy or fraud with required particularity and did not allege overt acts or dishonest intention attributable to the 1st plaintiff or MWLS, rendering the notices defective and an abuse of process.

Citation
LEE TAK (or TUCK) YAN AND OTHERS v. THE PRUDENTIAL ENTERPRISES LTD AND OTHERS
Parties
Plaintiffs: Plaintiffs (multiple: Lee Tak Yan et al); 1st Defendant: The Prudential Enterprises, Limited; Defendants: Samuel Tak Lee and N & L Investment Limited (2nd and 5th Defendants); 1st Third Party: MW Lee & Sons Enterprises Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
27 May 2003
Case Number
HCA4225/2001
Procedural Posture
Derivative Shareholder Action Arising From Allotment of Shares and Blue Pool Road Settlement / Chamber Hearing on Multiple Strike‑out Applications (applications to Strike Out Counterclaim, Contribution Notice and Amended Third Party Notice)
Outcome
All three strike‑out applications granted in favour of the applicants; counterclaim and notices struck out; costs ordered as to nisi orders
Legal Topics
Derivative Action, Breach of Fiduciary Duty, Conspiracy to Defraud, Striking Out for Abuse of Process, Contribution/indemnity, Pleadings Particularity
Source Language
EN
Company Law Trusts and Trustees (executors) Equity Civil Procedure Tort (conspiracy) Derivative Action Breach of Fiduciary Duty Conspiracy to Defraud +3 more

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Parties

Plaintiffs (multiple: Lee Tak Yan et al)

Plaintiffs

The Prudential Enterprises, Limited

1st Defendant

Samuel Tak Lee and N & L Investment Limited (2nd and 5th Defendants)

Defendants

MW Lee & Sons Enterprises Limited

1st Third Party

Procedural Posture

Derivative Shareholder Action Arising From Allotment of Shares and Blue Pool Road Settlement / Chamber Hearing on Multiple Strike‑out Applications (applications to Strike Out Counterclaim, Contribution Notice and Amended Third Party Notice)

Legal Issues

  1. 1 Whether the 2nd defendant's counterclaim against the executors disclosed a reasonable cause of action
  2. 2 Whether the Contribution Notice disclosed a right to contribution against the 1st plaintiff personally under Cap.377 s.3(1)
  3. 3 Whether the Amended Third Party Notice pleaded a cause of action/indemnity against MWLS by pleading a conspiracy with particulars and overt acts

Ratio Decidendi

The court struck out the 2nd defendant's counterclaim and the Contribution and Amended Third Party Notices because the pleadings failed to disclose a reasonable cause of action: the counterclaim did not establish duties on the executors to investigate the accountant's valuation nor plead knowledge of impropriety; the 2nd defendant lacked locus standi and the claim was contingent and speculative; the Contribution and Third Party Notices failed to plead conspiracy or fraud with required particularity and did not allege overt acts or dishonest intention attributable to the 1st plaintiff or MWLS, rendering the notices defective and an abuse of process.

Court Disposition

All three strike‑out applications granted in favour of the applicants; counterclaim and notices struck out; costs ordered as to nisi orders

Orders

  • The 2nd defendant's counterclaim against the 1st and 2nd plaintiffs (as executors) is struck out and dismissed
  • The Contribution Notice of the 2nd and 5th defendants against the 1st plaintiff is struck out