LEE LEUNG NANG STEWART AND OTHERS v. LI CHUNG SHING TONG (HOLDINGS) LTD

LEE LEUNG NANG STEWART AND OTHERS v. LI CHUNG SHING TONG (HOLDINGS) LTD

The court granted leave under s168BC because plaintiffs had served notice, established prima facie that proceedings were in the company's interest and disclosed serious questions to be tried given evidence of contamination and outsourcing failures implicating senior management and a director; the application to appoint an independent professional accountant under s168BG was refused because existing investigations and available material were, on the facts, sufficient and appointment was not necessary; plaintiffs' costs of the leave application were ordered to be paid by the company while indemnification for future litigation costs was adjourned sine die pending further financial information.

Citation
LEE LEUNG NANG STEWART AND OTHERS v. LI CHUNG SHING TONG (HOLDINGS) LTD
Parties
1st Plaintiff: Lee Leung Nang Stewart; 2nd Plaintiff: Lee Cheung Nang Alfred; 3rd Plaintiff: Li Tai Sang Albert; Defendant/company: Li Chung Shing Tong (Holdings) Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
5 September 2011
Case Number
HCMP1516/2010
Procedural Posture
Statutory Derivative Action Under Section 168 BC Companies Ordinance (cap.32) / Application for Leave by Originating Summons (leave Granted)
Outcome
Leave granted to Plaintiffs to bring statutory derivative proceedings on behalf of the Company under s168BC; application to appoint an independent professional accountant under s168BG refused; Plaintiffs' costs of this leave application awarded against the Company; application for indemnity of future costs adjourned...
Legal Topics
Derivative Action, Leave to Bring Proceedings, Breach of Directors' Duties, Appointment of Independent Investigator, Costs and Indemnity
Source Language
EN
Company Law Corporate Governance Civil Procedure Regulatory Compliance (pharmacy/chinese Medicines) Derivative Action Leave to Bring Proceedings Breach of Directors' Duties Appointment of Independent Investigator +1 more

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Parties

Lee Leung Nang Stewart

1st Plaintiff

Lee Cheung Nang Alfred

2nd Plaintiff

Li Tai Sang Albert

3rd Plaintiff

Li Chung Shing Tong (Holdings) Limited

Defendant/company

Procedural Posture

Statutory Derivative Action Under Section 168 BC Companies Ordinance (cap.32) / Application for Leave by Originating Summons (leave Granted)

Legal Issues

  1. 1 Whether the plaintiffs satisfied requirements of s168BC(3) for leave (prima facie in company's interest; serious question to be tried; notice served)
  2. 2 Whether an independent professional accountant should be appointed under s168BG
  3. 3 Whether costs of the application and future proceedings should be paid/indemnified by the company under s168BI

Ratio Decidendi

The court granted leave under s168BC because plaintiffs had served notice, established prima facie that proceedings were in the company's interest and disclosed serious questions to be tried given evidence of contamination and outsourcing failures implicating senior management and a director; the application to appoint an independent professional accountant under s168BG was refused because existing investigations and available material were, on the facts, sufficient and appointment was not necessary; plaintiffs' costs of the leave application were ordered to be paid by the company while indemnification for future litigation costs was adjourned sine die pending further financial information.

Court Disposition

Leave granted to Plaintiffs to bring statutory derivative proceedings on behalf of the Company under s168BC; application to appoint an independent professional accountant under s168BG refused; Plaintiffs' costs of this leave application awarded against the Company; application for indemnity of future costs adjourned...

Orders

  • Leave granted to the Plaintiffs to bring proceedings on behalf of Li Chung Shing Tong (Holdings) Limited under section 168BC of the Companies Ordinance
  • Order refusing appointment of an independent professional accountant under section 168BG