JANFUL LTD AND ANOTHER v. SINOSOFT TECHNOLOGY GROUP LTD AND ANOTHER

JANFUL LTD AND ANOTHER v. SINOSOFT TECHNOLOGY GROUP LTD AND ANOTHER

Ex parte leave to serve out was set aside because the plaintiffs failed to establish a serious issue to be tried (primary pleaded losses were, on the pleadings and in the absence of supporting evidence, reflective losses recoverable only by the JV company) and because there was material non-disclosure at the ex parte stage of highly material matters (possible PRC governing law and extensive PRC proceedings). The derivative action was not permitted to proceed because the plaintiffs failed to establish a prima facie case of company loss or control by wrongdoers sufficient to stifle corporate action and the derivative claim was shown to be pursued with collateral/ulterior motives; forum...

Citation
JANFUL LTD AND ANOTHER v. SINOSOFT TECHNOLOGY GROUP LTD AND ANOTHER
Parties
1st Plaintiff (substituted): Tremendous Success Holdings Limited; Original 1st Plaintiff (substituted): South China Holdings Limited; 2nd Plaintiff: Janful Limited; Plaintiff (hca 2423): Law Ka Leung, Victor; Plaintiff (hca 2423): Teoh Tean Chai, Anthony; 3rd Plaintiff (hca 2423): South China Finance and Management Limited; 1st Defendant / Technical Defendant in Derivative Action: Sinosoft Technology Group Limited; Defendant (ns Principal): Nanjing Skytech Co., Limited; Defendant / Director Alleged to Have Procured Publication: Xin Yingmei; Defendant (ns Principal): Wang Xiaogang; Defendant (ns Principal): Zhang Hong; Defendant (ns Principal): Ma Ming; Defendant (absent/unrepresented): Ding Su Lin; Defendant (ns Principal): Liu Biao
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
11 July 2016
Case Number
HCA1613/2013
Procedural Posture
Civil Litigation: Applications Under Order 11/12 (service Out), Defamation and Derivative Claims / Inter Partes Hearing on Multiple Summonses; Judgment on Interlocutory Challenges and Setting Aside Ex Parte Leave and Strike Out/stay Applications
Outcome
Ex parte leave to serve out of jurisdiction set aside; plaintiffs' Order 11 service out applications discharged/set aside where claims disclosed no serious issue (reflective loss) or material non-disclosure established; derivative action (HCA 2423) struck out/ stayed in favour of PRC forum on multiple grounds (no...
Legal Topics
Derivative Action, Order 11 Service Out, Forum Conveniens, Reflective Loss (no Reflective Loss Rule), Material Non Disclosure at Ex Parte Stage, Double Actionability, Malicious Falsehood/libel, Fiduciary Duties, Order 2 Relief From Sanctions, Assignment of Tort Claims
Source Language
EN
Company Law Civil Procedure Private International Law Tort Law Defamation Law Equity/trusts Derivative Action Order 11 Service Out +8 more

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Parties

Tremendous Success Holdings Limited

1st Plaintiff (substituted)

South China Holdings Limited

Original 1st Plaintiff (substituted)

Janful Limited

2nd Plaintiff

Law Ka Leung, Victor

Plaintiff (hca 2423)

Teoh Tean Chai, Anthony

Plaintiff (hca 2423)

South China Finance and Management Limited

3rd Plaintiff (hca 2423)

Sinosoft Technology Group Limited

1st Defendant / Technical Defendant in Derivative Action

Nanjing Skytech Co., Limited

Defendant (ns Principal)

Xin Yingmei

Defendant / Director Alleged to Have Procured Publication

Wang Xiaogang

Defendant (ns Principal)

Zhang Hong

Defendant (ns Principal)

Ma Ming

Defendant (ns Principal)

Ding Su Lin

Defendant (absent/unrepresented)

Liu Biao

Defendant (ns Principal)

Procedural Posture

Civil Litigation: Applications Under Order 11/12 (service Out), Defamation and Derivative Claims / Inter Partes Hearing on Multiple Summonses; Judgment on Interlocutory Challenges and Setting Aside Ex Parte Leave and Strike Out/stay Applications

Legal Issues

  1. 1 Whether ex parte leave to serve writs out of jurisdiction should be set aside for: (a) no serious issue to be tried (reflective loss and/or defective pleading of foreign law); (b) forum conveniens (PRC more appropriate); (c) material non-disclosure at ex parte stage; and (d) failure to satisfy Order 11 gateways
  2. 2 Whether the derivative action (HCA 2423) is properly constituted (prima facie fraud on the minority and control enabling the wrongdoers to stifle company action) and whether it is instituted for an ulterior motive
  3. 3 Whether foreign law had to be pleaded or proved at interlocutory stage and effect of presumption that foreign law is same as lex fori

Ratio Decidendi

Ex parte leave to serve out was set aside because the plaintiffs failed to establish a serious issue to be tried (primary pleaded losses were, on the pleadings and in the absence of supporting evidence, reflective losses recoverable only by the JV company) and because there was material non-disclosure at the ex parte stage of highly material matters (possible PRC governing law and extensive PRC proceedings). The derivative action was not permitted to proceed because the plaintiffs failed to establish a prima facie case of company loss or control by wrongdoers sufficient to stifle corporate action and the derivative claim was shown to be pursued with collateral/ulterior motives; forum...

Court Disposition

Ex parte leave to serve out of jurisdiction set aside; plaintiffs' Order 11 service out applications discharged/set aside where claims disclosed no serious issue (reflective loss) or material non-disclosure established; derivative action (HCA 2423) struck out/ stayed in favour of PRC forum on multiple grounds (no...

Orders

  • Set aside ex parte leave to serve the concurrent writ out of jurisdiction in respect of the affected actions
  • Declare that plaintiffs' Order 11 service out applications fail for lack of serious issue to be tried and material non-disclosure