MA WAI CHIU v. NG KIN FAI RICHARD AND OTHERS

MA WAI CHIU v. NG KIN FAI RICHARD AND OTHERS

The court was not persuaded that the plaintiff raised a serious issue to be tried that business opportunities diverted to third parties created a proprietary right to recover the full value of receivables; the real loss was the profits FEL would have made. Accordingly the court refused the interlocutory injunction to restrain dealing with receivables but accepted undertakings and a payment into court of US$58,800 representing a 3% profit margin on the contested invoices, and limited disclosure to the contracts, receipts and receivables already offered by PSG, YMH and Lam.

Citation
MA WAI CHIU v. NG KIN FAI RICHARD AND OTHERS
Parties
Plaintiff (derivative Claimant): MA WAI CHIU; 1st Defendant: NG KIN FAI RICHARD (also known as DICK NG); 2nd Defendant: CHU FUNG YEE (also known as MANDY CHU); 3rd Defendant: PRIMO SOURCING GROUP LIMITED; 4th Defendant: YIN MEI HOLDINGS LIMITED; 5th Defendant: LAM SHU PAN
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
20 January 2017
Case Number
HCA61/2017
Procedural Posture
Derivative Claim by Shareholder of Company / Interlocutory Application for Injunctive Relief (first Return Date)
Outcome
Second injunction (freezing/dealing with receivables claimed at US$2.356m) refused; undertakings as to non-solicitation and disclosure accepted; PSG, YMH and Lam ordered to pay US$58,800 into court by way of interim security; disclosure limited; costs reserved.
Legal Topics
Derivative Action, Proprietary Claim, Business Opportunity, Equitable Allowance, Receivables, Freezing Injunctions, Disclosure
Source Language
EN
Company Law Equity Trusts and Fiduciary Duties Commercial Law Injunctions Derivative Action Proprietary Claim Business Opportunity +4 more

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Parties

MA WAI CHIU

Plaintiff (derivative Claimant)

NG KIN FAI RICHARD (also known as DICK NG)

1st Defendant

CHU FUNG YEE (also known as MANDY CHU)

2nd Defendant

PRIMO SOURCING GROUP LIMITED

3rd Defendant

YIN MEI HOLDINGS LIMITED

4th Defendant

LAM SHU PAN

5th Defendant

Procedural Posture

Derivative Claim by Shareholder of Company / Interlocutory Application for Injunctive Relief (first Return Date)

Legal Issues

  1. 1 Whether diverted business opportunities constitute trust property entitling the plaintiff to proprietary recovery of receivables in full
  2. 2 Whether interlocutory injunctions should restrain defendants from contacting FEL customers and from dealing with receivables
  3. 3 Appropriate measure of recovery (full receivables v profits lost) at interlocutory stage

Ratio Decidendi

The court was not persuaded that the plaintiff raised a serious issue to be tried that business opportunities diverted to third parties created a proprietary right to recover the full value of receivables; the real loss was the profits FEL would have made. Accordingly the court refused the interlocutory injunction to restrain dealing with receivables but accepted undertakings and a payment into court of US$58,800 representing a 3% profit margin on the contested invoices, and limited disclosure to the contracts, receipts and receivables already offered by PSG, YMH and Lam.

Court Disposition

Second injunction (freezing/dealing with receivables claimed at US$2.356m) refused; undertakings as to non-solicitation and disclosure accepted; PSG, YMH and Lam ordered to pay US$58,800 into court by way of interim security; disclosure limited; costs reserved.

Orders

  • PSG, YMH and Lam to pay into court US$58,800.00 within seven days
  • PSG, YMH, Lam, and (as offered) Ng and Chu to give undertaking not to contact, canvas, solicit or accept business from any customer of Fashion Element (HK) Limited except for specified limited purposes