YUEN TAK SUNG v. SEA DRAGON FOOD LTD

YUEN TAK SUNG v. SEA DRAGON FOOD LTD

The court granted leave to commence the statutory derivative action because the low threshold of a serious issue to be tried was met and the proposed action was in the interests of the company; the court dispensed with written notice under s733(1)(c) where appropriate given deadlock but preserved fairness by giving the intended 1st defendant liberty to apply to set aside the order within 28 days; the applicant's costs of the originating summons (including the hearing) were ordered to be indemnified out of the company's assets and costs of the substantive derivative action were reserved.

Citation
[2018] HKCFI 2471
Parties
Applicant/shareholder and Director of Sea Dragon Food Limited: Applicant; Intended 1st Defendant/shareholder and Director of Sea Dragon Food Limited: Intended 1st defendant; Intended 2nd Defendant/son of Intended 1st Defendant and Former Employee: Intended 2nd defendant; Intended 3rd Defendant/limited Company Incorporated by Intended 2nd Defendant: Intended 3rd defendant; Respondent/company: Sea Dragon Food Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
30 October 2018
Case Number
HCMP1721/2018
Procedural Posture
Application for Leave to Commence Statutory Derivative Action Under the Companies Ordinance / Leave Application/interlocutory Decision
Outcome
Leave granted to commence statutory derivative action with specified costs directions and limited dispensation of service; liberty afforded to intended 1st defendant to apply to set aside within 28 days.
Legal Topics
Derivative Action, Breach of Fiduciary Duty, Deadlock of Directors/shareholders, Service of Notice Under Companies Ordinance S733, Costs Orders, Passing Off, Misuse of Confidential Information
Source Language
EN
Company Law Corporate Governance Equity Civil Procedure Intellectual Property (passing Off) Confidential Information Derivative Action Breach of Fiduciary Duty +5 more

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Parties

Applicant

Applicant/shareholder and Director of Sea Dragon Food Limited

Intended 1st defendant

Intended 1st Defendant/shareholder and Director of Sea Dragon Food Limited

Intended 2nd defendant

Intended 2nd Defendant/son of Intended 1st Defendant and Former Employee

Intended 3rd defendant

Intended 3rd Defendant/limited Company Incorporated by Intended 2nd Defendant

Sea Dragon Food Limited

Respondent/company

Procedural Posture

Application for Leave to Commence Statutory Derivative Action Under the Companies Ordinance / Leave Application/interlocutory Decision

Legal Issues

  1. 1 Whether there is a serious issue to be tried
  2. 2 Whether the proposed derivative action is in the interests of the company
  3. 3 Whether the company itself has commenced proceedings

Ratio Decidendi

The court granted leave to commence the statutory derivative action because the low threshold of a serious issue to be tried was met and the proposed action was in the interests of the company; the court dispensed with written notice under s733(1)(c) where appropriate given deadlock but preserved fairness by giving the intended 1st defendant liberty to apply to set aside the order within 28 days; the applicant's costs of the originating summons (including the hearing) were ordered to be indemnified out of the company's assets and costs of the substantive derivative action were reserved.

Court Disposition

Leave granted to commence statutory derivative action with specified costs directions and limited dispensation of service; liberty afforded to intended 1st defendant to apply to set aside within 28 days.

Orders

  • Grant leave to commence the statutory derivative action as sought in paragraph 1 of the originating summons
  • Order that the applicant's costs for the originating summons, including and up to the costs of the hearing, be indemnified out of the company's assets