MAXFORTUNE TRADING LTD v. FUNG TIN YAU

The appeals were dismissed because (1) the 2078 counterclaim pleaded a reasonable cause of action based on assumed fiduciary duties supported by pleaded facts and materials and was not plainly unsustainable; (2) the defences in HCA 2998-3000 raised triable factual issues (Withdrawal/Wyse Agreements, Duomatic and estoppel) precluding summary judgment and conditional leave to defend was refused; and (3) the derivative claims in HCA 133 & 136 established a prima facie case within the 'fraud on the minority' exception so strike out was inappropriate.

Citation: [2020] HKCFI 252
Parties: Petitioner/defendant/plaintiff/respondent (consolidated): Fung Tin Yau; 1st Respondent/defendant: Fung Tin Shing; 2nd Respondent/defendant: Fung Wing See; Plaintiff/1st Plaintiff/1st Defendant (various Actions): Lai Ng Nui; 2nd Plaintiff: Fung Wing Yan; 3rd Plaintiff: Fung Wing Yin; 3rd Respondent/company: Great Anchor International Limited; Plaintiff/3rd Respondent/2nd Defendant/company: Maxfortune Trading Limited; 3rd Respondent/plaintiff/company: Premium Management Limited; Plaintiff/company: Wyse Investment Limited; 3rd Defendant/company: Samdor Company Limited
Court: Court of First Instance
Jurisdiction: Hong Kong
Judgment Date: 23 January 2020
Case Number: HCA2998/2017
Procedural Posture: Consolidated Companies Winding Up and Related Civil Actions (appeals From Masters) / Master Appeals Heard in Chambers Before Judge; Decision on Appeals and Costs
Outcome: All three sets of appeals dismissed
Legal Topics: Derivative Action, Winding Up, Assumption of Fiduciary Duties, Strike Out Applications, Summary Judgment, Duomatic Principle, Fraud on the Minority, Constructive Trust
Source Language: EN

Company Law Equity and Trusts Civil Procedure Appeal Derivative Action Winding Up Assumption of Fiduciary Duties Strike Out Applications +4 more

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Parties

Fung Tin Yau

Petitioner/defendant/plaintiff/respondent (consolidated)

Fung Tin Shing

1st Respondent/defendant

Fung Wing See

2nd Respondent/defendant

Lai Ng Nui

Plaintiff/1st Plaintiff/1st Defendant (various Actions)

Fung Wing Yan

2nd Plaintiff

Fung Wing Yin

3rd Plaintiff

Great Anchor International Limited

3rd Respondent/company

Maxfortune Trading Limited

Plaintiff/3rd Respondent/2nd Defendant/company

Premium Management Limited

3rd Respondent/plaintiff/company

Wyse Investment Limited

Plaintiff/company

Samdor Company Limited

3rd Defendant/company

Procedural Posture

Consolidated Companies Winding Up and Related Civil Actions (appeals From Masters) / Master Appeals Heard in Chambers Before Judge; Decision on Appeals and Costs

Legal Issues

1 Whether the 2078 counterclaim discloses a reasonable cause of action based on assumed fiduciary duties and should be struck out
2 Whether summary judgment should have been granted in HCA 2998-3000 or whether defendants have leave to defend
3 Whether the derivative actions in HCA 133 and 136 should be struck out for alternative remedy, absence of fraud on the minority, or lack of clean hands

Ratio Decidendi

Court Disposition

All three sets of appeals dismissed

Orders

Costs order nisi: Respondent to have costs of all three sets of appeals to be taxed if not agreed
Costs to be borne as follows: 2078 strike out appeals by Lai Ng Nui and Fung Wing See; 2998-3000 O.14 appeals by Maxfortune, Wyse and Premium respectively; 133/136 strike out appeals by Lai Ng Nui, Fung Wing See and Fung Tin Shing