WYSE INVESTMENT LTD v. FUNG TIN YAU

WYSE INVESTMENT LTD v. FUNG TIN YAU

All three sets of appeals dismissed because the Masters’ decisions to refuse strike out and to refuse summary judgment were correct: the pleaded counterclaims and defences disclosed triable issues, assumption of fiduciary duties is a legally recognisable cause, factual disputes (Consensus v Withdrawal/Wyse Agreements) cannot be resolved summarily, and a prima facie case of fraud on the minority exists for derivative claims; therefore leave to defend should stand and derivative actions should not be struck out.

Citation
[2020] HKCFI 252
Parties
Petitioner/defendant/plaintiff: Fung Tin Yau; 1st Respondent/defendant: Fung Tin Shing; 2nd Respondent/defendant: Fung Wing See; Plaintiff/1st Defendant: Lai Ng Nui; Plaintiff/2nd Defendant: Fung Wing Yan; Plaintiff/3rd Defendant: Fung Wing Yin; 3rd Respondent/company: Great Anchor International Limited; Plaintiff/company: Maxfortune Trading Limited; Plaintiff/company: Premium Management Limited; Plaintiff/company: Wyse Investment Limited; Defendant/company: Samdor Company Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
23 January 2020
Case Number
HCA1291/2018
Procedural Posture
Consolidated Company and Civil Actions (winding Up, Derivative Actions, Contract/trust Claims) / Appeal From Masters' Orders Heard by Judge in Chambers; Decision on Striking Out, Summary Judgment Appeals and Leave to Pursue Derivative Actions
Outcome
All three sets of appeals dismissed
Legal Topics
Derivative Action, Assumption of Fiduciary Duties, Strike Out (o.18 R.19), Summary Judgment (o.14), Duomatic Principle, Fraud on the Minority (exception to Foss V Harbottle), Constructive Trust, Estoppel
Source Language
EN
Company Law Equity and Trusts Civil Procedure Insolvency Law Derivative Action Assumption of Fiduciary Duties Strike Out (o.18 R.19) Summary Judgment (o.14) +4 more

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Parties

Fung Tin Yau

Petitioner/defendant/plaintiff

Fung Tin Shing

1st Respondent/defendant

Fung Wing See

2nd Respondent/defendant

Lai Ng Nui

Plaintiff/1st Defendant

Fung Wing Yan

Plaintiff/2nd Defendant

Fung Wing Yin

Plaintiff/3rd Defendant

Great Anchor International Limited

3rd Respondent/company

Maxfortune Trading Limited

Plaintiff/company

Premium Management Limited

Plaintiff/company

Wyse Investment Limited

Plaintiff/company

Samdor Company Limited

Defendant/company

Procedural Posture

Consolidated Company and Civil Actions (winding Up, Derivative Actions, Contract/trust Claims) / Appeal From Masters' Orders Heard by Judge in Chambers; Decision on Striking Out, Summary Judgment Appeals and Leave to Pursue Derivative Actions

Legal Issues

  1. 1 Whether the 2078 counterclaim discloses a reasonable cause of action based on assumed fiduciary duties and should be struck out
  2. 2 Whether summary judgment was properly refused in HCA 2998-3000 and whether leave to defend should be conditional
  3. 3 Whether the common law derivative actions (HCA 133 & 136) are maintainable given alleged alternative remedies, absence of fraud on the minority and applicant's conduct

Ratio Decidendi

All three sets of appeals dismissed because the Masters’ decisions to refuse strike out and to refuse summary judgment were correct: the pleaded counterclaims and defences disclosed triable issues, assumption of fiduciary duties is a legally recognisable cause, factual disputes (Consensus v Withdrawal/Wyse Agreements) cannot be resolved summarily, and a prima facie case of fraud on the minority exists for derivative claims; therefore leave to defend should stand and derivative actions should not be struck out.

Court Disposition

All three sets of appeals dismissed

Orders

  • Appeals dismissed
  • Costs nisi: Respondent to have costs of all three sets of appeals, to be taxed if not agreed