SECURITIES AND FUTURES COMMISSION v. CHENG WAI TAK AND OTHERS

SECURITIES AND FUTURES COMMISSION v. CHENG WAI TAK AND OTHERS

Leave to adduce expert evidence on the alleged general 'custom' (Amended Question 1) is refused because the subject matter is not a recognised body of knowledge, the proposed expert’s qualification was not demonstrated, and the issue was not pleaded; leave to adduce expert evidence on the feasibility, advantages/disadvantages, mitigation measures and estimated proceeds of the three specified disposal methods (Amended Question 2) is granted because those questions fall within a recognised field of 'securities and assets realization', are relevant to pleaded disputes and necessary to assist the court objectively in assessing directors' reasonableness and the 1st Respondent’s ability to...

Citation
[2024] HKCFI 961
Parties
Petitioner: Securities and Futures Commission; 1st Respondent: Cheng Wai Tak; 2nd Respondent: Tse Ka Wing; 3rd Respondent: Liu Ka Wing; 4th Respondent: Li Shui Yan; 5th Respondent: Wong Chi Chiu; 6th Respondent: Wong Yik Chung John; 7th Respondent: Perfect Optronics Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
5 April 2024
Case Number
HCMP1575/2019
Procedural Posture
Proceedings Under Section 214 Securities and Futures Ordinance Concerning Directors' Duties and Compensation Claim / Interlocutory Application for Leave to Adduce Expert Evidence; Decision on Admissibility and Directions for Expert Evidence
Outcome
Amended Question 1 refused; Amended Question 2 permitted with directions for expert evidence and costs order in favour of respondents
Legal Topics
Expert Evidence Admissibility, Share Disposal Methods, Share Buy Back, Directors' Duty to Seek Advice, Compensation Order, Feasibility of Asset Realization
Source Language
EN
Securities Law Company Law Evidence Law Civil Procedure Directors' Duties Expert Evidence Admissibility Share Disposal Methods Share Buy Back +3 more

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Parties

Securities and Futures Commission

Petitioner

Cheng Wai Tak

1st Respondent

Tse Ka Wing

2nd Respondent

Liu Ka Wing

3rd Respondent

Li Shui Yan

4th Respondent

Wong Chi Chiu

5th Respondent

Wong Yik Chung John

6th Respondent

Perfect Optronics Limited

7th Respondent

Procedural Posture

Proceedings Under Section 214 Securities and Futures Ordinance Concerning Directors' Duties and Compensation Claim / Interlocutory Application for Leave to Adduce Expert Evidence; Decision on Admissibility and Directions for Expert Evidence

Legal Issues

  1. 1 Whether expert evidence should be admitted on a purported industry 'custom' that boards obtain professional advice for disposals of substantial shareholdings (Amended Question 1)
  2. 2 Whether expert evidence should be admitted on feasibility, advantages/disadvantages, mitigation and likely proceeds of three disposal methods (open market sale, off-market block sale, company buy-back) for the Consideration Shares in the relevant period (Amended Question 2)
  3. 3 Whether the 2nd–6th Respondents breached their duties by approving the Disposal Agreement without properly considering alternatives or seeking professional advice

Ratio Decidendi

Leave to adduce expert evidence on the alleged general 'custom' (Amended Question 1) is refused because the subject matter is not a recognised body of knowledge, the proposed expert’s qualification was not demonstrated, and the issue was not pleaded; leave to adduce expert evidence on the feasibility, advantages/disadvantages, mitigation measures and estimated proceeds of the three specified disposal methods (Amended Question 2) is granted because those questions fall within a recognised field of 'securities and assets realization', are relevant to pleaded disputes and necessary to assist the court objectively in assessing directors' reasonableness and the 1st Respondent’s ability to...

Court Disposition

Amended Question 1 refused; Amended Question 2 permitted with directions for expert evidence and costs order in favour of respondents

Orders

  • Leave granted to each of the Petitioner, the 1st Respondent and the 2nd to 6th Respondents to adduce expert evidence from one expert in securities and assets realization on Amended Question 2
  • Parties to inform the Court and each other of the identity of their respective experts within 28 days from the date of the decision