CHINA HEALTH GROUP LTD v. LI ZHONG YUAN AND OTHERS

CHINA HEALTH GROUP LTD v. LI ZHONG YUAN AND OTHERS

The court exercised its discretion to refuse consolidation because there was only limited overlap of issues, the actions concerned distinct incidents at different times with different reliefs and parties, consolidation would cause substantial and undue delay (prejudicing the advanced Note Action) given the primitive...

Source-derived case information.

Citation
[2021] HKCFI 3806
Parties
Plaintiff / 1st Plaintiff: China Health Group Limited; 2nd Plaintiff (fund Transfer Action): Wisdom Profit Investment Limited; 3rd Plaintiff (fund Transfer Action): China Healthcare Holdings (Hong Kong) Limited; Plaintiff (derivative Action): CHC Investment Holdings Limited; Plaintiff (hca 1270/2019): CHC Investment Holdings Limited (Chc Investment Holdings Limited); Defendant / 3rd Defendant: World Success Investments Limited; 1st Defendant in All Actions: Li Zhong Yuan; 2nd Defendant (where Named): Zhou Baoyi; 3rd Defendant (derivative Action): Zhang Yi Juan; 2nd Defendant (hca 2549/2017) and Plaintiff (hca 2569/2017): Capital Foresight Limited; 3rd Defendant (hca 2549/2017): Li Hong Holdings Limited; 4th Defendant (derivative Action): Shanghai Huiqu E-Commerce Company Limited; Defendant / Company on Whose Behalf Derivative Claims Brought: Harvest Network Limited; Defendant / Company on Whose Behalf Derivative Claims Brought: Shanghai De Yi Er Investment Management Consulting Co. Limited; Former Subsidiary / Defendant: Shanghai Harvest Network Technology Co. Ltd (Shanghai Harvest)
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
17 December 2021
Case Number
HCA2549/2017
Procedural Posture
Consolidation Application (interlocutory) / Hearing and Decision on Consolidated Amended Summonses; Interlocutory Judgment Dated 17 December 2021
Outcome
Consolidation application dismissed; amended summonses dismissed
Legal Topics
Fiduciary Duties, Knowing Receipt, Dishonest Assistance, Derivative Action, Consolidation of Actions, Abuse of Process, Costs
Source Language
en
Company Law Equity Civil Procedure Fiduciary Duties Knowing Receipt Dishonest Assistance Derivative Action Consolidation of Actions +2 more

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Parties

China Health Group Limited

Plaintiff / 1st Plaintiff

Wisdom Profit Investment Limited

2nd Plaintiff (fund Transfer Action)

China Healthcare Holdings (Hong Kong) Limited

3rd Plaintiff (fund Transfer Action)

CHC Investment Holdings Limited

Plaintiff (derivative Action)

CHC Investment Holdings Limited (Chc Investment Holdings Limited)

Plaintiff (hca 1270/2019)

World Success Investments Limited

Defendant / 3rd Defendant

Li Zhong Yuan

1st Defendant in All Actions

Zhou Baoyi

2nd Defendant (where Named)

Zhang Yi Juan

3rd Defendant (derivative Action)

Capital Foresight Limited

2nd Defendant (hca 2549/2017) and Plaintiff (hca 2569/2017)

Li Hong Holdings Limited

3rd Defendant (hca 2549/2017)

Shanghai Huiqu E-Commerce Company Limited

4th Defendant (derivative Action)

Harvest Network Limited

Defendant / Company on Whose Behalf Derivative Claims Brought

Shanghai De Yi Er Investment Management Consulting Co. Limited

Defendant / Company on Whose Behalf Derivative Claims Brought

Shanghai Harvest Network Technology Co. Ltd (Shanghai Harvest)

Former Subsidiary / Defendant

Procedural Posture

Consolidation Application (interlocutory) / Hearing and Decision on Consolidated Amended Summonses; Interlocutory Judgment Dated 17 December 2021

Legal Issues

  1. 1 Whether the three actions should be consolidated under Order 4 rule 9(1)
  2. 2 Whether the actions raise common questions of law or fact sufficient to justify consolidation
  3. 3 Whether consolidation would save time and costs or instead cause undue delay and prejudice to defendants

Ratio Decidendi

The court exercised its discretion to refuse consolidation because there was only limited overlap of issues, the actions concerned distinct incidents at different times with different reliefs and parties, consolidation would cause substantial and undue delay (prejudicing the advanced Note Action) given the primitive and partially unserved Derivative Action, and the application was a tactical abuse of process; accordingly the amended summonses for consolidation were dismissed and costs were ordered against the plaintiffs on an indemnity basis.

Court Disposition

Consolidation application dismissed; amended summonses dismissed

Orders

  • Dismissed amended summonses dated 13 July 2021 (HCA 2549/2017 & 2569/2017), 19 July 2017 (HCA 1270/2019) and 18 August 2017 (HCA 2469/2016)
  • Costs of the Consolidation Application to be paid by the plaintiffs to Dr Li, Capital Foresight Limited and Li Hong Holdings Limited forthwith on an indemnity basis with a certificate for 2 counsel