FUNG TIN YAU v. FUNG TIN SHING AND OTHERS

FUNG TIN YAU v. FUNG TIN SHING AND OTHERS

The appeals were dismissed because (1) the 2078 counterclaim, grounded on assumed/ad hoc fiduciary duties, disclosed a reasonable cause of action and was not plainly and obviously unsustainable; (2) the 2998-3000 summary judgment applications were improper where genuine disputes of fact existed about oral Withdrawal/Wyse Agreements and potential estoppel/Duomatic defences, so leave to defend was appropriate; and (3) the derivative claims in HCA 133 and 136 established a prima facie case within the fraud on the minority exception and were not strikingly unfit to proceed. Accordingly none of the interlocutory orders under appeal should be disturbed.

Citation
[2020] HKCFI 252
Parties
Petitioner/plaintiff/defendant (consolidated Actions): Fung Tin Yau; Respondent/defendant: Fung Tin Shing; Respondent/defendant: Fung Wing See; Plaintiff/defendant (various Actions): Lai Ng Nui; Plaintiff: Fung Wing Yan; Plaintiff: Fung Wing Yin; 3rd Respondent/company: Great Anchor International Limited; Plaintiff/3rd Respondent/company: Maxfortune Trading Limited; Plaintiff/3rd Respondent/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
HCCW171/2016
Procedural Posture
Companies (winding Up) Petitions and Related Civil Actions Consolidated for Hearing; Interlocutory Appeals / Appeal Hearing and Decision on Interlocutory Applications (strike Out, Summary Judgment, Derivative Action Threshold)
Outcome
All three sets of appeals dismissed; interlocutory strike out and summary judgment appeals dismissed; leave to defend upheld; derivative claims allowed to proceed
Legal Topics
Derivative Action, Fiduciary Duties, Constructive Trust, Strike Out Test, Summary Judgment (o.14), Duomatic Principle, Estoppel, Fraud on the Minority, Costs
Source Language
EN
Company Law Equity and Trusts Civil Procedure Derivative Action Fiduciary Duties Constructive Trust Strike Out Test Summary Judgment (o.14) +4 more

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Parties

Fung Tin Yau

Petitioner/plaintiff/defendant (consolidated Actions)

Fung Tin Shing

Respondent/defendant

Fung Wing See

Respondent/defendant

Lai Ng Nui

Plaintiff/defendant (various Actions)

Fung Wing Yan

Plaintiff

Fung Wing Yin

Plaintiff

Great Anchor International Limited

3rd Respondent/company

Maxfortune Trading Limited

Plaintiff/3rd Respondent/company

Premium Management Limited

Plaintiff/3rd Respondent/company

Wyse Investment Limited

Plaintiff/company

Samdor Company Limited

3rd Defendant/company

Procedural Posture

Companies (winding Up) Petitions and Related Civil Actions Consolidated for Hearing; Interlocutory Appeals / Appeal Hearing and Decision on Interlocutory Applications (strike Out, Summary Judgment, Derivative Action Threshold)

Legal Issues

  1. 1 Whether the 2078 counterclaim discloses a reasonable cause of action based on assumed fiduciary duties
  2. 2 Whether the 2998-3000 summary judgment orders should be set aside given factual disputes about oral Withdrawal/Wyse Agreements and estoppel/Duomatic principle
  3. 3 Whether the derivative claims in HCA 133 and 136 disclose a prima facie case falling within the fraud on the minority exception to Foss v Harbottle

Ratio Decidendi

The appeals were dismissed because (1) the 2078 counterclaim, grounded on assumed/ad hoc fiduciary duties, disclosed a reasonable cause of action and was not plainly and obviously unsustainable; (2) the 2998-3000 summary judgment applications were improper where genuine disputes of fact existed about oral Withdrawal/Wyse Agreements and potential estoppel/Duomatic defences, so leave to defend was appropriate; and (3) the derivative claims in HCA 133 and 136 established a prima facie case within the fraud on the minority exception and were not strikingly unfit to proceed. Accordingly none of the interlocutory orders under appeal should be disturbed.

Court Disposition

All three sets of appeals dismissed; interlocutory strike out and summary judgment appeals dismissed; leave to defend upheld; derivative claims allowed to proceed

Orders

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