SUNG CHUNG KWUN AND OTHERS v. ADDCHANCE HOLDINGS LTD AND OTHERS

SUNG CHUNG KWUN AND OTHERS v. ADDCHANCE HOLDINGS LTD AND OTHERS

The court refused to strike out the pleaded parts. The SOC sufficiently pleads proprietary rights (choses in action) under the 2nd Mortgage Agreement and Collateral Repayment Agreement — including the right to discharge the mortgage and to the return of an unencumbered Tower — and pleads Poon's breaches that could have caused those rights to be wrongfully transferred to Champion. It is not plain and obvious the knowing receipt claim is unsustainable; the matters are factually and legally complex and for trial. Accordingly the strike out application was dismissed and costs ordered against Champion.

Citation
[2022] HKCFI 1799
Parties
1st Plaintiff: Sung Chung Kwun; 2nd Plaintiff: Addchance Dyeing Factory Limited; 3rd Plaintiff: Powerlink Industries Limited; 1st Defendant: Addchance Holdings Limited (now known as GTI Holdings Limited); 2nd Defendant: Champion Forever Group Limited; 3rd Defendant: Addchance Limited; 4th Defendant: Chinakey (Hong Kong) Limited; 5th Defendant: Sky Emperor International Limited; 6th Defendant: Poon Sum; 7th Defendant: Hammer Capital Private Investments Limited; 8th Defendant: Champion Alliance Industries Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
15 June 2022
Case Number
HCA2385/2017
Procedural Posture
Civil (equity: Knowing Receipt, Constructive Trust, Proprietary Relief) / Interlocutory — Strike Out Application Against Parts of Amended Statement of Claim (application to Strike Out)
Outcome
Strike out application dismissed
Legal Topics
Knowing Receipt, Constructive Trust, Proprietary Remedy, Tracing, Striking Out, Bona Fide Purchaser, Breach of Fiduciary Duty
Source Language
EN
Equity Trusts Civil Procedure Property Fiduciary Law Mortgages Knowing Receipt Constructive Trust +5 more

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Parties

Sung Chung Kwun

1st Plaintiff

Addchance Dyeing Factory Limited

2nd Plaintiff

Powerlink Industries Limited

3rd Plaintiff

Addchance Holdings Limited (now known as GTI Holdings Limited)

1st Defendant

Champion Forever Group Limited

2nd Defendant

Addchance Limited

3rd Defendant

Chinakey (Hong Kong) Limited

4th Defendant

Sky Emperor International Limited

5th Defendant

Poon Sum

6th Defendant

Hammer Capital Private Investments Limited

7th Defendant

Champion Alliance Industries Limited

8th Defendant

Procedural Posture

Civil (equity: Knowing Receipt, Constructive Trust, Proprietary Relief) / Interlocutory — Strike Out Application Against Parts of Amended Statement of Claim (application to Strike Out)

Legal Issues

  1. 1 Whether the pleaded parts of the Amended Statement of Claim disclose a reasonable cause of action in knowing receipt
  2. 2 Whether the plaintiffs had a pre-existing or continuing proprietary interest in the property/mortgage rights claimed
  3. 3 Whether a valid assignment to a bona fide purchaser extinguished the plaintiffs' equitable rights or whether those rights revived against the transferee (Wilkes v Spooner exception)

Ratio Decidendi

The court refused to strike out the pleaded parts. The SOC sufficiently pleads proprietary rights (choses in action) under the 2nd Mortgage Agreement and Collateral Repayment Agreement — including the right to discharge the mortgage and to the return of an unencumbered Tower — and pleads Poon's breaches that could have caused those rights to be wrongfully transferred to Champion. It is not plain and obvious the knowing receipt claim is unsustainable; the matters are factually and legally complex and for trial. Accordingly the strike out application was dismissed and costs ordered against Champion.

Court Disposition

Strike out application dismissed

Orders

  • Application to strike out dismissed
  • Champion Forever Group Limited to pay the plaintiffs the costs of and incidental to the striking out application (including any costs reserved), with Certificate for Counsel