LONG SING UNION ENGINEERING LTD v. MA CHI KI aka KEITH MA AND ANOTHER

LONG SING UNION ENGINEERING LTD v. MA CHI KI aka KEITH MA AND ANOTHER

The court found on balance that Lee and Ma entered the JV Agreement (as varied) and formed the Company; LSP (through Ma) and Lee acted so as to create both an express trust and a common intention constructive trust such that LSP held the four Projects and all income derived from them on trust for the Company; Ma breached fiduciary duties in causing payments and attempting to divert benefits; defendants must account for all income subject to deduction of Direct Expenses, 50% of Legitimate Indirect Expenses for the Relevant Period and any profit tax, and must pay out the stakeholder funds and provide particulars for the account.

Citation
[2023] HKCFI 2833
Parties
Plaintiff: Long Sing Union Engineering Limited; 1st Defendant: Ma Chi Ki (also known as Keith Ma); 2nd Defendant: Long Sing Plumbing Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
2 November 2023
Case Number
HCA1873/2019
Procedural Posture
Statutory Derivative Action (companies Ordinance) / Judgment (trial)
Outcome
Judgment for the Plaintiff on the principal issues: declarations granted that the Projects and proceeds were held on trust for the Company; account ordered; equitable remedies against Ma and LSP granted in respect of fiduciary breach and breach of trust.
Legal Topics
Constructive Trust, Express Trust, Common Intention Constructive Trust, Breach of Fiduciary Duty, Knowing Receipt, Accounting and Inquiry, Statutory Derivative Action, Joint Venture Agreement, Overpayments, Equitable Compensation
Source Language
EN
Company Law Trusts and Equity Fiduciary Duties Restitution and Unjust Enrichment Contract Law Constructive Trust Express Trust Common Intention Constructive Trust +7 more

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Parties

Long Sing Union Engineering Limited

Plaintiff

Ma Chi Ki (also known as Keith Ma)

1st Defendant

Long Sing Plumbing Limited

2nd Defendant

Procedural Posture

Statutory Derivative Action (companies Ordinance) / Judgment (trial)

Legal Issues

  1. 1 Whether Lee and Ma reached the alleged JV Agreement and its December 2014 variation
  2. 2 Whether the Company was formed pursuant to that JV Agreement
  3. 3 Whether payments into and out of the joint HSBC account were made pursuant to the JV Agreement/Arrangement or pursuant to alleged security agreements

Ratio Decidendi

The court found on balance that Lee and Ma entered the JV Agreement (as varied) and formed the Company; LSP (through Ma) and Lee acted so as to create both an express trust and a common intention constructive trust such that LSP held the four Projects and all income derived from them on trust for the Company; Ma breached fiduciary duties in causing payments and attempting to divert benefits; defendants must account for all income subject to deduction of Direct Expenses, 50% of Legitimate Indirect Expenses for the Relevant Period and any profit tax, and must pay out the stakeholder funds and provide particulars for the account.

Court Disposition

Judgment for the Plaintiff on the principal issues: declarations granted that the Projects and proceeds were held on trust for the Company; account ordered; equitable remedies against Ma and LSP granted in respect of fiduciary breach and breach of trust.

Orders

  • Declaration that the Projects and all benefits and income derived therefrom have been held by LSP on trust for the Company from the date of its incorporation
  • Declaration that defendants are liable to account to the Company for all assets, income, profits, interest and other benefits derived from use of the amount equivalent to the Overpayments or the amount found due on account