LEE SAI NAM v. LI SHU CHUNG AND ANOTHER

LEE SAI NAM v. LI SHU CHUNG AND ANOTHER

The court held the Misappropriation Claim was barred by the no reflective loss principle on the pleadings and therefore was properly withdrawn/liable to be struck out; accordingly the Father must pay Ken's costs for the Misappropriation Claim and associated striking-out parts. By contrast, the New Shares Claim, read...

Source-derived case information.

Citation
LEE SAI NAM v. LI SHU CHUNG AND ANOTHER
Parties
Plaintiff (original Action); 1st Defendant (counterclaim): Lee Sai Nam; 1st Defendant (original Action); Plaintiff (counterclaim): Li Shu Chung; 2nd Defendant (original Action): Li Joseph See Sun; 2nd Defendant (counterclaim) (withdrawn): Allied Ever Holdings Ltd; 3rd Defendant (counterclaim): Lee Sin Man Seline; 4th Defendant (counterclaim): Yuen Hing Enterprise Macao Commercial Offshore Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
7 February 2014
Case Number
HCA1711/2009
Procedural Posture
Civil Litigation Shareholders/company Dispute / Interlocutory Applications (pre Trial Costs Hearing)
Outcome
Costs orders made: Father to pay Ken's costs for Misappropriation Claim and related Striking Out parts; Ken to pay Father's costs for Striking Out Summons parts relating to New Shares Claim; costs to be taxed if not agreed and certificate for two counsel.
Legal Topics
No Reflective Loss Principle, Strike Out Application, Derivative Action, Constructive Trust, Costs Follow Event
Source Language
en
Company Law Trusts Civil Procedure Costs Insolvency Law No Reflective Loss Principle Strike Out Application Derivative Action +2 more

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Parties

Lee Sai Nam

Plaintiff (original Action); 1st Defendant (counterclaim)

Li Shu Chung

1st Defendant (original Action); Plaintiff (counterclaim)

Li Joseph See Sun

2nd Defendant (original Action)

Allied Ever Holdings Ltd

2nd Defendant (counterclaim) (withdrawn)

Lee Sin Man Seline

3rd Defendant (counterclaim)

Yuen Hing Enterprise Macao Commercial Offshore Limited

4th Defendant (counterclaim)

Procedural Posture

Civil Litigation Shareholders/company Dispute / Interlocutory Applications (pre Trial Costs Hearing)

Legal Issues

  1. 1 Whether the Misappropriation Claim was barred by the no reflective loss principle and thus liable to be struck out/withdrawn; allocation of costs for that claim
  2. 2 Whether the New Shares Claim as originally pleaded disclosed a reasonable cause of action for trust/constructive trust and whether parts of pleadings should be struck out; allocation of costs for that application
  3. 3 Whether exceptions to the no reflective loss principle (eg Giles v Rhind) applied in Hong Kong circumstances

Ratio Decidendi

The court held the Misappropriation Claim was barred by the no reflective loss principle on the pleadings and therefore was properly withdrawn/liable to be struck out; accordingly the Father must pay Ken's costs for the Misappropriation Claim and associated striking-out parts. By contrast, the New Shares Claim, read in context of the whole pleading, was not a plain and obvious case for strike out because it was arguable that the new shares were part of a subsisting trust or acquired qua trusteeship; accordingly Ken must pay the Father's costs in respect of the strike out summons as to the New Shares Claim. Costs to be taxed if not agreed and certificate for two counsel ordered.

Court Disposition

Costs orders made: Father to pay Ken's costs for Misappropriation Claim and related Striking Out parts; Ken to pay Father's costs for Striking Out Summons parts relating to New Shares Claim; costs to be taxed if not agreed and certificate for two counsel.

Orders

  • The Father do pay Ken's costs of and occasioned by the Misappropriation Claim (including argument on costs)
  • The Father do pay Ken's costs of and occasioned by the Striking Out Summons in respect of impugned parts of the AR&ADC and paragraphs 18-19 of Seline's amended witness statement relating to the Misappropriation Claim (including argument on costs)