BEST YEAR ENTERPRISES LTD (in liquidation) AND ANOTHER v. POWER SECURITIES CO LTD (formerly known as JUN YANG SECURITIES CO LTD) AND ANOTHER

BEST YEAR ENTERPRISES LTD (in liquidation) AND ANOTHER v. POWER SECURITIES CO LTD (formerly known as JUN YANG SECURITIES CO LTD) AND ANOTHER

On the pleadings taken at their highest, Sin's alleged losses are merely reflective of losses suffered by Best Year and/or EPL (the companies that held the First Credit shares) and therefore the claims are barred by the doctrine against recovery of reflective loss; the post-loss sale of Sin's company shares does not convert reflective loss into a distinct personal loss capable of recovery; moreover Sin is in privity with Best Year such that earlier summary judgment and related litigation give rise to res judicata and Henderson abuse of process; accordingly the counterclaim (RADCC) and the statement of claim (SOC) are plain and obvious bad on their face and must be struck out and dismissed.

Citation
[2019] HKCFI 2920
Parties
1st Plaintiff: Best Year Enterprises Limited; Plaintiff/applicant: Power Securities Company Limited; Counterclaimant / Defendant: Sin Kwok Lam; 2nd Defendant: Ng Kam Lung Volais; 3rd Defendant: Tang Ching Ho; 4th Defendant: Sit Sai Hung, Billy
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
5 December 2019
Case Number
HCA1071/2019
Procedural Posture
Strike Out Applications Re Counterclaim and Claim (hca1719/2018 and Hca1071/2019) / Judgment on Strike Out Applications
Outcome
RADCC in HCA1719/2018 struck out; SOC in HCA1071/2019 struck out; Sin's claims in both actions dismissed
Legal Topics
Reflective Loss, Res Judicata / Issue Estoppel, Abuse of Process (henderson), Strike Out Principles, Relief From Sanction, Winding Up
Source Language
EN
Company Law Civil Procedure Tort Law Insolvency Law Commercial Litigation Reflective Loss Res Judicata / Issue Estoppel Abuse of Process (henderson) +3 more

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Parties

Best Year Enterprises Limited

1st Plaintiff

Power Securities Company Limited

Plaintiff/applicant

Sin Kwok Lam

Counterclaimant / Defendant

Ng Kam Lung Volais

2nd Defendant

Tang Ching Ho

3rd Defendant

Sit Sai Hung, Billy

4th Defendant

Procedural Posture

Strike Out Applications Re Counterclaim and Claim (hca1719/2018 and Hca1071/2019) / Judgment on Strike Out Applications

Legal Issues

  1. 1 Whether Sin's counterclaim/claim is barred by the doctrine against recovery of reflective loss
  2. 2 Whether Sin's disposal of his company shares after the alleged loss avoids the reflective loss rule
  3. 3 Whether prior summary judgment and related proceedings give rise to res judicata or privity binding Sin

Ratio Decidendi

On the pleadings taken at their highest, Sin's alleged losses are merely reflective of losses suffered by Best Year and/or EPL (the companies that held the First Credit shares) and therefore the claims are barred by the doctrine against recovery of reflective loss; the post-loss sale of Sin's company shares does not convert reflective loss into a distinct personal loss capable of recovery; moreover Sin is in privity with Best Year such that earlier summary judgment and related litigation give rise to res judicata and Henderson abuse of process; accordingly the counterclaim (RADCC) and the statement of claim (SOC) are plain and obvious bad on their face and must be struck out and dismissed.

Court Disposition

RADCC in HCA1719/2018 struck out; SOC in HCA1071/2019 struck out; Sin's claims in both actions dismissed

Orders

  • RADCC (amended defence and counterclaim) in HCA1719/2018 struck out
  • Statement of Claim in HCA1071/2019 struck out