BASAB INC. AND ANOTHER v. SUPERB GLORY HOLDINGS LTD AND OTHERS

BASAB INC. AND ANOTHER v. SUPERB GLORY HOLDINGS LTD AND OTHERS

The claims against the receivers were struck out because, as a matter of substance, the plaintiffs' alleged loss was merely reflective of Accufit’s loss arising from the sale at undervalue; the no reflective loss principle therefore barred the plaintiffs' claims including the pleaded conspiracy and equitable compensation claims, and the injunction claim was unnecessary following the BVI refusals of derivative leave.

Citation
BASAB INC. AND ANOTHER v. SUPERB GLORY HOLDINGS LTD AND OTHERS
Parties
Plaintiff / 1st Plaintiff: Basab Inc.; 2nd Plaintiff: Hui King Chun; 1st Defendant (3rd Defendant in Hca6/2014) Receiver: Fok Hei Yu; 2nd Defendant (4th Defendant in Hca6/2014) Receiver: Batchelor, John Howard; 1st Defendant (in Hca6/2014): Superb Glory Holdings Limited; 2nd Defendant (in Hca6/2014): Chen LiHua; 5th Defendant (in Hca6/2014): Double Key International Limited; 6th Defendant (in Hca6/2014): Cheng Hung Mui; 7th Defendant (in Hca6/2014): Zhang Xiaofeng
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
9 March 2017
Case Number
HCA6/2014
Procedural Posture
Civil Litigation Concerning Company Shares, Receivership, Conspiracy and Equitable Remedies / Application to Strike Out (o.18 R.19 Rhc) Heard; Decision Dismissing/striking Out Claims Against Receivers (interlocutory/final for Those Claims)
Outcome
Statement of Claim of Basab Inc. in HCA2562/2013 struck out and 1st Action dismissed; plaintiffs' claims against the receivers in HCA6/2014 struck out and those claims dismissed.
Legal Topics
Reflective Loss Principle, Derivative Action, Breach of Fiduciary Duty by Receivers, Sale at Undervalue, Injunctive Relief, Striking Out Pleadings
Source Language
EN
Company Law Equity and Trusts Civil Procedure Insolvency/receivership Tort Law Reflective Loss Principle Derivative Action Breach of Fiduciary Duty by Receivers +3 more

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Parties

Basab Inc.

Plaintiff / 1st Plaintiff

Hui King Chun

2nd Plaintiff

Fok Hei Yu

1st Defendant (3rd Defendant in Hca6/2014) Receiver

Batchelor, John Howard

2nd Defendant (4th Defendant in Hca6/2014) Receiver

Superb Glory Holdings Limited

1st Defendant (in Hca6/2014)

Chen LiHua

2nd Defendant (in Hca6/2014)

Double Key International Limited

5th Defendant (in Hca6/2014)

Cheng Hung Mui

6th Defendant (in Hca6/2014)

Zhang Xiaofeng

7th Defendant (in Hca6/2014)

Procedural Posture

Civil Litigation Concerning Company Shares, Receivership, Conspiracy and Equitable Remedies / Application to Strike Out (o.18 R.19 Rhc) Heard; Decision Dismissing/striking Out Claims Against Receivers (interlocutory/final for Those Claims)

Legal Issues

  1. 1 Whether the plaintiffs' claims against the receivers offend the no reflective loss principle
  2. 2 Whether a chargor/guarantor can recover losses allegedly caused by a receiver where the company has the primary claim
  3. 3 Whether the receivers owed equitable duties to the plaintiffs in their capacities asserted

Ratio Decidendi

The claims against the receivers were struck out because, as a matter of substance, the plaintiffs' alleged loss was merely reflective of Accufit’s loss arising from the sale at undervalue; the no reflective loss principle therefore barred the plaintiffs' claims including the pleaded conspiracy and equitable compensation claims, and the injunction claim was unnecessary following the BVI refusals of derivative leave.

Court Disposition

Statement of Claim of Basab Inc. in HCA2562/2013 struck out and 1st Action dismissed; plaintiffs' claims against the receivers in HCA6/2014 struck out and those claims dismissed.

Orders

  • Strike out the Statement of Claim of Basab Inc. in HCA2562/2013 and dismiss the 1st Action
  • Strike out the plaintiffs' Statement of Claim as against the Receivers in HCA6/2014 and dismiss the 2nd Action as against the Receivers