DAYS IMPEX LTD (in liquidation) AND ANOTHER v. FUNG, YU & CO (a firm) AND ANOTHER

DAYS IMPEX LTD (in liquidation) AND ANOTHER v. FUNG, YU & CO (a firm) AND ANOTHER

The strike‑out application was dismissed because the plaintiffs' claim against the auditors raised arguable and non‑plainly‑unsustainable issues of law and fact—including the scope of auditors' duty to detect and report fraud, factual and legal causation, attribution/illegality, circuity and limitation—that could not be resolved summarily on strike‑out and required evidence at trial; D2 could not be struck out on the material before the court.

Citation
DAYS IMPEX LTD (in liquidation) AND ANOTHER v. FUNG, YU & CO (a firm) AND ANOTHER
Parties
1st Plaintiff: Days Impex Limited (in liquidation); 2nd Plaintiff: Days International Limited (in liquidation); 1st Defendant: Fung, Yu & Co. (a firm); 2nd Defendant: Fung, Yu & Co. CPA Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
24 October 2017
Case Number
HCA1035/2014
Procedural Posture
Professional Negligence (auditors) / Strike Out Application (chambers Hearing)
Outcome
Strike out application dismissed; SOC not struck out
Legal Topics
Scope of Auditors' Duty, Detection and Reporting of Fraud, Causation (factual and Legal), Illegality and Attribution, Circuity of Action, Limitation (s31 Limitation Ordinance), Successor Liability
Source Language
EN
Professional Negligence Company Law Insolvency Law Civil Procedure Administrative/regulatory Reporting Scope of Auditors' Duty Detection and Reporting of Fraud Causation (factual and Legal) +4 more

Case Brief

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Parties

Days Impex Limited (in liquidation)

1st Plaintiff

Days International Limited (in liquidation)

2nd Plaintiff

Fung, Yu & Co. (a firm)

1st Defendant

Fung, Yu & Co. CPA Limited

2nd Defendant

Procedural Posture

Professional Negligence (auditors) / Strike Out Application (chambers Hearing)

Legal Issues

  1. 1 Whether auditors' duty extended beyond provision of information to detection and reporting of fraud
  2. 2 Whether factual causation existed between alleged audit breaches and the companies' losses
  3. 3 Whether legal causation existed such that auditors' failure was an effective cause of losses

Ratio Decidendi

The strike‑out application was dismissed because the plaintiffs' claim against the auditors raised arguable and non‑plainly‑unsustainable issues of law and fact—including the scope of auditors' duty to detect and report fraud, factual and legal causation, attribution/illegality, circuity and limitation—that could not be resolved summarily on strike‑out and required evidence at trial; D2 could not be struck out on the material before the court.

Court Disposition

Strike out application dismissed; SOC not struck out

Orders

  • Strike out summons dismissed
  • Order nisi that the plaintiffs have the costs of this application, to be taxed if not agreed