CHINA MEDICAL TECHNOLOGIES, INC. (IN LIQUIDATION) v. WU XIAODONG AND OTHERS

CHINA MEDICAL TECHNOLOGIES, INC. (IN LIQUIDATION) v. WU XIAODONG AND OTHERS

On the available evidence the Plaintiffs demonstrated a genuine and strong case of large‑scale misappropriation supported by multiple independent documentary and witness sources; ordering security would require the alleged victims to pay to protect the alleged perpetrator, and the defendant's contempts, absconding and foreign indictment further militated against granting security; accordingly the court exercised its discretion to dismiss the security application and decline to order security for costs.

Citation
[2022] HKCFI 3237
Parties
1st Plaintiff (in Liquidation): China Medical Technologies, Inc; 2nd Plaintiff: CMED Technologies Ltd; 3rd Plaintiffs (joint and Several Liquidators of China Medical Technologies, Inc (in Liquidation)): Cosimo Borrelli and Yuen Lai Yee; 1st Defendant: Wu Xiaodong; 2nd Defendant: Samson Tsang Tak Yung; 7th Defendant: Supreme Well Investments Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
21 October 2022
Case Number
HCA1417/2013
Procedural Posture
Civil Company Insolvency, Fraud and Ancillary Interlocutory Applications / Interlocutory Application for Security for Costs Under RHC O 23 R 1 and S 905 Companies Ordinance
Outcome
Summons for security for costs dismissed; order nisi for costs in favour of Plaintiffs against Mr Tsang
Legal Topics
Security for Costs, Breach of Fiduciary Duty, Misappropriation of Assets, Mareva Injunction, Contempt of Court, Assessment of Merits on Interlocutory Applications
Source Language
EN
Company Law Civil Procedure Trusts and Fiduciary Duties Fraud Criminal Extradition and Contempt Security for Costs Breach of Fiduciary Duty Misappropriation of Assets +3 more

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Parties

China Medical Technologies, Inc

1st Plaintiff (in Liquidation)

CMED Technologies Ltd

2nd Plaintiff

Cosimo Borrelli and Yuen Lai Yee

3rd Plaintiffs (joint and Several Liquidators of China Medical Technologies, Inc (in Liquidation))

Wu Xiaodong

1st Defendant

Samson Tsang Tak Yung

2nd Defendant

Supreme Well Investments Limited

7th Defendant

Procedural Posture

Civil Company Insolvency, Fraud and Ancillary Interlocutory Applications / Interlocutory Application for Security for Costs Under RHC O 23 R 1 and S 905 Companies Ordinance

Legal Issues

  1. 1 Whether security for costs should be ordered under RHC O 23 r 1 and s 905 Companies Ordinance
  2. 2 Extent to which the court may consider merits when exercising discretion for security for costs
  3. 3 Whether impecuniosity caused by alleged wrongdoing precludes ordering security

Ratio Decidendi

On the available evidence the Plaintiffs demonstrated a genuine and strong case of large‑scale misappropriation supported by multiple independent documentary and witness sources; ordering security would require the alleged victims to pay to protect the alleged perpetrator, and the defendant's contempts, absconding and foreign indictment further militated against granting security; accordingly the court exercised its discretion to dismiss the security application and decline to order security for costs.

Court Disposition

Summons for security for costs dismissed; order nisi for costs in favour of Plaintiffs against Mr Tsang

Orders

  • Summons for security for costs dismissed
  • Order nisi that costs of and occasioned by the summons be to the Plaintiffs, to be taxed if not agreed, and paid by Mr Tsang forthwith