CHEN HA PING HEPBURN also known as CHEN HA PING AND ANOTHER v. LEELOONG INVESTMENT COMPANY LTD AND ANOTHER

CHEN HA PING HEPBURN also known as CHEN HA PING AND ANOTHER v. LEELOONG INVESTMENT COMPANY LTD AND ANOTHER

Leave was granted to commence derivative actions on behalf of Loong San and Loong Wan in respect of the misappropriation sum of HK$11,375,108 because the respondent was in possession of company monies without a satisfactory defence or proof of beneficial entitlement; dividends dispute was resolved by the respondent's undertaking and no substantive relief was required; the Loans issue (beneficial ownership of purchase price channeled through respondent's account) was withdrawn by applicants and left to pending private litigation by the founder, thus no leave was granted on that issue and associated costs orders reflected the court's findings on evidence and conduct.

Citation
CHEN HA PING HEPBURN also known as CHEN HA PING AND ANOTHER v. LEELOONG INVESTMENT COMPANY LTD AND ANOTHER
Parties
1st Applicant: CHEN HA PING HEPBURN; 2nd Applicant: CHEN TING HOI; 1st Respondent (hcmp 1380/2013): LOONG SAN INVESTMENT COMPANY LIMITED; 1st Respondent (hcmp 1381/2013): LOONG WAN INVESTMENTS LIMITED; 1st Respondent (hcmp 1383/2013): LEELOONG INVESTMENT COMPANY LIMITED; 2nd Respondent: CHEN TING SAN DANIEL
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
30 April 2014
Case Number
HCMP1383/2013
Procedural Posture
Leave to Commence Statutory Derivative Action Under the Companies Ordinance (cap.32) / Reasons for Judgment (decision on Leave and Costs)
Outcome
Partial grant of leave: leave to commence derivative actions granted for misappropriation claims in respect of Loong San and Loong Wan; dividends dispute resolved by undertaking; Loans issue withdrawn by applicants and not determined on leave application; various costs orders made and certificate for two counsel...
Legal Topics
Statutory Derivative Action, Breach of Fiduciary Duty, Misappropriation of Company Assets, Beneficial Ownership of Loans, Expert Evidence Admissibility, Costs Orders
Source Language
EN
Company Law Trusts and Equitable Remedies Civil Procedure Statutory Derivative Action Breach of Fiduciary Duty Misappropriation of Company Assets Beneficial Ownership of Loans Expert Evidence Admissibility +1 more

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Parties

CHEN HA PING HEPBURN

1st Applicant

CHEN TING HOI

2nd Applicant

LOONG SAN INVESTMENT COMPANY LIMITED

1st Respondent (hcmp 1380/2013)

LOONG WAN INVESTMENTS LIMITED

1st Respondent (hcmp 1381/2013)

LEELOONG INVESTMENT COMPANY LIMITED

1st Respondent (hcmp 1383/2013)

CHEN TING SAN DANIEL

2nd Respondent

Procedural Posture

Leave to Commence Statutory Derivative Action Under the Companies Ordinance (cap.32) / Reasons for Judgment (decision on Leave and Costs)

Legal Issues

  1. 1 Whether leave should be granted to commence derivative actions alleging misappropriation of company funds by a director
  2. 2 Whether alleged loans recorded in company books represent beneficial entitlements of the director or are held on trust for another (beneficial ownership of Loans)
  3. 3 Whether dividends recorded to a director's credit were proprietary to him or to the individual shareholders

Ratio Decidendi

Leave was granted to commence derivative actions on behalf of Loong San and Loong Wan in respect of the misappropriation sum of HK$11,375,108 because the respondent was in possession of company monies without a satisfactory defence or proof of beneficial entitlement; dividends dispute was resolved by the respondent's undertaking and no substantive relief was required; the Loans issue (beneficial ownership of purchase price channeled through respondent's account) was withdrawn by applicants and left to pending private litigation by the founder, thus no leave was granted on that issue and associated costs orders reflected the court's findings on evidence and conduct.

Court Disposition

Partial grant of leave: leave to commence derivative actions granted for misappropriation claims in respect of Loong San and Loong Wan; dividends dispute resolved by undertaking; Loans issue withdrawn by applicants and not determined on leave application; various costs orders made and certificate for two counsel...

Orders

  • Leave granted to institute derivative actions on behalf of Loong San Investment Co Ltd and Loong Wan Investments Ltd in respect of misappropriation of HK$11,375,108
  • No substantive order required in respect of Dividends Issue following respondent's undertaking to reverse dividend entries