TOP POINT LTD v. K&L GATES (A FIRM OF SOLICITORS)

TOP POINT LTD v. K&L GATES (A FIRM OF SOLICITORS)

The impugned phrases were struck out because, as pleaded, they could be read as relying on mere constructive knowledge or negligence to establish the subjective dishonest intention necessary for claims of sham and conspiracy; where fraud is central, allegations must be pleaded with particularity to show actual or blind‑eye knowledge rather than mere negligence. The firm was granted general leave to amend the pleaded paragraphs to particularize that it relies on actual or blind‑eye knowledge (not mere carelessness) within 21 days.

Citation
[2020] HKCFI 234
Parties
Plaintiff (main Action); Defendant (counterclaim): Top Point Limited; Defendant (main Action); Plaintiff (counterclaim): K&L Gates (a firm of solicitors); Defendant (counterclaim): Geminis Funds SPC; Defendant (counterclaim): Capital Cosmos Financial Limited; Defendant (counterclaim): Evenstar Master Fund SPC; Defendant (counterclaim): Geminis Finance Limited; Defendant (counterclaim): Geminis Capital International Limited; Defendant (counterclaim): Cosmos Media Investments Limited; Defendant (counterclaim): Genpoint International Limited; Defendant (counterclaim): James Ting-Yeh Yang
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
20 January 2020
Case Number
HCA1088/2011
Procedural Posture
Civil Action With Counterclaim and Interlocutory Striking Out Application / Interlocutory — Application to Strike Out Parts of the Re Amended Defence and Counterclaim Prior to Trial
Outcome
Phrases struck out and leave granted to amend; costs ordered nisi in favour of Top Point Parties; case management directions given
Legal Topics
Strike Out, Sham Transaction, Conspiracy to Injure by Unlawful Means, Knowing Receipt, Constructive Knowledge, Blind Eye Knowledge, Particularity in Pleading Fraud, Client Account/escrow Agreements
Source Language
EN
Civil Procedure Equity and Trusts Fraud Commercial Law Professional Negligence Strike Out Sham Transaction Conspiracy to Injure by Unlawful Means +5 more

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Parties

Top Point Limited

Plaintiff (main Action); Defendant (counterclaim)

K&L Gates (a firm of solicitors)

Defendant (main Action); Plaintiff (counterclaim)

Geminis Funds SPC

Defendant (counterclaim)

Capital Cosmos Financial Limited

Defendant (counterclaim)

Evenstar Master Fund SPC

Defendant (counterclaim)

Geminis Finance Limited

Defendant (counterclaim)

Geminis Capital International Limited

Defendant (counterclaim)

Cosmos Media Investments Limited

Defendant (counterclaim)

Genpoint International Limited

Defendant (counterclaim)

James Ting-Yeh Yang

Defendant (counterclaim)

Procedural Posture

Civil Action With Counterclaim and Interlocutory Striking Out Application / Interlocutory — Application to Strike Out Parts of the Re Amended Defence and Counterclaim Prior to Trial

Legal Issues

  1. 1 Whether the phrases "or ought reasonably to have known" and "or ought to have known" in specified paragraphs should be struck out as insufficiently particular and amounting to negligence rather than actual or blind-eye knowledge
  2. 2 Whether a rolled-up plea alleging actual or alternatively constructive knowledge is permissible where fraud or sham is alleged
  3. 3 Whether a sham requires subjective dishonest common intention and cannot be established by mere negligence

Ratio Decidendi

The impugned phrases were struck out because, as pleaded, they could be read as relying on mere constructive knowledge or negligence to establish the subjective dishonest intention necessary for claims of sham and conspiracy; where fraud is central, allegations must be pleaded with particularity to show actual or blind‑eye knowledge rather than mere negligence. The firm was granted general leave to amend the pleaded paragraphs to particularize that it relies on actual or blind‑eye knowledge (not mere carelessness) within 21 days.

Court Disposition

Phrases struck out and leave granted to amend; costs ordered nisi in favour of Top Point Parties; case management directions given

Orders

  • Strike out the words "or ought reasonably to have known" in paragraph 13 of the Re‑Amended Defence and Counterclaim
  • Strike out the words "or ought to have known" in paragraph 32(2) of the Re‑Amended Defence and Counterclaim