LEE JONG RONG AND ANOTHER v. GREAT CHOICE CONSULTANTS LTD AND OTHERS

LEE JONG RONG AND ANOTHER v. GREAT CHOICE CONSULTANTS LTD AND OTHERS

The trust allegation was struck out because it was inherently inconsistent with the pleaded and documented corporate restructuring establishing D1 as a holding company, contradicted by contemporaneous documents (allotments, declarations, balance sheets) and presented in three mutually inconsistent versions; consequently the express trust claim disclosed no reasonable cause of action and was not believable. Separately, numerous paragraphs in Parts V–VI and specified paragraphs irrelevant to the sole cause of action against D3–D6 were struck out as prejudicial and unnecessary for trial.

Citation
LEE JONG RONG AND ANOTHER v. GREAT CHOICE CONSULTANTS LTD AND OTHERS
Parties
1st Plaintiff: Lee Jong Rong; 2nd Plaintiff: Chan Mei Chun; 1st Defendant: Great Choice Consultants Limited; 2nd Defendant: K & A International Company Limited; 3rd Defendant: Liu Chin Chen; 4th Defendant: Lee Tzu Chen Jerry; 5th Defendant: Tsui Kam Chuen Clive; 6th Defendant: Yeh Wen Sen
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
27 January 2017
Case Number
HCA789/2014
Procedural Posture
Civil Appeal (striking Out Application) / Judgment on Striking Out Application
Outcome
Claim against D1 and D2 struck out; specified paragraphs of the Statement of Claim struck out as to D3–D6; D3–D6 ordered to file defence; costs awards made.
Legal Topics
Striking Out, Express Trust Over Shares, Holding Company Structure, Separate Legal Personality, Abuse of Process, Winding Up Proceedings
Source Language
EN
Company Law Trusts and Equity Civil Procedure Corporate Governance Striking Out Express Trust Over Shares Holding Company Structure Separate Legal Personality +2 more

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Parties

Lee Jong Rong

1st Plaintiff

Chan Mei Chun

2nd Plaintiff

Great Choice Consultants Limited

1st Defendant

K & A International Company Limited

2nd Defendant

Liu Chin Chen

3rd Defendant

Lee Tzu Chen Jerry

4th Defendant

Tsui Kam Chuen Clive

5th Defendant

Yeh Wen Sen

6th Defendant

Procedural Posture

Civil Appeal (striking Out Application) / Judgment on Striking Out Application

Legal Issues

  1. 1 Whether the shares of the subsidiary (D2) were held on trust by the holding company (D1) for the individual contributors
  2. 2 Whether the trust allegation in the Statement of Claim disclosed a reasonable cause of action or was inherently incredible and subject to striking out
  3. 3 Whether specified paragraphs in Parts V and VI and other paragraphs of the Statement of Claim are irrelevant and should be struck out as prejudicial or an abuse of process

Ratio Decidendi

The trust allegation was struck out because it was inherently inconsistent with the pleaded and documented corporate restructuring establishing D1 as a holding company, contradicted by contemporaneous documents (allotments, declarations, balance sheets) and presented in three mutually inconsistent versions; consequently the express trust claim disclosed no reasonable cause of action and was not believable. Separately, numerous paragraphs in Parts V–VI and specified paragraphs irrelevant to the sole cause of action against D3–D6 were struck out as prejudicial and unnecessary for trial.

Court Disposition

Claim against D1 and D2 struck out; specified paragraphs of the Statement of Claim struck out as to D3–D6; D3–D6 ordered to file defence; costs awards made.

Orders

  • Plaintiffs' action against D1 and D2 struck out with costs to D1 and D2, to be taxed on party-party basis if not agreed
  • Certificate for counsel in respect of the hearing of D1 and D2's summons on 28 July 2016