YEARICH LTD v. MOSTOP LTD AND OTHERS

YEARICH LTD v. MOSTOP LTD AND OTHERS

The court held that allegations must, in substance, concern the conduct of the affairs of the subject company to sustain a s.168A petition; where a company is dormant or a shelf company with no assets or activity, allegations about misconduct in other active companies are insufficient as a matter of law to found unfairly prejudicial relief. Applying that test the petitions for four shelf companies were plainly untenable and struck out, while petitions concerning property‑holding companies, Sparkling Wine, Step Further and Insomnia Singapore were not plainly unarguable and therefore were retained and permitted to be amended and consolidated with the High Court Action.

Citation
YEARICH LTD v. MOSTOP LTD AND OTHERS
Parties
Petitioner: Anthony James Hatton; Petitioner (beneficially Owned by Anthony Hatton): Yearich Limited; 2nd Petitioner in HCMP 1208/2007: Rustem Limited; 1st Respondent / 1st Defendant: Dorothy Jane Furness; 2nd Respondent / 2nd Defendant: Raphael Homer Echaluce; 3rd Respondent / Nominal Respondent: Stephen Smout; Management Company / 1st Plaintiff / 4th Respondent in Petitions: Step By Step Limited; Subject Company / Plaintiff: Step Up Limited; Subject Company / Operator of All Night Long: Step Further Limited; Subject Company / 2nd Plaintiff: New Success Enterprises Limited; Subject Company (singapore): Insomnia Live Music Pte Limited; Property‑holding Subject Company: Glory Sun Investments Limited; Property‑holding Subject Company: Step Onward Limited; Shelf Company Subject: Rich Sun International Limited; Property‑holding Subject Company: New Sun Development Limited; Shelf Company Subject: Harbour Sun Limited; Shelf Company Subject: Gain Sun International Limited; Property‑holding Subject Company: Excel Sun Limited; Shelf Company Subject: Step Higher Limited; Intellectual Property Holding Subject Company: Sparkling Wine International Limited; Defendant in High Court Action / Operator of Sticky Fingers: Entertainment Company Limited; Defendant in High Court Action / to Operate Spicy Fingers: Mad Dogs Wanchai Public House Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
26 October 2007
Case Number
HCMP847/2007
Procedural Posture
Companies Ordinance S.168 a Unfair Prejudice Petitions and Related High Court Civil Action HCA 2712/2006 / Chamber Decision on Strike‑out, Amendment and Consolidation Summonses; Directions and Orders Given
Outcome
Partial allowance and partial dismissal of strike‑out applications; four petitions struck out; amendments permitted to remaining petitions; consolidation orders made to join HCMP 1208/2007 and HCA 2712/2006 with specified consolidated petitions; costs directions made
Legal Topics
Unfairly Prejudicial Conduct (s.168 A), Strike Out Under Order 18 R 19(1), Consolidation of Proceedings, Amendment of Petitions, Constructive Trusts and Proprietary Relief
Source Language
EN
Company Law Equity and Fiduciary Duties Civil Procedure Unfairly Prejudicial Conduct (s.168 A) Strike Out Under Order 18 R 19(1) Consolidation of Proceedings Amendment of Petitions Constructive Trusts and Proprietary Relief

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Parties

Anthony James Hatton

Petitioner

Yearich Limited

Petitioner (beneficially Owned by Anthony Hatton)

Rustem Limited

2nd Petitioner in HCMP 1208/2007

Dorothy Jane Furness

1st Respondent / 1st Defendant

Raphael Homer Echaluce

2nd Respondent / 2nd Defendant

Stephen Smout

3rd Respondent / Nominal Respondent

Step By Step Limited

Management Company / 1st Plaintiff / 4th Respondent in Petitions

Step Up Limited

Subject Company / Plaintiff

Step Further Limited

Subject Company / Operator of All Night Long

New Success Enterprises Limited

Subject Company / 2nd Plaintiff

Insomnia Live Music Pte Limited

Subject Company (singapore)

Glory Sun Investments Limited

Property‑holding Subject Company

Step Onward Limited

Property‑holding Subject Company

Rich Sun International Limited

Shelf Company Subject

New Sun Development Limited

Property‑holding Subject Company

Harbour Sun Limited

Shelf Company Subject

Gain Sun International Limited

Shelf Company Subject

Excel Sun Limited

Property‑holding Subject Company

Step Higher Limited

Shelf Company Subject

Sparkling Wine International Limited

Intellectual Property Holding Subject Company

Entertainment Company Limited

Defendant in High Court Action / Operator of Sticky Fingers

Mad Dogs Wanchai Public House Limited

Defendant in High Court Action / to Operate Spicy Fingers

Procedural Posture

Companies Ordinance S.168 a Unfair Prejudice Petitions and Related High Court Civil Action HCA 2712/2006 / Chamber Decision on Strike‑out, Amendment and Consolidation Summonses; Directions and Orders Given

Legal Issues

  1. 1 Whether acts or omissions by other related companies or by shareholders/directors in their personal capacity can be treated as conduct of the subject company’s affairs for s.168A purposes
  2. 2 Whether each petition discloses a reasonable cause of action or is frivolous/vexatious/abuse of process
  3. 3 Whether consolidation of petitions with the High Court Action is appropriate and expedient

Ratio Decidendi

The court held that allegations must, in substance, concern the conduct of the affairs of the subject company to sustain a s.168A petition; where a company is dormant or a shelf company with no assets or activity, allegations about misconduct in other active companies are insufficient as a matter of law to found unfairly prejudicial relief. Applying that test the petitions for four shelf companies were plainly untenable and struck out, while petitions concerning property‑holding companies, Sparkling Wine, Step Further and Insomnia Singapore were not plainly unarguable and therefore were retained and permitted to be amended and consolidated with the High Court Action.

Court Disposition

Partial allowance and partial dismissal of strike‑out applications; four petitions struck out; amendments permitted to remaining petitions; consolidation orders made to join HCMP 1208/2007 and HCA 2712/2006 with specified consolidated petitions; costs directions made

Orders

  • Petitions in HCMP Nos. 846, 848, 849 and 851 of 2007 are struck out and dismissed
  • Applications to strike out the petitions in HCMP Nos. 840, 842, 843, 845, 847 and 850 of 2007 are dismissed