YIFUNG DEVELOPMENTS LTD v. LIU CHI KEUNG, RICKY AND OTHERS

YIFUNG DEVELOPMENTS LTD v. LIU CHI KEUNG, RICKY AND OTHERS

The court refused to strike out the plaintiff's claim on causation, finding the defendants' causation argument was an abuse of process and, in any event, raised factual issues about available assets and contractual extensions that could not be resolved on strike-out; the court also refused to strike out the defendants' indemnity defence and cross-claim because the enforceability and scope of the articles indemnity under BVI law presented disputed legal and factual issues (including expert disagreement and questions of actual knowledge/incorporation) requiring a trial and particularised pleadings.

Citation
[2019] HKCFI 388
Parties
Plaintiff: Yifung Developments Ltd; 1st Defendant: Liu Chi Keung, Ricky; 2nd Defendant: Ho Sing Chung, Robert; 3rd Defendant: Choy Siu Fung, Rebecca; Third Party: Hidemoto Ka Wai
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
22 February 2019
Case Number
HCA3020/2015
Procedural Posture
Civil (company/directors' Duties) / Chambers Strike Out Hearing and Judgment on Interlocutory Applications
Outcome
Both the defendants' and the plaintiff's strike-out summonses dismissed; indemnity defence and causation issues to proceed to trial after amendment and particulars
Legal Topics
Directors' Duties, Indemnity in Articles of Association, Abuse of Process (henderson V Henderson), Causation in Breaches of Duty, Circuity of Action
Source Language
EN
Company Law Contract Law Equity and Trusts Civil Procedure Directors' Duties Indemnity in Articles of Association Abuse of Process (henderson V Henderson) Causation in Breaches of Duty +1 more

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Parties

Yifung Developments Ltd

Plaintiff

Liu Chi Keung, Ricky

1st Defendant

Ho Sing Chung, Robert

2nd Defendant

Choy Siu Fung, Rebecca

3rd Defendant

Hidemoto Ka Wai

Third Party

Procedural Posture

Civil (company/directors' Duties) / Chambers Strike Out Hearing and Judgment on Interlocutory Applications

Legal Issues

  1. 1 Whether the plaintiff's claim should be struck out for failure to establish causation between alleged breaches and loss
  2. 2 Whether regulation 15.1 of the articles (a BVI law indemnity) provides a defence to the company's claim or gives rise to circuity of action
  3. 3 Whether the defendants' causation argument is an abuse of process of the Henderson v Henderson type

Ratio Decidendi

The court refused to strike out the plaintiff's claim on causation, finding the defendants' causation argument was an abuse of process and, in any event, raised factual issues about available assets and contractual extensions that could not be resolved on strike-out; the court also refused to strike out the defendants' indemnity defence and cross-claim because the enforceability and scope of the articles indemnity under BVI law presented disputed legal and factual issues (including expert disagreement and questions of actual knowledge/incorporation) requiring a trial and particularised pleadings.

Court Disposition

Both the defendants' and the plaintiff's strike-out summonses dismissed; indemnity defence and causation issues to proceed to trial after amendment and particulars

Orders

  • The Defendants' summons and the Plaintiff's summons are each dismissed.
  • There will be an order nisi that the Defendants should pay the Plaintiff's costs to be taxed, if not agreed, on the indemnity basis in respect of the Plaintiff's opposition to the Defendants' causation argument and on the standard basis in respect of the Plaintiff's opposition to the Defendants' indemnity argument.