Hong Kong Case Law: Decisions & Judgments

Topic

Misapplication of company funds

Legal area

Court

20 Jul 2018

TONG YUEN MAN AND ANOTHER v. CHINA HABIT LTD

Citation

[2018] HKCFI 1703
Court

Court of First Instance
Case number

HCA1384/2013

On the evidence the court found there was no express or resulting trust in favour of Ng and Tong, no enforceable quasi-partnership or common understanding of a 50/50 joint venture, and the allegations of unfair prejudice were not made out to a degree warranting winding up or compulsory purchase; accordingly the petition and the ownership claim were dismissed though there was a breakdown of trust between the parties.
17 Jan 2008

THE OFFICIAL RECEIVER v. LAM KWOK SHING AND ANOTHER

Citation

THE OFFICIAL RECEIVER v. LAM KWOK SHING AND ANOTHER
Court

Court of First Instance
Case number

HCMP2240/2007

The court found on the balance of probabilities that the respondents were directors (including de facto), that the three companies were insolvent, that the respondents breached statutory duties to keep accounts and file statements and misapplied company funds by directing payments to companies they controlled; these findings rendered them unfit to be concerned in company management and mandated disqualification under s.168H. Applying Schedule 15 factors and the bracket approach, the court imposed a two‑year disqualification on the 1st respondent (after a six‑month discount for mitigation) and…
12 Dec 2006

YIP KWAI CHOR v. KING FUNG CONTRUCTION WORK CO LTD AND ANOTHER

Citation

YIP KWAI CHOR v. KING FUNG CONTRUCTION WORK CO LTD AND ANOTHER
Court

Court of First Instance
Case number

HCMP375/2005

The court found that on the balance of probabilities Lau had misapplied Company funds in several specific series of cheque withdrawals, had wrongfully diverted the West Kowloon subcontract to Brother Eng. in which he had an interest, that the back-to-back site-transfer arrangement resulted in an established claim by the Company against Sing Yip for $3,247,828 but that the Company\'s claimed excess expenditure on the two sites became nil after disallowance of unreliable items; the five payments of $2.5m to Yip were not proven to be recoverable loans; the appointment of Wong and the purported r…
3 Nov 2005

THE OFFICIAL RECEIVER v. CARSTEN MANFRED HANS-MARTIN-FRANK

Citation

THE OFFICIAL RECEIVER v. CARSTEN MANFRED HANS-MARTIN-FRANK
Court

Court of First Instance
Case number

HCMP4868/2003

The respondent misapplied substantial company funds causing insolvency and failed to cooperate with the Official Receiver and court process; such conduct falls within the mandatory disqualification regime and justifies a five-year disqualification (top of the 2-5 year bracket) to protect creditors and the public.
7 Sept 2005

THE OFFICIAL RECEIVER v. SIT JOHNNY (FORMERLY SIT CHING)

Citation

THE OFFICIAL RECEIVER v. SIT JOHNNY (FORMERLY SIT CHING)
Court

Court of First Instance
Case number

HCMP177/2003

The respondent's unauthorised use of company funds (US$250,000) and failure to account for substantial transfers (US$4,000,000 converted to RMB with large unexplained sums), combined with convictions for failing to keep proper books, failure to file statutory returns and failure to deliver a statement of affairs, established that he was unfit under s168H when assessed against the matters in the 15th Schedule; because the respondent and his witnesses did not attend for cross-examination their affirmations were excluded, leaving the Official Receiver's evidence uncontradicted and mandating a di…
6 Dec 2004

THE OFFICIAL RECEIVER v. FAN SIU TING AND ANOTHER

Citation

THE OFFICIAL RECEIVER v. FAN SIU TING AND ANOTHER
Court

Court of First Instance
Case number

HCMP916/2004

On the balance of probabilities OR proved that both respondents breached their duties as directors by failing to keep proper accounting records, misapplying company funds and contributing to insolvency; procedural notice shortfall under s168P was directory and not fatal; disqualification under s168H in the public interest was warranted with periods of five years for the 1st respondent and four years for the 2nd respondent after mitigation; costs to OR ordered.
18 Apr 2002

THE OFFICIAL RECEIVER v. LAM WAI KEUNG

Citation

THE OFFICIAL RECEIVER v. LAM WAI KEUNG
Court

Court of First Instance
Case number

HCMP4110/2001

Given the respondent's convictions for offences connected to the company, the unexplained loss of substantial deposits, failure to keep statutory books, default in statutory filings and failure to provide a satisfactory explanation despite opportunity, the court found him unfit to act and imposed an eight‑year disqualification commencing 21 days after the order.
8 Oct 1998

HWANG DA-LIN AND ANOTHER v. WONG CHING MAN AND OTHERS

Citation

HWANG DA-LIN AND ANOTHER v. WONG CHING MAN AND OTHERS
Court

Court of First Instance
Case number

HCCW643/1996

The petitioner established unfairly prejudicial conduct by the controlling family members (misapplication of TLI funds to benefit Sea Giant, wrongful write‑offs, misappropriation of cash rental, usurpation of director powers and continuing advances after proceedings) justifying relief under s.168A. The court ordered a buy‑out of the petitioner’s 30% holding with valuation to be assessed as at the petition date (1 November 1996) subject to adjustments to disregard effects of oppressive conduct (include Sea Giant advances, interest subsidies, Pointe Claire write‑off, advances after the TLC peti…
13 Mar 1997

JENCO LTD. v. EASTERN FLOWER LTD. AND OTHERS

Citation

JENCO LTD. v. EASTERN FLOWER LTD. AND OTHERS
Court

Court of First Instance
Case number

HCCW631/1996

The court found a prima facie case for winding up based on a breakdown of mutual trust in a quasi‑partnership, and concluded the companys assets were put in jeopardy by unexplained transfers to Hung Wan Construction Company Limited for a high‑risk Shanghai project; proposed undertakings were inadequate, and therefore provisional liquidators should be appointed to protect the company and its creditors before determining further relief.