Hong Kong Case Law: Decisions & Judgments

Topic

Related party transactions

Legal area

Court

13 Sept 2024

SECURITIES AND FUTURES COMMISSION v. ZHOU LING AND OTHERS

Citation

[2024] HKCFI 2484
Court

Court of First Instance
Case number

HCMP2067/2020

Court held R1 and R2 breached their duties in the 1st Acquisition by failing to disclose personal loan/interest relationships with Zhao and by permitting announcements to describe Zhao as an independent third party; the alleged Artificial Transactions (Drug, Tamiflu, Unasyn, Contractubex, Coniel) were genuine commercial transactions supported by contemporaneous market research and actual trading and did not constitute misfeasance or misconduct; the HK$26,000,000 payment in the 2nd Acquisition was a genuine loan from Wang to R1 evidenced by a loan agreement and subsequent repayments, not a sec…
28 Jun 2024

SHOWN WAI INVESTMENT COMPANY LTD v. HUI YIP WING DAVID

Citation

[2024] HKCFI 1477
Court

Court of First Instance
Case number

HCA2959/2015

The plaintiff's claim is dismissed: the court found no properly pleaded cause of action based on de facto directorship and, on the evidence, the defendant was not a de facto director at the relevant time; in any event the defendant's conduct fell within his roles as Group General Manager/Chime director/authorised representative, adequate disclosure had been made (employment contracts and verbal disclosure to Director of Corporate Governance), no real possibility of a conflict or breach of duty was established, causation was not proved and the plaintiff failed to mitigate losses by accepting a…
7 Oct 2022

GENERAL-LITE GROUP CORP. v. T & L SECURITIES LTD

Citation

[2022] HKCFI 3080
Court

Court of First Instance
Case number

HCMP2113/2021

The court found the plaintiff acted in good faith and had proper shareholder purposes related to corporate interest; the application was not a personal application in disguise given the plaintiff’s control and circumstances; reliance on findings from the other judgment was not essential because direct evidence supported the key facts; the breadth of the request was not per se indicative of bad faith but the temporal scope must be reasonable. The court granted the inspection order in part, modifying the request for audited financial statements to cover financial years ended 31 March 2012 to 31…
27 Jan 2021

CHUNG PUI TAK AND ANOTHER v. TAM CHI LEUNG NOLAN AND ANOTHER

Citation

[2021] HKCFI 242
Court

Court of First Instance
Case number

HCA1439/2012

On the evidence the court found the JV Agreement—rather than an Option Agreement—included the term that P1 held a 40% beneficial interest in D2 (trust), and P1 had made initial capital payments accordingly; D1, as director and controlling participant, owed fiduciary duties to P2 (given P2’s role as pocket/agent for the joint venture) and breached those duties by entering undisclosed conflicted related‑party dealings and by failing to produce or satisfactorily explain accounting records for management fees, subcontracting fees, transportation payments, supplier invoices, cash withdrawals, two…
16 Apr 2020

CYBERWORKS AUDIO VIDEO TECHNOLOGY LTD (In Compulsory Liquidation) v. SILVER KENT TECHNOLOGY LTD

Citation

[2020] HKCFI 398
Court

Court of First Instance
Case number

HCA2780/2006

On the evidence Tong acted as a de facto director after resignation and MAEGL was a shadow director from 28 July 2000; the Company was balance‑sheet insolvent by Q3/Q4 1999; deliberate under‑reporting of licensed production, sale of assets by ante‑dated/after‑the‑event entries and interposition of Silver Kent diverted value to the group and breached duties; breaches were dishonest so Limitation Ordinance s 20 applied; Remedy entitled to equitable compensation: HK$29,694,615 against Tong and HK$20,251,901 against MAEGL; claims under MAHK and the Silver Kent agreement dismissed and Silver Kent…
16 Apr 2020

CYBERWORKS AUDIO VIDEO TECHNOLOGY LTD (In Compulsory Liquidation) v. MEI AH (HK) CO LTD

Citation

[2020] HKCFI 398
Court

Court of First Instance
Case number

HCA677/2006

Court found on balance that Tong remained a de facto director after resignation and MAEGL was a shadow director from at least 28 July 2000; the Company deliberately under‑reported production and royalties (large, systematic understatement) and sold assets/transferred sales to related parties at undervalue while insolvent or nearing insolvency (insolvency triggered by Q3/Q4 1999 using full contractual royalty rates); those acts amounted to dishonest breaches of fiduciary duties and/or facilitated dishonest assistance; section 20 Limitation Ordinance prevented limitation defence to primary frau…
22 Jan 2020

WONG LUEN HANG AND ANOTHER v. TOPMIX INDUSTRIAL LTD AND OTHERS

Citation

[2020] HKCFI 245
Court

Court of First Instance
Case number

HCMP1065/2019

Plaintiffs established a proper purpose and a sufficiently reasonable case for investigation of the legal expenses, the increase in directors' debts and the FRL-related debts because auditors disclaimed opinions, defendants provided inconsistent and inadequate explanations and had not disclosed relevant documents in ongoing derivative proceedings; accordingly the court exercised its discretion to order production and inspection of specified documents relating to those three issues under section 740, while refusing overly broad requests for wholesale inspection of all books without justificati…
4 Feb 2010

RE GOLDEN SAND TRADING LTD

Citation

RE GOLDEN SAND TRADING LTD
Court

Court of First Instance
Case number

HCCW85/2009

The respondent discharged its onus by adducing sufficient evidence (banking records, invoices, delivery orders, supplier confirmations and audited accounts) to establish a bona fide dispute on substantial grounds as to whether the transfers were advances owed by the respondent; accordingly the winding-up petition was dismissed and the petitioner ordered to pay costs on a party-and-party basis.
29 Jun 2007

KA WAH CONTAINER STORAGE LTD v. SUPER EASTERN LTD AND OTHERS

Citation

KA WAH CONTAINER STORAGE LTD v. SUPER EASTERN LTD AND OTHERS
Court

Court of First Instance
Case number

HCCW238/2006

Payments to Well River were properly validated because they were incurred and continuing in the ordinary course of the companies' business, there was no evidence the rates were excessive, and the validation orders were expressly made without prejudice to the petitioners' substantive allegations; therefore interlocutory validation was appropriate and conditions for production of employment contracts were unnecessary.
7 Feb 2007

LSHH v. MTKK

Citation

LSHH v. MTKK
Court

Family Court
Case number

FCMC12642/2005

The court exercised its discretion under R.77(4) to grant a limited inspection: auditors' reports are not displaced absent expert evidence of unreliability, but because the petitioner raised specific, substantiated concerns (possible related party subcontracting charges and the significance of WIP to company value) the court ordered inspection limited to accounting records for the subcontracting charges between the HK and Shanghai companies (1 Jan 2003–31 Jul 2005) and all books/documents relating to WIP of the HK company for the same period; wider inspection was refused and the husband was o…