Hong Kong Case Law: Decisions & Judgments

Topic

Misappropriation of company funds

Legal area

Court

30 Oct 2025

LOONG SAN INVESTMENT COMPANY LTD AND ANOTHER v. CHEN TING SAN DANIEL also known as CHEN TING SAN and DANIEL CHEN

Citation

[2025] HKCFI 5099
Court

Court of First Instance
Case number

HCA2568/2013

On the totality of contemporaneous material, conduct and expert evidence the court found the deceased father was the beneficial owner of the funds that were held in the defendant's bank accounts and of the withdrawals from Leeloong; the defendant acted as trustee/nominee and was liable to account. The loans recorded in Loong San and Loong Wan (HK$53m and HK$54m) were funded by the father's money and the defendant must account for and repay the misappropriated net withdrawals; defendant's debtor-creditor/loan argument was rejected as inconsistent and a late fabrication.
22 May 2025

GMT INDUSTRIAL LTD v. FAN RONG LI and YAU PAUL as the Administrator of the estate of SELVAM SELVARAJ, deceased

Citation

[2025] HKCFI 2141
Court

Court of First Instance
Case number

HCA546/2015

On the balance of probabilities the court found the liquidators proved that the two payments totalling US$7,000,000 were misappropriated by director Selvaraj in breach of his fiduciary duties, that the estate holds the sums on constructive trust for GMT, and that the defendant failed to justify the receipts or raise any valid defence; accordingly declarations, an account and restitution with equitable compensation and interest were ordered.
26 Nov 2024

WONG CHUN KWONG IVAN AND ANOTHER v. CANADIAN EDUCATION FOUNDATION (CHINA) LTD AND OTHERS

Citation

[2024] HKCFI 3167
Court

Court of First Instance
Case number

HCCW130/2016

The petitioner failed to prove unfairly prejudicial conduct or misappropriation. The court accepted that substantial injections by Fortune/Yeung were loans and, on balance, that the parties agreed at the Fishing Point meeting that those loans bore interest at 6% and were repayable ahead of others; audited accounts reflected the indebtedness and, where qualified, were re-audited to unqualified status when confirmations were provided. The transfer of the School interest to Ms Yeung was justified by PRC regulatory requirements and implemented under a nominee/trust arrangement. There was no estab…
26 Nov 2024

SAN PAK ENGINEERING COMPANY LTD v. CHAN YIK FONG AND ANOTHER

Citation

[2024] HKCFI 3250
Court

Court of First Instance
Case number

HCA201/2020

The Court found on the facts that Mr Chan misappropriated substantial company funds and the 3rd Party assisted or participated; D2's non est factum plea failed because he signed carelessly; the parties concluded and performed a binding Settlement Agreement which discharged the disputes in question (including the 5th Withdrawal); the Letter was not actionable as defamatory in context and alternatively was justified by the truth of the misconduct found; accordingly the Plaintiff's claims and the Defendants' counterclaims and third party claim were dismissed and costs ordered to follow the event…
28 Mar 2024

SECURITIES AND FUTURES COMMISSION v. ZHENG DUNMU AND OTHERS

Citation

[2024] HKCFI 928
Court

Court of First Instance
Case number

HCMP1462/2019

The court found on the evidence that the 3rd respondent, as CFO and executive director, caused or allowed the Company to publish false or misleading placement announcements, procured publication of financial reports overstating cash by RMB251 million by providing and relying on fabricated bank records, and allowed and concealed the misappropriation of HK$163 million to the 1st respondent. Those acts constituted misconduct under s.214(1)(b),(c) and (d) SFO. It was just to make a 10‑year disqualification order and a compensation order requiring payment of HK$163,000,000 with interest, together…
18 Jan 2021

LEADER SCREWS MANUFACTURING CO LTD v. HUANG SHUNKUI

Citation

[2021] HKCFI 141
Court

Court of First Instance
Case number

HCA2067/2019

Retrospective leave to file a defence was refused because the defendant offered no good explanation for a five‑month delay and the draft defence was unarguable on its face; default judgment under Order 19 r7 was entered for the pleaded causes (breach of fiduciary duty, deceit, breach of duty of fidelity and unjust enrichment) for HK$9,037,474.68; compound interest at prime + 1% compounded yearly was awarded (pre- and post-judgment) with pre-judgment interest quantified to 9 October 2020; and the Mareva injunction was varied and continued for six months to freeze the judgment sum and accrued i…
14 May 2019

LIU CHUN KAU ANDY v. HUNG LEE CONSTRUCTION ENGINEERING LTD

Citation

[2019] HKCFI 1269
Court

Court of First Instance
Case number

HCMP527/2019

The court found that the threshold for a 'serious issue to be tried' is met on the pleaded breaches of fiduciary duty, that it is in the company's interests to grant leave because successful claims would result in an account of profits or payments to the company, that the company has not and is unlikely to authorize proceedings due to board/shareholder deadlock, and that the plaintiff acted in good faith; accordingly leave to bring the derivative action should be granted and the plaintiff may make submissions on costs under the statutory scheme.
3 May 2019

NGAI YING CHU JUDY AND ANOTHER v. LEUNG CHI LING VINCY AND ANOTHER

Citation

[2019] HKCFI 1158
Court

Court of First Instance
Case number

HCA991/2015

The contemporaneous documents together with multiple written acknowledgements signed by the Defendant established the existence and quantum of the 1st Plaintiff's loans and prevented a limitation defence; the evidence established that the Defendant withdrew and used company funds for personal purposes, entitling the 2nd Plaintiff to damages; the Defendant's asserted defences were unsupported and rejected, therefore judgment is entered for the Plaintiffs for the specified sums with interest and costs.
18 Apr 2019

XU LIU CHUN v. WU CHANG JIANG AND ANOTHER

Citation

[2019] HKCA 355
Court

Court of Appeal
Case number

CACV380/2018

The Court dismissed the appeal and cross‑appeal: the judge correctly found no misappropriation of the US$9.2 million and that payments were made with the knowledge and consent of the only two shareholders/directors, so the sum could not be treated as a company asset for valuation; Wu failed to prove a resulting trust over Xu's 40% shareholding and consequently Xu is the beneficial owner of 40%; therefore no reinstatement of US$9.2 million in valuation and cross‑appeal fails.
13 Jul 2018

XU LIU CHUN v. WU CHANG JIANG AND ANOTHER

Citation

[2018] HKCFI 1575
Court

Court of First Instance
Case number

HCMP3166/2014

On the evidence petitioner was a beneficial owner of the 40% shares (not a nominee); respondent's unilateral transfer of US$4.4m from the company without authorization and respondent's persistent failure to produce audited accounts/adequate financial information amounted to conduct unfairly prejudicial to petitioner as a member; the earlier US$9.2m withdrawals were not proved to be misappropriation and were made with petitioner's knowledge/consent or were of mixed/uncertain provenance; appropriate remedy is an order that respondent purchase petitioner's shares with valuation at the petition d…