Your World of Legal Intelligence
 Hong Kong | 1-800-335-6202

Moulin Global Eyecare Holdings Ltd (In Liquidation) v Olivia Lee Sin Mei

Judgment Cited authorities 30 Cited in Precedent Map Related
Vincent
Judgment Date07 December 2012
Year2012
Citation[2013] 1 HKLRD 744
Judgement NumberCACV161/2012
Subject MatterCivil Appeal
CourtCourt of Appeal (Hong Kong)
CACV155/2012 MOULIN GLOBAL EYECARE HOLDINGS LTD (IN LIQUIDATION) v. OLIVIA LEE SIN MEI

CACV155/2012 and CACV161/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NOS. 155 AND 161 OF 2012

(ON APPEAL FROM HCA NO. 167 OF 2008)

________________________

BETWEEN

MOULIN GLOBAL EYECARE HOLDINGS LIMITED
(IN LIQUIDATION) (formerly known as MOULIN
INTERNATIONAL HOLDINGS LIMITED)		 Plaintiff
and
OLIVIA LEE SIN MEI Defendant

Before: Hon Kwan, Fok and Lam JJA in Court

Dates of Hearing: 18 and 19 September 2012

Date of Judgment: 7 December 2012

________________________

J U D G M E N T

________________________

Hon Kwan JA:

Introduction and background

1. The two appeals before us are against the decisions of Barma J on 27 June 2012 ([2012] 4 HKLRD 263; “the June Decision”) and 3 July 2012 (“the July Decision”). The decisions are in respect of the striking out of certain claims or the disallowance of certain amendments in the statement of claim.

2. The defendant, Olivia Lee Sin Mei, was a former director of the plaintiff, Moulin Global Eyecare Holdings Limited, from 8 December 2000 to 1 November 2004 and a member of its audit committee during her tenure as a director. She had also provided legal advice to the plaintiff as a solicitor, before and after her appointment as a director. This action was commenced against her in 2008 by the plaintiff’s liquidators for breach of duties. In the original statement of claim filed on 15 February 2008, the only claim of the plaintiff[1] was for dividends in the sum of HK$242 million odd (“the Dividends Claim”) and tax and bank fees amounting to HK$102 million odd, on the basis that these sums would not have been paid had the defendant complied with her duties and the plaintiff’s true financial position had been identified.

3. In June 2008, the defendant applied to strike out the whole of the statement of claim and succeeded before Deputy Judge Carlson in April 2009 ([2009] 3 HKLRD 265). The plaintiff’s appeal was allowed and its claim was reinstated by the Court of Appeal on 30 April 2010 ([2010] 2 HKLRD 1096). Following the reinstatement of this action, the plaintiff filed and served an amended statement of claim (“the ASOC”) on 13 May 2010. This was done without leave pursuant to Order 20 rule 3 of the Rules of the High Court.

4. The ASOC is a wholesale replacement of the original pleading. The claim for tax and bank fees was abandoned. Two further claims were introduced, which gave rise to the applications before Barma J and these appeals.

5. Firstly, there is a claim for HK$37,232,000, being the sums paid by the plaintiff to repurchase its own shares between the year ended 31 March 2001 and the year ended 31 December 2003 (“the Share Repurchases Claim”). It was alleged that the defendant was involved in advising the plaintiff on the propriety of the share repurchases, and was in breach of her duties as a director and member of the audit committee by permitting the plaintiff to repurchase its shares when the plaintiff and the Moulin group were insolvent at the time. If the defendant had acted properly and the plaintiff’s true financial position had become known, the plaintiff could not have repurchased its own shares as it did not in fact have any retained earnings, and the plaintiff therefore suffered loss in the amount claimed being the total payments made for this purpose.

6. The other claim is for HK$98,472,648 and US$15 million with interest, being payments made in 2002 and 2003 for the early redemption of certain convertible notes known as the “Chishore Notes” and the “HSBC Notes” (“the Convertible Notes Claim”). The plaintiff’s case is that these notes were redeemed at a time when the plaintiff was insolvent, with the defendant’s active approval and involvement as a director and legal adviser to the plaintiff, in order to conceal breaches of interest covenants on the notes that confirmed the plaintiff was in serious financial difficulty. If the defendant had acted properly and the plaintiff’s true financial position had been identified, these early redemptions would not and could not have been made. The plaintiff therefore suffered loss in the amounts paid for the early redemption of the notes plus interest.

7. By the time the ASOC was filed on 13 May 2010, more than six years had elapsed since the early redemption of the notes and the share repurchases. Before filing the ASOC, the plaintiff had issued a writ against the defendant in a new action on 23 April 2010 making the Share Repurchases Claim and the Convertible Notes Claim, in line with the suggestion of the Court of Appeal at the hearing in April 2010 ([2010] 2 HKLRD 1096 at paras 25 to 26).

8. The defendant applied to strike out the ASOC by summons dated 9 September 2010, as amended on 25 October 2011. This was heard by Barma J in a three-day hearing in April 2012.

9. By the June Decision, Barma J held that:

(1) the Convertible Notes Claim should be struck out on the grounds that:

(a) the plaintiff had suffered no loss by virtue of its early redemption of the notes; and

(b) the claim was in any event a “new cause of action” for the purpose of section 35 of the Limitation Ordinance, Cap 347 and Order 20 rule 5 of the Rules of the High Court, which was time-barred at the time of the filing of the ASOC and did not arise out of “the same or substantially the same facts as a cause of action in respect of which relief has already been claimed in the action”; and

(2) the Share Repurchases Claim should be struck out on the ground in (1)(b).

10. The plaintiff was left to pursue the Share Repurchases Claim in the separate action commenced under the writ in April 2010, which is to be consolidated in due course with this action. To the extent that allegations in relation to the Share Repurchases Claim and the Convertible Notes Claim are sought to be relied on for the remaining Dividends Claim of HK$242 million odd as further particulars of the defendant’s knowledge or knowledge she should have had as to the plaintiff’s financial position at the relevant times, the judge allowed such allegations to remain in the ASOC for that purpose only.

11. The plaintiff appealed against the holdings in (1)(a), (b) and (2). It also appealed against the decision to grant extension of time to the defendant to object to the amendments in the ASOC made without leave, notwithstanding that she had failed to do so within 14 days from the filing of the ASOC, as provided for in Order 20 rule 4. This is CACV 161 of 2012.

12. In the course of the hearing before Barma J in April 2012, the plaintiff proffered a further amendment to the ASOC to advance, as an alternative to the Dividends Claim, the Convertible Notes Claim and the Share Repurchases Claim, a claim for damages quantified by reference to the plaintiff’s increased net deficiency (“IND”). The defendant objected to the amendment on the grounds it was not the subject of any application by summons and it was not properly particularised. The judge directed that the plaintiff should consider and formulate the precise amendment it sought to make and to issue a summons for leave to amend if necessary.

13. On 4 June 2012, the plaintiff duly issued a summons to amend the ASOC to add a new paragraph 399A to a draft further amended statement of claim (“the FASOC”). The draft FASOC was first put forward in a summons to amend the ASOC in September 2011. The proposed amendment in the additional paragraph was to advance an alternative claim for IND of HK$1.23 billion, being the loss suffered by the plaintiff as a result of the defendant’s breaches of duty. Barma J heard this summons on 3 July 2012 and gave his decision on the same day. By the July Decision, the judge held that the alternative claim for IND introduced a new cause of action for limitation purpose but this new cause of action arose out of substantially the same facts as those pleaded in the ASOC in support of the existing relief claimed. He gave leave to amend. Paragraph 399A was then added to the FASOC and it is in these terms:

“Further and in the alternative to paragraph 397 above, Holdings [i.e. the plaintiff] suffered loss of at least HK$1.23 billion constituting the increase in the net deficiency of Holdings from at least 31 March 2001 until the date of appointment of the Provisional Liquidators on 23 June 2005, an increase from a net deficiency of HK$745 million had Provisional Liquidators been appointed as at 31 March 2001 to the actual net deficiency in the winding up of Holdings of HK$1.98 billion.”

14. The defendant appealed against the July Decision giving leave to amend by adding paragraph 399A. This is CACV 155 of 2012. The plaintiff filed a respondent’s notice to contend that the judge had erred in holding that the alternative claim for IND introduced a new cause of action.

The issues in the two appeals

15. Thus, the broad issues to be resolved in these appeals are as follows:

(1) if no loss was suffered by the plaintiff on the facts alleged in the Convertible Notes Claim;

(2) if the Share Repurchases Claim and the Convertible Notes Claim were new causes of action for limitation purpose;

(3) if the Share Repurchases Claim and the Convertible Notes Claim arose out of the same or substantially the same facts as those pleaded in support of the existing claim;

(4) if extension of time should be granted to object to the amendments in the ASOC made without leave;

(5) if the alternative claim for IND was a new cause of action for limitation purpose; and

(6) if the claim for IND arose out of the same or substantially the same facts as those pleaded in support of the existing claim.

16. They will be discussed in the above order.

If...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT