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Suen Wah Fai And Another v Cis Global Opportunities Fund Spc And Others

Judgment Cited authorities 7 Cited in Precedent Map Related
Vincent
JurisdictionHong Kong
Judgment Date28 September 2023
Neutral Citation[2023] HKCFI 2493
Subject MatterCivil Action
Judgement NumberHCA699/2022
Year2023
HCA699/2022 SUEN WAH FAI AND ANOTHER v. CIS GLOBAL OPPORTUNITIES FUND SPC AND OTHERS

HCA 699/2022

[2023] HKCFI 2493

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 699 OF 2022

________________________

有關坤達實業投資有限公司 (Kwong Da Enterprises Limited) (公司編號: 164433) 的事宜
有關達深有限公司 (Top Rich Incorporation Limited) (公司編號: 2281087) 的事宜
有關香港法例第622章《公司條例》第42條的事宜

________________________

BETWEEN

孫嬅徽 (Suen Wah Fai) 1st Plaintiff
林懋達 (Lam Mau Tat) 2nd Plaintiff
and
CIS 環球機遇基金獨立投資有限公司 1st Defendant
(CIS Global Opportunities Fund SPC)
坤達實業投資有限公司 2nd Defendant
(Kwong Da Enterprises Limited)
達深有限公司 (Top Rich Incorporation Limited) 3rd Defendant
VIA Asset Management Limited 4th Defendant
鍾浩為 (Chung Ho Wai Alan) 5th Defendant
郭柏權 (Kwok Pak Kuen) 6th Defendant
麥光耀 (Mak Kwong Yiu Mark) 7th Defendant
上海坤達匯融資租賃有限公司 8th Defendant
公司註冊處處長 (The Registrar of Companies) 9th Defendant

________________________

Before: Deputy High Court Judge H. Au-Yeung in Chambers (Open to Public)
Date of Hearing: 23 August 2023
Date of Decision: 28 September 2023

________________________

DECISION

________________________

INTRODUCTION

1. Pursuant to a summons filed by the 5th defendant (“Chung”) and the 6th defendant (“Kwok”), Master Connie Lee ordered on 13 December 2022 that the Writ of Summons and Statement of Claim as against them be struck out on the ground that the Statement of Claim discloses no reasonable cause of action (“Master’s Decision”) under Order 18 rule 19(1)(a) of the Rules of the High Court (Cap.4A, Laws of Hong Kong) (“RHC”).

2. This is the appeal of the plaintiffs against the learned Master’s Decision.

LEGAL PRINCIPLES

3. It is well established that an appeal against Master’s decision is dealt with by way of an actual rehearing of the application which led to the order under appeal, and the judge treats the matter as though it came before him for the first time. The judge will give the weight it deserves to the previous decision of the Master, but he is in no way bound by it. The judge in chambers is in no way fettered by the previous exercise of the Master’s decision. (Hong Kong Civil Procedure 2023, Volume 1, paragraph 58/1/2).

4. The legal principles applicable to a striking out application are trite. In Polyline Development Limited (寶富來發展有限公司) (in liquidation) v Ching Lin Chuen (程練傳) & Others [2021] HKCFI 483, Mr Recorder Manzoni SC had summarised the same as follows:

“10. As a matter of general principle, it is trite that:

(1) a strikeout application will only be successful in a plain and obvious case. The claim must be obviously unsustainable, the pleadings unarguably bad and it must be impossible, not just improbable, for the claim to succeed before the court will strike it out.

(2) However, plain is not the same as simple, and obvious is not the same as short. If, on a careful reading of the statement of claim, however complicated, it can be seen that there is no cause of action or the claim will obviously not succeed, then it will be struck out despite the apparent complexity.

(3) There should be no trial upon affidavit and disputed facts should be taken in favour of the party sought to be struck out. Where the legal viability of a cause of action is sensitive to the facts, an order to strikeout should not be made. However, the court should remain vigilant to ensure that its processes are not abused by the prosecution of hopeless claims.

(4) The court should not decide difficult points of law in striking out proceedings.

(5) It is for the party seeking to strikeout the pleading to demonstrate that the case is a plain and obvious one in which the other party’s claim is bound to fail. However, in the context of limitation, once a limitation defence is raised, the onus is on the plaintiff to prove that the cause of action relied upon accrued within the limitation period, even in a strike out application.

11. Insofar as the application is premised upon the proposition that there is no reasonable cause of action, I must proceed on the basis that the facts alleged in the statement of claim will be established. No evidence is admissible in relation to this limb of the applications and I must address the matter simply on the basis of what is pleaded. Where a pleading is defective only in not containing particulars to which the other side is entitled the correct approach is to order particulars rather than strikeout the pleading.”

5. In relation to [10(4)] of the decision quoted above, Ma J (as his Lordship then was) had given his guidance in his Judgment in Chuang Yue Chien Eugene v Ho Yau Kwong Kevin [2002] 4 HKC 245 at [14(3)] as follows:

“Questions of law may be dealt with in a strike out application provided that the underlying facts are certain. It is sometimes said that the court may decline to determine difficult questions of law in a strike out application: see Hong Kong Civil Procedure 2002, Vol.1, at paragraph 18/19/4. This would therefore explain why applications such as the present one are sometimes made in the alternative under Order 14A or even Order 33, rule 3: see Hong Kong Civil Procedure 2002, Vol.1, at paragraphs 8/19/3 (at paragraph 5) and 18/19/4. In my view, questions of law can be determined in strike out applications provided that they are crucial and the court has all the relevant facts before it and that these facts are certain. There is, on the other hand, little point in dealing with any points of law, whether in strike out applications or applications under Order 14A or under Order 33, rule 3, if the relevant facts are either not before the court or are in dispute.”

THE PLAINTIFFS’ PLEADED CASE

6. The plaintiffs’ case as pleaded in their Statement of Claim against Chung and Kwok may be summarised as follows:

(1) There had been a meeting held among the plaintiffs and the 7th defendant (“Mak”) (who represented both the 1st defendant (“CIS”) and the 4th defendant (“VIA”)) in May 2019 (“the May 2019 Meeting”);

(2) At the time of the May 2019 Meeting:

(a) the 1st plaintiff was the sole legal and beneficial owner of the 2nd defendant (“Kwong Da Limited”);

(b) the 2nd plaintiff was the sole legal and beneficial owner of the 3rd defendant (“Top Rich Limited”);

(3) At the May 2019 Meeting, it was agreed, inter alia, that, for the purpose of raising funds for a group of companies ultimately owned by the plaintiffs, the plaintiffs shall transfer their respective shareholdings in Kwong Da Limited and Top Rich Limited to CIS, however, after the transfer, the plaintiffs shall remain the beneficial owners of Kwong Da Limited and Top Rich Limited respectively (“the Trust Agreement”);

(4) Pursuant to the Trust Agreement, the 1st plaintiff entered into a Framework Agreement with VIA, under which it was recorded that the 1st plaintiff hoped that CIS would set up a new fund, and that she agreed to appoint VIA as the fund manager of the said new fund;

(5) Chung is at all material times the director of CIS and VIA, and/or authorised to act on their behalf;

(6) Pursuant to the Trust Agreement and the said Framework Agreement, on 17 June 2019:

(a) Chung (representing CIS) and the 1st plaintiff executed a sales and purchase agreement under which, inter alia, the entire shareholding in Kwong Da Limited was transferred by the 1st plaintiff to CIS at the consideration of USD21.7 million;

(b) Chung (representing CIS) and the 2nd plaintiff executed a sales and purchase agreement under which, inter alia, the entire shareholding in Top Rich Limited was transferred by the 2nd plaintiff to CIS at the consideration of USD220,000;

(7) Despite what had been provided in the aforesaid sales and purchase agreements, no consideration had ever been paid by CIS to the plaintiffs, nor did the 1st and/or the 2nd plaintiff make any demand for such payment;

(8) Hence, after 17 June 2019, CIS became the express trustee of the shares of Kwong Da Limited and Top Rich Limited, whereas:

(a) the 1st plaintiff was still the sole beneficial owner of Kwong Da Limited;

(b) the 2nd plaintiff was still the sole beneficial owner of Top Rich Limited;

(9) On 13 November 2020, CIS and/or Chung unlawfully and without authority:

(a) caused Kwong Da Limited to appoint Chung as its director;

(b) caused Top Rich Limited to appoint Chung as its director;

(10) On 4 December 2020, CIS and/or Chung unlawfully and without authority caused Kwong Da Limited to appoint Kwok as its director;

(11) On 8 December 2020, CIS and/or Chung unlawfully and without authority caused Top Rich Limited to appoint Kwok as its director;

(12) Further, since 13 November 2020, CIS, Chung and/or Kwok unlawfully and without authority committed a series of acts in the PRC and Hong Kong which had the effect of fraudulently seizing substantive control of the assets of Kwong Da Limited and Top Rich Limited without paying any consideration (“the Unlawful Acts”).

7. The two causes of action relied upon by the plaintiffs against Chung and Kwok are:

(1) Breach of fiduciary duties by personally committing the Unlawful Acts;

(2) Dishonest assistance in the breach of trust/fiduciary duties by CIS.

DISCUSSION

Breach of fiduciary duties

8. As far as this cause of action is concerned, the complaint of Chung and Kwok is that the plaintiffs’ case is unsustainable because it has not been pleaded as to why Chung and Kwok owe the plaintiffs any fiduciary duties as such. In particular, there is no plea in the Statement of Claim:

(1) that Chung and/or Kwok:

(a) were present at the May 2019 Meeting; or

(b) had any knowledge of the Trust Agreement reached in the May 2019 Meeting;

(2) as to why Chung and/or Kwok are fiduciaries and/or trustees vis-à-vis the plaintiffs and would owe them any duties as such;

(3) as to the...

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