We would like to highlight several cases in this April issue of ONC Corporate Disputes and Insolvency Quarterly:  

Insolvency

In the case of Osman Mohammed Arab and Another v Chu Chi Ho Ian HCB 4344/2012, the court held that a trustee in bankruptcy is not bound by judgment recovered against the bankrupt. Instead, he is entitled to go behind to get at the truth. The case of Bruno Arboit v Koo Siu Ying and Another HCMP 2749/2012 reminds liquidators trying to enforce private examination order by contempt proceedings that they need to prove the existence of the specific documents (which the respondents allegedly failed to produce) at the time of the disclosure order. Practitioners should also note the case of Lee Yuk Shing v Dianoor International Ltd (in liquidation) HCMP 2483/2011, where the overly aggressive liquidators and their legal advisers were criticized by the court, which granted an order for costs on indemnity basis.

Corporate Disputes

The Court of Final Appeal was split 3:2 in the case of Cheng Wai Tao v Poon Ka Man Jason FACV17/2015. It dealt with the difficult issue of how contractual provisions interact with fiduciary duties. The case of Hao Xiaoying v Wong Yiu Lam William and Others CACV 70/2015 is also significant. In that case, the Court of Appeal clarified that, for the purpose of an inspection order, records of a company refer to documents “owned by” or “belong to” the company. Whether or not the company has possession of such documents is irrelevant. The case of Deutsche Bank AG v Sebastian Holdings Inc and another [2016] EWCA Civ 23 could be viewed as one rare instance of “piercing the corporate veil”. In that case, the English High Court ordered the sole director and shareholder, who controlled and funded the company’s litigation, to pay costs, as he was the “real party” to the litigation.

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