City University of Hong Kong LW5656/LW6103E Company Law I

School of Law A/Y 2017-2018, Semester A

Topic 9: Members Remedies

Text:
Stefan HC Lo and Charles Z Qu, Law of Companies in Hong Kong, 2nd ed (Sweet & Maxwell,
Hong Kong, 2015) ch 10

A. The Proper Plaintiff Rule: the rule in Foss v Harbottle.

1. The rule in suing on the rights of the corporation

Foss v Harbottle (1843) 2 Hare 461

Linkage with the internal management principle and the irregularity principle
Bamford v Bamford [1970] Ch 212
MacDougall v Gardiner (1875) 1 Ch D 13 (Court of Appeal)
Cf. Cook v Deeks [1916] 1 AC 554

Distinction between a wrong to the company, and a wrong to the members personally
Edwards v Halliwell [1950] 2 All ER 1064

2. The rule against reflective loss.

Johnson v Gore Wood and Co [2002] 2 AC 1
Landune International Ltd v Cheung Chung Leung Richard [2006] 1 HKC 517
Waddington Ltd v Chan Chun Hoo [2009] 4 HKC 381

3. Common law exceptions to the rule in Foss v Harbottle.

(a) Ultra vires / illegal conduct

Smith v Croft (No 2) [1988] Ch 114

(b) Fraud on the company and control

Prudential Assurance Co Ltd v Newman Industries (No. 2) [1981] Ch 257, on appeal
[1982] Ch 204
Waddington Ltd v Chan Chun Hoo [2009] 4 HKC 381
Pavlides v Jensen [1956] Ch 565
Daniels v Daniels [1978] 2 WLR 73

wrongdoer in control:
Smith v Croft (No 2) [1988] Ch 114
Prudential Assurance Co Ltd v Newman Industries (No. 2) [1981] Ch 257 at 317

(d) Statutory derivative action.

*CO Part 14, Division 4 (ss733-738)

Swansson v R A Pratt Properties Pty Ltd (2002) 42 ACSR 313

 Charlton v Baber (2003) 47 ACSR 31
*Re F & S Express Ltd [2005] 4 HKLRD 743
Re Myway Ltd [2008] 3 HKLRD 614
Waddington Ltd v Chan Chun Hoo [2009] 4 HKC 381

B. Statutory remedies for minority oppression and unfair prejudice

*CO ss, 724, 725, 728, 729

Variation of clss rights (s 180ff)

Re Haven Gold Mining Co (1882) 20 Ch D 151

*ONeill v Phillips [1999] 2 All ER 961
*Re Taiwa Land Investment Co Ltd [1981] HKLR 297
Re Tai Lap Investment Co Ltd [1999] 1 HKLRD 384
*Re Chime Corp Ltd [2004] 3 HKLRD 922
*Ebrahimi v Westbourne Galleries Ltd [1972] 2 All ER 492
Re Sam Weller & Sons Ltd [1990] BCLC 80
*Re Mediavision Ltd Ltd [1993] 2 HKC 629.
Sanford v Sanford Courier Pty Ltd (1986) 10 ACLR 549
Re Overton Holdings Pty Ltd (1984) 9 ACLR 225
Re Dalkeith Investments Pty Ltd (1985) 9 ACLR 247

Professor Alexander Loke

November 2017