Shown Wai Investment Company Limited v Hui Yip Wing David 

”) instigated claims against the Defendant (“

”), who was both a director of SW’s parent company, Chime Corporation Limited (“

”), and a general manager of the Chinachem Group (“

Hui had introduced to the Group a potential investment in a PRC real estate development project, which he negotiated on its behalf. Eventually, the Board of Chime passed a resolution to agree to the proposed investment through its wholly-owned subsidiary, and SW was thereafter appointed as the special purpose vehicle through which the Group was to enter into the transaction. The sale and purchase agreement was signed on 12 December 2009, but Hui was only formally appointed as a director of SW on 28 December 2009.

 director at all material times prior to his formal appointment, and he acted in breach of his fiduciary duties and the duty to exercise reasonable care, skill and diligence in procuring SW to enter into the transaction. In any event, Hui had also breached his duties as 

director after 28 December 2009 by failing to prevent SW’s completion of the transaction.

directorship, SW argued that Hui had assumed directorial duties and responsibilities 

 SW by playing the dominant and leading role in the negotiation of the transaction which was to be entered into by an SPV (which ended up being SW), and he individually drove the resolution of the Chime Board which was required as part of the Group’s corporate governance structure to approve the transaction. His role and responsibilities were at least equivalent to (if not greater than) those of a director of SW.

The Court examined the applicable principles on 

 directorship and reiterated the need to plead and prove functions which are only referable to 

 directorship and not to any other capacity. As both Chime and SW had their own properly functioning boards, Hui could not be said to have individually assumed any responsibility to SW, and the Court distinguished two recent English cases cited by SW in which the director of the parent company was found to be a 

director of SW, the Court found that there was no evidence that the directors of Chime or SW would have agreed to exiting the transaction and confining SW’s loss to the deposit paid.

, instructed by Gibson, Dunn & Crutcher, acted for the Plaintiff.

, instructed by Lam & Co., acted for the Defendant.

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