A number of years ago, Cheung had set up and operated a garment manufacturing business as...

 

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A number of years ago, Cheung had set up and operated a garment manufacturing business as a sole trader out of factory premises in Kwai Chung. The premises were insured against fire under a policy in his own name. Subsequently Cheung established a company, X Ltd, and transferred his business to the company. Cheung and his former employee Mui were the two subscribers to the company, and they were also the directors. Recently, Cheung and Mui decided to expand their company's business into retailing as well, and for that purpose they set up a subsidiary Y Ltd. X Ltd held 100% of the shares of Y Ltd. Cheung and Mui were also the directors of Y Ltd. Mui found retail premises in Cheung Sha Wan for the retail operations, and obtained the services of Designs Ltd to fit out those premises. (a) A fire occurred in the premises in Kwai Chung. This caused significant damage to the property, and lead to significant losses for X Ltd. Advise as to whether Cheung or X Ltd may claim under the insurance policy. (b) Designs Ltd has not been paid for the work done on the Cheung Sha Wan shop premises. Jack and Jill are the shareholders and directors of Designs Ltd, and they wish to sue in contract for the amounts owed. Advise Jack and Jill as to as to which party should be the plaintiff in court proceedings, and which party or parties should be the defendant(s) in this action. Would your answer differ if Y Ltd does not have any assets or funds to satisfy any claim made against it? A number of years ago, Cheung had set up and operated a garment manufacturing business as a sole trader out of factory premises in Kwai Chung. The premises were insured against fire under a policy in his own name. Subsequently Cheung established a company, X Ltd, and transferred his business to the company. Cheung and his former employee Mui were the two subscribers to the company, and they were also the directors. Recently, Cheung and Mui decided to expand their company's business into retailing as well, and for that purpose they set up a subsidiary Y Ltd. X Ltd held 100% of the shares of Y Ltd. Cheung and Mui were also the directors of Y Ltd. Mui found retail premises in Cheung Sha Wan for the retail operations, and obtained the services of Designs Ltd to fit out those premises. (a) A fire occurred in the premises in Kwai Chung. This caused significant damage to the property, and lead to significant losses for X Ltd. Advise as to whether Cheung or X Ltd may claim under the insurance policy. (b) Designs Ltd has not been paid for the work done on the Cheung Sha Wan shop premises. Jack and Jill are the shareholders and directors of Designs Ltd, and they wish to sue in contract for the amounts owed. Advise Jack and Jill as to as to which party should be the plaintiff in court proceedings, and which party or parties should be the defendant(s) in this action. Would your answer differ if Y Ltd does not have any assets or funds to satisfy any claim made against it?

Answer rating: 100% (QA)

a Cheung cannot claim under the insurance policy as the policy was taken out in his own name ... View the full answer