Sushi boss Ricky Cheng loses another legal battle
Flamboyant sushi chain owner Ricky Cheng Wai-tao is facing an even higher damages bill after his former restaurant business partners won an appeal.
Flamboyant sushi chain owner Ricky Cheng Wai-tao is facing an even higher damages bill after his former restaurant business partners won an appeal yesterday.
Cheng, sometimes known as Ricky San or "Mr Ricky" in Japanese, founded the Itamae Sushi and the Itacho Sushi brands.
He lost an initial court case in 2013 when a judge ruled that shareholders of Smart Wave - set up to manage the first Itamae Sushi restaurant - were entitled to compensation regarding 20 restaurants of a rival chain, named Itacho, which Cheng set up.
Yesterday the Court of Appeal ruled the Smart Wave shareholders could also claim compensation in respect of the eight Itamae restaurants which Cheng subsequently opened.
Mr Justice Peter Cheung Chak-yau said in a written judgment: "[Cheng], as the sole director of Smart Wave, was under a fiduciary duty to act in its best interests, and it was against the interests of Smart Wave for him to operate a competing sushi restaurant business where the business opportunity is diverted from Smart Wave to himself.
"The burden is on [Cheng] to demonstrate the propriety of the impugned transaction."
Cheng and other shareholders including Daisy Poon and her brother Jason Poon Ka-man set up Smart Wave as a corporate vehicle to operate the first outlet of Itamae Sushi in Tsim Sha Tsui in 2004.
After the success of the first branch, Cheng registered the trademark for "Itamae" and "Itacho" and he personally opened a number of further restaurants under both brands.
But following mounting disputes, the Poons took legal action in 2011, by which time Cheng was operating eight Itamae Sushi outlets - not including the original which closed in 2010 - and 20 other restaurants which were branded as Itacho Sushi.
Yesterday three Court of Appeal judges ruled the terms of an agreement between Cheng and his fellow shareholders was "extremely vague" and that Cheng had admitted he had not told the other shareholders that he had a "right" to open further restaurants on his own.
Mr Justice Cheung, sitting with Ms Justice Maria Yuen Ka-ning and Mr Justice Carlye Chu Fun-ling, found the shareholders might not understand the agreement and were entitled to claim losses incurred from the eight Itamae outlets. The amount of damages has yet to be assessed.
Cheng, who made frequent television appearances, became the first non-Japanese to claim the prize lot at an annual tuna auction in Tsukiji, Japan, after he paid HK$430,000 for a bluefin.
