Everwise Investments Ltd and Another v. Hung Wo Chiu and Others

HCMP 1240/2014

[2018] HKCFI 2454

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1240 OF 2014

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J U D G M E N T

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1.This matter arises out of two provisional sale and purchase agreements purportedly concluded on behalf of the 1^st plaintiff as vendor and the 1st and 2nd defendants as purchasers.  These provisional agreements were purportedly entered into in September 2013.  The person who signed the provisional agreements purportedly on behalf of the 1^st plaintiff was the 4th defendant.

2.The disputes between the plaintiffs and the 1st to 3rd defendants have already been settled, and what remains before me today is the claim for relief against the 4th defendant, essentially for a declaration concerning the beneficial ownership of the shares in the 1^st plaintiff.

3.The plaintiffs’ case, which I accept, is that when the two properties in question were purchased, they were purchased under an oral agreement whereunder the 4th defendant would contribute half of the balance required of the purchase, and the two legal shareholders of the 1st plaintiff would contribute the other half.  The contributions by the legal shareholders were by means of setting off loans that were owed by the 4th defendant to Madam Wong, ie one of the legal shareholders in the 1^st plaintiff.  The purchases by the 1st plaintiff were done in 2010 and 2012 respectively.

4.However, in February 2014, certain sums were still owed by the 4th defendant to Madam Wong and, hence, the parties reached an oral agreement, which is referred to as the “Superseding Agreement” in the papers, essentially to the effect that the 4th defendant’s half beneficial share in the 1st plaintiff would be transferred to Madam Wong, as a result of which the agreement between the two legal shareholders in the 1st plaintiff and the 4th defendant was that the beneficial interest would be held by Madam Wong for 75 per cent and Mr Jor for 25 per cent.

5.The declaration sought is to this effect.  I am told by Mr Lam that the reason for this declaration is that the Official Receiver of the 4th defendant, who has been declared bankrupt, has not given a sufficiently unequivocal confirmation that the Official Receiver will not pursue any claim on behalf of the 4th defendant in respect of the beneficial ownership of the shares in the 1st plaintiff.

6.I am satisfied that in these circumstances, the appropriate course is to grant the declaration sought so as to avoid any possible arguments later as to whether the Official Receiver’s present stance precludes anybody from contending any beneficial ownership on behalf of the 4th defendant at a later time.

7.I should add that the Official Receiver, who is of course the trustee of all the property as defined in the Bankruptcy Ordinance of the 4th defendant, has written on 19 October this year to the effect that the Official Receiver will not adopt the defences of the 4th defendant. 

8.So, for the reasons I have endeavoured to state, I will accede to the declaration sought and I am told that on reflection, what the plaintiffs desire is to have a declaration in the following terms, namely, that a declaration that the shares in the 1st plaintiff are beneficially owned by Madam Wong (75 per cent) and Mr Jor (25 per cent).  And as I said, I will accede to that request and grant the declaration as amended, in the above terms.   

(Discussion re costs)

9.So I would grant a costs order of this action against the 4th defendant to the plaintiffs, and such costs are to be taxed if leave to do so is obtained from the Bankruptcy Court.

Mr Justin Lam, instructed by Wong, Hui & Co, for 1^st -3^rd plaintiffs

The 4th defendant was not represented and did not appear