Elite Exports (HK) Ltd. v. Nicole Elizabeth Kozma and Others

DCCJ001282/2001

DCCJ1282/2001

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1282 OF 2001

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Coram: H H Judge Carlson in Chambers

Date of Hearing: 31 May 2001

Date of Judgment: 5 June 2001

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J U D G M E N T

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1.This action is related to case 1283 of 2001 in which I have just delivered judgment giving the defendants unconditional leave to defend. This is also an Order 14 summons.

2.The issue is identical. Did the plaintiff company advance the $250,000 now claimed in the writ to the defendants trading as Tigger's Treats or was this payment made to Tigger's Treats' successor, namely Tigger's Treats Limited? These payments were made by means of four cheques, three made out in favour of Tigger's Treats and one dated 23 February 2001 to Tigger's Treats Limited. These cheques are at page 24 of the Bundle.

3.The plaintiff is a company controlled by Mr Sunil Sadhwani. He and his wife, Karune, met Nicole Kozma, one of the defendants, at the fete on the occasion of the annual Sedan Chair Race at the Matilda Hospital in October 1999. Karune Sadhwani was interested in pursuing a business in the baking and sale of cakes and pastries. The defendants operated a business providing toys and other children's favours, largely, but not exclusively, for children's parties. It was thought that a cake business would go well with the existing Tigger's Treat business.

4.The defendants were about this time looking to expand this business and considered that this could be done more effectively by forming a limited company, which they did on 6 December 1999, and which they registered as Tigger's Treats Limited. One of the advantages of taking that course was that they might invite other investors to inject capital to assist expansion and to take shares through their capital investment.

5.The issue in this matter is whether the sums paid by the plaintiff were merely a loan to the defendants trading as Tigger's Treats or whether this was an investment in Tigger's Treats Limited. As I shall demonstrate in a moment, the evidence is simply far too uncertain to permit of an answer that would justify summary judgment against these defendants.

6.The Exhibits SS5 to SS9, pages 246 to 285 of Mr Sadhwani's affidavit, clearly demonstrate the intention that the plaintiff should invest in Tigger's Treats Limited. It may be, but it cannot be put any higher than that, that there was an intention to initially advance this sum to the defendants rather than to the company but such a view is no more than arguable. The whole thrust of the discussions and of the contemporaneous documentation show a clear intention for the plaintiff to take up a 30 per cent shareholding in Tigger's Treats Limited.

7.The plaintiff company has come nowhere near to showing that the defendants have no arguable defence. The issues are clearly very much in the air and cannot be resolved in this summary procedure.

8.The matter must go to trial for resolution in the conventional way. The defendants, therefore, must have unconditional leave to defend.

9.In this case as well, I shall order that the defendants file their defence within 28 days and I make an order nisi that the costs of this proceeding be costs in the cause.

Representation:

Present: Ms S Liang, of Susan Liang & Co., for the Plaintiff

Mr Healy, of Messrs Oldham, Li & Nie, for the Defendants

Present: Ms Agnes Wan, of Susan Liang & Co., for the Plaintiff

Ms Randall, of Messrs Oldham, Li & Nie, for the Defendants