Re Daiei Sanko Co Ltd

HCMP 2940/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2940 OF 2014

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J U D G M E N T

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1.I have before me an originating summons issued by the applicant, Daiei Sanko Company Limited, on 12 November 2014 seeking:

(i) an order for the appointment of Toru Yamashita (“the Proposed Trustee”) as new trustee to hold one share (“the Share”) in Well Comos Limited and all income and proceeds therefrom on trust for the applicant in substitution for the late Takayasu Miwa, deceased (“the Deceased”), the former sole trustee of the Share; and

(ii) an order that the Share do vest in the Proposed Trustee in his capacity as trustee as aforesaid.

2.The evidence before me, including an affidavit made by Masaru Kitamura, an attorney admitted to practise in the courts of Japan, discloses the following facts and matters:

(1) Well Cosmos Limited is a company incorporated in Hong Kong with a total of 200,000 issued shares, of which 199,999 shares are registered in the name of the applicant and the remaining one share (ie the Share) in the name of the Deceased.

(2) According to the audited financial statements of Well Cosmos Limited made up to 31 March 2014, the company had total assets with a value of US$246,039.64 and total liabilities (accrued expenses) of US$2,225.64.  The book value of the Share was only US$1.219.  The net profit for year was US$9,533.11.  It is further stated in the report of the directors that the principal activities of the company are “the advancing of loan to director for interest income”.  However, as at 31 March 2014, the amount of the advance to a director was zero.

(3) The Deceased held the Share on a bare trust for the applicant as beneficiary.

(4) The Deceased was a Japanese national and passed away on 14 January 2013 in Japan.

(5) The Deceased died intestate, leaving his surviving spouse and three children as his “heirs” under Japanese law.

(6) Save and except the Share, the Deceased did not leave any properties in Hong Kong.

(7) Under Japanese law, the lawful heirs are automatically entitled to inherit all the properties of the Deceased jointly and have the same priority to administer the Deceased’s estate, without the need for any application for a grant of administration.

(8) The Deceased’s wife and children do not intend to apply for letters of administration in Hong Kong.

(9) The Deceased was last domiciled in Japan.

3.It would appear that Well Cosmos Limited has few (if any) activities, and is practically owned by the applicant. 

4.Ms Kwan (for the applicant) has referred me to various authorities regarding the circumstances in which the court may exercise its discretion to appoint a new trustee under the English equivalence of section 42 of the Trustee Ordinance.  Although it is possible, in theory, for the Deceased’s wife and/or children to apply for letters of administration of the Deceased’s estate in Hong Kong to effect the transfer of the Share to the Proposed Trustee, in the circumstances of the present case as mentioned in paragraph 2 above, I am satisfied that (i) it is expedient to appoint a new trustee in respect of the Share in substitution for the Deceased, and (ii) it is inexpedient or impracticable so to do without the assistance of the court.

5.Also, having regard to the special circumstances pertaining to the present case, in particular the fact that:

(i) the former sole trustee was a foreign national last domiciled outside the jurisdiction;

(ii) the former trustee has passed away;

(iii) the former trustee leaves no estate in Hong Kong save and except the property held on trust;

(iv) the former trustee’s heirs do not intend to apply for letters of administration; and

(v) there seems to be no other person who is interested in the Share beneficially;

it would be appropriate to permit this application to be made on an ex parte basis without appointing anyone as the personal representatives of the Deceased for the purpose of the present application.  That it is permissible to do so is supported by the recent decision of Deputy High Court Judge Wilson Chan in Re Pacific Good Investment Limited, HCMP 366/2014 (5 March 2014), and the cases referred to in paragraph 14 of that decision.

6.The Proposed Trustee is a fit and proper person to be appointed as a new trustee of the Share.

7.In conclusion, I make an order in terms of paragraphs 1, 2 and 3 of the originating summons.

Ms Thelma Kwan, instructed by P C Woo & Co, for the applicant