CHEUNG KWOK WAI v. HO PAUL KIN CHUNG AND ANOTHER

HCA 194/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 194 OF 2007

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Decision on Directions

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1. This is an application by the Plaintiff to enter judgment against the 1^st and 2^nd Defendant pursuant to Order 13 rule 6.  The Plaintiff is the executor appointed in the will of the late Cheung Hung (“the deceased”) who passed away on 5 May 1995.  Before his death, the deceased entered into certain partnership arrangement with the Defendants for investment and property dealings.

2. They invested into two sets of properties viz. half of the interest of and in the 1^st Property and the whole of the 2^nd Property as described in the Statement of Claim respectively.

3. For certain unknown reasons the interest in 1^st Property was held by a company called Time Full Development Limited and the deceased had 25% interest of its total issued shares.  The 1^st Property was sold on 6 September 1999 at a price of $6,900,000.00.  The Plaintiff claims that he as the executor is entitled to 25% of the half interest (i.e. $862,500.00 being 1/8 of $6,900,000.00).

4. The writ with the Statement of Claim endorsed thereon was served on 2 February 2007 and the Defendants did not file any acknowledgement of service.  Pursuant to Order 13 rule 6, the Plaintiff issued the inter parte summons asking for an order that judgment be entered against the 1^st and 2^nd Defendants for:

“1.    The sum of HK$862,500.00;

2.      An account of all sums due from the 1^st and 2^nd Defendants to the Plaintiff in respect of the rental income from the Property known as Flat C on the 1^st Floor, Flat D on 1^st Floor and a Portion of the Flat Roof thereof, Nos. 5-11 Woosung Street, Kowloon, Hong Kong.

3.      An order for payment of all sums found to be due by the 1^st and 2^nd Defendants to the Plaintiff on taking of the account under the preceding paragraph;

4.      Damage to be assessed;

5.      Interest on all sums adjudged to be paid by the 1^st and 2^nd defendants to the plaintiff at such rate and for such period as the Court may deem appropriate;

6.      Further or other reliefs, including all further necessary or appropriate accounts, inquiries and directions; and

7.      Costs of this action.”

The summons came before me in a 3-minute chambers hearing.  I had no time to think through the application.  I told the Plaintiff that I would set out my concerns in writing which I do.

5. I am satisfied with the Summons properly served but I refuse to enter judgment as claimed.  I understand that Time Full Development Limited was deregistered.  According to Section 292 of the Companies Ordinance (Cap. 32), all properties held by a company before its dissolution shall be deemed to be bona vacantia.  I cannot accept what has been pleaded in paragraph 10:

“10.        The 1^st and 2^nd Defendants converted the said sum of $3,450,000.00 into their own use and dissolved Time Full Development Limited by deregistration in 2004.  In the premises, the 1^st and 2^nd Defendants are jointly and severally liable to pay to the Plaintiff representing the Deceased or his estate 25% of the said sum of $3,450,000.00, i.e. $862,500.00.”

It could be either the Company being defrauded or the Government.

6. I am also not too sure in what proportion the deceased, the 1^st Defendant and the 2^nd Defendant made the investment into the 2^nd Property through the partnership.

7. I am also troubled by a Statement in the Commentary in paragraph 2 of Section 13/6/1 of Hong Kong Civil Procedure 2007 which states: “the Plaintiff may then proceed by summons or motion for judgment under Order 19 rule 7”.  It is trite to say as set out in Section 19/7/11: “The court cannot receive any evidence in cases hereunder, but must give judgment according to the pleadings alone.”

8. For the reasons mentioned in paragraphs 5, 6 and 7 I have some reservation in entering judgment.  I have adjourned the hearing to a date to be fixed with one hour reserved.  The Plaintiff should prepare submissions on the issues I have mentioned earlier.