BELLE CHOW v. GLORY MANOR COMPANY LIMITED AND OTHERS

IN THE SUPREME COURT OF HONG KONG

COMPANIES WINDING UP NO. 28 OF 1989

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D E C I S I O N

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1. I have before me a motion for directions with regard to the appropriate date for the assessment of the valuation of the petitioner's shares pursuant to an order that I made on the 24th April 1989.

2. The motion arises as a result of a petition that was presented under section 168A of the Companies Ordinance on the 3rd March 1989, seeking an order for the purchase of the petitioner's shares and in the alternative inter alia, an order to wind-up the company on the just and equitable ground.

3. The 1st respondent, Glory Manor Company Limited (the company), was incorporated on the 17th February 1987 with the petitioner and 2nd respondent as the only directors and shareholders each holding one share. The 2nd respondent was later appointed to be the permanent chairman of the board of directors whilst shareholdings were increased by allotting to the petitioner a further 124,999 shares making a total of 125,000 shares and the 2nd respondent, a further 374,999 shares, making a total of 375,000 shares.

4. In about the middle of 1938 the relationship between the petitioner and the 2nd respondent began to deteriorate. On the 16th January 1989, the 2nd respondent purported to appoint his wife, the 3rd respondent, as the third director of the company without giving notice to the petitioner. In February 1989 the 2nd respondent attempted to remove the petitioner as a director. As a result the petitioner alleged in the petition that the affairs of the company were being conducted in a manner unfairly prejudicial to her on the alternative that she had been excluded from the management of the company. On the same date as the presentation of the petition I granted an ex parte injunction to the petitioner against the 2nd and 3rd respondents that inter alia restrained the 2nd respondent from diverting the funds of the company. Upon the return date of the inter partes summons on the 6th March 1989 when directions were sought, a similar order was made until the full hearing which was adjourned to a later date.

5. However, on the 24th April 1989 I made an order which was in effect by consent, although the order as drawn up is not expressed in those terms, that the petitioner's shares the company be purchased by the 2nd and 3rd respondents at a price or valuation to be assessed by an independent accountant.

6. Mr Ho, counsel for the respondents, submitted that the date for the valuation of the shares should be the date of the order, the 24th April 1989, whereas Mr Ng, counsel for the petitioner, contended that the date should either be that of the presentation of the petition, the 3rd March 1989 or at the time when misconduct was alleged, in which case he suggested the end of December 1988.

7. I was referred by Mr Ho to a passage in Gore-Browne on Companies, 44th Edition, Vol. 2 at 28.17 which reads :-

"Various dates have been chosen for this purpose (e.g. date of the unfair prejudice, date of the petition, date when the valuation is made, or the date of a consent order that shares should be purchased 'at such a price as the court should thereafter determine')."

My attention was also drawn to In re London School of Electronics Ltd. [1986]1 Ch. 211 where Nourse J. had this to say at p. 224 :-

"If there were to be such a thing as a general rule, I myself would think that the date of the order or the actual valuation would be more appropriate than the date of the presentation of the petition or the unfair prejudice. Prima facie an interest in a going concern ought to be valued at the date on which it is ordered to be purchased. But whatever the general rule might be it seems very probable that the overriding requirement that the valuation should be fair on the facts of the particular case would, by exceptions, reduce it to no rule at all. That that is so is already suggested by such authorities as there are on this question. In Scottish Co-operative Wholesale Society Ltd. v. Meyer [1959] A.C. 324 the shares were ordered to be purchased at the value which they would have had at the date of the petition if there had been no oppression. In In re Jermyn Street Turkish Baths Ltd. [1970]1 W.L.R. 1194 the order of Pennycuick J. discloses that the assets, undertaking and goodwill of the company were to be valued on an inquiry as at the date of the master's certificate. In In re A Company (No. 002567 of 1982) [1983] 1 W.L.R. 927 Vinelott J. held that the shares of a petitioner who had unreasonably rejected previous fair offers to purchase them ought to be valued at the date of the valuation and not at the date when he had been excluded from participation in the affairs of the company. However, Vinelott J. said that he could conceive of many cases where, in an application under section 75, fairness would require that the valuation should relate back to an earlier date such as, in that case, the exclusion of the petitioner: see [1983]1 W.L.R. 927, 937D-E. That observation was approved by Mervyn Davies J. in In re O.C. (Transport) Services Ltd. [1984] B.C.L.C. 251, 258, where he held that the facts required the valuation to be made at a date earlier than the date of the petition, in fact at the date when the unfair prejudice had occurred. Finally, in In re Bird Precision Bellows Ltd. [1984] Ch. 419 the valuation was made as at the date of a consent order that the shares should be purchased at such price as the court should thereafter determine. That case is not of any real assistance on this point, because the date was no doubt implicit in the terms of the consent order."

8. No evidence was given upon the petition so that no findings of misconduct as alleged by the petitioner have been made. Neither date suggested by Mr Ng is therefore appropriate. As I have said, the order was in effect made by agreement so I am quite satisfied that the proper date for the valuation of the shares should be the date of the order, the 24th April 1989. Accordingly there will be an order to this effect together with an order for costs to the respondents.