WFM MOTORS PTY LTD. and Another v. COMTOWELL LTD. and Another

1997, No.MP3499

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS

-------------

-------------

-----------------------

J U D G M E N T

-----------------------

1. This is a notice of originating motion issued by WFM Motors Pty. Limited and Denis Alan Aitken ("the Applicants") for an order pursuant to section 100 of the Companies Ordinance that the register of members of Comtowell Limited (the "Company") be rectified. The latest annual return of the Company made up to 14 December 1992 shows the 2nd Respondent ("Mr Maydwell") as the holder of 9,999 ordinary shares of HK$1 each ("the Shares") in the capital of the Company. The Applicants seek to strike out the name of Mr Maydwell and in lieu thereof, to insert the name of the 1st Applicant as the holder of 9,998 of the Shares and the name of the 2nd Applicant as the holder of one of the Shares.

2. After hearing counsel for the Applicants and Mr Maydwell in person I ordered rectification of the Company's register as sought. The reasons appear below.

Background

3. The present application is a consequence of litigation between the 1st Applicant and Mr Maydwell stretching back for some five years in three jurisdictions, namely, New South Wales, Hong Kong and London. For present purposes, it is sufficient simply to state that in October 1993, the 1st Applicant obtained a judgment in a sum in excess of HK$3.7 million in an action in New South Wales against Mr Maydwell under a guarantee. This judgment was registered in Hong Kong.

4. Mr Maydwell failed in his first attempt to set aside that registration. In his second attempt to set aside the registration, he succeeded at first instance but the order of the learned judge was reversed by the Court of Appeal in December 1995. Mr Maydwell then decided to appeal to the Privy Council and applied to the Court of Appeal for a stay of execution. On 24 October 1996, the Court of Appeal made an order ("the 1996 Order") upon very elaborate undertakings on the part of Mr Maydwell through his counsel which are considered below. The Court of Appeal ordered that the interest of Mr Maydwell in, inter alia, the Shares, stand charged with the payment of the amount due from Mr Maydwell to the 1st Applicant on the judgment including interests and costs up to the amount of $5.5 million; that the Registrar hold the share certificates until further order; and that execution be stayed until further order.

5. Mr Maydwell and his sister were the only shareholders and directors of the Company. Under the terms of the undertakings recited in the 1996 Order, Mr Maydwell undertook :

(1) to deposit the shares certificates in his name together with instruments for transfer executed in blank and signed undated letters of resignation as director with the Registrar;

(2) to procure signed undated letter from the other director in the Company and to procure that it be deposited with the Registrar with all due despatch; and

(3) to procure the Company to issue a share certificate within 28 days for the remaining 9,900 shares in the Company owned by him and to lodge the same with the Registrar together with instruments of transfer executed in blank.

There were additional undertakings by Mr Maydwell by his counsel. The relevant one for present purposes is the following :

"6. Not to oppose the registration of the shares in the name of the [1st Applicant] or the [1st Applicant's] nominee, should the [1st Applicant] become entitled to transfer the shares into its name and sell the same upon determination of [Mr Maydwell's] appeal to the Privy Council against the judgment."

6. The Privy Council dismissed Mr Maydwell's appeal with indemnity costs to the 1st Applicant on 21 May 1997.

7. By order dated 29 July 1997, on the 1st Applicant's summons to revoke the stay of execution, the Court of Appeal lifted the stay granted by the 1996 Order and ordered the Registrar to deliver to the 1st Applicant's solicitors the share certificates, instruments of transfer for the Shares and signed undated letters of resignation as director of, inter alia, the Company lodged with the Registrar pursuant to the 1996 Order and that the 1st Applicant give 14 days' written notice to Mr Maydwell of any decision to settle or compromise HCA No.3514 of 1993, an action between Skink Limited (in liquidation) and the Official Receiver as Plaintiffs v. the Company.

8. It is common ground that the Company's only asset now consists of a flat in MacDonnell Road estimated to be worth about $12 million.

Rectification of the Register

9. This application is based on section 100(1)(a) of Cap.32. It reads as follows :

"(1) If-

(a) the name of any person is, without sufficient cause, entered in or omitted from the register of members of a company; or

(b) ......

the person aggrieved, or any member of the company, or the company, may apply to the court for rectification of the register."

10. As there are no directors of the Company, Mr Maydwell and his sister having both resigned, there is no board to whom the instruments of transfer can be submitted for registration. The Applicants wish to enforce the 1996 Order made in their favour by the Court of Appeal now that the stay has been revoked. They are plainly within the meaning of 'aggrieved person' within section 100(1)(a) of Cap.32.

11. As appears below, none of Mr Maydwell's objections to the relief sought had any merit.

Effectiveness of Mr Maydwell's resignation as director

12. Pursuant to the undertaking given to the Court of Appeal, Mr Maydwell signed an undated letter of resignation as director of the Company and deposited the same with the Registrar. However, Mr Maydwell lodged only one original letter of resignation from each director although normal practice requires the filing of two originals, one for the Company and one for the Companies Registry. Mr Warren Ko of the solicitors acting for the Applicants was informed by the Companies Registry that whilst an original was required for filing at the Registry, service of a certified copy on the Company would be sufficient. The affidavit of Roger Gordon Beresford sworn on 22 January 1998 gives a full explanation of how the letters came to be dated 12 September 1997 and how the words "the original" were deleted and in their place the words "a certified true copy of the" were added to the copy that was sent to the Company. Mr Maydwell's position was that the letter became ineffective as a result of these 'amendments' by the Applicants' solicitors.

13. It is relevant to mention that at a hearing before Mr Justice Rogers on 5 November 1997 in other proceedings commenced in the name of the Company by Mr Maydwell, the learned judge held that his letter of resignation was effective and that therefore Mr Maydwell had no authority to represent the Company.

14. Mr Maydwell made half-hearted submissions that his letter of resignation was rendered void by Mr Ko's 'amendments' in that it had been completed by Mr Ko in excess of the authority implied by its having been executed in blank and delivered to the 1st Applicant in that form. Issue estoppel apart, I have no doubt that the letter of resignation was effective in the light of the evidence regarding the 'amendments' appearing in the copy filed with the Company.

Procedure

15. Mr Maydwell's next objection was that the application under section 100 was misconceived in that the instruments of transfer ought to have been served on the Company at its registered office non constat that there were no directors of the Company who could act upon those instruments of transfer. He submitted that the correct procedure is that set out in section 69(1) of Cap.32. That section provides :

"(1) If a company refuses to register a transfer of any shares or debentures, the company shall, within two months after the date on which the transfer was lodged with the company, send to the transferor and the transferee notice of the refusal."

16. Mr Maywell's submission based on section 69 is difficult to follow. Here it is not a question of a company 'refusing' to do an act : rather, it is a question of there not being a board who could act for the Company. The objection based on section 69 is thus wholly misplaced.

The 1996 Order

17. Mr Maywell's third objection was that the undertaking given not to oppose the registration of the Shares was premised on the 1st Applicant becoming entitled to transfer the Shares into its name "and sell the same". It was submitted that on the evidence before the court, the 1st Applicant is not proposing "to sell the Shares". Rather, the 1st Applicant's present intention is to wind up the Company and to realise its assets. The reason is that the only asset of the Company is the property in MacDonnell Road and the Shares of the Company are unmarketable because of a pending action, namely the 1993 action commenced by Skink (in liquidation) and the Official Receiver against the Company. This, it was said, was not what was envisaged by the Court of Appeal and the basis upon which it made the 1996 Order.

18. In my judgment, the undertakings and the terms of the 1996 Order have one common theme and that is to facilitate the enforcement of the New South Wales judgment registered in Hong Kong through imposing a charge on the Shares to be transferred to the Applicants with a view to their being able to satisfy the judgment obtained in 1993. Mr Maydwell's objection is based on a misreading of para.6 of his undertaking set out above. Once the 1st Applicant becomes entitled to transfer the Shares into its name, it must follow that it would also be entitled to sell them, the power of sale being an incident of legal title. The reference in the undertaking to the sale of the Shares is but a means through which the Applicants could satisfy the judgment, the primary purpose of the 1996 Order being to enable the Applicants to enforce the judgment which remains valid and enforceable in Hong Kong.

Costs

19. Counsel for the Applicants seeks costs on an indemnity basis because Mr Maydwell's opposition is in breach of his undertakings to the Court of Appeal. There is considerable force in this submission : the present is one of the many rearguard attempts to delay and obstruct the implementation of the Court of Appeal's order. The intent of the Court of Appeal is clear and Mr Maydwell ought never to have opposed this application. Accordingly, I award costs to the Applicants on an indemnity basis.

(Doreen Le Pichon)

Judge of the Court of First Instance
High Court