TSANG, HOI WAH AVA, deceased AND ANOTHER v. BANCKA LTD

HCMP 1427/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1427 OF 2017

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AND

HCMP 1429/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1429 OF 2017

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___________________

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AND

HCMP 1430/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1430 OF 2017

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AND

HCMP 1431/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1431 OF 2017

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(HEARD TOGETHER)

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D E C I S I O N

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1.  I have before me four originating summonses seeking identical orders pursuant to section 570 of the Companies Ordinance, Cap 622, namely, orders for the convening of Extraordinary General Meetings (“EGMs”) of each Company in order that resolutions can be passed appointing an additional director of each Company and authorising the new director to operate each Company’s bank accounts and make payments in the normal course of the Company’s business.

2.  The applications come about in the following circumstances: The sole shareholder and director of each Company unfortunately and unexpectedly died on 18 April 2017.  The deceased was only 41 at that time and died intestate.  Because the Companies were all playing a role in an active business, it is necessary to appoint a director who can manage their business affairs. 

3.  The deceased was married and had a three-year-old son.  I am satisfied that it is probable that when the necessary procedural requirements have been satisfied that the deceased’s husband Mr Daniel Dieter Kloeden will obtain Letters of Administration in respect of his late wife’s estate.  When these Letters of Administration have been obtained it will be possible for Mr Kloeden, pursuant to subsection 6 of section 570, to make an application for the orders currently sought and I would expect those orders or something in similar terms to be obtained as a matter of course. 

4.  The procedural complication in the present case arises as a result of the fact that it is necessary for a new director of the Companies to be appointed promptly and more quickly than Mr Kloeden will be able to obtain Letters of Administration.  I am not aware of an application being made pursuant to section 570 in similar circumstances and Ms Chan, who appeared for the applicants, had not been able to find any relevant authorities either in Hong Kong or other similar jurisdictions.  It would, however, be surprising if there were not some means by which the court could make an order to deal with the practical problem that the Companies face during the period in which Letters of Administration are being sought. 

5.  As one would expect, the Rules of the High Court, Cap 4A (“RHC”) contain guidance and provisions which are relevant. Order 15, rule 6A provides in the following sub-paragraphs:

“(1) Where any person against whom an action would have lain has died but the cause of action survives, the action may, if no grant of probate or administration has been made, be brought against the estate of the deceased.

…

(3) An action purporting to have been commenced by or against a person shall be treated, if he was dead at its commencement and the cause of action survives, as having been commenced by his estate or against it in accordance with paragraph (1) as the case may be, whether or not a grant of probate or administration was made before its commencement.

(4) In any such action as is referred to in paragraph (1) or (3)—

(a) the plaintiff shall, and the defendant, the personal representatives of the deceased or any person interested in the deceased’s estate may, during the period of validity for service of the writ or originating summons, apply to the Court for an order appointing a person to represent the deceased’s estate for the purpose of the proceedings or, if a grant of probate or administration has been made, for an order that the personal representative of the deceased be made a party of the proceedings, and in either case for an order that the proceedings be carried on by or against the person so appointed or, as the case may be, by or against the personal representative, as if he had been substituted for the estate;

…”

Although the wording of these rules is not entirely apposite, in my view, it is on a fair reading of sub-rule (3) clear that these provisions apply to circumstances such as the present where after a person has died, it is necessary for proceedings to be commenced before either Letters of Administration or a Grant of Probate has been obtained. 

6.  What that means in terms of procedure is considered by Mr Justice Bharwaney in Bushra Bibi v Method Building & Engineering Works Ltd [2014] 3 HKLRD 21.  This is conveniently summarised in the first three holdings of the headnote of the decision:

“(1) The procedure for commencing a fatal accident claim before the grant of letters of administration or probate was guided by s.5(2) of the FAO and O.15 r.6A(3) of the Rules of the High Court (Cap.4A, Sub.Leg.) (RHC). Pending the appointment of a representative of the deceased’s estate, the ‘1^st’ and ‘2^nd’ plaintiffs should be described in the title of the action respectively as ‘ABC, deceased’ and ‘XYZ, on behalf of herself and the other dependants of ABC, deceased’ and the proceedings commenced by the issue and filing of the writ of summons, along with a concise statement of the nature of the claim on its reverse (Chung Yi Yuen v Lau Koon Shing [1999] 2 HKLRD 413 applied). (See paras.8–11.)

(2) After the proceedings were so commenced, an application should be made to the court under O.15 r.6A(4) of the RHC, during the period of validity for service of the writ, for an order appointing a person to represent the deceased’s estate in the proceedings; and an order that the proceedings be carried on by the person so appointed as if he had been substituted for the estate. (See para.12.)

(3) After a carry on order was granted, the statement of claim, supported by a statement of truth, should be filed. The title of action should also be amended so that the ‘1st Plaintiff’ became ‘XYZ, the person appointed to represent the estate of ABC, deceased (by Carry On Order dated ... ) ’. (See paras.13, 16.)”

What that means in practice for an application of this sort is that the originating summons should be headed, as in the present case, with two applicants: the first being the deceased; the second being the person who is making the application on behalf of himself or herself and any other person interested in the estate which in the present case, is the deceased’s other dependant, her son.  An order then needs to be made appointing the 2^nd applicant to represent the deceased’s estate in the proceedings thus allowing the proceedings to be progressed and a substantive order sought. 

7.  Order 15, rule 6A of the RHC and Mr Justice Bharwaney’s decision are framed in the context of writ actions which are likely to have various interlocutory stages leading up to trial.  The present applications are rather different.  These applications are made by originating summonses and are in the absence of active opposition commonly dealt with on the first hearing of the originating summons.  In such a case, it seems to me to be permissible for the procedural stage which I have just described to be dealt with together with the substantive application and for an order to be made granting the 2^nd applicant leave to make the application on behalf of the deceased’s estate, and then for the court to grant in the same order the substantive relief which is sought.

8.  There is one further technical issue with which I should deal.  Section 570(2) provides:

“The Court may, either of its own motion or on application—

(a) by a director of the company; or

(b) by a member of the company who would be entitled to vote at the meeting,

order a general meeting of the company to be called, held and conducted in any manner the Court thinks fit.”

9.  As will be apparent from my explanation of the background to the present applications, the 2^nd applicant is neither a director nor a member of any of the Companies.  This poses the question on what basis, if any, can the court properly treat section 570 as having been engaged.  There are two possibilities: firstly that the court proceeds on the basis that it is satisfied that it should of its own motion make the substantive order sought for a general meeting; alternatively that the court proceeds on the basis that although the 2^nd applicant is not registered as a member of the Companies in the Companies’ Share Registers, it is only a matter of time and formality before the 2^nd applicant becomes so.  The first possibility has not been fully explored before me.  In my view sub-section (2)(b) is satisfied if the 2^nd applicant can demonstrate to the court that it is probable that the 2^nd applicant will become a member of the Companies. I am so satisfied in the present case.

10.  I will therefore make orders in each of the four applications: first, authorising the applicant to make these substantive applications and for the convening of an EGM of each of the Companies, that notice of the EGMs be dispensed with and that the attendance of the 2^nd applicant at an EGM will constitute a quorum, and at the meetings a resolution be put to the Companies for the appointment of the 2^nd applicant or such other person or persons as the 2^nd applicant considers appropriate as additional directors of each of the Companies,  finally there be liberty to apply and no order as to costs.