LAU WAI YIN AMY AND ANOTHER v. POON CHUNG KWONG PETER AND ANOTHER

HCMP 64/2019

[2019] HKCFI 1056

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 64 OF 2019

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D E C I S I O N

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1.  This seems to me to be a straightforward case of the administrators of a deceased shareholder seeking the transfer of the shares in the company into their name, for the purpose of the due and proper administration of the estate. The deceased shareholder was Joseph Pun, who passed away on 19 February 2018, having been apparently a 61% shareholder, the company’s secretary, and one of the two directors of the company, together with Mr Peter Poon, the 1^st defendant.

2.  The plaintiffs are the joint administrators of the estate of the late Joseph Pun, pursuant to letters of administration granted on 17 July 2018.  The plaintiffs gave notice under section 158(1) of the Companies Ordinance (Cap 622) for the transfer of shares, but the company had not sent any notice of refusal within two months or registered the transfer.

3.  The company’s articles are relevantly in the form of the provisions of Table A in the predecessor Companies Ordinance (Cap 32).  Regulation 30 of Table A provides that any person becoming entitled to a share in consequence of the death of a member may elect either to be registered himself as holder of the share or to have some person nominated by him registered as the transferee, though the directors shall in either case have the same right to decline registration as they would have had in the case of a transfer of the share by the member before his death.  In the case of a transfer by a member in his lifetime, regulation 26 of Table A, like the statute, also requires that the directors, where they refuse to register a transfer, to send to the transferor and transferee notice of the refusal within two months.

4.  On the evidence, the company had neither resolved to refuse to register the transfer nor given any notice of refusal, nor is there any basis for objection raised against the transfer in the correspondence I have seen.

5.  The plaintiffs’ affirmation was served on the defendants on 16 January 2019.  The defendants did not file any evidence within 4 weeks, as required by O 28, r 1A(4), that is, by 13 February 2019.  Even now, over another 40 days later, the defendants have not filed any evidence in opposition.

6.  Mr Chan has appeared this morning on behalf of the 1^st defendant, with the primary stance of seeking an adjournment of the hearing of the originating summons on the basis that the parties are “in a very advanced stage of settlement negotiations”.

7.  However, what has given rise to concern on the part of the plaintiffs is that not only has Mr Chan referred to the state of the negotiations between the parties, but a bundle has been prepared and submitted on behalf of the 1^st defendant producing the correspondence between the parties from November 2018 up to 22 March 2019, some of which were marked “without prejudice” and “subject to contract”.  As Mr Chan accepted, at least some of the correspondence is covered by “without prejudice” privilege.

8.  In these circumstances, it seems to me that the relevant letters should not have been included in the bundle for the court without both parties’ consent, although I should add I have not read those letters included in the additional bundle produced by the 1^st defendant.  Disclosure of those letters is, with respect, not justified by reference to the principles stated by Robert Walker LJ (as he then was) in Unilever plc v Procter & Gamble Co [2000] 1 WLR 2436, which stated that evidence of negotiations may be given, for instance, on an application to strike out proceedings for want of prosecution in order to explain delay or apparent acquiescence.  Generally, however, as stated in the same paragraph in Robert Walker LJ’s judgment, this exception is limited to the fact that such negotiations have taken place and the dates.  It was said that “occasionally fuller evidence is needed in order to give the court a fair picture of the rights and wrongs of the delay”, but I do not think that in the circumstances of this case those letters should have been produced.

9.  I have been told that there is nothing in those letters concerning postponement of the present proceedings.

10.  In these circumstances, it seems to me simply the unilateral position taken by the 1^st defendant not to respond to the originating summons with any proper evidence.  With respect, I do not think that provides a proper basis for adjourning the originating summons to another date.

11.  Separately, Mr Chan has raised certain matters casting aspersions on the conduct of the late Joseph Pun with respect to the conduct of the affairs of the company, none of which however is admissible because none of them is in evidence. 

12.  In any event, those allegations or, to put them at the lowest, suspicions, were raised only against the deceased.  They are not objections personal to the administrators, who are the persons to whom the transfer of shares requested to be registered is made. 

13.  It is to be noted also that on 21 November 2018 the 1^st defendant’s solicitors had already written to the plaintiffs’ solicitors, stating that their client had no objection whatsoever to the appointment of the plaintiffs as directors of the company and would comply with all the formalities as prescribed by the Companies Ordinance in full.

14.  In these circumstances, it does not seem to me there is any meritorious opposition or prospect of it to the originating summons.  There will therefore be an order requiring the transfer to be registered.

15.  I will now hear counsel on the form of order and the question of costs.

(Discussion)

16.  I will make an order in terms of paragraphs 1, 2, 3 and 5 of the draft order attached to the notice of hearing of the Originating Summons as amended.

(Discussion re costs)

17.  Costs to the plaintiffs to be taxed if not agreed.