PAGANO, MARIO v. SAPONARO, CLAUDIO AND OTHERS

HCMP 1953/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1953 OF 2015

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D E C I S I O N

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1.  I have before me an amended originating summons dated 12 August 2015 issued by the applicant seeking a declaration that he is absolutely entitled to the one issued share currently registered in the name of the 2^nd respondent in the 3^rd respondent. The 2^nd respondent is owned and controlled by the 1^st respondent.

2.  The applicant’s claim relies on a written declaration of trust dated 17 October 2012 which on its face provides quite clearly that the 2^nd respondent holds the share in the 3^rd respondent as nominee of the applicant, and that the applicant is entitled to all dividends, rights and interests accruing to the share and that such rights and interests are held on trust by the 2^nd respondent for the applicant.  The declaration of trust was executed on behalf of the 2^nd respondent by the 1^st respondent.

3.  When the originating summons (prior to its amendment) first came on before me, the 1^st respondent was legally represented and sought leave to file evidence to contest the application on the grounds that he had acquired a beneficial interest in the share.  Subsequently, his solicitors filed their own affirmation exhibiting a draft affidavit of the 1^st respondent. The 1^st respondent’s affidavit was never sworn and filed.  The 1^st and 2^nd respondents’ solicitors came off the record and the 1^st and 2^nd respondents have taken no further role in the proceedings and did not attend the hearing today contesting the application.

4.  In the circumstances it seems to me that the court can properly proceed on the basis that the application is uncontested and that the court should make an order which leads to the execution of an instrument of transfer of the share to the applicant and an ancillary order providing for the rectification of the 3^rd respondent’s register of members.

5.  Mr Brewer who appeared on behalf of the applicant reminded me of the Privy Council’s decision in Nilon Limited v Royal Westminster Investments SA[1], in which the Privy Council held that the statutory provision in the British Virgin Islands which provides for a similar procedure to that under which the application before me has been brought (namely Order 85) could only be used for a summary determination of an applicant’s right to an order for rectification:

“where the applicant has a right to registration by virtue of a valid transfer of legal title, and not merely a prospective claim against the company dependant on the conversion of an equitable right to a legal title by an order for specific performance of a contract.” (see Lord Collins at paragraph 51)

6.  Mr Brewer brought this decision to my attention when the matter first came on before me, at which time it appeared that the application might be contested and as a result of the Privy Council’s decision, it might be argued that Order 85 was not the appropriate procedure to adopt for the resolution of the applicant’s claims. 

7.  As matters as have transpired, the application had not been contested. It seems as a result that the decision in Nilon is not relevant.  The applicant is entitled to the declaration that it seeks confirming that the declaration of trust has the effect that it purports to have namely, it provides that the 2^nd respondent holds the share on trust for the applicant and also an order for the execution of an instrument of transfer for the conveyance of the legal title in the share to the applicant.  

8.  It seems to me that although at the date of this hearing, an instrument of transfer has not yet been executed (and I intend to order that it is executed by the Registrar, as it seems inherently unlikely that the 1^st respondent, who is in Italy, will do so), in my view the court can still properly proceed on the basis that the position is that the applicant has for all practical purposes, a valid transfer of legal title.  I will therefore also make an order for rectification of the 3^rd respondent’s register of members.  I have been invited to make a gross sum assessment of costs of the proceedings which I do in sum of HK$380,000.