LAM LAI YI v. HO WING SZE AND ANOTHER

HCMP 1651/2009

in the high court of the

hong kong special administrative region

court of appeal

miscellaneous proceedings no. 1651 of 2009

(on an intended appeal from DCCJ NO. 2221 of 2006)

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D E C I S I O N

1.  This is an application for leave to appeal from a judgment of Deputy District Judge Yip given on 27 May 2009.  The matter before the judge was a claim by the plaintiff for the sum of HK$102,824.40.  The matter arose in respect of what was alleged to have been the sale of shares in a company.  The plaintiff relies upon a contract contained in the minutes of the Extraordinary General Meeting of the company Yummi Yummi Food Products Company Ltd which took place on 30 August 2005.

2.  The minutes, which were signed by all three shareholders, including the plaintiff, contained three resolutions.  The first was that the plaintiff would resign from the board of directors effective on 1 September 2005.  The plaintiff was, however, to continue to work at the company until 20 September 2005.  The second resolution was that the plaintiff would sell all the shares that she owned in the company to the remaining shareholders namely the defendants.  The third resolution was as follows:

“The resolution was passed by all presents and it was resolved that a certified accountant will be appointed to evaluate the value of the said company in order to determine the price for the transfer of shares of the said company.  All expenses in due course will be responsible by Ms. Lam Lai Yi.”

3.  There is no dispute between the parties that following that meeting the defendants did appoint an accountant of their choice and it was based upon the evaluation given by that accountant that the plaintiff’s claim is based.

4.  The judge came to the conclusion that there was only an agreement to negotiate for the sale and purchase of the plaintiff’s shares.  He did so partly for the reason that he considered that it was “absurd” that the plaintiff might have to accept only a nominal valuation whereas the defendants might have to accept an “astronomical” valuation.  In reaching that conclusion the judge took into account what had been said by the parties in the course of giving evidence as to what their interpretation of the resolutions had been.

5.  In my view, the first question which arises is whether the three resolutions together constitute a contract between the three parties.  If the court were to consider that it does, the question which would then follow would be whether that contract was enforceable.  The question would also arise as to whether it would be possible for parties to give evidence as to their understanding of the meaning of what would be a written contract.

6.  In my view it is reasonably arguable that the resolutions at the board meeting do constitute a binding contract for the sale of the plaintiff’s shares and that the agreement is valid on the basis that the price was to be fixed by an independent valuer.  I therefore give leave to appeal.