Glory Rise Ltd v Luo Xing Juan Angela

HCCW 568/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 568 OF 2002

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IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CIVIL ACTION NO. 285 OF 2003

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BETWEEN

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(HEARD TOGETHER)

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J U D G M E N T

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The two proceedings

1. There are two related matters before me, a petition and an action.

2. The petition was brought by Luo Xing Juan Angela (“Miss Luo”). The estate of Hui Shui See Willy (“the deceased”) is the 1^st respondent, Hui Mi Chi (“Miss Hui”) is the 2^nd respondent, and the company in question, Glory Rise Limited (“the Company”), is the 3^rd respondent. Miss Hui is a sister of the deceased. Miss Luo sought to wind up the Company on the just and equitable ground, alternatively relief under section 168A of the Companies Ordinance, Cap. 32.

3. The action was brought by the Company against Miss Luo. The Company claimed vacant possession of a property held by the Company at No. 11 Ka Shue Road, Hillview Court, Block 5, 1^st Floor, Flat A in Sai Kung, New Territories (“the Property”), mesne profits and a declaration that Miss Luo holds 3,500 shares in the Company on trust for the estate of the deceased. It alleged that Miss Luo was granted a bare licence to occupy the Property jointly with the deceased in about May or June 1999, that the licence was terminated by one month’s notice served on 22 January 2001, and that Miss Luo has continued in occupation as a trespasser.

The background matters

4. The background matters are largely not in dispute and may be stated as follows.

5. Miss Luo was married to one Mr. Yik in the Mainland in 1992. Their daughter, Mon Din, was born in 1993. In 1995, Mr. Yik arranged for Miss Luo to come to Hong Kong. They separated not long after she had arrived. Miss Luo then lived in Hong Kong by herself. Mon Din was looked after by Miss Luo’s parents in Shanghai. Miss Luo supported herself with a job in a property agency. Later she worked as a receptionist in a nightclub.

6. Miss Luo first met the deceased when she was working in the property agency. The deceased was involved in the buying and selling of properties for investment. They met again by chance when the deceased went to the nightclub she worked. They became friends and developed an intimate relationship. After several months, they started to live together. Their cohabitation began in 1996 and lasted until the deceased passed away suddenly on 1 September 2000. Miss Luo ceased to work full time after she had lived with the deceased.

7. In the beginning, Miss Luo and the deceased cohabited at the premises rented by her at Unit A3, 11^th Floor, Wah Po Building, Prat Avenue, Tsimshatsui. In about September 1997, they lived in a small flat in Unit A4 on the 4^th Floor of the same building. This property was purchased in the name of Miss Luo with a mortgage. The rest of the purchase money in about HK$500,000.00 was put up by the deceased. He also paid for the decoration and furniture, the salary of the maid and the mortgage instalments.

8. The deceased had a number of girl friends before Miss Luo, and he had cohabited with one of them between 1983 to 1989. He had never married. Before he lived with Miss Luo, the deceased lived with his mother and unmarried sisters, including Miss Hui, in Mount Kellett Road. In September 1996, the deceased’s family moved to premises in Clear Water Bay Apartments, No. 8 Ka Shue Road, Sai Kung, New Territories. At all times a room was kept for the deceased in his family home; he had some of his personal belongings there and some of his bank statements were sent to that address. I do not attach any significance to this.

9. The deceased was a businessman. From about 1980, he and Miss Hui were in business together. They held shares in various companies. Some of these companies were used to hold properties as investments, and one of them was Inter-Trade Agencies Limited (“Inter-Trade Agencies”) in which the deceased held 80% of the shares and Miss Hui 20%.

10. In 1993, the deceased was diagnosed with lung cancer and had undergone surgery. After that, he relied on Miss Hui to handle many of the business affairs for him, and spent more time on his leisure.

The Company and the purchase of the Property

11. The Company was incorporated on 6 June 1997 with a nominal capital of HK$10,000.00, divided into 10,000 shares of HK$1.00 each. It was acquired as a vehicle for investment by the deceased and his business partner Cheng Pui Kit (“Mr. Cheng”) in July 1997. They were appointed the first directors. Mr. Cheng held 6,000 of the shares and the deceased held the remaining 4,000 shares.

12. In about April 1998, the deceased and Miss Hui attended the sales office of the developer for Hillview Court which was then under construction and decided to purchase a property in the development for investment. On 2 April 1998, Miss Hui signed a Memorandum of Sale of the Property on behalf of the Company to purchase the Property at HK$7,790,600.00. All the initial expenses for the purchase of the Property were borne by the deceased and Miss Hui in the respective proportions of 80:20; these expenses comprised the initial deposit of HK$350,000.00, the further deposit of HK$429,060.00, the stamp duty and legal fees of HK$215,602.00, and two sums paid as further deposit of HK$779,060.00 each. They decided to use the Company as the vehicle for this purchase. Until then, no investment or business activity was carried out by the Company. Mr. Cheng agreed to transfer all his shares in the Company to the deceased and Miss Hui, although the transfer did not actually take place until 3 February 1999, shortly before completion of the purchase of the Property. At a board meeting of the Company on 3 April 1998, it was resolved inter alia that Mr. Cheng should resign as a director and Miss Hui was to be appointed a director with immediate effect.

13. On 2 February 1999, in anticipation of the completion of the purchase of the Property, the Company obtained a term loan of HK$4 million from the Bank of America to finance the purchase, repayable by 180 monthly instalments of HK$41,768.99 each, with a first legal charge over the Property and a joint and several personal guarantee given by the deceased and Miss Hui.

14. On 3 February 1999, Mr. Cheng transferred 4,000 shares in the Company to the deceased and 2,000 shares to Miss Hui. The deceased’s shares in the Company were increased to 8,000. The shareholdings in the Company thus reflected the respective contributions that had been made by the deceased and Miss Hui towards the purchase price of the Property.

15. The Property was assigned by the developer to the Company on 12 February 1999. The deceased and Miss Hui paid two mortgage instalments in March and April 1999, again in the proportions of 80:20, until the deceased moved into the Property in the circumstances as mentioned below. The total contributions made by Miss Hui towards the purchase price and the mortgage instalments amounted to HK$528,576.40.

16. At all material times, other than holding the Property, the Company has not carried out any other business.

17. In or about April 1999, the deceased and Miss Hui engaged various property agencies to sell the Property at HK$8.2 million or to let it at HK$35,000.00 exclusive of rates, government rent and management fees. They had some offers but did not find them attractive, as the property market was on the decline at that time. The deceased then decided to reside in the Property with Miss Luo. From about the time the deceased moved into the Property, he took up the entire responsibility for paying the mortgage instalments. He also came to an arrangement with Miss Hui in about June 1999 to acquire all her interest in the Property and her shareholding in the Company and he was to pay back all her contributions towards the purchase price. On 25 June 1999, Miss Hui signed in escrow the documents for the transfer of her shares in the Company. The transfer was not effected until March 2000, when Miss Hui was paid back her contribution of HK$528,576.40. According to a shareholders’ resolution on 6 March 2000, they approved the transfer of 1,999 of the shares of Miss Hui to the deceased. On 28 March 2000, these shares were transferred by Miss Hui to the deceased.

18. Miss Hui admitted that the one remaining share held by her was held on trust for the deceased. She has remained as a director of the Company to this day. I accept her evidence that the deceased wanted her to hold one share on trust for him and to remain a director so as to oversee the administrative affairs of the Company. I do not attach any particular significance to the fact that the deceased wanted Miss Hui to tend to the administrative matters of the Company when necessary, even after he had transferred 35% of the shares to Miss Luo as mentioned below. This is understandable as Miss Hui and the deceased were in business...