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Tang Jialin v Sinopac Securities (Asia) Ltd And Others

Judgment Cited authorities 13 Cited in Precedent Map Related
Vincent
Judgment Date23 August 2019
Neutral Citation[2019] HKCFI 2087
Year2019
Judgement NumberHCA90/2018
Subject MatterCivil Action
CourtCourt of First Instance (Hong Kong)
HCA90/2018 TANG JIALIN v. SINOPAC SECURITIES (ASIA) LTD AND OTHERS

HCA 90/2018

[2019] HKCFI 2087

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 90 OF 2018

____________

BETWEEN
TANG JIALIN (唐佳琳) Plaintiff
and
SINOPAC SECURITIES (ASIA) LIMITED 1st Defendant
LI SHUANGHUI (李双晖) 2nd Defendant
DAN KAZUYOSHI 3rd Defendant

____________

Before: Deputy High Court Judge William Wong SC in Chambers
Date of Hearing: 24 July 2019
Date of Decision: 23 August 2019

____________

DECISION

____________

INTRODUCTION AND BACKGROUND

1. This is an unusual case. The facts, so far disclosed to the Court, are strange and inexplicable in many respects as will be detailed below. This Court is left with a distinct impression that all parties to these proceedings, including the 1st defendant, have yet to disclose all relevant material facts to assist this Court to understand what had really happened.

2. The 2nd defendant alleges that in August 2016, she was approached by one Mr Chiu who represented to her that Addchance Holdings Limited, a company listed on the Stock Exchange of Hong Kong (Stock Code: 3344) (“the Company”), was seeking to obtain further financing by the allotment and issuance of new shares.

3. The 2nd defendant produced a chain of emails from 3 November 2016 to 4 November 2016 between Mr Chiu and herself regarding the signing of a subscription agreement for new shares in the Company.

4. On 6 January 2017, the 2nd defendant and the Company executed a share subscription agreement (“the Share Subscription Agreement”)under which the 2nddefendant agreed to subscribe for 250 million new shares of the Company (“the 250 Million Shares”) at the consideration of HK$20 million. Clause 4.1 of the Share Subscription Agreement provides that the consideration has to be paid by banker’s draft payable to the Company.

5. At the extraordinary general meeting of the Company dated 17 March 2017, the following relevant resolution was passed:

“ 5. THAT

(a) Subject to the fulfillment of the terms and conditions set out in the share subscription agreement (the ‘Fourth Subscription Agreement’) dated 6 January 2017 (a copy of each of the Fourth Subscription Agreement has been produced to this meeting marked ‘D’ and initialled by the Chairman for the purpose of identification), and entered into between the Company and Mr. Li Shuanghui [the 2nd defendant] (the ‘Fourth Subscriber’), in relation to the subscription of 250,000,000 new shares (the ‘Fourth Subscription Shares’) in the Company by the Fourth Subscriber, the Fourth Subscription Agreement and the transactions contemplated thereunder be and are hereby approved, confirmed and ratified.”

6. On 28 April 2017, three share certificates (numbered ADC00008270, ADC00008271 and ADC00008272) were issued by the Company to the 2nd defendant which certify her to be the registered owner of a total of 250 million fully paid ordinary shares of the Company. It appears that the said share certificates were collected by the Company’s authorised representative.

7. On the same date, the Company made an announcement on the Stock Exchange of Hong Kong to the effect that:

“ The Board is pleased to announce that all the conditions precedent to the Fourth Subscription have been fulfilled and as at 28 April 2017, the completion of Fourth Subscription had taken place in accordance with the terms and conditions of the Fourth Subscription Agreement.

Immediately before the Fourth Completion, the Company had 5,146,730,909 Shares in issue. Upon the Fourth Completion, an aggregate of 250,000,000 new Shares, representing approximately4.63% of the issued share capital of the Company as at the date of this announcement (as enlarged by the allotment and issue of the Fourth Subscription Shares), have been duly allotted and issued as fully paid to the Fourth Subscriber at the Subscription Price of HK$0.08 per Subscription Share. Accordingly, immediately after the Fourth Completion, there are 5,396,730,909 Shares in issue.”

(emphasis added)

8. In the Company’s interim results announcement for the six months ended 30 June 2017, at the note under “Share Capital”, it is stated:

“ On 6th January 2017, the Group entered into subscription agreement with four subscribers, Gold Train Investments Limited (the ‘First Subscriber’), Mr. Yuan Dongjie (the ‘Second Subscriber’), Mr Chen Chiquan (the ‘Third Subscriber’) and Ms. Li Shuanghui (the ‘Fourth Subscriber’), pursuant to which theFirst Subscriber has agreed to subscribe no less than 2,500,000,000new shares and no more than 3,800,000,000 new shares and each of the remaining subscribers have agreed to subscribe 250,000,000 new shares. The ultimate beneficial owner of First Subscriber is Mr. Poon Sum (who has been appointed as an executive director and chairman of the board of directors of the Company on 19th April 2017) and the remaining Subscribers are independent third parties. All new shares under subscripting agreement would be at HK$0.08 each. All of these subscriptions have been completed and an aggregate of 4,550,000,000 shares have been issued by the Company. The gross and net proceeds from these subscriptions are approximately HK$364 million and HK$359 million, respectively. The net proceeds from the subscriptions werearrived after deduction of commission and other related expenses.” (emphasis added)

9. I pause to note that although all the documentary evidence shows that the 2nd defendant had paid for the 250 Million Shares, it is common ground between the 1st defendant and the 2nd defendant that, in fact, the 2nd defendant had not paid for the said shares.

10. Strangely, there is no explanation from the 2nd defendant as to why she had not paid for the 250 Million Shares and yet was expecting the said shares to be delivered to her. The 2nd defendant’s case is that a company called Gain Act Limited, which she did not authorised and whose director and shareholder she does not know, was allegedly authorised to pay for those shares. I find this very strange and difficult to understand.

11. However, the strangest and most inexplicable event was that on 5 May 2017, by a standard form of transfer purportedly signed by the plaintiff and the 2nd defendant and witnessed by one Mr Cheng Pak Ho (“Mr Cheng”) of the 1st defendant at the office of the 1st defendant (“the Standard Form of Transfer”), the entire 250 Million Shares were somehow transferred to the plaintiff at nil consideration. It is the 1st defendant’s case that:

“ (a) Immediately prior to the transfer of the 250M Shares to the Plaintiff and since 28 April 2017, the 1st Third Party had been the registered holder of 250 million shares of Listco by way of physical scripts with certificate numbers ADC00008270 for 100 million shares, ADC00008271 for 100 million shares and ADC00008272 for 50 million shares.

(b) The transfer of 250M Shares from the 1st Third Party to the Plaintiff was effected by a Standard Form of Transfer duly stamped and signed by the 1st Third Party and the Plaintiff dated 5 May 2017 (‘050517 Transfer Form’).

(c) The 250M Shares were transferred for no consideration, and consideration was not stated on the 050517 Transfer Form.

(d) The 050517 Transfer Form was signed by the 1st Third Partyand the Plaintiff on the same date (5 May 2017) and at the samelocation (the Defendant’s branch office at Unit 2703, 27/F Tower 1 Admiralty Centre, 18 Harcourt Road, Hong Kong) and before the same witness, Mr Cheng Pak To (“Mr Cheng”).

(e) I have made enquiries with other staff members of the Defendant and checked the Defendant’s written records and I verily believe that on 5 May 2017, neither the Plaintiff nor the 1st Third Party was a customer of the Defendant, and at the time, the Defendant had no knowledge of this transfer.”

(Paragraph 4 of the 3rd Affirmation of Ho Tzu Chuan)
(emphasis added)

12. First, the plaintiff has not explained why she was able to obtain the 250 Million Shares at nil consideration. In her Amended Statement of Claim, she has not pleaded how she acquired title of the 250 Million Shares.

13. Secondly, the 2nd defendant strongly denied that she signed the Standard Form of Transfer. The 2nd defendant’s case is that the said form was executed by an imposter purported to be her, in the presence of Mr Cheng at the 1st defendant’s office. The 2nd defendant has adduced her travel record to show that she was not in Hong Kong on 5 May 2017 and therefore it was impossible for her to have signed the Standard Form of Transfer before Mr Cheng of the 1st defendant at the 1st defendant’s office.

14. Thirdly and strangely, Mr Cheng of the 1st defendant who witnessed the execution of the Standard Form of Transfer has not given any evidence to explain this purported transaction. It is also strange that the 1st defendant apparently has not asked Mr Cheng about this purported transaction. At the hearing, Ms Cheung for the 1st defendant informed the Court that Mr Cheng has left the employment of the 1st defendant.

15. Fourthly, even more strangely, it is the plaintiff’s pleaded case that she did not and does not know who the 2nd defendant is and yet by the Standard Form of Transfer witnessed by Mr Cheng of the 1st defendant, the 2nd defendant transferred the 250 Million Shares of the Company to the plaintiff at nil consideration. I find this very difficult to fathom.

16. Then on 1 May 2017, the plaintiff opened a securities trading account with the 1stdefendant (“the Account”) and Mr Cheng was assigned by the 1st defendant to be the account executive of the Account.

17. On 18 May 2017, the plaintiff deposited 250 million shares by way of physical scrip with certificate number ADC00008273 into the Account. Mr Ho, the...

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