Professional Documents
Culture Documents
HCMP 894/2015
IN THE HIGH COURT OF THE
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IN THE MATTER of Section 42 of
the
Companies
Ordinance
(Chapter 622, Laws of Hong Kong)
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BETWEEN
1st Plantiff
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2 Plaintiff
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and
THE REGISTRAR OF COMPANIES
()
1st Defendant
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rd
3 Defendant
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4th Defendant
LIU HUI ()
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Before: Hon Au-Yeung J in Court
Dates of Hearing: 18-20 October 2016
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JUDGMENT
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Introduction
1. Family members of the Plaintiffs transferred Shares in D2 (the
Company) to D5 (Korchina) allegedly under a Trust for stated
purposes. The transfer was secured by an undated instrument of transfer
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and undated bought and sold notes executed by Korchina (the Security
Documents). The purposes allegedly were not fulfilled. The Security
Documents were utilized to transfer the shares to the 1st Plaintiff.
2. Korchina denied the existence of the Trust and alleged that the
Security Documents were forged. Meanwhile, Korchina has changed the
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The
Company was joined for the judgment to bind it. The main protagonists
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at the trial were the Plaintiffs on one side, D3 (Wang"), D4 (Liu) and
Korchina on the other.
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Undisputed facts
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6. The 1st Plaintiff (the Mother) has 2 daughters, Huang Pin Ching (
) (HPC); and Huang Yi Chen ( ) (HYC) (collectively
the Sisters). She also has a son, the 2nd Plaintiff (the Brother).
They were from Taiwan.
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Transfer). Since then, Wang has been the sole registered shareholder of
the Company until the Mother became a shareholder in January 2015 in
disputed circumstances.
11.Since 4 December 2013 Wang has been a registered director and from
19 June 2015, Liu became one of the directors.
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12.According to HPC, there was problem over sale of the Land, as part of
it was occupied by third parties/triads. In 2013, she came to know Wang
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Transfer was effected, but the Shares were to be returned to the Sisters or
their nominee upon fulfilment of the purposes or on demand.
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14.At the same time, on the Sisters request and as security, Wang
executed the Security Documents, which were prepared by Ms Trista Yu
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of a secretarial company.
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Documents using her mobile phone, after their execution. The Original
Declaration of Trust had been torn up by Gu in 2014 when HPC was
having a discussion with him.
16.Wang, Gu and Korchina refused to return the Shares to the Sisters
despite demand at the end of 2014. Realizing the fraudulent intent of
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Gu to take over the Land, the Brother, then as the sole director of the
Company, commenced the Mainland Proceedings on 22 January 2015
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17.On 27 January 2015, the Sisters dated the Security Documents and
transferred the Shares to the Mother solely. The Companies Registrar has
not yet registered the change in shareholder because of this case.
18.A month later, on 27 February 2015, the subject forms (the 2
Forms), signed by Wang, were filed at the Companies Registry:
(a)
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(b)
19.The present case for rectifying the information in the 2 Forms was
commenced by originating summons (the OS) on 16 April 2015, which
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a consideration of US$500,000.
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21.Wang also claimed that her purported signatures and the company
the Mother was void and an injunction restraining the Mother and the
Brother from representing that they were shareholder or director of the
Company.
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The issues
23.The issues are:
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(2)
(3)
(4)
Plaintiffs.
24.There was a plea of fraud against Wang and Liu, without particulars.
The Plaintiffs did not pursue this plea.
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The Witnesses
25.As stated by Stock JA (as he then was) in Esquire (Electronics) Ltd v
Hong Kong and Shanghai Banking Corp Ltd [2007] 3 HKLRD 439, at
135:
Comparison with contemporaneous documentation is always
an aid to reliability of oral testimony, unless there is reason to
believe that the documentation is contrived or materially
incomplete. the truth, in so far as one is able to reach it or,
can best be tested by reference to contemporaneous
documentation where it exists, or to its absence where one
would expect it to have been created, as well as to inherent
probabilities (though bearing in mind that there may be
occasions where the truth may run against that particular grain)
having regard to the all the facts that are known.
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and original Security Documents. HPC was the only witness in the whole
case. Material evidence kept emerging whilst she testified. She was
wholly discredited under cross-examination. I find her to be untruthful
and unreliable.
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support of the OS, pleadings and documents (or the lack of them), the
Plaintiffs case
was
fraught
with
inherent
improbabilities
and
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inconsistencies.
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is on the party (in this case, the Plaintiffs) asserting that the beneficial
interest is different from the legal title to prove to the contrary: Stack v
Dowden [2007] 2 AC432, 4-5, Lord Hope; 68, Baroness Hale.
30.The letter before action dated 13 March 2015 from the Plaintiffs
solicitors to Wang and HPC-1st 1 filed on 27 April 2015 simply alleged
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that the 2 Forms were false. They did not assert the existence of a trust or
indeed any cause of action. It did not mention Gu or Wang. It did not
describe how the Mother came to be the shareholder.
31.That letter and HPC-1st was made at a time when the Mainland
Proceedings were already on foot, ie after the alleged fraud was
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33.The circumstances under which the Trust arose were peculiar. The
Land was worth about RMB26 million in 2015. See the statement of
claim in the Mainland Proceedings signed by the Brother. HPCs own
estimation (without valuation) was RMB1 billion. And yet the Trust was
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34.In the witness box, HPC added that Gu represented that he had a
military background. Gu said that the military party would buy the Land
at RMB800 million and that she would be paid in 1-2 months. This was
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years since the age of 21, would have been so nave in handling such
valuable assets. She wanted the court to believe that she reposed blind
trust in 2 strangers. Her story was inherently incredible.
38.Insofar as documentary proof was concerned, there was a paper
napkin (admittedly in existence and mentioned for the first time in HPCs
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39.On its face, the Declaration of Trust was a suspicious document. Party
A was the Company instead of the Sisters. HPC said that it was a
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40.Further, there was no reason why the Declaration of Trust was signed
by Gu but the Security Documents (allegedly executed at the same time)
were signed by Wang.
41.What happened after creation of the Trust? The purchase price for
the Land was not forthcoming as Gu had promised. HPC also witnessed
Gu tear up the original Declaration of Trust in October 2014 (a date
which HPC remembered by reference to the Taiwan National Day). She
discovered Gu to be a fraudster at the end of October 2014.
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42.Gus conduct would not have left any doubt in HPCs mind that he
would not honour the Trust. And yet HPC did nothing to wrest back
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control of the Company. She blindly relied on the bare words of Gu that
money would arrive soon and that there were formalities to go through. It
took her another 3 months to make the Mother a shareholder.
43.Further still, the Brother filled up Form NR1 on 10 October 2014,
purporting to change the registered office to a place of Gus choice. Form
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revoked the change in the 2 weeks before Form NR1 was filed.
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44.On the other hand, there was no evidence from the Defendants side to
contradict HPC. There was no document to prove set off of the huge
Debt. Shenzhen Hang Mei was incorporated on 18 December 2013, after
the 2013 Transfer. The court was left with the unanswered questions as to
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why Korchina obtained the Shares in the first place and why HPC dared
to fabricate a claim of trust and security, and to forge documents.
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45.Mr Lam (counsel for the Plaintiffs) referred to one rhetorical question
asked by HPC in her evidence, He [Gu] did not give me a penny for the
Land. Why would I just gift the Land to him for free? With respect, that
was an over-simplification of the Plaintiffs case.
46.In Kao Lee & Yip v Koo Hoi Yan & Others [2003] 3 HKLRD 296 at
34, Ma J (as he then was) says,
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47.A judge is not bound always to make a finding one way or the other
with regard to the facts averred by the parties. It is open to him the 3 rd
alternative of saying that the party on whom the burden of proof lies has
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48.The case of there being a Trust simply begged belief in view of the
inherent improbabilities and inconsistencies in HPCs evidence. Her new
evidence in the box was but her recent invention. I am not satisfied that
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49.Since I have doubts as to the existence of the Trust, I deal with this
issue only for the sake of completeness.
The Wu Yi case was decided on burden of proof and upheld on appeal on the same ground [2014] 2
HKLRD 1054, upheld on final appeal on the different ground that the defence case was proved on
balance of probabilities (2015) 18 HKCFAR 364.
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as alleged.
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the party engaging him. The Plaintiffs direct evidence, however, was not
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satisfactory.
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Documents still existed. The inference was that Trista Yus evidence was
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58.Ms Lam fairly accepted that the number of Shares had been correctly
identified in the Instrument of Transfer as being nos. 1-10000. I was
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also unable to see why HPC had wanted only 5,000 Shares to be retransferred to her if there really was a trust. However, the amendment
was never shown to have been brought to Wangs attention.
59.Fourthly, HPCs oral evidence was that she took photos of the undated
Security Documents (and the Declaration of Trust) only after she had
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brought the originals home. Since she had the originals, there was no
reason for her to make copies. Even if she needed a copy, there was
a photocopying machine at Gus office but she never made copies there.
60.HPCs evidence was incredible. I am not satisfied that the Security
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61.In his closing submission, Mr Lam submitted that the Plaintiffs were
not seeking to enforce the terms of the Declaration of Trust. They just
used that document to show that the transfer to Korchina must be subject
to a trust of some sort, and it did not matter what the exact terms of the
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trust were. If the Plaintiffs failed for any reason other than uncertainty,
but Korchina paid nothing for the Shares, and the Shares could not
possibly have been gifts, the legal consequence (by mere operation of
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Sun v Peckson Ltd & anor (unreported, ECSC CA, 22 May 2015) 7894, Kentish-Egan, QC, JA (Ag) in support of his propositions.
62.I am unable to agree with Mr Lam. A party should not be allowed to
depart from his pleading: Kwok Chin Wing v 21 Holdings Limited (2013)
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to proof. This was distinguishable from Ng Man Sun in that the court
there did not disbelieve the claimants evidence.
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63.Even if there was a trust, it was doubtful if the condition for utilizing
the Security Documents was met. The Brother had executed a Share
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Mainland Proceedings, they did not dispute the validity of the Share
Transfer Agreement but simply alleged that the consideration was not
paid. In the present case, the pleaded case was that Gu allegedly told
HPC that a re-transfer could be effected at nil consideration, again not
disputing validity. HPCs oral testimony, however, was that the Brother
had signed on the Share Transfer Agreement without intending it to take
effect.
original from her house, only to discover it sometime later when she
moved. I do not consider it appropriate to find there to be a resulting trust
on the Plaintiffs inconsistent evidence.
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Conclusion
under which the Security Documents came into existence or that Wangs
signature on the Security Documents was genuine. Even if the Security
Documents were genuine documents signed by Wang, I am not satisfied
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that the condition for utilizing them was met, or that a resulting trust had
arisen. The claim against Wang and Korchina is not established.
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65.Liu could not have been liable in any way. Save for a brief mention of
him in the pre-action letter, Liu simply did not feature in HPCs evidence.
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(2)
(3)
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(Queeny Au-Yeung)
Judge of the Court of First Instance
High Court
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