Lee v Lee [2011] FJHC 192; HBC229.2010L (28 March 2011)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

Civil Action No: HBC 229 of 2010L

BETWEEN:

WAI HING LEE
Plaintiff

AND:

YUK LUEN LEE and RICHARD YING HIN LEE as Executors and Trustees of the late Allen Lee
1st Defendants

AND:

THE PUBLIC TRUSTEE for the estate of LUM SUI FONG
2nd Defendant

FINAL JUDGMENT

Judgment of: Inoke J.

Counsel Appearing: Mr C B Young for the Plaintiff
Ms M Muir the 1st Defendant

Solicitors: Young & Assocs for the Plaintiff
M K Sahu Khan for the 1st Defendant

Date of Hearing: 21 March 2011
Date of Judgment: 28 March 2011

INTRODUCTION

[1] This is an application by the Plaintiff to secure payment of a judgment which I gave in her favour against the Defendants on 27 August 2010. That judgment is reported in Wai Hing Lee v Yuk Luen Lee [2010] FJHC 367; HBC087.2006L (27 August 2010).

[2] One of the Defendants in that case, Lum Sui Fong, died on 31 July 2010, some 3 months after I heard the trial on 23 April 2010 and about a month before I delivered my judgment. No grant of probate or administration has been applied for so the estate of Lum Sui Fong remains unadministered.

[3] The Plaintiff alleges that Lum Sui Fong held a substantial number of shares in a company called Lum Sui Fong Investments Limited (formerly Lees Transport Limited) (the "Company") which is worth more than $1.0m. She says that before his death, Lum Sui Fong fraudulently transferred those shares to the other shareholder to avoid payment of the judgment sum.

[4] The present application is to stop further dealings on those shares and the Company properties.

THE APPLICATION

[5] The Summons was filed on 17 December 2010 pursuant to O 29(1) of the High Court Rules 1988 and s 51(1) of the Property Law Act [Cap 130]. It sought interim orders restraining all the Defendants from selling, transferring or disposing: (1) the shares in the Company previously held by Lum Sui Fong, and (2) any real property held in the name of the Company. The First Defendants are being sought to be restrained as the directors of the Company.

CONSIDERATION OF THE APPLICATION

[6] Both counsel filed written submissions and argued the matter fully before me and the brevity of this judgment is no indication of the extent of submissions and arguments. But rather this judgment is brief because the points were fully canvassed.

[7] The fundamental question is whether the Plaintiff should be put in a better position than any other creditor. That depends on the creditor's rights given by s 51 of the Property Law Act which provides:

51. (1) Save as provided by this section, every alienation of property with intent to defraud creditors shall be voidable at the instance of the person thereby prejudiced.

(2) This section does not affect any law for the time being in force relating to bankruptcy.

(3) This section does not extend to any estate or interest in property alienated to a purchaser in good faith not having, at the time of the alienation, notice of the intention to defraud creditors.

[8] The first point I note from the section is that there must be a creditor-debtor relationship. That does not exist in this case as between the Plaintiff and the Company. That disposes of the order sought against the Company and its directors. I do not need to go further and consider whether to do otherwise would amount to piercing the corporate veil.

[9] Mr Young did eventually concede that to put a blanket restraint on the sale of the Company properties would be going too far but submitted that nevertheless, I should impose a limited restriction that unless this Court is satisfied that a proposed dealing is bona fide and for the business of the Company it should not be allowed. Even that I think is going too far. It is an unnecessary interference with the Company's management and business. And secondly, it would amount to deciding this case in a summary manner.

[10] In so far as dealings on the shares in the Company are concerned they are clearly caught by the section. But I note that even if fraud is proved the transaction is not automatically void; it is voidable only. Further, the principal relief sought by the Plaintiff in her Writ of Summons is exactly the same as that which is sought in this application. I should not determine this matter in this summary way.

[11] The First Defendants have given an undertaking not to further deal with the shares in question until final determination of this action which to some extent nullifies one of the orders sought in this application.

[12] For these reasons, the Plaintiff's application fails.

COSTS

[13] Although I said, in my earlier judgment that this was a commercial matter but nevertheless a family matter and I made no order as to costs, I think the prospects of this application succeeding were remote and the First Defendants have been put to an unnecessary expense. They should be entitled to their costs which I set at $1,500.

ORDERS

[14] The Orders are as follows:

1. The Plaintiff's application is dismissed.
   
2. The Plaintiff shall pay the First Defendant's costs of $1,500 within 21 days.
   
3. The matter is to take its normal course.
   

Sosefo Inoke
Judge