Claire Chow v Delores Chow and Conrad Haoda (2009) N3593

• Jurisdiction: Papua New Guinea
• Judge: Manuhu J
• Judgment Date: 13 February 2009
• Court: National Court
• Citation: (2009) N3593
• Docket Number: WS. NO. 147 of 2008
• Year: 2009
• Judgement Number: N3593

Full Title: WS. NO. 147 of 2008; Claire Chow v Delores Chow and Conrad Haoda (2009) N3593

National Court: Manuhu J

Judgment Delivered: 13 February 2009

N3593

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS. NO. 147 of 2008

BETWEEN:

CLAIRE CHOW

Plaintiff

AND:

DELORES CHOW

First defendant

AND:

CONRAD HAODA

Second defendant

Lae: Manuhu J

2009: 9 & 13 February

JUDGMENT

COMPANY LAW – transfer of shares – transfer of share documents signed while transferor was resting in bed and recovering from attempted suicide – transferor was led to believe she was signing for different shares – transferor was not thinking properly – transferor was subjected to constant and sustained abuse and assault - transfer was manifestly unfair, and unconscionable.

Cases cited:

Papua New Guinea Cases

Papua New Guinea National Stevedores Pty Ltd v Andrew Baing (2001) N2069,

The Papua Club Inc v Nasuam Holdings Ltd & Ors (2004) N260,

Pinpar Developer Pty Ltd v TL Timber Development Pty Ltd (2006) N3075, In The Matter of an Application by Timothy Mathew O’Dwyer trading as O’Dwyer & Bradley Solicitors of Brisbane, Australia v Arnold Theodorus Derks (2007) N3226,

Kore Gene v MVIT [1995] PNGLR 244,

Overseas Cases

Knupp v Bell (1968) DLR Vol. 67 (2d.) 256.

Counsel:

Anthony Pryke, Lawyer for the Plaintiff

Luke Vava Jr, Lawyer for the Defendants

13 February, 2009

1. MANUHU, J.: Claire Chow, wife of Henry Chow Jr, is the mother of Delores Chow. Conrad Haoda is Delores’s partner. Conrad is a passive but appropriately joined as a party to the proceeding. He was not present at the hearing. Claire is aggrieved by the transfer of her two ordinary shares to her daughter in a company she co-owned with Henry. The substantive dispute is between Claire and Delores. Company registry records show that Claire’s two shares in Wai Chung Limited are now owned by Delores. Claire wants her shares returned. Delores has refused to return the shares. Claire has commenced this action to recover the shares.

2. The substantive issue, therefore, is whether the transfer of shares from Claire to Delores was properly and lawfully done.

3. Out of the three shares in Wai Chung Limited, Claire held two shares and Henry held the remaining one share. The family also owned other companies including Kimbe Farming Limited which operated a Mobil Service Station in Lae. The family business was managed by Claire and Henry until Easter 2006 when Henry left for Sydney. The management of the business was entrusted solely into Claire’s care.

4. The initial indication on change of management surfaced in September 2007. On 2nd September 2007 or thereabouts, Delores claims that she was asked by her father to take over management of Kimbe Farming Limited because her mother was running down the family business. It was alleged that there was, among other things, a huge debt of K300,000 owing to creditors. Claire was in Sydney at that time receiving further treatment in relation to her cancer problems. Delores explained that change of management was a resolution reached by the family in a meeting and that she and Conrad would take over from Claire. Delores further claims that her mother consented to the change of management as well as the transfer of her two shares. In addition, assets of Wai Chung Limited would be sold to settle the debts.

5. Consistent with the advice from the father, Delores and Conrad took necessary steps to seize management of the business from Claire. Claire was unhappy about the take over. Eventually, on 1st January 2008, Claire’s 17 year old son Michael handed to her a document, a Notice of Change of Shareholders, a Form 13, under the Companies Act. Claire had just attempted suicide two days earlier and was in bed at home when she was approached by Michael. Claire signed the document and thereby gave up her two shares. Conrad submitted the documents to the appropriate office and the shares are now in Delores’s name.

7. Accordingly, Delores argues that Claire signed the relevant transfer document as agreed and without threats, inducements, assaults and coercion.

8. At the outset, it is nearly unimaginable that we could have such a dispute between mother and daughter. A mother-daughter relationship is usually a symbol of trust, love and peace. A dispute of this nature is, however, not unheard of. When we come across one, it means that something has seriously gone wrong and there is a reason compelling enough for the mother to sue her daughter.

9. In this case, the pertinent questions to ask are whether there was a family business meeting in Sydney? What were the resolutions passed? Did Claire agree in such a meeting for her shares to be transferred to her daughter without consideration? Claire was in Sydney at the relevant time but she is not aware of any meeting and any resolution for her to transfer her shares. There is also no evidence from the father to support the daughter’s claim that a resolution was made in a family meeting in Sydney. Delores herself did not attend any meeting in Sydney. Her evidence is hearsay.

10. Most importantly, there is no evidence of any instrument or statement, written or oral, by Claire that her two shares were to be transferred to her daughter. Even if Delores is truthful about what her father might have said to her, as a daughter, she could have simply approached her mother and verify whether she had indeed agreed to transfer her shares.

11. The argument that Claire mismanaged the Service Station, if true, is understandable but company management matters and transfer of shares can be isolated. Delores is part of the Chow family. Claire, I would like to think, is part of the Chow family too. What difference does it make to a company that is attempting to manage its debts for the mother’s shares to be transferred to the daughter without consideration? It does not bring extra cash to assist in the repayment of the company’s debts. Delores virtually acquired the shares for free, and there is no evidence that they were gifts from her mother.

12. Ultimately, I am not satisfied that there was a family business meeting in Sydney. I am not satisfied that any resolution was passed for the change of management. I am not satisfied that Claire agreed to part with her two shares in Wai Chung Limited.

13. The onus, however, is on Claire to establish her case. In that connection, Claire’s evidence on the circumstances and her condition at the time she signed Form 13 is not disputed. Claire stated that her husband wanted to transfer his shares to Delores as an incentive for her to manage the business with Conrad. When she was in Sydney for medical check up there was a lot of discussions between her husband and Delores about the family business. She returned to PNG on 8th September 2007. Sometimes later, Delores and Conrad uninvitingly took over management of the company. Claire was unhappy. The relationship between Claire and Delores turned sour then.

14. On one occasion, Delores asked Claire as to when the shares would be transferred. Claire did not answer and the two began having constant arguments and disagreements. Delores became abusive and constantly screamed at her mother. From 27th to 30th November 2007, Claire stayed in a hotel room to avoid contacts with Delores and Conrad. But Delores continually sent phone text messages in relation to the transfer of shares. Claire was depressed.

15. On 2nd December 2007, Claire presented herself to Dr Laki of Good Samaritan Clinic with a migraine headache. She was advised to avoid stressful conditions. She was treated and supplied with mediation.

16. When she returned home, the situation between herself, Delores and Conrad did not improve. Delores and Conrad usually kept to themselves. Claire started to worry about herself generally and became more concerned for her recovery from her cancer problems. She was aware that depression would not aid the recovery process.

17. Claire resorted to suicide on 30th December 2007. She found a number of travel sickness tablets and some panadeine forte and took them. She would have died then. But she regained her consciousness in Dr Laki’s Clinic. She was attended to and given an injection to neutralize her condition. Claire was still ill and was vomiting a lot as a result of the attempted suicide.

18. On 1st January 2008, two days after the attempted suicide, her son Michael gave her a document to sign. She was told it was for the transfer of Henry’s shares, which she already knew about. Obviously, Claire did not realize that the father should have signed for the transfer of his shares. Obviously, she was still recovering from the attempted suicide and was not thinking properly. This is a woman who had attempted suicide two days earlier.

19. Claire saw Dr Laki again on 2nd January 2008 and was given medication for migraine. Delores and Conrad moved to another house but on 10th January 2008, Delores returned to the house where Claire was and had an argument with Claire. In the course of the argument, Claire remembers (she wrote them down) Delores saying: Too bad, what can you do? You have already signed yourself out. You signature is already on...