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Lo Kwong Hung And Others v The Registrar Of Companies

Judgment Cited authorities 10 Cited in 1 Precedent Map Related
Vincent
Judgment Date29 November 2017
Subject MatterMiscellaneous Proceedings
Judgement NumberHCMP1520/2016
CourtHigh Court (Hong Kong)
HCMP1520/2016 LO KWONG HUNG AND OTHERS v. THE REGISTRAR OF COMPANIES

HCMP 1520/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1520 OF 2016

____________________

IN THE MATTER OF JENSEN LIMITED (置生有限公司)

and
IN THE MATTER OF Section 765(1) of the Companies Ordinance (Cap 622)

____________________

BETWEEN
LO KWONG HUNG (盧廣洪) 1st Applicant
LO KWONG TAI (盧廣帶) 2nd Applicant
and
THE REGISTRAR OF COMPANIES Respondent

____________________

Before: Hon G Lam J in Court
Date of Hearing: 12 April 2017
Dates of further written submissions: 7, 13 November 2017
Date of Judgment: 29 November 2017

_______________

J U D G M E N T

_______________

1. I have before me an application to restore the company, Jensen Limited (“the Company”), to the Companies Register, pursuant to s 765(1) of the Companies Ordinance (Cap 622). The circumstances that have given rise to this application are perhaps unusual but can be shortly stated.

2. The Company had, in 1999, apparently through a mortgagee’s sale, acquired certain land including two pieces of land in Yuen Long, namely Lot No 3009 and Section B of Lot No 3010 in Demarcation District 104, Yuen Long (or, more accurately, the leasehold under the relevant Government lease) (“the Land”). Subsequently, the Company found that Mr Lo Kwong Hung and members of his family were in occupation of the Land and duly made demands to them to deliver up vacant possession.

3. In response, in June 2005, Mr Lo’s solicitors wrote to the Company asserting that Mr Lo and his family had been in occupation of the Land continuously since around 1967. They claimed to have acquired possessory title to the Land by way of adverse possession.

4. On 2 November 2006, Mr Lo and his brother Mr Lo Kwong Tai, who together are the two applicants in these proceedings, instituted a civil action in the District Court against the Company as the sole defendant, asserting that they had been in possession of the Land adverse to the registered owners since 1967 and that, by operation of ss 7 and 17 of the Limitation Ordinance (Cap 347), they had acquired all the right, title and interests of and in the Land. They claimed a declaration to that effect and an order that all the estate, right, title and interests in the Land be vested in them, and costs. The District Court writ was served on the Company at its registered office on 3 November 2006. No acknowledgement of service or notice of intention to defend was entered by the Company.

5. Before the Lo brothers could obtain judgment, however, on 14 September 2007 the Company was struck off the Companies Register and dissolved as from the publication of the gazette notice of that date. Its name was struck off pursuant to s 291 of the predecessor Companies Ordinance (Cap 32), the Company having failed to file any proper returns after the annual return for 2003.

6. The Lo brothers now wish to have the Company’s name restored to the Register in order to proceed with their action against it and obtain judgment. Without a restoration order, by operation of law all the Company’s property and rights in the Land have become and will remain vested in the Government as bona vacantia: see s 292 of the predecessor Ordinance.

7. The twist is that the Government is also the lessor of the Land, and Mr Chain, who appeared for the applicants, submitted that since a person cannot be both landlord and tenant of the same premises at the same time, the leasehold is merged in the reversion: Rye v Rye [1962] AC 496, 513. Further, it has been held in Fairweather v St Marylebone Property Co Ltd [1963] AC 510 that while dispossession of a lessee by a squatter for the prescribed number of years may extinguish the lessee’s title, it does not set time running against the lessor, and that time only starts to run against the lessor when his estate falls into possession: Chung Ping Kwan v Lam Island Co Development Ltd [1997] AC 38, 46. Thus a lessor can eject a squatter if the lessee surrenders the lease to the lessor even after the limitation period has expired as against the lessee.

8. Mr Chain submitted that, by operation of the rule in Fairweather v St Marylebone Property Co Ltd (assuming it remains good law in Hong Kong), it is at least arguable that the applicants would not have acquired a possessory title good against the Government as lessor, against whom time only started to run in 2007 when its estate fell into possession. In other words, the dissolution of the Company and the consequent vesting of the Land as bona vacantia in the Government, resulting in a merger of the leasehold into the reversion, operated with like effect as a surrender of the lease by the Company to the Government. Having heard no contrary argument, I am prepared to assume, for present purposes, that this is the result of the confluence of the bona vacantia provision and the rules in Rye and Rye and Fairweather v St Marylebone Property Co Ltd. Hence the present application.

9. The Originating Summons was served on the former members and directors of the Company but there was no response except for a letter from a registered shareholder who stated he was only a nominee and had no instruction to take any action. The Registrar of Companies (who represents the Government’s interests in relation to bona vacantia: see Liu Yiu Keung Stephen v Registrar of Companies (unrep, HCMP 1098/2004, 11 June 2004)) has highlighted an issue in relation to the standing of the applicants, which I deal with below, but has otherwise taken a neutral stance.

10. S 765 of the Companies Ordinance (Cap 622) provides as follows:

“(1) Where a company’s name or a company has been struck off the register under section 291 or 291A of the predecessor Ordinance, and the company is dissolved under that section, an application to the Court for the restoration of the company to the Companies Register may be made by a person who —

(a) was a director or member or creditor of the company; and

(b) feels aggrieved by the striking off.

(2) Where a company has been deregistered, and is dissolved, under section 291AA of the predecessor Ordinance, an application to the Court for the restoration of the company to the Companies Register may be made by a person who feels aggrieved by the deregistration.

(3) Subsection (4) applies if —

(a) a company’s name has been struck off the Companies Register under section 746, 747 or 748, and the company is dissolved under that section; or

(b) a company has been deregistered, and is dissolved, under section 751.

(4) An application to the Court for the restoration of the company to the Companies Register may be made—

(a) by a person who was a director or member or creditor of the company; or

(b) by any other person, including the Government, who appears to the Court to have an interest in the matter.”

11. Since the Company’s name had been struck off under s 291 of the predecessor Ordinance, the applicable provision for restoration is s 765(1). The issue to which the Registrar has quite properly drawn attention is whether the applicants may be regarded as “creditors” of the Company within the meaning of s 765(1).

12. It will be noted that the equivalent wording in the new Companies Ordinance (Cap 622) has been changed. Where a company is not in operation, its name may be struck off the Register under ss 744-746. In such a case s 765(4) is applicable in relation to the restoration of the company to the Register. Under this sub-section, the application may be made not only by a director, member or creditor of the company, but also by any other person “who appears to the Court to have an interest in the matter”. As the Company was struck off under s 291 of the predecessor Ordinance, however, the applicants have to show themselves to be a person who was a director or member or creditor of the Company and feels aggrieved by the striking off. Aggrieved they may well feel, but are they creditors of the Company?

13. S 765(1) is derived from part of s 291(7) of the predecessor Companies Ordinance (Cap 32) which likewise provided that “if a company or any member or creditor thereof feels aggrieved by the company having been struck off the register, the court on an application made by the company or member or creditor…” may order the name of the company to be restored to the register. S 291(7), which was present in the first iteration of the Companies Ordinance when it was enacted in 1933, was in turn modelled on s 295 of the (UK) Companies Act 1929.

14. Despite counsel’s thorough research, no relevant legislative materials have been found that shed any light on the meaning of the term “creditor” in that provision in either the (UK) Companies Acts or in the successive Companies Ordinances of Hong Kong.

15. There are cases, however, in which the provision had come before the courts and the meaning of the word “creditor” received attention. In In re Harvest Lane Motor Bodies Ltd [1969] 1 Ch 457, the question arose as to whether a person who had a personal injury claim for damages against a company was its “creditor” for the purposes of an application to restore the company under s 353 of the (UK) Companies Act 1948 (the equivalent of s 295 of the 1929 Act). In holding that the applicant was a creditor, Megarry J stated as follows (at p 462C-G):

“Accordingly, I find myself in the position that although the authorities show something of a tendency to construe the word ‘creditor’ widely, there is...

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