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One Worldwide Group Ltd v Seaside Holdings Ltd

Judgment Cited authorities 6 Cited in Precedent Map Related
Vincent
JurisdictionHong Kong
Judgment Date09 April 2024
Neutral Citation[2024] HKCFI 999
Subject MatterCompanies Winding-up Proceedings
Judgement NumberHCCW107/2024
Year2024
HCCW106/2024 SUMMIT PRESTIGE ENTERPRISES LTD v. PEAK NO. 1 HOLDINGS LTD

HCCW 106, 107, 108, 109/2024

[2024] HKCFI 999

HCCW 106/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO 106 OF 2024

________________________

IN THE MATTER OF PEAK NO. 1 HOLDINGS LIMITED (山頂一號控股有限公司)
and
IN THE MATTER OF COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE (CAP. 32)

________________________

BETWEEN

SUMMIT PRESTIGE ENTERPRISES LIMITED Petitioner
and
PEAK NO. 1 HOLDINGS LIMITED
(山頂一號控股有限公司)		 Respondent

________________________

AND

HCCW 107/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO 107 OF 2024

________________________

IN THE MATTER OF SEASIDE HOLDINGS LIMITED (海岸創投有限公司)
and
IN THE MATTER OF COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE (CAP. 32)

________________________

BETWEEN

ONE WORLDWIDE GROUP LIMITED Petitioner
and
SEASIDE HOLDINGS LIMITED
(海岸創投有限公司)		 Respondent

________________________

AND

HCCW 108/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO 108 OF 2024

________________________

IN THE MATTER OF MID-LEVELS NO. 1 HOLDINGS LIMITED (半山一號控股有限公司)
and
IN THE MATTER OF COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE (CAP. 32)

________________________

BETWEEN

TOP INTEGRATED GROUP LIMITED Petitioner
and
MID-LEVELS NO. 1 HOLDINGS LIMITED
(半山一號控股有限公司)		 Respondent

________________________

AND

HCCW 109/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO 109 OF 2024

________________________

IN THE MATTER OF ZHENGTAN HOLDINGS LIMITED (正天控股有限公司)
and
IN THE MATTER OF COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE (CAP. 32)

________________________

BETWEEN

TOP INTEGRATED GROUP LIMITED Petitioner
and
ZHENGTAN HOLDINGS LIMITED
(正天控股有限公司)		 Respondent

________________________

Before: Hon Linda Chan J in Chambers
Date of Hearing: 7 March 2024
Date of Decision: 9 April 2024

________________________

D E C I S I O N

________________________

1. There are 8 summonses before the court:

(1) The first 4 summonses dated 26 February 2024 (“Continuation Summonses”) issued by the Petitioners for continuation of the orders made by this Court on 23 February 2024 appointing Mr Edward Middleton and Ms Tiffany Wong as provisional liquidators over the Companies[1] (together “PLs”) upon the ex parte applications made by the Petitioners on the same day (“Appointment Orders”).

(2) The other 4 summonses dated 5 March 2024 (“Discharge Summonses”) purportedly issued by (a) Peak No. 1 Holdings Limited (“Peak”), the respondent in HCCW 106/2024; (b) Seaside Holdings Limited (“Seaside”), the respondent in HCCW 107/2024; (c) Mid-Levels No. 1 Holdings Limited (“Mid-Levels”), the respondent in HCCW 108/2024; and (d) Zhengtan Holdings Limited (“Zhengtan”), the respondent in HCCW 109/2024 (collectively “Companies”) to discharge and/or set aside the Appointment Orders or alternatively, to stay the Appointment Orders pending final determination of the appeal against the “WU Order” (as defined in §7 below) and the proceedings commenced in the names of the Petitioners[2] against the Liquidators and the registered agent of the Petitioners[3] in BVIHC(COM) No. 159 of 2023 (“BVI Proceedings”).

2. I use the word “purportedly” as it has not been established by the 6 individuals purporting to act as directors of the Companies (as described in §15(2)-(4) below) (“Purported Directors”) that they had been properly appointed as directors.

3. More importantly, even if (contrary to my view) the Purported Directors were properly appointed and have authority to act on behalf of the Companies, I do not think that they have any valid ground to seek a discharge or stay of the Appointment Orders.

A. BACKGROUND

A1. CPG

4. The dispute arose out of the liquidation of China Properties Group Limited (“CPG”), a company incorporated in the Cayman Islands whose shares were until 4 August 2023 listed on The Stock Exchange of Hong Kong Limited.

5. Prior to its liquidation, CPG:

(1) was an investment holding company which, through its direct and indirect subsidiaries incorporated in the BVI, Hong Kong and the Mainland, engaged in petroleum trading and property development business in the Mainland (together “Group”);

(2) had a principal place of business at 14/F Wheelock House, 20 Pedder Street, Hong Kong (“Premises”);

(3) had a majority shareholder, Hillwealth Holdings Limited, which is a company owned and controlled by Mr Wong Sai Chung (汪世忠) (“Mr Wong”); and

(4) was under the management and control of its executive directors which included (a) Mr Wong, (b) Mr Wang Shih Chang George (汪世昌), the elder brother of Mr Wong (“George Wang”), and Mr Xu Li Chang (徐禮昌) (“Mr Xu”) (collectively “Former Directors”).

6. On 28 February 2022, a winding-up petition based on insolvency ground was presented by a creditor against CPG in HCCW 67/2022.

7. After a contested hearing, on 31 May 2023, Anthony Chan J ordered CPG to be wound up (“WU Order”)[4]. Although CPG filed a notice of appeal in CACV 197/2023 against the WU Order (“WU Appeal”), no further step has been taken to pursue the Appeal after the filing of a notice of setting down on 28 June 2023.

8. On 23 June 2023, the Judge made a regulating order under ss.227-227B of Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) (“CWUMPO”) against CPG and appointed Mr Middleton and Ms Tiffany Wong (i.e. PLs) as liquidators of CPG (together “Liquidators”).

9. The Liquidators considered that the Former Directors could not pass any resolution without giving notice to the non-executive directors of CPG who had not resigned, whereas the Former Directors claimed that all the non-executive directors had resigned[5]. This however is not a real issue. It is clear that upon the making of the WU Order, the Former Directors ceased to have any power to act in the name or on behalf of CPG other than for the limited purpose of pursuing the WU Appeal or seeking a discharge of the appointment of the Liquidators (Re Union Accident Insurance Co [1972] 1 WLR 640; Fletcher, The Law of Insolvency, 5th ed., §22-102).

10. The principles are well-established but it is worth repeating here as the Former Directors repeatedly ignored the principles and continued to act as if they had power to act in the name of CPG and even went so far as to cause legal proceedings to be commenced in the name of CPG against the Liquidators in HCMP 1015/2023.

11. The statutory scheme of winding-up has been described by Lord Diplock in Ayerst v C&K (construction) Ltd [1976] AC 167, at 176E-177D as follows:

“… the making of a winding-up order brings into operation a statutory scheme for dealing with the assets of the company that is ordered to be wound up. The scheme is now contained in Part V of the Companies Act 1948 and extends to voluntary winding as well as to compulsory winding up; but in so far as it deals with compulsory winding up its essential characteristics have remained the same since it was first enacted by the Companies Act 1862…..

Upon the making of a winding-up order:

(1) The custody and control of all the property and choses in action of the company are transferred from those persons who were entitled under the memorandum and articles to manage its affairs on its behalf, to a liquidator charged with the statutory duty of dealing with the company’s assets in accordance with the statutory scheme (section 243[6]). Any disposition of the property by the company otherwise than by the liquidator is void (section 227[7]).

(2) The statutory duty of the liquidator is to collect the assets of the company and to apply them in discharge of its liabilities (section 257(1))[8]. If there is any surplus he must distribute it among the members of the company in accordance with their respective rights under the memorandum and articles of association (section 265[9]). In performing these duties in a compulsory winding up the liquidator acts as an officer of the court (section 273[10]); and if the company is insolvent the rules applicable in the law of bankruptcy must be followed (section 317[11]).

(3) All powers of dealing with the company’s assets, including the power to carry on its business so far as may be necessary for its beneficial winding up, are exercisable by the liquidator for the benefit of those persons who are entitled to share in the proceeds of realisation of the assets under the statutory scheme….”

12. The fact that the Former Directors did not have any power to cause CPG to commence HCMP 1015/2023[12] or to pass any resolutions on behalf of CPG to change the board of the Petitioners had been raised by the Liquidators repeatedly but were ignored by the Former Directors. To-date, the Former Directors and their solicitors, Messrs. Kobre & Kim (“KK”), have not been able to show that the acts taken by the Former Directors in the name or on behalf of CPG after the WU Order are valid and effective.

A2. Petitioners

13. The Petitioners (i.e. One World, Summit and Top Integrated):

(1) are companies incorporated in the BVI on 5 January 2022;

(2) are wholly owned subsidiaries of CPG;

(3) have since the incorporation of the Companies...

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