Re King’s Glory Educational Centre Ltd

Court:High Court (Hong Kong)
Judgement Number:HCCW456/2016
Judgment Date:21 Sep 2017
HCCW456/2016 RE KING’S GLORY EDUCATIONAL CENTRE LTD

HCCW 456/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO. 456 OF 2016

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IN THE MATTER of KING’S GLORY EDUCATIONAL CENTRE LIMITED (英皇教育中心有限公司)
and
IN THE MATTER of Section 177(1)(d) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.32)

__________________

HCMP 3573/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 3573 OF 2016

___________________

BETWEEN
KING’S GLORY EDUCATIONAL CENTRE LIMITED
(英皇教育中心有限公司)
Plaintiff
and
TSANG WOON MING (曾煥明) Defendant

___________________

HCMP 95/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 95 OF 2017

___________________

BETWEEN
KING’S GLORY EDUCATIONAL CENTRE LIMITED
(英皇教育中心有限公司)
Plaintiff
and
TSANG WOON MING (曾煥明) Defendant

Before: Hon Anthony Chan J in Court

Date of Hearing: 30 August 2017

Date of Judgment: 21 September 2017

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J U D G M E N T

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1. There are 3 actions before the court. They all arose out of a statutory demand (SD) served by Tsang Woon Ming (Tsang) on King’s Glory Education Centre Ltd (Company) dated 12 December 2016.

2. The Company is the main operating entity of a group of companies which provide education services called King’s Glory Education (Group). The protagonists in these matters are the 4 shareholders of the Group, namely, Tsang (37.5%), Lai Ka Lim (12.5%), Lin Wei Hsien (25%) and Ho Man Lung (25%). The Shareholders hold their interest in the Group via a corporate vehicle, Nobility School Ltd (Nobility)[1].

3. By the SD, Tsang sought to recover a director’s loan (Loan) of HK$3 million (M) from the Company, which was made up of 4 sums: HK$1.5M paid on 2 July 2015 (Sum A); HK$800,000 paid on 1 September 2015 (Sum B); HK$400,000 paid on 19 April 2016 (Sum C); and HK$300,000 paid on 4 May 2016 (Sum D).

4. The Company says that Sum A was in fact Tsang’s capital contribution which was put up by the 4 Shareholders after they bought the Group in March 2015. In respect of Sum B, it was part of the injection of funds required from the Shareholders to the Group to maintain its operation. Half of that sum (HK$400,000) was Tsang’s money, and he was reimbursed by Ho Man Lung (Ho) in respect of the other half because it was part of the latter’s injection to the Group.

5. There is no issue that Sums C and D, together with half of Sum B, were loans from Tsang. However, the operation of the Group was unprofitable and instead of continuing to fund its operation, the Shareholders opted to sell their interests. On 4 July 2016, they reached an agreement with Lin Wei Hsien (Lin) for him to purchase the interests of the other 3 Shareholders at HK$8M via a corporate vehicle, Doers Youth (Hong Kong) Group Ltd (Doers). A sale and purchase agreement in Chinese (SPA) was signed by, inter alia, all the Shareholders. The Company says that the loans given by the Shareholders to the Group prior to 4 July 2016 were all subsumed by or given up in exchange for their share of the purchase price.

6. By a Notice of Motion in HCMP 3573/2016 filed on 23 December 2016 (NM1), the Company sought an injunction against Tsang to restrain him from presenting a winding up petition based on the SD. However, apparently Tsang then stole a march on the Company by petitioning its winding up in HCCW 456/2016 filed on 28 December 2016 (Petition). The Petition does not rely on the deeming provision under s.178(1)(a) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, Cap 32 (Ordinance) because less than 3 weeks had expired after the service of the SD on the Company. Instead, it is alleged that the Company is insolvent and unable to pay its debt pursuant to s.177(1)(d) of the Ordinance.

7. The Petition rendered NM1 academic when it came before the court for hearing on 30 December 2016. There was an attempt by the Company to amend NM1, which was not resolved at the hearing due to concern whether the amendment was permissible. However, the amendment was subsequently abandoned. At the hearing, NM1 was adjourned for argument, and Tsang gave an undertaking not to prosecute the Petition until the adjourned hearing.

8. The Company took out a Summons in HCCW 456/2016 filed on 13 January 2017 (Summons) to strike out the Petition on the unusual frivolous, vexatious and abuse of process grounds. On the same day, the Company issued another...

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