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Re Yuen Chak Construction Co Ltd

Judgment Cited authorities 2 Cited in Precedent Map Related
Vincent
Judgment Date02 December 2004
Year2004
Judgement NumberHCCW378/2004
Subject MatterCompanies Winding-up Proceedings
CourtHigh Court (Hong Kong)
HCCW000378/2004 RE YUEN CHAK CONSTRUCTION CO LTD

HCCW 378/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 378 OF 2004

____________

　 IN THE MATTER of YUEN CHAK CONSTRUCTION COMPANY LIMITED
　 and
　 IN THE MATTER of the Companies Ordinance, Cap. 32

____________

Before: Hon Kwan J in Court

Date of Hearing: 2 December 2004

Date of Judgment: 2 December 2004

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J U D G M E N T

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1. This is a petition presented by Madam Cheng Ying Hung, trading as Po Shing Company, to wind up Yuen Chak Construction Company Limited (“the Company”). The petitioner is a judgment creditor, having obtained judgment against the Company in HCA No. 411 of 2001 on 12 June 2003, after a four-day trial before Deputy Judge Muttrie, in the sum of HK$928,397.85.

2. The Company seeks an adjournment of the petition pending its application to reinstate its appeal against the judgment. It has lodged an appeal for this purpose in CACV No. 202 of 2003. This was dismissed in its absence on 12 March 2004. I understand the application for reinstatement has been fixed to be heard on 11 March 2005.

3. There are three supporting creditors. They are all former employees of the Company and all are judgment creditors. The total amount due to them is in the region of HK$850,000.00.

4. I will first set out the relevant background matters.

5. The petitioner’s claim against the Company in the High Court Action was for the balance of the price of petroleum products sold and delivered by the petitioner at the request of the Company between July 2000 to December 2000, in the amount of HK$928,397.85. The Company counterclaimed against the petitioner for damages for delay in the delivery of goods of HK$3.9 million odd. On 12 June 2003, judgment was given in favour of the petitioner and the counterclaim was dismissed. The judgment is primarily on findings of fact.

6. On 10 July 2003, the Company applied for a stay of execution of the judgment pending an appeal to be brought. A notice of appeal with 19 grounds of appeal was filed on 23 July 2003.

7. The application for stay pending appeal was heard by Deputy Judge Muttrie on 10 October 2003 and was dismissed. In his Reasons for Judgment, the judge noted that the appeal is mainly on questions of fact and would appear to be a difficult one to pursue. He did not think the grounds of appeal are so strong as to justify a stay on their own. As for the Company’s contention that it would be forced into liquidation if a stay were not granted and would thereby suffer loss which could not be compensated if its appeal should succeed, the judge did not think this contention would tally with the Company’s accounts that had been placed before the court, given that the judgment sum was less than HK$1 million and the Company would appear to have HK$9.8 million worth of assets according to its accounts. He was not satisfied that a good cause for stay pending appeal had been made out. The Company had failed to demonstrate that the appeal would be rendered nugatory without a stay.

8. The Company filed a notice of appeal against the dismissal of the stay application pending appeal. This is CACV No. 315 of 2003. No steps have been taken to set down the hearing of this subsequent appeal.

9. On 1 March 2004, the former solicitors of the Company wrote to the Company referring to the appeal in CACV No. 202 of 2003 to be heard on 12 March 2004 and stating that as they had not received any instructions from the Company in relation to the settlement of the appeal, they had issued a summons to cease to act. The summons and the supporting affirmation were served on the Company with the letter. The application for the solicitors to cease to act was granted on 5 March 2004, the Company was absent at this hearing. It was notified of the order for discharge by a letter of the court of the same date.

10. On 8 March 2004, the Company applied to a Master for leave to act without a solicitor. It is not entirely clear if the application was for leave to act in the appeal or merely for leave to act in an application to adjourn the appeal. The application was refused by the Master on 9 March 2004. On 8 March 2004, the Company by its director Ho Kwok Wa (“Mr Ho”) made an affirmation to apply for an adjournment of the appeal on the ground that its solicitors had “resigned” since 1 March 2004 and that it needed time to look for a suitable lawyer. On 9 March 2004, the clerk of Rogers VP wrote to the Company referring to its letter dated 6 March 2004 and informed the Company that the Court of Appeal was not disposed to grant any adjournment of the appeal.

11. On 10 March 2004, the Court of Appeal informed the parties by letter that the appeal would be heard at 9:30 a.m. instead of 10 a.m. on 12 March 2004. That letter was sent to the Company by fax on 10 March 2004 at 3:38 p.m. and by post, in the same way as previous letters dated 5 March 2004 and 9 March 2004 were sent to the Company. Mr Ho however claimed that the Company did not receive this letter. He did not arrive in court on time. The appeal was dismissed in the absence of the Company.

12. Mr Ho wrote to the court on 12 March 2004 requesting the appeal be “rescheduled” for hearing, as he had no notice that the time for the hearing of the appeal had been put forward by half an hour. The Court of Appeal replied by letter on 15 March 2004 refusing the request, as there was no notice that any solicitors had been appointed to act for the Company and no leave was given for any director to represent the Company in the Court of Appeal. It is quite clear it would be of no avail even if Mr Ho had attended court in time, as the Court of Appeal has no jurisdiction to entertain an application for leave for a director to represent a company or to entertain any appeal from a Master’s refusal of leave (Kone Elevator (HK) Ltd v Senfield Ltd, CACV No. 216 of 2002, 24 February 2003, paras 2 to 11).

13. On 25 March 2004, this petition was presented.

14. The present solicitors filed a notice to act for the Company in CACV No. 202 of 2003 on 17 April 2004, and a notice to act for the Company in these proceedings on 31 May 2004.

15. On 19 June 2004, Mr Ho filed an affirmation on behalf of the Company in CACV No. 202 of 2003, in support of an application for reinstatement of the appeal under the inherent jurisdiction of the court. He claimed that the Company had only a week, from 5 to 12 March 2004, to look for new solicitors to act for the Company in the appeal. That is not correct. The Company had notice since 1 March 2004 of the former solicitors’ application to cease to act, as acknowledged in the affirmation of Mr Ho on 8 March 2004. Mr Ho also claimed that the Company had a reasonable excuse for not attending the appeal on 12 March 2004.

16. On 22 July 2004, the Company filed another notice of appeal in CACV No. 202 of 2003, containing “perfected” grounds of appeal of 15 paragraphs. It is not entirely clear if the perfected grounds are to be advanced in substitution of the grounds in the first notice of appeal.

17. Mr Ho has filed three affirmations in opposition to the petition. He produced an advice of counsel who, having reviewed part of the transcript of proceedings, expressed the view that there is “some merit in reviewing the original appeal in more detail to properly assess the possibility, or probability, of success”. Counsel also advised that the Company should provide an undertaking in respect of the full amount outstanding on the judgment and costs. In the affirmation of Mr Ho made in CACV No. 202 of 2003 on 16 June 2004, he mentioned that he was so advised and asserted he is able to give an undertaking on behalf of the Company to pay to his solicitors’ account a sum representing the judgment debt plus interest and a reasonable sum on costs, so that the petitioner would not be prejudiced by the application to reinstate the appeal. No steps have been taken for five months to give effect to the proposed undertaking.

18. At the hearing today, counsel for the Company, Mr Edward Ng, offered a revised undertaking to the court that the Company is to pay into court the full amount of the judgment debt plus interest and a sum of HK$300,000.00 towards the petitioner’s costs within 7 days hereof, such sum to remain in court pending the outcome of the Company’s application to reinstate the appeal in CACV No. 202 of 2003 and pending the outcome of the appeal if the application for reinstatement were successful.

19. Mr Richard Khaw appearing for the petitioner informed the court that the primary position of the petitioner is to seek a winding-up order today, but if the court were minded to adjourn the petition, as a fall back position, he would accept the undertaking offered by the Company’s counsel. I will deal with the question of the undertaking offered by the Company subsequently.

20. The Company has a number of hurdles in its application for an adjournment.

21. Firstly, the petitioner is a judgment creditor and is prima facie ex debito justitiae entitled to a winding-up order.

22. Secondly, the Company had applied for a stay pending appeal and that application has been refused, for the reasons summarised above. Although the Company has appealed against the order refusing a stay, the Company has not pursued that appeal seriously. If I were to adjourn the petition today pending the determination of the Company’s application to reinstate the appeal, I would practically be granting a stay on the...

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