Re Poly Property Group Co Ltd

HCMP 3154/2015

MISCELLANEOUS PROCEEDINGS NO. 3154 OF 2015

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J U D G M E N T
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1.This is an application for extension of time under section 142(4) of the Companies Ordinance, Cap 622 for delivery of return of allotment by the applicant to the Registrar of Companies under section 142(1).

2.The Registrar takes a neutral stand in this matter and has not appeared.

3.The applicant was incorporated in Hong Kong on 27 February 1973.  Since 2004, it has always delivered its returns of allotment to the Registrar in time save the case under consideration.

4.The facts of this case are quite similar to those in Re China Unicom (Hong Kong) Ltd, HCMP 3378/2013, a decision by Harris J.

5.The applicant allotted shares to two persons on 21 November and 4 December 2014 pursuant to options granted previously.  A return of allotment was prepared and signed by the Company Secretary on 20 December 2014.  The return was then passed from one member of staff to another and another for the purpose of delivery to the Registrar right away.  However, for some unknown reason, the return was mislaid by someone in the course of delivery.

6.The fact that the return was not sent to the Registrar was discovered by a casual enquiry by a responsible member of staff upon the filing of another return on 30 January 2015.

7.After the non-delivery of the return was confirmed by an on-line search, the applicant immediately prepared and filed a fresh return on the same day.  The return was then registered by the Registrar on 26 February 2015.  But the applicant did not at the same time apply for extension of time under section 142(4).

8.The Registrar queried the applicant on 18 March 2015 on the out of time filing of the return and the applicant replied on 25 March 2015.

9.The Registrar sought clarification on 7 May 2015 and the applicant replied on 12 May 2015.

10.Then on 10 November 2015, the applicant received six summonses laying information against it for the late filing of the return. The summonses are to be heard tomorrow.

11.The applicant obtained legal advice and was then aware of the need to apply for extension of time under section 142(4).

12.This application was first fixed for hearing on 11 December 1015 with 30 minutes reserved.  However, the reserved time was insufficient and it was adjourned.

13.The applicant then tried to obtain an adjournment of the hearing of the six summonses, but the Registrar did not see it fit to give the consent.  Since there was no certainty that the magistrate would adjourn the six summonses, the applicant therefore sought this urgent hearing.

14.Section 142(4) and (5) provide:

“(4) If a limited company fails to deliver a return that complies with subsection (2) within one month after an allotment of shares, the Court may, on application by the company or a responsible person of the company, extend the period for delivery of the return by a period determined by the court.

(5) The Court may extend a period under subsection (4) only if it is satisfied—

(a) that failure to deliver the return was accidental or due to inadvertence; or

(b) that it is just and equitable to extend the period.”

15.There is no direct authority on how to apply this section save China Unicom.  Mr Chan, counsel for the applicant submitted that “accidental” here should mean “not deliberate” (see In re S Abrahams & Sons [1902] 1 Ch 695 at 699 per Buckley J and In re Kris Cruisers Ltd [1949] 1 Ch 138 at 141-142 per Vaisey J), and “inadvertence” should mean “carelessness” and “absence of bad faith” (see Thomas Montgomery & Sons v WB Anderson & Sons Ltd (1979) SLT 101 at 103 per Lord Ross).

16.On the basis of the evidence before me, I agree that the applicant’s failure to deliver the return to the Registrar in time was because of an accidental and not deliberate error.  I also hold that its failure to apply soon after the discovery of the error was because of the ignorance of the law which is an instance of inadvertence.

17.I am also satisfied that it is just and equitable to grant this application as no prejudice will result to anyone.

18.Harris J has pointed out in China Unicom that once a summons has been issued, this court should be slower to grant extension of time than otherwise and some special circumstances are needed to justify the court to treat the application as made soon after the failure was discovered.

19.Mr Chan submitted that the fresh return was accepted and registered by the Registrar.  Hence, the applicant thought that the matter was resolved.  That coupled with the applicant’s ignorance of the need to apply for extension of time was the reason for the delay in the making of this application.  Furthermore, a system has now been installed by the applicant to check the delivery of such return to the Registrar to prevent recurrence.  I accept this submission.

20.I find that there are special circumstances justifying the granting of relief in this case.  I therefore extend the time for delivery of the return in question to the Registrar to 30 January 2015.

21.I make no order as to costs.

Mr Anthony Chan, instructed by Ashurst Hong Kong, for the applicant