Re Kason Engineering and Construction Co Ltd
Read the full judgment text of CACV 20/1969 on BabelCite. This Court of Appeal judgment was delivered on 31 July 1969.
1. For my part, I would have no hesitation in allowing this appeal. The facts may be briefly stated.
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CACV000020/1969 IN THE SUPREME COURT OF HONG KONG APPELLATE JURISDICTION CIVIL APPEAL NO. 20 OF 1969 (On Appeal from Companies Winding-up No.8 of 1969) -----------------
----------------- Coram: Rigby, S.P.J. & Huggins, J. Date of Judgment: 31 July 1969 ----------------- JUDGMENT ----------------- Rigby, S.P.J.: 1. For my part, I would have no hesitation in allowing this appeal. The facts may be briefly stated. 2. On the 30th April, a Winding-up Petition was presented against the appellants, the Kason Engineering & Construction Co., Ltd. The petition was brought by a company by the name of British Orient Limited. That petition was duly served upon the present appellant company, and all the necessary formalities in connection with the presentation of such a winding-up petition were in fact complied with. 3. On the 31st May, the petition came before a judge. Counsel appearing for the petitioners then gave notice that the petitioning company did not propose to proceed with the petition, and he drew the attention of the court to the fact that notices had been received from other creditors, in accordance with the provisions of Rule 30 of the Companies (Winding-up) Rules, that they intended to appear at the hearing of the petition, and a written notice of the intention of such creditors, made under the provisions of Rule 31, was produced to the Court. Counsel appearing for the petitioners intimated that the Court might think it proper, under the provisions of Rule 33 enabling such a course to be followed, for any one of such creditors to apply to be substituted in place of the original petitioners. The learned judge accordingly made an order adjourning the petition for two weeks, and said that if no application was made within that time by a creditor for substitution under Rule 33, he would dismiss the petition. That was on the 31st of May. 4. On the 7th of June, a summons was taken out by another company, Mitsui & Co., Ltd., being one of the creditors who had given notice of their intention to appear at the hearing of the original petition. This company, under the provisions of the summons, asked to be substituted in place of the original petitioners in the original winding-up petition; and a winding-up petition was then presented by Mitsui & Co., Ltd., such petition being supported by an affidavit verifying the facts of the petition, giving particulars of the debt, the fact that a writ of fieri facias had been taken out to have the judgment debt satisfied, that the debt remained wholly unsatisfied, and that it was apparent that the company was unable to pay its debts. 5. The summons for that order to substitute Mitsui & Co., Ltd as petitioners in place of the original petitioners, British Orient Ltd., came before the same judge on the 11th June. At that hearing it is apparent from the record that the original petitioners were legally represented and also, by separate representation, Mitsui & Co., Ltd. The learned judge made an order in terms of the summons, to wit, that Mitsui & Co., Ltd. be substituted as petitioners in place of the British Orient Ltd. Counsel appearing on behalf of Mitsui & Co., Ltd. thereupon asked that a winding-up order be made. The record states 'By consent, winding-up order to be made'. It is a little difficult to appreciate what precisely is meant by 'By consent, winding-up order to be made'. One would have thought that the only persons interested in the making of such an order 'By consent', would have been the petitioners desiring to be substituted for the purpose of the winding-up order and, of course, the company against whom the winding-up order was to be made. But it is apparent that not only was the company against whom such winding-up proceedings were to be taken, not represented, but no notice of the intention to apply for such a substitution of the petition itself was, at any time, served upon that company, that is to say, the company against whom the original petition was brought. The position is, therefore, that a winding-up order has been made against the present appellants but no copy of the petition, upon the basis of which such a winding-up order was sought, has, at any time, been served upon the appellants so as to give them an opportunity, if they were so minded, to oppose it. 6. Mr. Chan, who now appears for the respondent company, Mitsui & Co., Ltd. has contended that the debt itself was verified by an affidavit and that the present appellant company has in no way been prejudiced by the failure to re-serve the substituted petition. The fact remains, however, that when the original petition was brought, the appellants had notice of that petition, knew of the facts alleged against them in support of the petition, and did not seek to resist the making of a winding-up order against them, based upon the facts contained in that petition. Indeed, it must be apparent that they came to some agreement with the original petitioners as a consequence of which that petition was withdrawn. But the essential factor is that they had full notice of the matters upon which that original winding-up petition was brought against them and, in consequence, they had the fullest opportunity to resist that petition if they were so minded. No such considerations apply in respect of the substituted petition; it was not served upon them, they accordingly had no notice of its contents, and no opportunity to contest the facts contained therein, if they were minded so to do. In my judgment, the substituted petition should have been served upon them and they should have been afforded an opportunity to resist it, if they were so minded, before any winding-up order was made. 7. There is a reference in Buckley on the Companies Acts, 13th Edition, at page 1033, dealing with substitution orders of this nature. The paragraph is in the following terms:
8. I would respectfully agree with the observations there made. In my judgment, this substituted petition should have been served upon the present appellant company, and they should have been afforded an opportunity to oppose it before any winding-up order was made against them. It has not been served. I would accordingly allow this appeal. Representation: B. Liu (Samuel Soo & Co.) for Appellants. W. Chan (P.C. Woo & Co.) for Respondent. Miss Smith for Official Receiver. IN THE SUPREME COURT OF HONG KONG APPELLATE JURISDICTION CIVIL APPEAL NO. 20 OF 1969 -----------------
----------------- Coram: Rigby and Huggins, JJ. Date of Judgment: 31 July 1969 ----------------- JUDGMENT ----------------- Huggins, J: 9. I also would allow the appeal. 10. After argument the company has been substituted as appellant and the appellant company complains that the winding-up order has been made in circumstances in which it had no notice of the proceedings. Notice of the original petition was given. Application was later made for substitution of another creditor. No notice of that application was given, or indeed needed to be given, and no notice of the Order of substitution was given, but the judge proceeded forthwith to the making of a winding-up order "by consent". The company was not present at that hearing and was not able to consent. It was completely unaware of the new petition. It was a technical defect that no application for leave to amend the petition was made at the same time as the application to substitute the new petitioning creditor, but no point has been taken as to that. 11. The substance of the complaint made by the appellants is that there has been a breach of the rules of natural justice. Counsel for the respondent argues that the appellant company has not been prejudiced and has not challenged the facts now alleged in the amended petition. Therefore, he says, to allow the appeal would serve no useful purpose other than to delay. The company has had no opportunity to challenge before today the facts alleged in the amended petition and their truth or otherwise is not material to this appeal. Counsel relies upon Re Invicta Works Ltd.(1) for the proposition that a winding-up order can properly be made, immediately after a substitution of petitioning creditor, without any adjournment. That proposition I accept, but I do not accept that the circumstances of this case are comparable with those of that case, where the company was actually represented at the time the substitution was made. In the present case although it may well be, as has been said, that in the result the appellant will gain nothing but time, there has been a breach of the rules of natural justice and the appeal ought to be allowed. 31st July, 1969. Representation: B. Liu (Samuel Soo & Co.) for the Appellant W. Chan (P.C. Woo & Co.) for the Respondent Miss Smith for the Official Receiver (1) 1894 W.N. 39 |