Re HK Zexin Resources Co, Ltd

HCCW 348/2017

[2018] HKCFI 298

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING‑UP PROCEEDINGS NO 348 OF 2017

________________

________________

____________________

D E C I S I O N

____________________

1.I have before me a winding‑up petition seeking a winding‑up order on the grounds of insolvency. The petition was issued on 15 November 2017 and it relies in order to prove insolvency on a statutory demand dated 29 September 2017. The amount of the alleged debt is significant: RMB120,519,063.55. The debt has already been the subject of litigation in HCA 3243/2016.

2.On 20 September 2017, Deputy High Court Judge Lee heard an application for summary judgment.  As is apparent from the Deputy Judge’s decision of 16 October 2017, he had before him at that time the parties’ pleaded cases and affirmations filed by both parties.  I understand, however, that although the company had solicitors present at the hearing, they attended on limited instructions which did not extend to actively arguing in opposition to the summary judgment application.  Apparently, one of the company’s directors was authorised to make submissions on its behalf and the Deputy Judge allowed him to do so.

3.The Deputy Judge entered judgment for the debt and rejected both the defendant’s alleged defence of set-off and also a stay of execution pending determination of the counterclaim.  The reasons are set out in the Deputy Judge’s decision.

4.Last Friday, I understand, the company filed an application returnable on 23 February 2018 before the Deputy Judge seeking a stay pending an appeal which was issued on 19 January 2018.  At the same time, the company’s new solicitors attempted to file evidence in opposition to the present petition.  That evidence does not add substantively to the defence.  It simply updates the court on the progress of the High Court Action and explains the reasons for the company’s inactivity, namely, that it has had to raise the money to pay the required legal costs.

5.The Companies Court is not, in circumstances of this sort, concerned with the underlying merits of the company’s defence.  That is a matter that has already been determined on the summary judgment application and if the adverse finding is to be challenged, the company must do so in the Court of Appeal.

6.The issue for me today is whether or not the petition should be adjourned until after the determination of the stay application.  The Companies Court has considered in a number of authorities how to deal with petitions which are opposed, but in respect of which evidence has either not been filed at the time the petition comes on before a Companies judge or only very shortly before.  They are:  Grand China Shipping Hong Kong Co Ltd [2013] 4 HKLRD 1; Sun Sang Kong Yuen Shoes Factory Co Ltd [2015] 4 HKLRD 52 and Rad Source Technologies Asia Ltd, an unreported judgment of mine in HCCW 253/2017, dated 6 November 2017.

7.The way in which the principles explained in those decisions apply in circumstances of this sort, namely, where there has been a failure to make an application to stay enforcement of a judgment pending an appeal it seems to me is exactly the same.  I invited Mr Lee, who appeared for the company, to take instructions to see whether the company was in a position to make a substantial payment into court as a condition of obtaining an adjournment of the petition.  It appears that the company is only able to offer to pay in HK$1 million within two weeks. 

8.The petitioner has declined to agree an adjournment on that condition.  It seems to me that it is perfectly reasonable for it to do so.  As I have repeated on a number of occasions now, it is important for companies, including companies which are the vehicles for Mainland businesses, to understand that the procedures in Hong Kong for the adjudication of disputes and for the determination of winding‑up petitions are important and the timetable and procedure specified in the legislation and the court rules are complied with.  This, the present company has clearly failed to do for no reason which I consider to be of any great weight or merit.

9.I will therefore make the normal winding‑up order.

(Discussion re costs)

10.Costs will simply be as in a normal winding up, as are the Official Receiver’s costs.

Mr Richard Zimmern, instructed by Reynolds Porter Chamberlain, for the petitioner

Mr Thomas Lee, instructed by Li & Partners, for the respondent

Mr Raymond Kong, instructed by the Official Receiver’s Office, for the Official Receiver