Re Prosperous Globalchina Holding Ltd

HCCW 279/2018

[2018] HKCFI 2789

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING‑UP PROCEEDINGS NO 279 OF 2018

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D E C I S I O N

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1.On 28 September 2018, Yi Chun Navigation Incorporated issued a petition against the Company seeking an order that the Company be wound up on the grounds of insolvency. The petitioner relies on non‑payment of a debt said to arise from a loan agreement dated 23 June 2015, pursuant to which the petitioner advanced a loan of GBP10 million to the Company. The petition is opposed by an opposing contributory, Li Fu Hua. There is no dispute, however, that the loan was advanced, and that there is outstanding a substantial proportion of the debt. The petitioner says that it is GBP7,461,148.58.

2.The Company is also subject to another winding-up petition issued by Ms Li herself which also constitutes an unfair prejudice petition.

3.The defence to the petitioner’s petition can be summarised as follows: When the Company was established, the opposing contributory reached understandings with the owner of the petitioner, Dr Chen Ching Chih, that Dr Chen would provide capital to finance the Company’s developing business. The capital structure of the Company involved Ms Li owning 51% of the issued shares and Dr Chen 49%.  Dr Chen, through the petitioner, initially issued GBP1.5million by way of capital.

4.It appears to be Ms Li’s case that Dr Chen, who is considerably older than her, had, what I shall describe for want of a better expression, a romantic interest in her which in the fullness of time, it became apparent she did not reciprocate.  As a result, by December 2016, when the Company required further cash in order to continue its business, Dr Chen gave Ms Li two choices as to how he was willing to provide the finance that she thought was required by the Company.  She says that during a business trip to Birmingham, Dr Chen told her on 2 December 2016 that the choices were either she slept with him, in which case he was prepared to provide additional finance in the form of capital, or if she did not wish to do so, he instead would lend money to the Company.  Ms Li chose the latter and as a result, the GBP10 million was advanced, although, as is apparent from what I have said earlier in these reasons, the loan agreement was back-dated to 23 June 2015. 

5.The argument of Mr Lam, who appeared on behalf of Ms Li, on precisely how these circumstances in some way restricted the petitioner’s ability to require repayment of the loan was unclear.  However, it seems fairly clear from his submissions, and also the way in which Ms Li’s case is put both in her affirmation filed in this petition and also the way her case is set out in her own petition when it deals with the understandings between Dr Chen and herself which led to the formation of the Company, that neither the petitioner nor Dr Chen was under any obligation to contribute further capital to the Company.  It seems to follow that in these circumstances the suggestion, and this is what is said to constitute a bona fide defence on substantial grounds to the petition, that the loan was advanced under duress and this provides a defence is simply misconceived and unsustainable. 

6.I will, therefore, make the normal winding-up order.

Mr José Maurellet SC and Ms Jacqueline Law, instructed by Stephenson Harwood, for the petitioner

Mr Gary C C Lam and Mr Tommy Cheung, instructed by Zhong Lun Law Firm, for the opposing contributory

Ms Cindy Li, instructed by the Official Receiver’s Office, for the Official Receiver