Hsin Chong Construction Co Ltd (in Provisional Liquidation) v. Build King Construction Ltd
Read the full judgment text of CACV 321/2019 on BabelCite. This Court of Appeal judgment was delivered on 4 December 2019.
1. This is the appeal of Hsin Chong Construction Company Limited (“the Company”) against the decision of Deputy High Court Judge Le Pichon handed down on 13 June 2019 ([2019] 3 HKLRD 367). By the decision, the judge ordered inter alia that:
Cited by 6 cases · Cites 5 cases
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CACV 321 /2019 [2019] HKCA 1305 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO 321 OF 2019 (ON APPEAL FROM HCCW NO 239 OF 2018) ________________________
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________________________ J U D G M E N T ________________________ Hon Kwan VP: 1.This is the appeal of Hsin Chong Construction Company Limited (“the Company”) against the decision of Deputy High Court Judge Le Pichon handed down on 13 June 2019 ([2019] 3 HKLRD 367). By the decision, the judge ordered inter alia that:
2.The Company raised three broad grounds of appeal:
Factual background 3.For ease of reference, I will adopt the terms and expressions used by the judge. The relevant background matters have been summarised comprehensively in her decision:
The holdings in the decision 4.In summary, the judge held that:
5.I will deal with the three broad grounds of appeal in the order mentioned at the outset. As acknowledged by Mr Paul Shieh, SC, who appeared for the Company on appeal[7], the arguments concerned have been raised before the judge. If clause 17 involved a disposition of the property of the Company within section 182 6.The property contended by the Company to be the subject of the disposition was said to be choses in action, being its 65% interest in whatever profit was generated by the JV, and its right to participate in the JV and the Contract[8]. The Company’s submissions may be summarised as follows:
7.I agree with the judge in holding that the exercise of exclusion rights under clause 17 of the JVA did not involve a disposition within section 182 of Cap 32. Her reasoning cannot be faulted. 8.On the meaning of “property”, Ms Linda Chan, SC for BK[13] referred the court to In re Campbell (A Bankrupt) [1997] Ch 14 at 18C to G in support of her submission that a mere expectation to be paid money upon completion of the Contract is not a “property” within section 182, as such right, being completely indeterminate, is not a contingent interest in property, but a mere “possibility of achieving an interest in something which presently does not exist but may exist in the future”. It was held by Knox J in Re Campbell that such right falls outside the ambit of “property” under section 436(1) of the Insolvency Act 1986[14]. Ms Chan also drew an analogy with Revenue and Customs Commissioners v Football League Ltd [2012] Bus LR 1539, which held that as the right of the football club to payment was subject to a condition precedent that it completed all its fixture obligations for the relevant season and it was unable to do so, the defaulting club was not deprived of an asset because there was no debt due to it (at §§136 to 137, 143 to 146). 9.The authorities cited by Ms Chan are apt. I do not agree with Mr Shieh that the statements in those cases were taken out of context by Ms Chan. 10.Re Campbell was concerned with the problem whether the prospect of an award from the Criminal Injuries Compensation Board was “property” that would vest in a trustee in bankruptcy when the award was made after the bankruptcy order. The prospect of payment did not arise out of the performance of a contractual obligation, as Mr Shieh was keen to differentiate from the present situation. But the context is nonetheless of relevance. In construing whether the prospect of such an award would come within the definition of “property” in section 436(1) of the Insolvency Act 1986 so as to form part of the bankrupt’s estate, Knox J was unable to accept that “property” in this context “is intended to describe anything other than an existing item” and did not accept that “it is susceptible of referring to something which has no present existence but may possibly come into existence on some uncertain event in the future” (at 18D). The right to receive a legacy on a contingent event is a contingent or future interest within the definition of property, as “there is existing property in respect of which there is a contingent interest”. This is distinguishable from the owner of a lottery ticket or one who has filled in a coupon on football pools, as “there is no underlying existing property which, or the proceeds of sale of which, are susceptible to the existence of a proprietary interest, even a future one” (at 18E to G). 11.In construing “property” for the purpose of section 182 to ascertain if it should form part of a company’s assets in a winding up by the court, I am inclined to think that an analogy may properly be drawn with the statutory construction in Re Campbell. I do not think “property” for present purpose is “susceptible of referring to something which has no present existence but may possibly come into existence on some uncertain event in the future”. In respect of the prospect of payment arising from future performance of the Contract, “there is no underlying existing property” which is susceptible to the existence of a proprietary interest, there is merely “the possibility of achieving an interest in something which presently does not exist but may exist in the future”. There is no legal entitlement to receive a share of any future profits unless the Company was in a position to perform and had performed its own contractual obligations. This is akin to the situation in Revenue and Customs Commissioners v Football League Ltd, in which the entitlement to payment was subject to the condition precedent which the insolvent club was unable to fulfil. I reject Mr Shieh’s contention that the judge had confused the existence of an asset with the ascertainment of the value and extent of the asset. 12.As for the Company’s right to participate in the JV and the Contract and the opportunity to earn the points under the prequalification system operated by the Government, I agree with the judge it is hollow to speak of such rights (which are personal to the Company and cannot be assigned without the prior consent of BK[15]) when the Company was unable to discharge its own obligations. Whether the Company could earn any points was subject to review by the Architectural Services Department[16], so the Company had merely an expectancy of achieving this. 13.I turn to consider whether the judge was correct to find on the totality of the evidence that the Company was in no position to perform its own contractual obligations. 14.There can be no dispute that the Company was insolvent at the material time. It had failed to pay salaries of its employees seconded to the Project and contributions to the Mandatory Provident Fund of its employees. It had failed to pay its suppliers and sub-contractors. Trading in the shares of its parent company has been suspended since March 2017. A creditor’s petition for winding up was presented against the Company in August 2018. Other creditors brought legal proceedings to enforce their claims. Receivers were appointed in respect of the share charge of the Company in December 2018. 15.Mr Shieh’s submission is that notwithstanding the insolvency of the Company, there is evidence to support a finding that the JV was financially self-sustaining as at the date of its exclusion in December 2018 and the JV would have been able to complete the Project without further financial injection by the Company. The Company had paid $9.1 million to the JV being its share of the initial working capital of $14 million, which was repaid to the parties at the very early stage of the Project in October 2016. There is no evidence that further injection of capital by the Company was needed. Mr Shieh referred to the ongoing interim payments received by the JV under the Project, and the financial reserves of the JV in the sum of $207 million as in January 2019. He submitted that the estimated net profit of the JV would be self-generated in the progress of the Project, pointing to the cash flow projection of the Project Manager’s report prepared in September 2018, which gave a forecast of more than $100 million in the JV accounts from December 2018 to the completion of the Project in March 2021. He contended that the Company had the necessary manpower to complete the Project, as BK had taken over the Company’s employees to continue with the Project after its exclusion. And there was no assertion in the affirmations filed on behalf of BK that the Company or the provisional liquidators would be incapable of completing the JVA. 16.The above points were drawn mainly from the 1st affirmation of one of the former directors, Lee Kok Foo James. They were answered in the affirmations filed by BK. As explained in the 1st affirmation of Cheung Siu Lun, the contract price was originally $2,480 million. At the time of the Company’s exclusion, works of approximately $620 million had been carried out. With an estimated date of completion of 15 months from the Company’s exclusion, the JV’s expenditure would be in the order of $100 million a month. It was crucial for the JV to ensure that it retained adequate cash to meet this level of expenditure and to manage its affairs in a way which generated a positive cash flow. As the Company was unable to pay its employees and suppliers, BK had agreed to the JV advancing funds to the Company to pay its employees and assured the JV’s supply chain that it would pay if suppliers should fail to get paid. Other events have occurred which rendered it difficult to predict what (if any) the actual profit will be on the Project[17]. 17.It seems to me Mr Shieh’s submission is unrealistic. If the JV was indeed financially self-sustaining, the Architectural Services Department would not have expressed serious concerns at its meeting with BK in August 2018 about the “very severe and detrimental” potential impact on the Contract in view of the Company’s financial difficulties and suggested to BK to take proactive action to prevent the Contract from being jeopardised and agree terms with the Company to transfer the Contract to BK[18]. 18.It is immaterial that no allegation was made in the affirmations of BK that the Company was incapable of completing the JVA. On the totality of the evidence, the judge is clearly entitled to come to the view that the Company, being insolvent, was in no position to perform its own contractual obligations. 19.The Company further complained that when the judge made the finding that the provisional liquidators appointed on 18 January 2019 would not be able to discharge the Company’s obligations under the JVA, she posed a number of queries concerning the obligations of the Company as the lead party in the JV[19] but those queries were not raised in the evidence and the skeleton arguments by BK. Hence, the Company was deprived of the opportunity of adducing evidence to address those queries of the judge and her finding was made without evidential basis. 20.There is no substance in the above contention. As noted by the judge[20], the queries regarding the ability of the provisional liquidators to discharge the Company’s obligations under the JVA were made in response to the submission to the contrary made on behalf of the Company. This is borne out by those parts of the transcript both sides referred us to[21]. In any event, I agree with Ms Chan that the queries raised by the judge are unanswerable. 21.As the Company was unable to perform its obligations under the JVA, there is no basis to assert that the Company has been deprived of a right to share in the future profits of the JV or to participate in the Contract. And as a disposition of any such right cannot have any impact on the creditors of the Company, section 182 is not engaged. 22.As for the contention that the exclusion had resulted in the removal or diminution of existing rights or property of the Company, this is also without merit. Any diminution of the profits earned before the exclusion is not caused by future losses that the Company has to bear, but by its inability to partake in the future profits earned by the JV as it was unable to perform its obligations under the JVA. 23.The judge had an alternative basis for upholding the validity of the exercise of clause 17 to exclude the Company from the JV, if, contrary to her holding, the exercise of exclusion rights did involve a disposition within section 182, and, assuming that clause 17 does not otherwise infringe the ADP[22]. It is not strictly necessary to consider this, as I am in agreement with her primary holding. I will deal with this succinctly as both parties have made submissions on this. 24.The judge’s reasoning is based on the following dicta of Briggs J in Lomas & Ors v JFB Firth Rixson Inc & Ors [2011] 2 BCLC 120 at §108 (which have been approved by the Longmore LJ on appeal ([2012] 2 All ER (Comm) 1076 at §88 and in Belmont Park at §§130 to 131 per Lord Walker of Gestingthorpe JSC and at §§175 to 177 per Lord Mance JSC):
25.The judge considered the factors suggested by Briggs J as one means of distinguishing between a commercial re-arrangement of rights to reflect the economic consequences of insolvency and an impermissible attempt to pre-empt the distribution of assets in a bankrupt estate. Applying that distinction, she held that the right in the present situation consists of the quid pro quo for services yet to be rendered by the Company and there is nothing objectionable about the contractual provision to terminate further performance on the insolvency of the Company. 26.Mr Shieh argued that the judge was wrong to regard the distinction of Briggs J as a self-standing rule so as to provide an alternative basis for upholding the validity of clause 17. He submitted that Briggs J’s distinction had formed part of the analysis of whether a contractual provision infringes the ADP, and this was borne out by the discussion of Lord Mance in Belmont Park at §175. 27.This seems to me to be a somewhat sterile debate. Mr Shieh did not challenge the correctness of the distinction of Briggs J. As for his contention that the present case does not fall within the latter of the two situations being services not yet rendered as held by the judge, I do not agree with him. As I have held, there is no merit in the contention that the exclusion had resulted in the removal or diminution of existing rights. In any event, the judge did consider the distinction again when she came to analyse whether clause 17 would infringe the ADP[23]. 28.For all the reasons given above, the first broad ground of appeal must fail. If clause 17 infringed the anti-deprivation principle 29.As noted in Hudson’s Building and Engineering Contracts (13th ed) at §11-093, almost all of the standard form building contracts contain express provisions providing for determination of the contract in the event of insolvency and further set out the consequences. The authors expressed surprise that the validity of a termination clause conditioned on liquidation or administration remains an open question. 30.The judge took the decision of the Supreme Court in Belmont Park as the leading authority and adopted the approach as stated by Lord Collins in §§102 to 105, as the ADP applicable in Hong Kong does not come from a different source and is derived from English law. In summary, it is necessary to look at the substance of the agreement rather than its form, and to consider whether the provision in question amounted to an illegitimate attempt to evade the relevant insolvency law or had some legitimate commercial basis. In each case, the “touchstone” is “to consider each transaction on its merits to see whether the shift in interests complained of could be justified as a genuine and justifiable commercial response to the consequences of insolvency” (Lomas & Ors v JFB Firth Rixson Inc & Ors, per Longmore LJ at §86)[24]. 31.It is pertinent to note that in Belmont Park, after reviewing the authorities over the last two hundred years, Lord Collins stated at §75:
32.It is important to bear in mind the above difference in approach regarding good faith or the commercial sense of the transaction in applying the ADP and the PPP. The judge followed Belmont Park and took into consideration the commercial justification or the intention of the parties to the transaction in applying the ADP. Even when one has to look at the effect of the provision on the unsecured creditors, it does not exclude the question of intention[25]. 33.Adopting the approach as mentioned, the judge held that clause 17 of the JVA did not infringe the ADP. Her reasoning may be summarised as follows:
34.Mr Shieh argued that the judge erred in law in ruling that commercial justification or the intention of the parties to the JVA can be taken into account in determining the ADP. He contended that the ADP should focus on the effect of the provision on the unsecured creditors to be protected, rather than the intention of the parties or the bona fide or otherwise of the provision itself, which the creditors have no control of or involvement in. Other than the decision of the Court of Appeal in Peregrine Investments Holdings Ltd & Anr v Asian Infrastructure Fund Management Co Ltd LDC & Ors [2004] 1 HKLRD 598, which I will discuss below, Mr Shieh has not cited any authority in support of his proposition. 35.As pointed out by Ms Chan, his contention is against a long line of authorities reviewed by Lord Collins in Belmont Park at §§69 to 79, including the following: Higinbotham v Holme (1819) 19 Ves Jun 88 at 92; In re Stephenson; Ex p Brown [1897] 1 QB 638 at 640; Borland’s Trustee v Steel Bros & Co Ltd [1901] 1 Ch 279 at 290 to 291; Bombay Official Assignee v Shroff (1932) 48 TLR 443 (Privy Council) at 446; In re Apex Supply Co Ltd [1942] Ch 108 at 114. And as noted by the judge[32], in the first full judicial analysis of the principles in Money Markets International Stockbrokers Ltd v London Stock Exchange Ltd [2002] 1 WLR 1150, Neuberger J formulated ten “rather limited propositions” from the cases at §118, and the propositions in (v) and (vi) show that the intention of the parties is relevant. 36.In Belmont Park, Lord Collins concluded that “commercial sense and absence of intention to evade insolvency laws have been highly relevant factors in the application of the anti-deprivation rule” (at §103) and that except in the case of a blatant attempt to deprive a party of property in the event of liquidation, “the modern tendency has been to uphold commercially justifiable contractual provisions which have been said to offend the anti-deprivation rule” (at §104). Mr Shieh did not seek to explain in what way these conclusions are wrong and should not be followed in Hong Kong. 37.Instead, he relied on certain statements of the Court of Appeal in Peregrine and submitted that as a matter of precedent, the Court of Appeal in Hong Kong had focused on the effect of the deprivation provision and not the intention behind it. He also criticised the judge for making a “contrived distinction” between the bona fides of the parties and the bona fides of the provision in seeking to explain that Woo VP in Peregrine was only addressing the bona fides of the parties, not the commercial justification or the bona fides of the provision as discussed in Belmont Park[33]. 38.Rogers VP said in §29 of that case that “it matters not that there might have been good commercial reasons” for the contractual arrangements under consideration. Woo VP said in §101 that he is “firmly of the view that the bona fides of the parties to [the contractual provision] or its operation was fair and equal amongst all shareholders … is not at all relevant to the application or otherwise of the anti-deprivation principle”. I accept that the distinction drawn by the judge between the bona fides of the parties and the bona fides of the provision may be somewhat strained, as that part of the judgment of Woo VP which began from §93 was headed “The bona fides and fairness of the contractual provision”. 39.The above remarks of Rogers VP and Woo VP must be understood in the light that the court was concerned with a case where there was a “blatant attempt” at diminishing the value of assets in the insolvent’s estate available for creditors, so the observations that good intentions or commercial reasons for having the contractual provision were immaterial in those circumstances were plainly correct[34]. 40.It is pertinent to bear in mind that the above statements of the judges were influenced by what Lord Cross said in British Eagle International Airlines Ltd v Compagnie Nationale Air France [1975] 1 WLR 758 at 780G to H[35] that the parties to the “clearing house” arrangements had good business reasons for entering into them and did not direct their minds how the arrangements might be affected by the insolvency of a party were irrelevant. As Lord Collins had stated in Belmont Park at §75 quoted earlier, British Eagle was concerned with the application of the PPP, and this must be distinguished from the situation in applying the ADP. Neither Rogers VP nor Woo VP had noted this material distinction. At §78, Lord Collins mentioned “there is an impressive body of opinion from some of the most distinguished judges that, in the case of the anti-deprivation rule, a deliberate intention to evade the insolvency laws is required” and “that conclusion is not affected by the decision in British Eagle”, as the PPP is clear and parties cannot contract out of it. 41.The remarks of Rogers VP and Woo VP are not germane to the ratio of the case as explained above. Peregrine was correctly decided on the facts and there is no obstacle to the courts in Hong Kong in following the approach in Belmont Park in applying the ADP. 42.Mr Shieh took issue with the judge in her discussion of the distinction between a flawed asset ab initio and a subsequently flawed asset[36]. As pointed out by Ms Chan, the judge was dealing with the distinguishing features in Peregrine. I do not consider the distinction of much use in the present discussion concerning the application of the ADP, and it is not necessary to pray in aid the distinction in view of a host of other factors considered by the judge that I have mentioned earlier. It is unnecessary to deal with Mr Shieh’s arguments on the distinction, save to observe that Lord Collins had not actually rejected the distinction in Belmont Park at §89, as submitted by Mr Shieh, see also Lord Collins at §§88 and 105 and Lord Mance at §163. 43.I reject Mr Shieh’s contention that even if it is permissible to consider the bona fides and commercial justification, there was insufficient justification in this situation. I agree with the judge’s reasoning as summarised earlier. She had applied the ADP in a commercially sensitive manner and taken into account the policy of party autonomy and the upholding of commercial bargains. I would uphold her ruling that the ADP was not infringed in this instance. If clause 17 infringed the pari passu principle 44.The PPP was said to be infringed by clause 17.5(b), which is concerned with the accounting exercise to be held on completion or termination of the Contract to calculate the amount of profit up to the date of exclusion that the defaulting party is entitled to, less “all costs, expenses, losses and damages incurred by the Continuing Party directly or indirectly as a result of the default of the Defaulting Party”. 45.Mr Shieh submitted that this provision infringed the PPP because the effect of this is that any claim by BK for loss and damage against the Company, which would otherwise have to be proved in liquidation and rank pari passu with other creditors, would be set off in the accounting exercise conducted thereunder, thereby giving the continuing party preferential treatment and rendering its recovery rate more than other unsecured creditors. 46.The judge held that clause 17 was part of the original bargain and not a flaw subsequently inserted. It was part and parcel of the contractual protection for the continuing party negotiated at the outset of the JV. While potentially it could engage the ADP, the PPP was not engaged. The amount claimed under clause 17.5(b) is not at the discretion or whim of BK, not only has any such loss to result from the default, it has to be calculated by an independent party appointed by the executive board[37]. 47.Mr Shieh submitted that insofar as the judge relied on the fact that the provision was part and parcel of the contractual protection negotiated at the outset of the JV, there is no authority to support why this should be considered relevant in the context of applying the PPP. He also made the point that bona fides or commercial justification is irrelevant to the operation of the PPP, citing British Eagle. 48.It seems to me that the judge’s holding has the support of this passage in Goode on Principles of Corporate Insolvency Law (5th ed) at §7-03 pp 259 to 260 cited by Ms Chan[38]:
49.Revenue and Customs Commissioners v Football League Ltd was cited by the author as an illustration in support of the proposition that it does not offend the PPP where a debtor’s interest under a contract is expressed to be limited or conditional by reference to the debtor’s entry into insolvency proceedings. 50.What is the asset here that would otherwise be available for distribution to creditors? The parties have agreed under clause 17.5 that the interest being granted to the defaulting party is to be limited or conditioned in some way, and such limitation and condition fall to be respected by the liquidator, as he must take the company’s assets as he finds them, subject to all limitations and conditions. Here, the contractual arrangement qualifies the nature of an asset upon the exercise of the exclusion right on insolvency. As the defaulting party, the Company is to be paid its proportionate share of the profits earned and received by the JV calculated up to the exclusion date upon the completion or termination of the Contract, an event which has not yet occurred, less the claims of the continuing party mentioned in clause 17.5(b), as well as its share of any losses arising from the Contract whether before or after the date of exclusion in clause 17.5(a). Clause 17.5 does not remove from the creditors an asset otherwise available for distribution. Nor is there property capable of being distributed under clause 17.5 as at the commencement of liquidation. The PPP has no role to play. 51.Ms Chan further submitted it is wrong in law for the Company to contend that clause 17.5 infringed the PPP in that its effect is to allow a set-off between BK and the Company and that “this is precisely the vice against which the PPP is directed”. Section 35 of the Bankruptcy Ordinance, Cap 6, which applies to a company in liquidation by virtue of section 264 of Cap 32, provides that there shall be a set-off of the “mutual debts or other mutual dealings” existing as at the commencement of winding up between the company in liquidation and any other person claiming to prove a debt. In re First Bangkok City Finance Ltd [1993] 2 HKLR 408 was cited as an example where set-off was applied under the statutory provisions. 52.Mr Shieh submitted that to ascertain if there are “mutual debts or other mutual dealings” for the statutory set-off to apply, one should be looking at clause 16 of the JVA, which governs final accounts in the situation where there is no default and both parties have performed their obligations under the JVA. The effect of clause 16 is that the distribution of profits will be made from the JV account, after deducting costs, liabilities, and reserves for contingencies. It is not the case of one party paying another. He also submitted that the deduction mechanism provided in clause 17.5 would cover the share of losses arising after the date of exclusion, and this cannot be part of the mutual dealings. 53.I do not accept his submissions. The provision for final account in clause 16 is not applicable to the situation where there is default, which is governed by clause 17. It is expressly provided in clauses 16.2 and 16.3 that the provisions therein are “if applicable, as modified by the provisions of Clause 17” and “if applicable, as set out by the provisions of Clause 17”. As for his contention that post-exclusion items would not form part of the mutual dealings, this is not correct in law. Dixon J in Hiley v Peoples Prudential Assurance Co Ltd (1938) 60 CLR 468 at 496 and 497 had explained as follows[39]:
54.I agree with Ms Chan that the statutory provisions of set-off would apply in this instance. 55.For all the reasons given above, I am not persuaded there was any infringement of the PPP. If the Supplemental Agreement should be validated under section 182 56.The judge held that the agreed consideration of $53.6 million under the Supplemental Agreement was a proper price to be paid for the Company’s residual rights in the JV[40]. There is no challenge of this on appeal[41]. The Company only challenged the judge’s exercise of discretion to validate the Supplemental Agreement under section 182[42]. 57.Mr Shieh’s main arguments are along these lines:
58.I do not think there are any valid grounds to interfere with the judge’s exercise of discretion to validate the Supplemental Agreement. 59.By clause 5(e) of the Supplemental Agreement, the Company confirmed that BK’s payment to Cogent Spring in clause 5(d) “will be understood as and/or equivalent to the effect that [BK] has discharged its liability in connection with or arising from [the Supplemental Agreement].” Cogent Spring was designated as the Company’s agent to receive the consideration from BK on the Company’s behalf. 60.The judge has fully considered the circumstances in which $20 million was paid to Cogent Spring. Insofar as part of the proceeds had been applied in contravention of section 182 and so prejudiced the unsecured creditors, it would have been because of the subsequent misapplication of the proceeds by the Company and/or its directors and not BK. BK was not in a position to control or direct the Company’s application of the proceeds[44]. The judge could discern no ulterior purpose or agenda in BK making payment into the designated account[45]. 61.There is no evidence that BK had actual or constructive notice of any acts of impropriety of the payments out from the account of Cogent Spring caused to be made by the Company. When BK raised concern about the request of the Company to pay $20 million to Cogent Spring, this was before BK was informed by the Company that the reason for the request was because the Company’s accounts were frozen and hence it was not possible for the Company to apply the funds to pay its employees[46]. 62.This ground of appeal is without merit and must be rejected. It is unnecessary to deal with Ms Chan’s further submission that this ground of appeal is academic as BK has accepted the Company’s repudiation of the Supplemental Agreement on 9 September 2019 and has terminated the same. Conclusion and costs 63.For all the above reasons, I would dismiss the Company’s appeal. As there is no dispute that costs should follow the event, I would order the Company to pay the costs of BK of this appeal, with a certificate for two counsel. Hon Cheung JA: 64.I agree with the judgment of Kwan VP. Hon Yuen JA: 65.I agree with the judgment of Kwan VP.
Mr Paul Shieh SC and Mr John Hui, instructed by Wilkinson & Grist, for the Company (Appellant) Ms Linda Chan SC and Mr John Leung, instructed by Hogan Lovells, for Build King Construction Limited (Respondent) The Official Receiver, attendance excused [1] This section reads: “In a winding up by the court, any disposition of the property of the company, including things in action, and any transfer of shares, or alteration in the status of the members of the company, made after the commencement of the winding up, shall, unless the court otherwise orders, be void.” [2] The sub-rules as explained by Lord Collins of Mapesbury in Belmont Park Investments Pty Ltd & Ors v BNY Corporate Trustee Services Ltd & Anr [2012] 1 AC 383 at §1. [3] Decision, §§19 to 38 [4] Decision, §§39 to 70, 72 to 76 [5] Decision, §71 [6] Decision, §§85 to 97 [7] With Mr John Hui [8] Decision, §§26, 27 [9] In the context of a devise of property in a will. [10] In the context of an application for production on documents under section 221(1) of Cap 32. [11] Decision, §§28, 31 [12] Decision, §30 [13] With Mr John Leung [14] “Property” is defined in section 436(1) to include “money, goods, things in action, land and every description of property wherever situated and also obligations and every description of interest, whether present or future or vested or contingent, arising out of, or incidental to, property”. This is similar to the definition of “property” in section 2 of the Bankruptcy Ordinance. [15] Clause 21.1 of the JVA [16] 1st affirmation of Chang Kam Chuen, §47; 1st affirmation of Cheung Siu Lun, §§42 and 43(c) [17] 1st affirmation of Cheung Siu Lun, §51 [18] Letter of BK’s solicitors to the Company dated 17 August 2018; 1st affirmation of Cheung Siu Lun, §27 [19] Decision, §30 [20] Decision, §29 [21] Transcript of hearing on 16 May 2018, pp 6N to 7G, 8E to G, 50L to 52C, 53E to T, 54J to M, 69T to 72N [22] Decision, §§33 to 38 [23] Decision, §74 [24] Decision, §§39, 44, 45, 46, 61, 65 [25] Decision, §§52, 59, 61, 64 [26] Decision, §48, citing Belmont Park at §109 [27] Decision, §67 [28] Decision, §47 [29] Decision, §69 [30] Decision, §70 [31] Decision, §73 [32] Decision, §52 [33] Decision, §58 [34] Decision, §59, citing Belmont Park at §104 [35] Peregrine at §§29, 79, 97 [36] Decision, §§62, 63 [37] Decision, §§71, 72 [38] See also §8-10 of the same work. [39] See In re Charge Card Services Ltd [1987] Ch 150 at 178D to F, in which Millett J said that the law is correctly stated by Dixon J in the passage quoted. [40] Decision, §91 [41] Mr Shieh’s submission is that it is difficult for BK to justify that $53.6 million is a fair consideration if the exclusion is held to be invalid, and BK has not attempted to justify the amount of $53.6 million in case the exclusion is held invalid. As I have upheld the ruling that clause 17 did not infringe the ADP or the PPP, and hence the exclusion right exercised thereunder was valid, there is no need to deal with this submission. [42] Decision, §§92 to 97 [43] Decision, §92 [44] Decision, §94 [45] Decision, §95 [46] 1st affirmation of Zen Wei Peu Derek, §§42 to 43 |
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