Re Wintac (Hong Kong) Ltd

HCCW 164/2023

[2023] HKCFI 2323

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO 164 OF 2023

__________________

__________________

__________________________________

R E A S O N S  F O R  J U D G M E N T

__________________________________

1.At the hearing of the petition presented by Hong Kong Topkey Limited (香港天勤有限公司) (“Petitioner”) on 13 April 2023 (as amended on 18 August 2023) (“Petition”) to wind up Wintac (Hong Kong) Limited (運達 (香港) 有限公司)(“Company”) on insolvency ground, I made a usual winding-up order against the Company. These are the reasons for my judgment.

2.The Company was incorporated in Hong Kong in 2010.  Mr Qu Haiping (“Mr Qu”) is the sole director of the Company.

3.On 4 January 2023, Master Alexander Tang granted summary judgment against the Company (and Mr Qu) in HCA 667/2022 in the amount of US$9,279,400 together with interest at judgment rate and costs assessed at HK$390,000 (“Judgment”).

4.On 3 February 2023, the Petitioner served a statutory demand on the Company requiring it to pay US$9,341,704.18 and HK$392,618.56, being the Judgment debt and interest accrued thereon as at 3 February 2023 (“Debt”) within 21 days thereof (“SD”).

5.Following the Company’s failure to comply with the SD, the Petition was presented on 13 April 2023. 

6.In the meantime, the Company appealed against the Judgment and applied for a stay of execution of the Judgment.  On 10 March 2023, Master Tang granted an interim stay of the Judgment conditional upon the Company paying HK$24 million into court.  The Company did not comply with the condition. 

7.On 30 May 2023, Master Keith Lam granted a stay of execution of the Judgment pending determination of the appeal. 

8.The appeal was heard by Deputy High Court Judge MK Liu and was dismissed on 4 July 2023.   

9.In the affirmation of Mr Qu filed on 23 August 2023 (“Qu 1^st”), the Company raises the following grounds in opposition to the Petition:

(1)  In HCB 1051/2023, being the petition presented by the Petitioner against Mr Qu in reliance on the Judgment, he explained why he disputed the Debt, and the explanation and reasoning stated in that affirmation apply to the Petition. 

(2)  The Petitioner is “effectively secured” as their camp is holding the shares of Window of Trade International Limited (“WOTL”) and the value of those shares (“Shares”) exceed the Debt.

(3)  The Shares are still “wrongfully withheld” from Mr Qu by Wu Xiaobing and his nominee, Wu Wei.

(4)  The appeal was dismissed by the Judge on pleadings point.  The Master is right in holding that Wu Jixiu, Wu Wei and the Petitioner were nominees of Wu Xiaobing[1]. 

(5)  The Company has appealed against the dismissal of the appeal to the Court of Appeal in CACV 230/2023. 

(6)  On 25 July 2023, the Court of Appeal (in CAMP 260/2023) granted a worldwide interim injunction restraining the Company and Mr Qu from disposing or dealing with or diminishing the value of the Shares which is said to have been valued at RMB703.8 million.

(7)  The Company has a valid cross-claim against Yihua Investment Development Limited (深圳藝華投資發展有限公司) (“Yihua”), a company currently under the control of Wu Xiaobing.

(8)  According to the letter issued by LKY China (華強會計師事務所), certified public accountants, as at 31 December 2020, Yihua owed the Company HK$80,774,830.  The amount has not been paid.

(9)  Under the ETA[2], the shares in WOTL (i.e. Shares) and the shares in Yihua (“Yihua Shares”) were transferred to Wu Xiaobing’s camp.  However, Wu Xiaobing’s camp “dissipated” Yihua Shares by transferring them to 東方富雲 (天津) 財務顧問公司 (“Dongfang”) and 展翎科技 (深圳) 有限公司 (“Zhanling”) as to 97.2% and 2.8% respectively at nominal consideration.  The dissipation was found by an arbitral tribunal to be “disturbing/troubling”.

(10)  Wu Xiaobing’s camp has attempted but failed to set aside the arbitral award. 

(11)  Mr Qu’s companies have commenced proceedings in the Mainland for return of the Yihua Shares in proceedings intituled (2022) 粵03民初6524號 and judgment will be issued in the coming months.

(12)  Had Wu Xiaobing’s camp returned the Yihua Shares to Mr Qu, he would have been able to procure Yihua to repay the Company as Yihua owns valuable land in the Mainland which, in turn, would allow Mr Qu to pay the Debt. 

10.Relying on the above matters, the Company contends that the Petition should be dismissed or stayed. 

11.In his submissions, Mr Edward KH Ng, counsel for the Company, submits that the Petitioner is effectively a secured creditor and does not have locus to present the Petition.  Alternatively, the Company has “strong grounds of appeal in CACV 230/2023”. 

12.I do not think that the Company has discharged the burden of showing that there is a bona fide dispute on substantial grounds in respect of the Debt or that there is any valid ground for the court to adjourn or stay the Petition. 

13.First, the affirmation filed by Mr Qu in HCB 1051/2023 (§9(1) above) has not been exhibited to Qu 1^st and, therefore, does not form part of the evidence filed by the Company in opposition to the Petition.

14.Second, the Company has not adduced any document to show that the Petitioner is a secured creditor (§9(2)-(3) above).  To the contrary, the following matters show that the Petitioner is not a secured creditor of the Company:

(1)  If the Petitioner were a secured creditor, the Company would have raised the point at the hearing before Master Tang when it asked for a stay of execution of the Judgment. 

(2)  At the very least, after the Petitioner had served the SD on the Company, the Company would have raised the point that the Petitioner holds valuable security provided by the Company, such that the Debt is secured or compounded for and no winding-up petition should be presented against the Company.

(3)  Neither has been done. No explanation has been provided by the Company as to why it did not raise the point if there is any truth in the assertion. 

(4)  The wordings chosen by Mr Qu and counsel - “effectively secured” - suggest that the Petitioner does not hold any security provided by the Company.

(5)  The assertion that the Shares are still “wrongfully withheld” from Mr Qu by Wu Xiaobing’s nominee reinforces the fact that the Shares are at the highest assets of Mr Qu, rather than assets of the Company.

15.Third, the contention that the Company has “strong grounds” in the appeal (§9(4)-(6) above) rings very hollow. 

(1)  The Company has not advanced any submissions to show that there is merit in the appeal. 

(2)  The fact that the Court of Appeal granted a worldwide injunction against the Company and Mr Qu militates against the Company’s contention that it has strong grounds in the appeal.

(3)  In any event, in the absence of a stay, the Petitioner is entitled to rely on the Judgment and seeks immediate payment of the Debt. 

16.Fourth, the claim against Yihua is not a cross-claim against the Petitioner (§9(7) above) for the purpose of opposing the Petition due to lack of mutuality.  In any event, there is no evidence to show that the claim is a serious claim.   

17.Fifth, there is no credible evidence in support of Mr Qu’s assertion that Yihua has the means to pay the Company (§9(8), (12) above) which, in turn, will enable the Company to pay the Debt.  It is not enough for Mr Qu to assert that Yihua owns valuable land in the Mainland.

18.Sixth, the alleged dissipation of Yihua Shares, the arbitral award and the proceedings commenced for recovery of the Yihua Shares (§9(9)-(12) above) are irrelevant to the Petition.  There is no evidence to show that the Yihua Shares are assets of the Company. 

19.The arbitral award is not before the court.  The passage cited in §10.2 of Qu 1^st does not support Mr Qu’s assertion that the tribunal found the “dissipation” to be “disturbing/troubling”.  All that was said is that within 2 months, the main responsibilities (主要義務) under the framework agreement <股權轉讓框架主協議> were transferred to Dongfang and Zhanling. 

20.The Petitioner is a judgment creditor and is entitled ex debito justitiae to seek a winding-up order against the Company.  The Company is deemed insolvent by reason of its failure to comply with the SD.  The Company has not discharged the burden of showing that there is any valid ground to oppose the Petition.