Kudos and Softfar Singapore Pte Ltd (in Liquidation) v. Sinolasting Trading Co Ltd
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HCCW 714/2025 [2026] HKCFI 5797 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMI NISTRATIVE REGION COURT OF FIRST INSTANCE COMPANIES WINDING-UP PROCEEDINGS NO 714 OF 2025 ____________________
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________________ JUDGMENT ________________ 1.This is the hearing of an application to wind up Sinolasting Trading Co Ltd (“the Company”) made on the petition of Kudos and Softfar Singapore Pte Ltd (in liquidation) (“KSS”, sometimes referred to in the documents as “Kudos-SG”), which had itself been wound up by the Singapore High Court on 16 May 2025. Background 2.1 The Company was incorporated in Hong Kong on 15 June 2022. About 6 months later, on 4 December 2022, KSS was incorporated in Singapore as the Company’s wholly owned subsidiary. 2.2 Since 19 December 2023 Ms Zhou Xuan, the financial controller of the Company and its deponent in these proceedings, had been the sole signatory of KSS’ Citibank account in Singapore. On 13 February 2025, she was also appointed a director of KSS. 3.1 On 21 February 2025, a creditor of KSS applied to the Singapore court to wind it up on the ground that it was unable to pay its debts. The application was served on 25 February 2025 and advertised on 7 March 2025. 3.2 On 16 May 2025, the Singapore court wound up KSS and appointed liquidators. 4.Section 126(2) of the Insolvency Restructuring and Dissolution Act 2018 of Singapore (‘IRDA’) provides (where material):
5.KSS’ liquidators found that after the application for its winding up was made on 21 February 2025, 2 payments from its Citibank account were made to the Company’s Hong Kong bank account, i.e. USD375,000 on 25 February 2025 and USD3,960,000 on 29 April 2025 (collectively “Subject Payments”). 6.Section 130(1) IRDA provides (where material):
7.It is common ground before me that no application has ever been made to the Singapore court for an order under s.130(1) IRDA, commonly known as a validation order. 8.On 5 August 2025, the Singapore court authorized KSS’s liquidators to issue proceedings against the Company. 9.1 On 18 August 2025, KSS’ Singapore lawyers issued a letter of demand against the Company for the return of the Subject Payments. There was no repayment or response. 9.2 On 5 September 2025, KSS’ Hong Kong solicitors issued a letter of demand against the Company for the return of the Subject Payments, as well as for the balance of allegedly unpaid share capital (“Unpaid Share Capital”). There was also no repayment or response. 10.KSS’ liquidators therefore took action. In gist, their case is that:
11.On 15 September 2025, KSS issued a statutory demand (“SD”) against the Company under s.178(1)(a) Companies (Winding Up and Miscellaneous Proceedings) Ordinance, Cap. 32 (“CWUMPO”) which states (where material):
12.It is noted that in the SD, KSS claimed that the Company owed the following:
13.No payment, or offer to pay any sum, was made by the Company. 14.On 14 November 2025, KSS presented a petition to wind up the Company. Paragraph 5 stated that the Company is indebted to the petitioner “in the sum of USD22,026,795, consisting of (i) the Unpaid Share Capital and the (ii) Void Dispositions (collectively ‘the Debt’)”.
15.The petition was supported by an affidavit of Mr Gary Loh Weng Fatt, one of KSS’ liquidators. 16.The Company filed an affirmation of Ms Zhou in opposition on 20 March 2026 in which she said (among other things) that the entire share capital has been paid, and exhibited various documents in support. 17.Mr Loh’s affidavit in reply was filed on 9 June 2026 in which he said (among other things) that after reviewing the information and documents now provided in the Company’s affirmation, “the Petitioner will not rely on [the Unpaid Share Capital] claim for the purpose of these proceedings”. 18.More than 3 weeks have passed since then, but no payment of any sum has been made by the Company. The Company’s grounds of opposition 19.The Company argues that the petition should never have been presented and cannot succeed for 5 independent reasons, in gist:
Discussion 20.As a number of matters in those grounds overlap, it would be convenient to discuss them in the following order:
(1) Abandonment of the Unpaid Share Capital demand 21.The Company’s first argument is that as the petition was presented for USD22,026,795, of which USD17,691,795 was for the Unpaid Share Capital which KSS has now abandoned, the “deemed insolvency relied upon under s.178(1)(a) CWUMPO falls away with it”. 22.This argument has been put forward as an “independent” ground; in other words, the Company argues that the petition should be dismissed purely because in the SD and the petition, the debt stated is larger (Skeleton Submissions for the Company §19). The Company says the “residue” is disputed, which will be discussed in detail below. 23.I am aware that after Mr Loh’s affidavit in reply, KSS did not amend the SD or the petition to delete the Unpaid Share Capital as part of the pleaded “debt” even though it has been abandoned. However, in my view, the misstatement of the debt is not fatal. 24.1 First, as explained by the Court of Appeal in Just Classic Ltd v Evershine Group Holdings Ltd [2023] HKCA 143, the importance of the debt stated in an SD in a winding up petition is not as crucial as the debt stated in an SD in a bankruptcy petition. This is due to the different language of the relevant provisions in the Bankruptcy Ordinance Cap. 6 (“BO”) and CWUMPO. At §22, the court quoted with approval a passage from Peter Gibson LJ’s judgment in TSB Bank plc v Platts (No.2) [1998] BPIR 284 in which he distinguished the statutory demand in the field of bankruptcy from the statutory demand in the field of company law. 24.2 In the field of bankruptcy, where the creditor has not obtained a judgment debt, the statutory demand he serves on the debtor is “the straight and narrow gateway” through which the creditor must pass to obtain a bankruptcy order. It is therefore essential for the creditor to correctly state the debt in the statutory demand. 24.3 By contrast, in the field of company law, the statutory demand is merely one means of establishing the company’s inability to pay its debts. 24.4 As Peter Gibson LJ held in TSB Bank:
24.5 Thus, it was held in Just Classic that a misstatement of the amount of the debt would not necessarily by itself render the statutory demand defective. At the hearing of the petition, the court should exercise its discretion to decide whether to set aside or to accept the defective statutory demand, having regard to all the circumstances, including whether it would be practical or cost-effective to revise the SD when a substantial debt was clearly outstanding (§§14-17). 25.In the present case, it is clear from the SD and the petition and Mr Loh’s affidavit in support that the demand for the Unpaid Share Capital (USD17,691,795) and the demand based on the Subject Payments (USD4,335,000) were of a different nature and were separately quantified, and the Company’s alleged liabilities for them were distinctly and independently founded. 26.It is also clear from Mr Loh’s affidavit in reply (filed in June 2026) that KSS is actively pursuing the Subject Payments, which amount exceeds the sum of HKD10,000 specified in CWUMPO. 27.The Company has not paid, nor has it ever offered to pay, any sum at all. 28.Further, the Company has not alleged any prejudice arising from the misstatement in the SD. 29.In the exercise of my discretion in the above circumstances, I do not accept the Company’s argument that the misstatement of the debt in the SD in itself should result in the dismissal of the petition. (2) The court’s approach to Singapore law 30.It is common ground that Singapore law applies to the issue whether the Subject Payments are void and whether they would be validated. 31.The Company submitted first that foreign law is a question of fact, which must be proved by expert evidence of which there is none. Its fallback position is that in the absence of proof of Singapore law from either party, Singapore law is presumed to be the same as Hong Kong law. 32.I shall first discuss the fallback position. This is the “presumption of similarity” which was discussed exhaustively by Lord Leggatt JSC in Brownlie v FS Cairo (Nile Plaza) LLC [2021] UKSC 45. Although he dissented on the “tort gateway” issue, the rest of the court agreed with his judgment on the presumption of similarity, which included an examination of the criticisms of this presumption (§120). I have sought to summarize below only those parts of the judgment which are relevant to our case.
33.Coming back to our case, I take the view that it is not fatal to KSS’ case that it has not adduced expert evidence of Singapore law (cf the Company’s first argument), because it is clear from the following matters that it is appropriate for this court to apply the presumption of similarity. 34.First, both Singapore and Hong Kong are common law systems. 35.Secondly, it is readily apparent from the provisions in IRDA set out in §4 and §6 above that (save for some minor differences in style of expression):
36.Third, it is clear that these provisions are modelled on virtually identical provisions which exist in other common law jurisdictions, especially in England and Wales and in Australia (Re Hsin Chong Construction Co Ltd [2021] HKCFA 14 [“Hsin Chong CFA”] §27, discussing s.182 CWUMPO). 37.In view of the above, it is clearly reasonable to expect that Singapore law is likely to be materially similar to Hong Kong law on the matters in issue. This presumption of similarity is corroborated by a Singapore Court of Appeal judgment referred to in §50.2 and §53.2 below, which shows that on the relevant issue, the Singapore court’s approach to legal reasoning and statutory interpretation is similar to that of the Hong Kong court. 38.I note also that in Lea Lilly Perry and anor v Lopag Trust Reg and anor [2023] UKPC 16 which was not concerned with the presumption of similarity (§21), that the Privy Council held as part of its “spectrum” approach (see §42.1 below) that if the foreign legal system is a common law system which adopts a similar approach to legal reasoning and statutory interpretation to that of English law, the English court is entitled and required to bring to bear its knowledge of the common law and the rules of statutory construction in analysing the foreign law (§12). 39.Consequently, whether applying the presumption of similarity or applying the “spectrum” approach (if applicable), this court should consider Hong Kong law when analysing the Singapore law on the matters in issue. 40.Before leaving this section however, I would like to add one observation. Counsel for KSS referred me to the following passages in Lord Leggatt’s judgment in Brownlie (§§148 - 149):
41.As articulated at §148, this appears to be, as it were, a “third approach” where a court is faced with a situation where foreign law applies (the first approach being consideration of expert evidence on the foreign law, and the second approach, application of the presumption of similarity if appropriate). 42.1 I note that in Lea Lilly Perry, Lord Hodge, giving the judgment of a 7-member appellate board of the Privy Council subsequent to Brownlie, applied the “spectrum” approach, i.e. considering a “spectrum” of circumstances in which the “principal variable” is the degree to which the judge can use his skill and experience of domestic law to ascertain the foreign law. At one end of the spectrum is where the foreign law is a common law system (§12), and at the other end is, for instance, the situation in Byers v Saudi National Bank [2022] EWCA Civ 43, where there were questions of Islamic law, of which the only authorized texts were in Arabic (§13). 42.2 Lord Hodge held that in applying the “spectrum approach” however, the starting point is that findings in relation to foreign law are findings of fact, as a judge is not to be imputed to know foreign law, and absent agreement, foreign law is provided by suitably qualified experts in the foreign law (§§10 – 15). 42.3 In relation to Lord Leggatt’s dicta at §148 of Brownlie, Lord Hodge noted specifically that the appeal before the Board was “not concerned with how far and in what circumstances a domestic court should now be able to dispense with expert evidence of foreign law” (emphasis added), and it was only concerned with an appellate court’s considerations when reviewing findings of fact of a trial judge on foreign law which were based on evidence of expert witnesses. Lord Hodge said: “in that context, Lord Leggatt’s dicta, in the Board’s view, are consistent with the spectrum approach which the case law in this field supports” (emphasis added) (§21). It would seem on one reading that the Privy Council has not endorsed Lord Leggatt’s “third approach” dicta for general application. 43.1 I have not been referred to authorities from the Court of Appeal or the CFA on whether the Hong Kong courts should apply Lord Leggatt’s “third approach” or the Privy Council’s “spectrum” approach. Fortunately, the problem does not arise in this case as it is clear (as indeed is the Company’s fallback position) that the presumption of similarity applies in view of the matters discussed in §§33-37 above. 43.2 I would only wish to observe in respect of the “third approach” that many cases in our courts involve Mainland law which is regarded as foreign law under the Hong Kong legal system. Although costs would obviously be saved if litigants rely only on internet materials on Mainland law, one can foresee the difficulties which would be faced if a Hong Kong court is asked to decide Mainland law, which may be complex and evolving, on the basis only of competing internet materials which may or may not be complete, and involving concepts in a system of law in which the judge has not received training or qualifications. (3) Would a validation order be made for the Subject Payments? 44.The Company argued first that as the Singapore court has not adjudicated on the dispositions and declined to validate them, there is no liquidated sum presently due and owing by it to KSS. 45.1 I do not accept that argument, because no adjudication by the Singapore court is necessary for a payment to be avoided under s.130(1) IRDA. As the CFA held in respect of the Hong Kong equivalent provision of s.182 CWUMPO, the section deems a disposition of company property occurring after the commencement of the winding up to be void unless the court otherwise orders; in other words, the disposition is “presumptively void” and the burden falls on the applicant to show why the court ought to make a validation order (Hsin Chong CFA §18). 45.2 As explained in Officeserve Technologies Ltd (in compulsory liquidation) and another v Annabel’s (Berkeley Square) Ltd and others [2018] EWHC 2168 (Ch), at § 21:
46.It is common ground in our case that no validation order has been made by the Singapore court in the 15 months since KSS was wound up. Ms Zhou has not explained in her affirmation why the Company has not applied for such an order during this lengthy period, nor is there evidence that an application is intended to be made. 47.Nevertheless, the Company submits that the Singapore court would be likely to grant a validation order for the Subject Payments as “the payments were the price of goods delivered at a contractual unit price – the paradigm of a transaction in the ordinary course of business for full consideration” (Skeleton Submissions for the Company §31). The Company submits that “the court routinely validates dispositions made in good faith in the ordinary course of business” (§30.2), relying on Re Gray’s Inn Construction Co Ltd [1980] 1 WLR 711 at 718 F-G. 48.1 However, subsequent to Gray’s Inn, it has been held that even where payments had been made in good faith in the ordinary course of business when the parties were not aware that an application had been made to wind up the company, there is no rule that such payments should normally be validated by the court (Express Electrical Distributors Ltd v Beavis and others [2016] EWCA Civ 765). 48.2 In Express Electrical, the recipient of payment had on an earlier date supplied goods on credit to the company in good faith in the ordinary course of business, payment for which was made by the company a week after the petition to wind up was presented. The recipient did not know about the petition when it received payment, so it could not be said that it was acting in bad faith (§17). Nevertheless, it was held that no validation order should be made, as there were no exceptional circumstances showing that the payment would be or had been for the benefit of the general body of unsecured creditors. At §§36-42, Sales LJ did not accept the “bald proposition” in the passage in Gray’s Inn at 718 F-G relied upon by the Company that a disposition carried out in good faith in the ordinary course of business at a time when the parties are unaware that a petition has been presented should normally be validated by the court. Sales LJ’s comments on that passage in Gray’s Inn 718 F-G were noted and agreed by the CFA in Hsin Chong CFA at §30 fn. 24. 49.In our case, even assuming that:
it is clear that those assumed facts by themselves would not entitle the Company to a validation order. 50.1 First, the underlying policy behind s.182 CWUMPO was explained by the CFA in Hsin Chong in this way (§28):
50.2 Corroborating the presumption of similarity, the same view of s.130(1) IRDA was expressed by the Singapore Court of Appeal in Singapore Commodities Group Co Pte Ltd v Founder Group (Hong Kong) Ltd [2025] SGCA 35 in this way (§101):
51.1 Since what is of central importance are the interests of the general body of creditors of the company as at the date when the application to wind up was made (Hsin Chong CFA §32), where the company’s property was transferred away after that date, the fact that the transfer was “wrapped in contractual clothing” would not of itself result in a validation order (§35). 51.2 Being “wrapped in contractual clothing” meant that before the application to wind-up, the company was already under a contractual liability to make the payment. Thus, as explained by the editor of Goode on Principles of Corporate Insolvency Law (§8-13):
52.Therefore, even assuming that KSS was under a pre-existing contractual liability to the Company to pay for goods which were delivered before the commencement of KSS’ winding-up, that would not in itself result in a court (whether a Hong Kong court or a Singapore court) ordering validation of the subsequent payments. 53.1 As noted above, the result may be different if it could be shown that the disposition was “likely to be, or actually has been, for the benefit of the unsecured creditors” (Hsin Chong CFA §31), e.g. being sold as a going concern, etc (§30). 53.2 Again corroborating the presumption of similarity, the Singapore Court of Appeal held in Singapore Commodities Group that “in general, such validation orders are only given when the court finds that the disposition by the company would benefit or has benefitted the company’s unsecured creditors as a whole …” (§101). 53.3 The cases cited by counsel for the Company are in fact examples of this. In Luen Cheong Tai Construction Co Ltd [2004] 1 HKLRD 735, the undisputed evidence was that but for the payments, the recipient (the sole sub-contractor of the company) would have legitimately stopped work, and the company would not have been able to keep the project afloat and thereby to retain substantial funds paid by the government (§12). Similarly in Re China Singyes Solar Technologies Holdings Ltd [2019] HKCFI 2559, the company was undergoing debt restructuring, which the majority of creditors regarded as beneficial, and it had to pay the recipient in order to continue its operations pending the restructuring. 54.1 There must however be specific evidence that the disposition was of this nature before the court would make a validation order. It is not enough for the Company to argue only that the Subject Payments were matched by goods received and therefore that there would not be a reduction in net assets. 54.2 In Express Electrical Distributors, the evidence showed only that the company wanted the goods in order to continue to carry on its business generally in its ordinary course for as long as possible in the hope that its position might improve, and without there being any objective of the sale of the business as a going concern in view. It was held that this was not a sufficient basis on which it could be inferred that the payment was in the interest of the general body of unsecured creditors, and a validation order was refused. 55.In our case, there was no evidence that the Subject Payments were “likely to be, or actually had been” for the benefit of KSS’ general body of unsecured creditors. KSS’ liquidators have not had sight of the goods, and there was no evidence that the goods were intended to be, or were actually, resold. The liquidators say that Ms Zhou has not responded to their requests for information and documents, and has failed to provide a statement of affairs (Loh II § 26). No evidence of the intended, or actual, benefit to the general body of unsecured creditors has been adduced by Ms Zhou. In her affirmation, she said only that the payments were made in good faith, for full valuable consideration, and without any intention to defraud [KSS’] creditors (§15). However, that is not enough in itself for the court to make a validation order. There was no evidence that at the time of the dispositions, KSS was eg planning to sell its business as a going concern, or planning restructuring, or had to make the Subject Payments to ensure future deliveries necessary to KSS’ survival, etc. 56.By reason of the above matters, it is clear that the Subject Payments are void pursuant to s.130(1) IRDA and the Singapore court would not make a validation order. (4) Does KSS have a restitutionary claim for the Subject Payments and does it constitute a debt for the purposes of a winding up petition? 57.As the Subject Payments are void, KSS’ liquidators are entitled to advance a restitutionary claim against the Company. This is clear from Hollicourt (Contracts) Ltd v Bank of Ireland [2001] Ch 555, §22, where the English Court of Appeal held that when a disposition is avoided under s.127 Insolvency Act 1986 (similar to s.182 CWUMPO/s.130(1) IRDA),
It was held that in the case of a recipient of the payment (as opposed to a bank which was merely the company’s paying agent), the general law requires restitution (§23). 58.The next question is whether the recipient Company has put forward any valid restitutionary defences. I note first of all that there is no evidence from the Company of specific defences such as change of position or estoppel, etc. It has simply argued that it had acted in good faith and given valuable consideration for the Subject Payments, and if they were avoided, it would have a claim against KSS for the unpaid price of goods or for the return of the goods (even though on the Company’s own case on the facts, property in the goods had passed to KSS), which would be set off against any restitutionary liability. 59.However, the defence of “good faith for value” in a claim characterized as restitutionary was clearly rejected in the insolvency context, as explained in Officeserve Technologies (§36),
60.This leads to the question whether the restitutionary claim constitutes a debt for the purposes of a winding up petition. 61.1 Counsel for KSS referred to Kho Luis Fabregas v Wu You [2026] HKCFI 125 where DHCJ Yee held that a restitutionary claim constituted a liquidated sum for the purpose of s.6(2)(b) BO. The requirement for a liquidated sum is expressly contained in s.6(2) which provides (where material) that:
61.2 In Fabregas, DHCJ Yee examined a number of cases in Hong Kong and England (s.267(2)(b) Insolvency Act 1986 being nearly identical to s.6(2)(b) BO) and came to the conclusion that a claim in restitution can be a claim for a “liquidated sum”, provided that no process of quantification or assessment is necessary. Although that decision was in the context of an application for leave to amend where the threshold is lower (§13), I note that the authorities cited were not cases of similar situations. 62.Unlike the BO, CWUMPO does not contain an express requirement for a “liquidated sum”, but the petitioner has to prove a debt and the court would consider whether the company has been able to show that the debt is bona fide disputed on substantial grounds. 63.The Company argues that there has been no court adjudication of a debt. However, it is well-established (and the Company has not disputed) that it is not a pre-requisite to the presentation of a petition that the petitioner must first obtain a court judgment. 64.In our case, the Company does not dispute that where there has been a void disposition under s.130(1) IRDA/s.182 CWUMPO, the liquidator’s remedy is a restitutionary claim for recovery of the payment. At the hearing, it was accepted that the decision in Fabregas is correct. However, it argues that the claim is unliquidated and defeasible as it would be extinguished if the disposition is validated, and it is not a presently due and owing debt unless and until it is adjudicated by the court seised of the winding up (Skeleton Submissions for the Company §§29‑35). 65.In respect of the Company’s argument that the restitutionary claim is unliquidated and defeasible as it would be extinguished if the disposition(s) is/are validated, I have set out in §§44-56 above the reasons for my conclusion that the dispositions of the Subject Payments would not be validated. As there is no suggestion (and no basis for any suggestion) that they might be validated in part and not validated in part, no quantification or assessment of the sums demanded would be required. 66.A petitioner need only prove that the company has refused to pay a debt of the statutorily prescribed amount and in light of the effect of s.130(1) IRDA discussed above, I find that KSS has proved that the Company is indebted to it in the sum of the Subject Payments. (5) Has the Company shown that it has a bona fide dispute on substantial grounds? 67.The Company’s argument in this respect is simply that the Subject Payments were the price of goods sold and delivered in genuine transactions. KSS has questioned various features appearing in the documents (e.g. inconsistent dates of documents, inconsistent terms of delivery, payment by KSS to the Company stated as a “refund” in a bank document) which the Company seeks to answer in §24 of its Skeleton Submissions. 68.I do not think it is necessary for me to consider these arguments. The point is that the debt is constituted by the dispositions made by KSS which were void under s.130(1) IRDA “from the beginning” i.e. the date of the application for its winding up (21 February 2025). I have discussed above that there is no evidence that the Subject Payments were made in exceptional circumstances where they would or did benefit KSS’ general body of unsecured creditors (§§53.1-55). As in Express Electrical, absent such evidence, the dispositions are void, and no validation order would be made. The dispositions clearly constitute a debt for winding up. When the facts would not entitle the Company to a validation order for the dispositions, the same factual scenario could not possibly constitute a bona fide defence to the petition based on the same dispositions. At most, the Company can prove in KSS’ liquidation as an unsecured creditor. (6) Is the Company insolvent? 69.First, the petition is presented under s.177(1)(d) CWUMPO, and s.178(1)(a) stipulates that a company shall be deemed to be unable to pay its debts if an SD has been served and it has for 3 weeks neglected to pay the sum or to secure or compound for it. A failure by a company to pay one debt is evidence that it is unable to pay its debts (French, Applications to Wind Up Companies 4th ed. §7.36). 70.The Company has failed to repay any part of the Subject Payments. It has not applied for a validation order despite the passage of a lengthy period of time, and for the reasons already discussed, it has no prospects of successfully doing so. 71.Finally, the Company denies that it is insolvent. Its allegation that it is solvent on the cash flow test does not appear to be supported by the evidence. Its allegation that it is solvent on the balance sheet test is made on the ground that its net liability position is largely attributable to impairment loss due to its investment in KSS. Be that as it may, the fact remains that KSS has been wound up due to insolvency. The consequence is that the Company has suffered a substantial loss leading to its net liability position of USD39,461,200 as at 30 June 2025. Order 72.For the reasons given above, I would make the usual winding‑up order with costs to the petitioner.
Ms Astina Au, instructed by DLA Piper Hong Kong, for the Petitioner Miss Rachel Chiu, instructed by Patrick Mak & Tse, for the Company The Official Receiver, absent |
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