Carrefour Korea Ltd. v. Worldplex Industrial Ltd. and Others

HCA016812/1998

HCA 16812/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 16812 OF 1998

____________

____________

AND

HCCW 77/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 77 OF 1999

____________

____________

Coram: Deputy Judge S Kwan in Chambers

Dates of Hearing: 17 and 20 March 2000

Date of Decision: 29 March 2000

_____________

D E C I S I O N

_____________

The applications

1. I have before me two applications. The first is a Summons issued by Mr Hector Geraldo Pines, the 3rd Defendant in HCA No. 16812 of 1998, seeking leave to make an application under O. 12 r. 8 of the Rules of the High Court out of time so as to dispute the jurisdiction of the court on the ground of forum non conveniens and for consequential relief. Mr Pines also seeks to set aside the writ or the service of the writ on him and the default judgment entered against him on the ground that he was not within the jurisdiction at the time of the service of the writ or shortly thereafter.

2. The second application is a Notice of Motion taken out in HCCW No. 77 of 1999 by the two directors and contributories of Richel Group Hong Kong Limited ("Richel"), Mr Julian Gonzalez and Mr Alberto Martinez Boehden ("the contributories"). Richel is the 2nd Defendant in HCA No. 16812 of 1998 and it was ordered to be wound up by the Court on 14 April 1999 upon the petition of Carrefour Korea Limited ("Carrefour"), which is the Plaintiff in the High Court action. Carrefour's petition for winding-up was founded on Richel's failure to satisfy the judgment debt of 34,899,037.00 Korean Won which all the Defendants were adjudged to pay in the default judgment entered against them in the High Court action. The contributories seek leave to act in the name of Richel to make a similar application under O. 12 r. 8 out of time to dispute the jurisdiction of the Court in the High Court action on the ground of forum non conveniens and for consequential relief. They also seek an order to stay the winding-up order and the order appointing the liquidators permanently or temporarily.

3. By an order made by Yuen J on 11 January 2000, the Notice of Motion was ordered to be heard before the same judge immediately after the Summons of Mr Pines. Yuen J also dealt with a preliminary issue raised by Carrefour and ruled that the contributories could apply in the name of Richel to set aside the default judgment with the leave of the Court despite the lack of consent from the liquidators.

4. The liquidators have adopted a neutral stance in the contributories' application. On 15 March 2000, they submitted to the Court a report on the background of the liquidation and the conduct of the directors. The liquidators are of the view that proper books of account do not appear to have been maintained and there is insufficient information in any of the books and records so far recovered to explain adequately the transactions of Richel, or for management to have been able to assess the financial position of Richel at any point in time, and make appropriate financial decisions. To date, the directors of Richel have not submitted a statement of affairs. The liquidators have not been able to obtain access to the banking records of Richel's account in Zurich and they are still seeking recognition from the Swiss courts of their status to obtain a release of the banking records.

5. Before I deal with the applications, I should mention that no point was taken by Mr Michael Delaney, counsel for Mr Pines and the contributories, on the service of the statutory demand and the petition on the registered office of Richel except to rely on this to explain the delay in taking out the applications. Further, it is not in dispute that service of the writ in the High Court action on Richel was properly effected. Mr Delaney also informed me that if his applications to challenge jurisdiction on the ground of forum non conveniens should fail, an application would then be made to set aside the default judgment on the basis that the Defendants have a meritorious defence. At the present stage, he asked me not to take into consideration the question of merits in the Defendants' case as this is irrelevant on an application under O. 12 r. 8 to challenge the jurisdiction of the Court (Mercedes-Benz AG v. Leiduck & Anr [1995] 1 HKC 448 at 455 E-F).

Leave to contributories to apply in Richel's name

6. I propose to grant leave to the contributories to act in the name of Richel for the purposes of making an application under O. 12 r. 8 in the High Court action and for consequential relief and an application to stay the winding-up proceedings. Such leave is granted upon the following terms:

(1) the contributories are to be liable in respect of any order as to costs that may be made against Richel in the intended applications; and

(2) the contributories are to be responsible for Richel's own costs to the extent that these costs are not recoverable from Carrefour under any order as to costs that may be made in the intended applications.

7. I impose such terms as a condition for granting leave because I am not satisfied, from what I gather in the liquidator's report, that Richel would be in a position to meet any order as to costs that may be made against it.

Delay in making the applications

8. Richel seeks to set aside the default judgment, leave to give late notice of intention to defend under O. 12 r. 6(1), and leave to apply under O. 12 r. 8 out of time. There is jurisdiction for granting leave even after judgment in default if there is satisfactory explanation for the delay (Reynolds v. Coleman (1887) 36 Ch D 453; Hewitson v. Fabre (1888) 21 Q BD 6; Yeung Fu Lin & Anr v. Wong Kam Hung & Anr [1997] 3 HKC 809; Supreme Court Practice 1999, Vol. 1, para. 12/8/4).

9. As I have stated earlier, Mr Pines makes a similar application under O. 12 r. 8 out of time.

10. Service of the writ and the Statement of Claim was effected on Richel by leaving the documents at its registered office at an address in Wu Chung House, Wanchai on 21 October 1998. As for Mr Pines, the aforesaid documents were served on him by inserting them through the letter box at an address in Sheung Yuet Road, Kowloon Bay on 23 October 1998, being his usual or last known address according to Carrefour. On 21 November 1998, Carrefour took out a summons for default judgment to be entered against them. A copy of the summons was served on Richel and on Mr Pines on 27 November 1998 in the same manner as described above. By this time, Carrefour had notice that the address in Wu Chung House had ceased to be the registered office of Richel as the company entrusted with the secretarial work of Richel, BCS Ltd, had filed a Notice of Cessation of registered office with the Companies Registry. The Notice was filed on 4 November 1998 and it took effect from 26 October 1998. No alternative address for Richel's registered office was filed with the Companies Registry at all material times until after the appointment of provisional liquidators in March 2000. On 6 November 1998, Carrefour's solicitor had telephoned a director of BCS Ltd and was told that a copy of the writ had been sent to Mr Pines but BCS Ltd had not been able to contact him. On 1 December 1998, BCS Ltd wrote to Carrefour's solicitors returning the statutory demand and the summons for default judgment as they had ceased to provide services to Richel as from 26 October 1998.

11. Carrefour successfully obtained an order for judgment in default against Richel, Mr Pines and Worldplex Industrial Ltd, the 1st Defendant in the action, on 23 December 1998. Judgment was entered on 12 January 1999 and served on Richel and Mr Pines in the same way as before on 25 January 1999.

12. Carrefour served two statutory demands on Richel on 9 November 1998 and 25 January 1999 and filed a winding-up petition on 21 January 1999. On 4 March 1999, Carrefour obtained an order appointing provisional liquidators of Richel. On 5 March 1999, the provisional liquidators filed a Notification of situation of registered office of Richel changing the address to their office in Gloucester Road Wanchai. Thereafter, Carrefour also effected service of various court documents on the new registered office. An order to wind up Richel was made on 14 April 1999 and an order appointing liquidators was made on 15 June 1999.

13. According to the contributories (they are both Argentinian living in Buenos Aires), BCS Ltd had unilaterally withdrawn its office address as the registered office of Richel without giving notice to Richel. Richel had no employees or officers in Hong Kong. As Richel had no notice of the withdrawal, it failed to give notice to the Companies Registry of a change of its registered office. The contributories first had notice of the proceedings in May 1999 when they learned of an order to block Richel's bank account in Zurich by Carrefour. They obtained the papers in the High Court action from their lawyer in Zurich and engaged solicitors in Hong Kong in July 1999. The Notice of Motion was filed in November 1999. The reason for the delay in making the application was largely due to the contributories' misconception of the problem faced by Richel. They mistakenly took the view that as Richel had no money and no business in Hong Kong, they were not eager to do anything in relation to the High Court action and the winding-up proceedings. After the order freezing Richel's Zurich account was lifted in September 1999, they decided to act because lack of action might suggest that Richel had accepted the allegations of Carrefour and this might adversely affect its rights and remedies against Carrefour.

14. Mr Pines gave a similar explanation. He too is an Argentinian living in Buenos Aires. He exhibited his passport showing that he did not come to Hong Kong after February 1997 and he was not in Hong Kong when service of process was effected in October 1998. He also exhibited a medical certificate dated 10 July 1999 certifying that from March 1998 to the date of the certificate, he had been suffering from continuous and lengthy states of depression which rendered him unable to move on his own. Like the contributories, the proceedings first came to his knowledge in May 1999 when he learned that his bank accounts in Zurich were blocked by the authorities and obtained documents from his lawyers in Zurich. His attention was focused on how to get the freezing order lifted, which came about in September 1999. Because of his illness and the blocking of his accounts which resulted in his lack of funds, he did not engage Hong Kong solicitors until July 1999. The solicitors had difficulty in taking instructions from Mr Pines as this was done through his attorney in Argentina. A further difficulty was that some of the documents provided had to be translated into English. Finally, it was not until mid October 1999 that Mr Pines managed to provide his solicitors with further costs on account and a summons for this application was issued later that month.

15. Having regard to the circumstances of this case, I am satisfied that an acceptable explanation has been provided by the contributories and Mr Pines for their delay in making the applications. I am prepared to find that the default judgment did not come to their knowledge until May 1999. It is relevant that all three were living in Argentina at all material times, and that the Zurich accounts of Richel and Mr Pines were blocked and the freezing order not lifted until September 1999. Further Mr Pines was certified to be suffering from serious illness. Having regard to the difficulty of obtaining instructions from Argentina, the lack of funds of the parties, and Mr Pines' illness, I think it would be appropriate to grant leave to Richel and Mr Pines to make their applications under O. 12 r. 8 out of time.

Service of the writ on Mr Pines

16. It follows from what I have set out above that as Mr Pines was not in Hong Kong at the time of the service on him of the writ and Statement of Claim, service of these documents was defective and the default judgment entered against him was irregular and ought to be set aside. The service of the writ on Mr Pines should also be set aside as leave is required to serve the writ on him out of the jurisdiction.

The nature of Carrefour's claim in HCA No. 16812 of 1998

17. Before I deal with the arguments on forum non conveniens, it would be appropriate to summarize the nature of the dispute and the issues involved in the High Court action.

18. Carrefour is a company incorporated in Korea and at all material times carried on business there as a supermarket retailer with Mr Bernard Eloi as its head of operations. In 1997, Carrefour was seeking to purchase suitable sites for new supermarket premises in Korea. A Korean law firm was appointed by Carrefour to act on its behalf to organise the identification of suitable sites and in the purchase of sites approved by Carrefour. The Korean lawyers principally responsible for the work were Mr Han Won Kyu and Mr Kim Tae Yung.

19. Between February and November 1997, Carrefour entered into nine transactions for the purchase of land as sites for new supermarket premises. The total amount of purchase price in Korean Won was 160,839,577,269.00 or US$182,357,797.00 at the exchange rate in July 1997. The actual price received by the landowners in Korea, according to a report of the District Prosecutor's Office in Seoul, was 104,843,030,614.00 Won or US$118,869,649.00. The difference between the amount paid by Carrefour and the amount received by the landowners was US$59,516,238.00, using the exchange rate in July 1997.

20. It is Carrefour's pleaded case that it was defrauded of the amount of US$59 million because of a conspiracy between Mr Pines and the two Korean lawyers Mr Han and Mr Kim to inflate prices for the land transactions. After the proceedings had been commenced, Carrefour claimed to have discovered that Mr Eloi was also involved in the conspiracy even though the Statement of Claim has not been amended. The Korean landowners were required to enter into "consulting agreements" with the Seoul branch office of Richel by which they agreed to pay to Richel the difference between the inflated and the actual purchase price. The Richel consulting fee was on average 40% of the total price according to a statement given by Mr Kim. After the consulting fee was received and to by-pass the currency exchange control in Korea, some of the proceeds were laundered through Hong Kong and remitted through banks in Hong Kong to Richel's account in Switzerland. Other parts of the proceeds were remitted to Richel's Swiss account through Malaysia and Macau. It is alleged by Carrefour that Richel was controlled by Mr Pines and used as a vehicle of fraud.

21. Criminal investigations were carried out in Korea and Switzerland. The Korean investigation was suspended because the primary suspects, Mr Eloi, Mr Pines and Mr Kim, had remained abroad and no statement could be taken from them. Warrants of arrest have been issued against all of them. The Swiss authorities found that it could not be established on the evidence that a previous criminal act under Swiss law had been committed so as to give rise to the offence of money laundering and therefore ordered that the freezing order on Richel's Swiss account be lifted in September 1999.

22. Carrefour's claim against inter alia Richel and Mr Pines in the High Court action was framed under two heads. Firstly, they were constructive trustees of the amounts appropriated on the basis of knowing receipt and knowing assistance. Secondly, they were joint tortfearers with the Korean lawyers as they had knowingly procured breaches by these lawyers of their obligations to Carrefour.

23. In his affirmation, Mr Pines claimed that the business of acquiring land in Korea was complex because of special circumstances in that country and involved great input of manpower, time and expenses before a successful offer of sale could be procured. Carrefour could not have conducted the transactions without the assistance of Mr Pines, his partners and his Korean staff. The consulting fee was commission agreed with and paid by the landowners. Carrefour was free to reject any offer of sale procured by the brokers engaged by Mr Pines' partners.

24. Mr Gonzalez also deposed to the effect that much work was undertaken by the Seoul branch of Richel in locating suitable sites, procuring offers of sale from landowners, and submitting them to Carrefour for consideration and that great expenses were incurred. He claimed it was proper and legitimate for the Seoul branch of Richel to get the consulting fee for what its local employees had done.

The test for forum non conveniens

25. The relevant test is set out in Spiliada Maritime Corporation v. Cansulex [1987] 1 AC 460 and the principles may be summarized as follows:

(1) The fundamental principle applicable to both the stay of proceedings on this ground and also to the grant of leave to serve proceedings out of the jurisdiction is that the court will choose that forum in which the case may be tried more suitably for the interests of all the parties and the ends of justice.

(2) On an application for stay of proceedings, the burden of proof is on the Defendant to show that the court should exercise its discretion to grant a stay. The Defendant has to show not just that Hong Kong is not the natural or appropriate forum for the trial but to establish that there is another available forum which is clearly or distinctly more appropriate than the Hong Kong forum.

(3) In considering whether there is another forum which is clearly more appropriate, the court will look for that forum with which the action had the most real and substantial connection. Connecting factors in this sense will include not only factors affecting convenience or expense (such as availability of witnesses), but also other factors such as the law governing the transaction and the places where the parties respectively reside or carry on business.

(4) If the court concludes at that stage there is no other available forum which is clearly more appropriate, it will ordinarily refuse a stay. If however the court concludes at that stage there is some other available forum which prima facie is clearly more appropriate for the trial, it will ordinarily grant a stay unless there are circumstances by reason of which justice requires that a stay should not be granted. For instance, if the Plaintiff will not obtain justice in the foreign jurisdiction. On this inquiry, the burden of proof shifts to the Plaintiff.

(5) Applications under O. 11 r. 1(1) for leave to serve proceedings out of the jurisdiction are to be determined according to the same principles applicable to a stay of proceedings subject to the burden being on the Plaintiff to show that leave should be granted, and to the court being required to consider both the residence or place of business of the Defendant and the relevant ground invoked by the Plaintiff under O. 11 r. 1(1). The Plaintiff is required to show that not merely that Hong Kong is the appropriate forum for the trial of the action but that it is clearly so. In discharging this burden, the Plaintiff is not confined to showing that justice cannot be obtained in an alternative forum, or, if so, only at excessive cost, delay or inconvenience, but is entitled to rely on the nature of the dispute, the legal and practical issues involved and such questions as local knowledge, availability of witnesses and their evidence and expense.

(6) The fact that the granting of a stay of proceedings or the refusal of leave to serve proceedings out of the jurisdiction may deprive the Plaintiff of a legitimate personal or juridical advantage available under the Hong Kong jurisdiction will not, as a general rule, deter the court from granting a stay or refusing leave if it is satisfied that substantial justice will be done to all the parties in the appropriate forum.

Stay of proceedings - Richel

26. The burden is on Richel to show that there is another available forum which is clearly or distinctly more appropriate for the trial of this action. It is submitted on behalf of Richel that Korea is such a forum as it has the most real and substantial connection with the action. There are these connecting factors.

27. The substance of the alleged tort was committed within Korea. I do not think there can be any dispute about that notwithstanding the submission of Mr James Jamison, who appears for Carrefour in this hearing, that there was an international fraud. The fact remains that the substantial part of the alleged fraud - the land transactions and the payment of the consulting fee by the landowners to Richel - was committed in Korea.

28. Many of the witnesses are Korean. They include the staff of Carrefour's office in Korea, Carrefour's lawyers in Korea, Richel's office in Korea, and a Korean firm called Bong Whang set up by Mr Pines. There are also estate agents, brokers and sub-brokers in each of the nine land transactions. Lastly, there are the landowners and there may be a significant number of them as it would appear form Mr Pines' Affirmation that the number of landowners for a single transaction had never been less than twenty because land was divided into a large number of lots. It is true that three of the principal individuals involved are not residing in Korea. However, none of them are living in Hong Kong. Mr Kim, Carrefour's Korean lawyer, is in the United States. Mr Eloi and Mr Pines are living in Argentina.

29. The consulting agreement signed between Richel and each of the landowners was drafted in English and then translated into Korean. It was stated that Korean law was to be the governing law. I have no information if that is also the position for the contracts for the sale and purchase of land between Carrefour and each of the landowners.

30. The focus of the dispute is whether the consulting fee received by Richel under the consulting agreements was proper and legitimate. It seems to me that the resolution of this dispute would involve not just expert evidence as to the practice of conveyancing and the practice of estate agents in Korea, and I take the point made on behalf of Carrefour that experts can travel. In my view, knowledge of and familiarity with the local conditions in Korea would be pertinent to assisting the tribunal in evaluating expert as well as factual evidence. Further, there may well be disputed issues of fact as to how negotiations were conducted and deals concluded as between brokers, sub-brokers and the landowners. Where disputes of fact are involved and credibility is in issue, a Korean tribunal is much better placed in assessing the evidence of discussions conducted in the Korean language and of documents in Korean.

31. I do not think it is material that neither Mr Pines nor Richel has assets in Korea as they have no assets in Hong Kong either.

32. I note also the manner in which the prosecutor's office in Zurich had considered the facts presented to them in their investigation report, and that they were unable to form an opinion that the commission paid to Richel was not justifiable notwithstanding that the amount paid seems to be "very high for the Swiss conditions", bearing in mind that one cannot "[compare] the Swiss reality or market conditions to the Korean or Asian ones". This demonstrates the importance of local knowledge and understanding of local practices in the trial of this action.

33. I am satisfied that the Korean courts are clearly and distinctly more appropriate for the trial of this action.

34. I turn to consider if there are any circumstances by reason of which justice requires that a stay should not be granted. It is submitted on behalf of Carrefour that neither Richel nor Mr Pines is amenable to the Korean jurisdiction, Richel being a Hong Kong company and Mr Pines is not a Korean resident and unlikely to return there as a warrant of arrest had been issued against him. The evidence adduced in support of that submission is from Mr Etienne Van Dyck, the chief internal counsel of Carrefour's parent company in France, and he deposed to the fact that he was advised by Carrefour's Korean lawyers that "although the Korean courts have a jurisdiction to permit service of their process on parties outside Korea, they also have a discretion not to exercise jurisdiction over parties who do not enter an appearance, and who are considered to have no presence in Korea and to have taken no action in Korea". I do not think this evidence provides sufficient support for the submission that Richel and Mr Pines are not amenable to the jurisdiction of the Korean courts. Further there is no explanation of how the discretion of the Korean courts to decline jurisdiction is to be exercised over such parties. There is no information before me as to how likely it is that the discretion to decline jurisdiction would be exercised. The burden of proof on this inquiry is on Carrefour. I do not think Carrefour has discharged the burden here. If it should transpire subsequently that the Korean courts should decline jurisdiction in Carrefour's claim against Richel and Mr Pines, that may be a valid ground for Carrefour to apply to lift any stay of proceedings in Hong Kong.

35. The fact that the granting of a stay of these proceedings may stall the momentum of Carrefour's action to recover substantial sums of which it had allegedly been defrauded is not a ground for refusing a stay if the court is satisfied that substantial justice will be done to all the parties in the appropriate forum. There is nothing on the evidence to persuade me that substantial justice will not be achieved in the Korean courts.

36. I am satisfied in all the circumstances it would be appropriate to grant a stay of the proceedings against Richel in the High Court action.

Leave to serve writ out of jurisdiction - Mr Pines

37. As I have ruled that Mr Pines was not and is not within the jurisdiction, Carrefour must obtain leave under O. 11 r. 1(1) to serve the writ on Mr Pines out of the jurisdiction. I was given to understand by Mr Jamison that Carrefour would rely on O. 11 r. 1(1)(c) (i.e. necessary or proper party to proceedings already duly served on a Defendant) and (1)(f) (i.e. claim founded on a tort and the damage was sustained or resulted form an act committed within the jurisdiction). No point was taken by Mr Delaney that Carrefour's case against Mr Pines does not come within O. 11 r. 1(1)(c) or (f) or that there is no serious issue to be tried between them. The only point taken is that of forum non conveniens.

38. The burden here is on Carrefour to show that Hong Kong is clearly the appropriate forum for the trial of the action. The connecting factors I have considered in relation to Richel must also apply in the case of Mr Pines. It follows that I am not satisfied that the court in Hong Kong is clearly the appropriate forum. If Carrefour had applied for leave to serve the writ out of the jurisdiction on Mr Pines, I would not have granted leave.

The Orders in HCA No. 16812 of 1998

39. Accordingly, I make the following orders in the High Court action:

(a) In respect of Richel

(1) Leave is given to Richel to serve notice of intention to defend out of time under O. 12 r. 6 for the purpose of making an application under O. 12 r. 8.

(2) Leave is given to Richel to apply under O. 12 r. 8 out of time.

(3) The default judgment entered against Richel is to be set aside.

(4) Thereafter, all further proceedings against Richel are to be stayed on the ground that the appropriate forum for the trial or resolution of the dispute between Carrefour and Richel is the court in South Korea.

(b) In respect of Mr Pines

(5) Leave is given to Mr Pines to serve notice of intention to defend out of time under O. 12 r. 6 for the purpose of making an application under O. 12 r. 8.

(6) Leave is given to Mr Pines to apply under O. 12 r. 8 out of time.

(7) The service of the writ on Mr Pines and the default judgment entered against him are to be set aside.

40. I also propose to make an order nisi as to costs that Carrefour is to pay the costs of Richel and Mr Pines in their applications in the High Court action.

Stay of the winding-up proceedings

41. In the Notice of Motion taken out by the contributories, the relief sought is for the winding-up order and the order appointing the liquidators and all further proceedings relating thereto be "permanently or temporarily stayed pending the final disposal of the application in High Court Action No. 16812 of 1998 by [the contributories] to seek leave of the Court to give notice of intention to defend the High Court Action under O. 12 r. 6 of the Rules of the High Court".

42. It seems to me that the relief sought has not been appropriately worded. I do not think it is the contributories' intention not to pursue the application to stay the winding-up proceedings once the Court has made a determination of the application in the High Court action. And I do not think Mr Jamison has understood the contributories' application in that sense, as he has referred me to Lai Kam Hung v. Guangdong (HK) International Co. Ltd [1995] 2 HKLR 211 and asked me not to stay the winding-up proceedings even if I were to stay the High Court action as there are serious doubts about what has been going on in the business of Richel and its state of affairs would call for an investigation of the kind in the course of a winding-up.

43. Lai Kam Hung applied the test laid down by Buckley J in Re Telescriptor Syndicate Ltd [1903] 2 Ch 174 and followed by Harman J in Re Lowston Ltd [1991] BCLC 570. The test is that the court has to be satisfied that it is right to stay the winding-up proceedings, and, if there be matters as to which the court has doubts, it should not so stay. The test is applicable notwithstanding that the judgment upon which a creditor has obtained his winding-up order on his petition has been set aside and that the judgment debt has become a disputed debt. The reason for this is due to public policy considerations.

44. In Re Telescriptor Syndicate Ltd and Lai Kam Hung, a stay of the winding-up proceedings was refused as there were dealings of such a nature which required investigation. In Re Lowston Ltd, Harman J looked at the history of the company to ascertain "whether there are any shady practices or unattractive incidents which would disable the applicants from having the company restored to their hands". In the end, he was persuaded to stay the winding-up proceedings in view of, inter alia, the personal undertakings offered by the applicants to procure the company to file all necessary statutory accounts and returns within a stated time.

45. Mr Delaney has made no submissions regarding the test to be applied. I note that a copy of the liquidator's report was not supplied to him before the hearing. In the light of that report, in particular the failure of Richel to maintain proper books and records in accordance with sections 121(1), (4) and 274(1) of the Companies Ordinance and the failure to submit the statement of affairs pursuant to section 190(1), I am not prepared, in the absence of appropriate personal undertakings from the contributories, to grant any stay of the winding-up proceedings. Further, no proposals have been put forward as to what provision is to be made for the liquidator's proper costs.

46. As Mr Delaney and those instructing him do not appear to have an adequate opportunity to consider the liquidator's report and seek instructions from the contributories in Argentina, I propose not to make any order at this stage regarding the contributories' application to stay the winding-up proceedings. This application is to be adjourned sine die with liberty to restore given to the contributories, Carrefour and the liquidators.

The Orders in HCCW No. 77 of 1999

47. Accordingly, I make the following orders in the winding-up proceedings:

(1) Leave is given to the contributories to act in the name of Richel for the purposes for making an application under O. 12 r. 8 in the High Court action and an application to stay the winding-up proceedings upon the terms as to costs as set out in the earlier part of this decision.

(2) The application to stay the winding-up proceedings is adjourned sine die with liberty to restore given to the contributories, Carrefour and the liquidator.

48. I will leave the question of costs in the Notice of Motion to be dealt with in the restored hearing.

Representation:

Mr James Edward Jamison, of Clifford Chance, for the Plaintiff in HCA No. 16812 of 1998 and the Petitioner in HCCW No. 77 of 1999

Mr Michael Delaney, instructed by Joseph C T Lee & Co., for the 2nd and 3rd Defendants in HCA No. 16812 of 1998 and the Contributories in HCCW No. 77 of 1999