Re Goldmann Commodities (HK) Ltd
Read the full judgment text of HCCW 45/1981 on BabelCite. This High Court CFI judgment was delivered on 27 November 1982.
1. The Goldmann Commodity Company (Hong Kong) Limited (hereinafter referred to as "Goldmann") was formed on the 23rd November, 1979 and was wound up as from the 17th May, 1981.
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HCCW000045/1981 IN THE SUPREME COURT OF HONG KONG COMPANIES WINDING-UP NO.45 OF 1981 --------------
-------------- Coram: Hon. LIU J. Date: 27 November 1982 __________ JUDGMENT __________ 1. The Goldmann Commodity Company (Hong Kong) Limited (hereinafter referred to as "Goldmann") was formed on the 23rd November, 1979 and was wound up as from the 17th May, 1981. 2. There were 4 directors in Goldmann, namely Choi Lup Tung, Yeung Ki Yuen, Wong Kin Man and Wong Wai Man. The latter two resigned in March 1980 and November 1980 respectively. 3. The Official Receiver sought an order that these directors and former directors of the company should each be fined in accordance with section 190(5) of the Companies Ordinance for failing to submit and verify a Statement of Affairs pursuant to sections 190(2) and 190(3) of the same Ordinance without reasonable excuse. The Official Receiver further sought an order that the Statement of Affairs of Goldmann be submitted and verified by the said directors in accordance with section 190(1), (2), (7) and (8) of the Companies Ordinance within, say, a period of 6 months. 4. Three of the directors, Choi Lup Tung, Wong Kin Man and Wong Wai Man applied for an exemption from submitting and verifying a Statement of Affairs. Mr. Yeung did not resist the application of the Official Receiver with much enthusiasm. 5. As long ago as 1898 in the case of Re New Par Consols, (1) Lord Russell C.J. observed that the submission and verification of a Statement of Affairs and assets of the company upon the making of a winding up order was "an essential part of the proceedings in the winding up - an essential part without which the whole machinery of the winding up must be most certainly imperfect". 6. Of section 235(2) of the Companies Act 1948 which is in terms identical with section 190(2) of our Companies Ordinance save for the words "or other chief officer" which nave no relevance for our present purpose, Dr. Penlington in his fourth edition of Penlington's Company Law at p. 703 has this to say:
7. It has to be decided, therefore, whether these four directors or any of them had any reasonable excuse in not submitting and/or verifying or concurring in submitting and/or verifying, wholly or in part, a Statement of Affairs of the company as required by the Official Receiver as liquidator. A necessary question to be answered is whether any of these four men against whom an order to submit and verify such a Statement of Affairs is sought has the materials for doing so. See In re Colombian Gold Mine (2) per Vaughan Williams J. A refusal to submit and verify a Statement of Affairs may possibly cast a shadow of deliberate concealment, per Buckley J. in In re Telescribtor Syndicate (3):
8. As far as Mr. Choi is concerned, he was throughout a director. He was also a director of Kamsley Tracers Limited (hereinafter referred to as "Kamsley") to which the business, including books and accounts, of Goldmann was transferred in July, 1980. Mr. Choi affirmed to the fact that he was travelling between Hong Kong and Taiwan most of the time from December, 1979 to August, 1901 and that since the end of 1979, he was involved as a partner in two companies there. He claimed that he was "never active" in the participation of the business of the company and that he had never "inspected the books or accounts of the company in details". It was said that he had not "constantly kept an eye on the accounts" and that he had no "recollection of the financial situation of the company". These guarded statements fall short of a flat denial of his participation in the company's business or of his access to or sight of its hooks. However, he dissociated himself from the day to day administration. According to him, both the business of the company and that of Kamsley after July, 1980 were managed by Mr. Yeung with the accounts of the company in the charge of Miss Wu. He was allegedly told that books and accounts of the company transferred to and stored in the offices of Kamsley were seized and removed by the Commercial Crime Bureau in early 1981. On the documents referred to by the official Receiver, Mr. Wong Kin Man alleged that he, Choi took $572,000 from the company. He disclosed that his recently retained accountant, Mr. Law, visited the Commercial Crime Bureau and inspected the documents available. Mr. Law came to the conclusion that it was "difficult, if not impossible, to prepare the Statement of Affairs on behalf of the company". Mr. Law added: "Even if the statement is prepared, it could hardly be reliable. However, if with the assistance of the accountant/ book maker and a director who was responsible for attending to the accounts of Goldmann Commodity Company (Hong Kong) Limited and if the following documents listed hereunder can be provided by any sources, I may be able to prepare a reasonable, reliable and detailed Statement of Affairs. Even so, it would take at least six months and a lot of man power to have such a Statement of Affairs prepared." He listed, all in all, 17 categories of documents. Mr. Law did not state outright that the preparation of a Statement of Affairs was impossible. 9. On the face of Mr. Choi's assertions, he was apparently not in a position to assert that it was an utter impossibility to prepare a Statement of Affairs with the existing materials. There was also no disclosure of what effort, if any, he had made in pressing for information from Mr. Yeung or Miss Rowena Wu. His excuses rested primarily on the absence of books and accounts, which has not been satisfactorily explained in these proceedings. 10. The directors had each a purpose of his own to serve, and there was much shifting of blame by all but perhaps one. Mr. Choi claimed that Mr. Yeung and Miss Wu were in charge of the books and accounts. Mr. Wong Kin Man was of the view that Messrs. Choi and Yeung were in control of the books and records and that Mr. Choi was responsible for book-keeping, and Mr. Yeung allegedly intimated to Mr. Wong Kin Man that Mr. Choi "might know about" the books and records of the company. Mr. Wong Wai Man deposed to the fact that: "the books of accounts were kept by Miss Rowena Wu who was in turn supervised by Messrs. Choi Lup Tung, Yeung Ki Yuen and Kandy Kuk". They cannot be all telling the truth. There seems to be no real justification for prefering any one version to the other or others, but I should naturally be more cautious in assessing matters advanced by way of excuses. In and by reason of my above examination of Mr. Choi's assertions, I am not at all satisfied that a Statement of Affairs could not be attempted or that Mr. Choi has done his reasonable best towards that end. Mr. Choi has not established any reasonable excuse, and subject to what counsel has to say I propose to fine him $70 per day for the 40 days prior to the date of the Liquidator's Summons, in all $2,800. His application for exemption is dismissed with costs to the official Receiver. I also order him to submit and verify or concur in submitting and verifying a Statement of Affairs within 6 months from today. The Official Receiver is to have costs on his summons. 11. Mr. Wong Kin Man was once a director. He is otherwise known as David Wong. He explained the background as follows: In July, 1979 Mr. Choi, Mr. Yeung and himself were partners in a Bangkok company trading as brokers of commodity futures and' that the three partners were minded to and did on the 23rd November, 1979 incorporate Goldmann in Hong Kong. He, David Wong was supposed to have a one-third share. He was much preoccupied with the Thailand company and only discovered in March, 1980 that instead of a one-third share in Goldmann, he was given two out of 20,000 shares. Thereupon, there was an unpleasant incident culminating in his resignation in March, 1980. In May, 1980, he formed his own company in Hong Kong only in July, 1980, after his resignation, the accounts of the Goldmann were transferred to Kamsley allegedly without his knowledge; nor was it then his concern. He claimed initially that he had no access whatsoever to the books and documents of the company in Hong Kong. In his preliminary examination on the 3rd December, 1981, he was quite adamant that prior to his resignation, proper books and accounts were kept, a full and true account of payments was entered in the cash books, a record of full particulars of all transactions was maintained in the journals and all debtors ' and creditors' accounts were posted in the ledgers. In his subsequent affirmation, Mr. David Wong admitted that as a director he had access to the books and accounts but that he perused some only once or twice. He believed that Mr. Choi was responsible for book-keeping at the time when he was in the company. 12. He was with Goldmann for only 4 out of the 16 months when he resigned in March, 1980. He recounted the ambition of Yeung, Choi and himself in the joint venture as planning, to Bet up a company in Bangkok, a company in Hong Kong and ultimately a company in Taiwan. The company in Taiwan, though promoted by the three of them, was formed after his resignation. He stated that Yeung and Choi consequently sold out their interests in the Thai Company and that later he, himself also sold his remaining share in the Thai Company on the 4th November, 1980. He allegedly pressed Yeung for accounts and books, but according to him, Yeung's excuse was that" he had no knowledge of their where about" but that "Choi might know about them." He did at one time try but unsuccessfully to contact Choi by telephone, but that was as long ago as mid 1981, 2 or 3 days after the first meeting with the Official receiver. 13. His brief association with the Hong Kong company, the abrupt cessation of the joint venture and his alleged effort of seeking information from Yeung and Choi were heavily relied upon. But has he done all he reasonably car in obtaining information and materials to enable him to submit and verify, in part, a Statement of Affairs? 14. He cannot be expected to be aware of the activities of Goldmann in later months after his resignation, but it is inconceivable that he could have had no knowledge of the first 4 months' operation or had subsequently been unable to gain enough information of Goldmann in what was truly a dissolution of partnership. He admitted to have access to and some perusal of books and accounts. He certainly can be required to verify the affairs of the company which relate back to these 4 months of operation or part of it. A firm of accountants were jointly instructed by Yeung and himself, and the Statement of Affairs submitted is monumentally unhelpful. No explanation of the accountants has been transmitted to the court as to why the Statement of Affairs was presented in its present form. He emphasized that after his resignation, he was no longer entitled to access to the books and records, but no one has raised objection on account of his status or the lack of it. Now that he is able to contact Choi, still he has not specified what effort, if any, he has made. From Miss Kwan, counsel for Choi, the court was given the information chat there was a joint meeting of the directors at which it was unable to reach any agreement as to "whether a joint Statement of Affairs could be furnished". The court does not have the advantage of the full discussions at such a joint meeting; nor was it sought to be explained what insurmountable difficulty, if any, there was. The court may take into consideration these matters that have come to light in this winding-up. In my view, it has not been established that it is impossible to attempt at the preparation of a Statement of Affairs with the available documents. Mr. Wong Kin Man cannot in the circumstances be said to have done his reasonable best despite his 4 months' involvement. He could certainly have been more energetic. No reasonable excuse was, in his case, made out. Subject to what counsel has to say, I propose to fine him $20 a day for the 30 days prior to the date of the Liquidator's Summons totalling $600. His application for exemption is likewise dismissed with costs to the official Receiver. I further order him to submit and verify or concur in submitting and verifying a Statement of Affairs of the company insofar as the same relates to the period of his directorship within 6 months from to-day. 15. Mr. Yeung has filed no affidavit. His position may be pieced together from information, at times conflicting, disclosed in all these proceedings with reference to him. I have no hestitation to fine him $70 a day for the 40 days prior to the Official Receiver's Summons with costs. I further order him to submit and verify or concur in submitting and verifying a Statement of Affairs within 6 months from to-day. 16. I turn finally to Wong Wai Man. He was the Sales Manager of kamsley in July, 1979 at $1,400 a month. In mid 1979, he was made the General Manager of Kamsley at $4,000 per month. He was transferred to Goldmann in May, 1980 as a Sales Manager and he was made a director in July, 1980 but only responsible for the Sales Department. He was an outsider and was only made a director for boosting his status. As a director, he returned to the office only three to four times a week and he did not enjoy the same rights and privileges as the other directors. He was a director only in name and had no access to the company's books and accounts. He resigned on 22nd November, 1980. He believed that the accounts might be held by one Kandy KuK, an alleged protege of Mr. Choi. He was told by Ms. Yeung while he was in Singapore that the affairs of Goldmann were no longer his concern after his resignation in November, 1980. He attempted but failed to contact Yeung since his return to Hong Kong. He had a meeting with and asked Choi and Wong for the books and accounts. He also sought to persuade Miss Wu to assist the official Receiver. He had done all that could reasonably be expected of him in the circumstances. The Official Receiver informed the court of his co-operation. On the 12th June 1982, he was fined $20 a day for the 50 days immediately before the 26th May 1982. It is difficult to draw the line as to precisely when he had finally done his reasonable best, but I find it purposeless to be pedantic. I do not propose to fine him or made an order against him as prayed for by the official Receiver. I grant an order in terms of paragraph 1 of his summons, but there shall be no order as to costs on his summons nor on that of the Liquidator's. I have come to the conclusion that he has now made out a reasonable excuse for his failure to submit a Statement of Affairs.
(1) [1898] 1 Q.B. 573 at p. 576 (2) [1894] 42 W.R. 624 (3) [1903] 2 C.H. 174 at p. 182 Representation: Mr. Allison for official Receiver and Liquidator. Ms. Susan Kwan instructed by Messrs. Tai, Tang & Chong for Mr. Choi Lup Tung, a director of the Company. Mr. Winston Poon instructed by Messrs. Woo, Kwan, Lee & Lo. for Mr. Wong Kin Man, a director of the Company. Mr. Suffiad instructed by Messrs. Ronald Ho & Co. for Mr. Yeung Ki Yuen, a director of the Company. Mr. John. Lee instructed by Messrs. Chan & Lau, Wai & Co. for Mr. Wong Wai Man, a director of the Company. |