Re Ming Fung Bullion Co. Ltd.
Read the full judgment text of HCCW 364/1998 on BabelCite. This High Court CFI judgment was delivered on 27 October 2000.
1. Mr Wong Chi Kit ("Mr Wong") appeals against the decision of the liquidators of Ming Fung Bullion Company Limited ("Ming Fung") in respect of a proof of debt. The appeal is pursuant to rule 95 of the Companies (Winding-Up) Rules, Cap.32.
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HCCW000364/1998 HCCW364/1998 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE COMPANIES WINDING UP PROCEEDINGS NO.364 OF 1998 --------------
------------- Coram: Hon Cheung J in Chambers Dates of Hearing: 20 March and 19 October 2000 Date of Judgment: 27 October 2000 ------------------------- J U D G M E N T ------------------------- The appeal 1. Mr Wong Chi Kit ("Mr Wong") appeals against the decision of the liquidators of Ming Fung Bullion Company Limited ("Ming Fung") in respect of a proof of debt. The appeal is pursuant to rule 95 of the Companies (Winding-Up) Rules, Cap.32. The facts 2. The current liquidators of Ming Fung were appointed as its provisional liquidators on 26 May 1998 upon the petition of the Securities and Futures Commission. Ming Fung was put into liquidation by court order dated 8 July 1998. 3. Mr Wong was a customer of Ming Fung since 25 November 1995. Prior to the liquidation of Ming Fung, Mr Wong had instructed Ming Fung to carry out foreign currency transactions on his behalf. 4. The liquidators' investigation into Mr Wong's accounts with Ming Fung shows that as of 26 May 1998, there was a credit balance in his account of HK$95,578.84 as evidenced by a customer's margin status report and also a customer's statement, both dated 26 May 1998. The sum of $95,578.84 is made up as follows :
Thereafter, Mr Wong submitted proof of debt in the liquidation. He submitted three different debts at different times :
After making investigation, the liquidators rejected the claims and maintained that HK$95,578 was due to Mr Wong. The money was released to Mr Wong on 26 August 1999. In exchange, Mr Wong signed a document accepting the adjudication and waiving all further claims against Ming Fung. Ming Fung had declared a first and final dividend of 100% on 30 April 1999. 5. I granted leave to Mr Wong to appeal against the decision of the liquidators out of time on 28 February 2000. The appeal was first heard on 20 March 2000 when it was adjourned to enable the liquidators to consider the documents submitted by Mr Wong. During the adjournment, Mr Wong provided further documents to the liquidators' solicitors. After considering the documents, the liquidators maintained their view on the debt that was due to Mr Wong. Deposit of $800,000 6. Central to Mr Wong's claims is a sum of $800,000 which he said had been deposited by him in cash on 22 May 1998 with Ming Fung. The liquidators excluded this sum in their adjudication of his debt. 7. As disclosed in the liquidators' letter dated 10 August 1999 to Mr Wong's former lawyers, the liquidators had provided a schedule of the daily transactions and balances of Mr Wong's account during the period 1 January 1998 to 26 May 1998. The schedule revealed that Mr Wong was utilizing two cheques of HK$800,000 which appeared to be "deposited" and "withdrawn" by Ming Fung each day. There was no cash deposit as alleged by Mr Wong. The cheques that were allegedly withdrawn and deposited each day in fact had the same cheque numbers. In this way, Mr Wong was able to artificially inflate the balance of his accounts to satisfy margin requirements. These cheques had never been deposited into Ming Fung's bank account, thus upon the cessation of Ming Fung's trading activities, the liquidators had to exclude the $800,000 to reflect the true cash position of Mr Wong. Further investigation 8. In my view, what the liquidators said are clearly borne out by the analysis shown in the schedule. Mr Wong challenged the liquidators' statement that the withdrawal and deposit involved two cheques on paper only. He said that in fact he had a withdrawal slip which shows that he had withdrawn $800,000 cash from Ming Fung on 14 May 1998. The liquidators carried out further investigation on this issue and they produced a copy of a margin withdrawal slip, Reference No.KA6637, on which it was shown that Mr Wong withdrew cash of $800,000. The liquidators stated that the description on the slip of a cash withdrawal was wrongly recorded because Ming Fung's respective daily cash and cheque withdrawal and deposit registers do not support the contention that this was a cash withdrawal. The liquidators produced the registers of Ming Fung dated 14 May 1998. The cheque register shows corresponding withdrawal and deposit entries of $800,000 on that date. It referred to a withdrawal slip reference to No.6637 which corresponded to the margin deposit slip reference. On the other hand, in the cash register there was no entry for a $800,000 cash withdrawal on that date. In my view Mr Wong was taking advantage of an error recorded in the margin withdrawal slip to build a case which does not exist in the first place. 9. Further, if according to Mr Wong, he had actually deposited $800,000 cash on 22 May 1998, then clearly his earlier withdrawal of $800,000 cash as alleged by him would cancel each other out. The net effect is that the liquidators were correct to exclude the sum of $800,000 from the final adjudication. In my view, Mr Wong's claim for the extra $800,000 is totally devoid of merits. 10. Mr Wong also referred to a statement dated 22 May 1998 in which there was a handwritten entry of $800,000 in the column described as "withdrawal of deposits". Mr Wong had not stated how this would assist his case. This seemed to be part of his allegations that $800,000 should not be excluded from the adjudication. As pointed out by Mr Dobby, the solicitor for the liquidators, the handwritten entry was merely to identify the typed figures in the statement which are illegible. Again, this point does not assist Mr Wong. Other criticisms 11. Mr Wong criticized certain entries in the schedule prepared by the liquidators. He stated that these entries, when compared with the actual supporting document, show that there was a discrepancy in the figures in the schedule. He further challenged an entry of $200,000 in the schedule which was described as a cheque entry. He stated that in fact it was a cash entry. 12. These criticisms had no effect on the overall adjudication of Mr Wong's claim because the schedule recorded the ongoing transactions and balances and the entries in the schedule for the later part of May 1998 corresponded with the supporting documents. This means that any earlier discrepancy had in fact been adjusted. Furthermore, the description of the $200,000 cheque entry was in accordance with the supporting documents. Burden of proof 13. The provisions on the proof of debt are sections 263 and 264 of the Companies Ordinance. As shown in In re Van Laun, ex p Pattullo [1906] 1 KB 155, the liquidators' right and duty when examining a proof, for the purpose of admitting or rejecting it, is to require some satisfactory evidence that the debt on which the proof is founded is a real debt. This rule is applicable to both bankruptcy and winding-up, see Standard Chartered Bank Hong Kong Trustee Limited v. Administrator of the Estate of Madam Lau Sui Ling, Deceased and The Official Receiver, Civil Appeal Nos.80 and 126 of 1989 and also Re Adam Holdings Limited [1985] 2 HKC 608. The burden of proof is upon the applicant to establish the debt upon a balance of probabilities : George Moore v. The Official Receiver, Bankruptcy No.40 of 1999. Mr Wong had clearly failed to prove by satisfactory evidence that there was a real debt. Waiver of claim 14. When Mr Wong obtained the $95,578.84 from the liquidators, he signed a document stating that he agreed to the adjudication on 1 June 1999 of the liquidators on his proof against Ming Fung. He also agreed that upon accepting the cheque, he would abandon all further claims against the liquidators and their staff. Mr Wong claimed that he was pressured by the staff of the liquidators to sign that document. 15. In my view, what Mr Wong said just does not sound true. He is an adult. The letter was written in Chinese, he understands the contents of the document and he signed his name on the document. Earlier on 16 August 1999, his former solicitors had asked the liquidators to release the sum of $95,578.84 to Mr Wong first pending the resolution by the court of Mr Wong's other claims. This was rejected by the liquidators who said that the money would be held by the liquidators pending the outcome of Mr Wong's application to the court. This being the background, Mr Wong clearly must have known the consequence of signing the letter of release on 26 August 1999. This would preclude him from raising further claims on the adjudication. Pager deposits 16. Mr Wong produced a deposit slip of $2,000 issued by Ming Fung. He said that he had rented a pager from Ming Fung and paid $2,000 as deposit. This sum had not been accounted to him. According to Mr Dobby, this deposit is refundable upon the return of the pager to the liquidators; as Mr Wong had not previously returned the pager to Ming Fung, the question of the return of deposits does not arise. It is open to Mr Wong to claim back this sum when he returns the pager to the liquidators of Ming Fung. This is not something that affects the adjudication of Mr Wong's claim. Conclusion 17. The appeal is dismissed with costs nisi to the liquidators.
Representation: Applicant in person, present Mr Christopher Dobby of Messrs Johnson Stokes & Master, for the Joint Liquidators of the Ming Fung Bullion Co. Ltd |
Further hearings and rulings under HCCW 364/1998