Re Wing Fung Construction (HK) Ltd

HCCW 807/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 807 OF 2004

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Before: Hon Kwan J in Chambers

Date of Hearing: 13 January 2006

Date of Decision: 13 January 2006

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D E C I S I O N

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1.This is the adjourned hearing of an application for a validation order made by the 1^st and 2^nd respondents, Wong Tak Kwong and Madam Chan Wai Chun.  They are the directors of Wing Fung Construction (H.K.) Limited (“the Company”).  The summons was issued on 30 December 2005.  The petitioner, Lau Yee Ching, has set out in his 16^th affirmation which of the items sought to be validated are opposed by him and the reasons for his opposition.  He has raised two general objections.  I have considered the general objections in paragraphs 6 to 14 of his affirmation and I have sought explanation from the 1^st respondent regarding the alleged double payments he received in respect of his salary and subsidy for the month of December 2004. 

2.The 1^st respondent provided the explanation through an employee of the Company Mr Lau Kwong Chi.  It would appear from the explanation given that the salary and subsidy for December 2004 was in fact not paid to the 1^st respondent out of the funds covered by payment certificate No. 15 but the money was used to pay some other employees.  I accept this explanation given on behalf of the 1^st respondent.  I do not consider the general objections raised by the petitioner to be of substance.  I turn to the individual objections raised by the petitioner to each of the items sought to be validated in this application.

3.There are 8 items in all.  I will go through them one by one.  The 1^st item relates to materials and machineries.  The amount sought to be validated is HK$105,942.82.  The petitioner will consent to HK$70,509.82.  The sums of HK$13,400.00 and HK$22,033.00 are objected to, on the basis that these expenses were incurred in relation to a car for the sole use of the 2^nd respondent and not for the business of the Company.

4.This objection has been raised in relation to similar expenses sought for this car in earlier applications and I have upheld the petitioner’s objections.  I see no reason to take a different view on this occasion.  So I will disallow these sums relating to the car and the amount I propose to validate under item 1 is only the sum of HK$70,509.82.

5.Item 2 relates to arrears of salaries from July 2005 to December 2005 in the sum of HK$397,216.80.  The petitioner will consent to HK$251,716.80.  The items objected to by the petitioner relate to the subsidies of the 1^st respondent at HK$10,000.00 a month for six months and the salaries of the 2^nd respondent at HK$14,250.00 a month for six months.

6.I am unable to conclude on the available evidence that these expenses relating to the 1^st respondent’s subsidies and the 2^nd respondent’s salaries are not genuine business expenses.  I therefore propose to validate these payments as well.  So the entire amount sought under item 2 is to be validated.

7.Item 3 is the advance on salaries to employees in the sum of HK$216,500.00.  The Company seeks to make payment of salaries to employees for January 2006 and February 2006 in view of the forthcoming Chinese New Year.  I see no reason to disallow the advance of salaries in this situation, so I will validate the entire amount sought.

8.Item 4 is payment to sub-contractors of HK$104,802.80.  The petitioner says he will consent to this item upon a personal undertaking of the 1^st respondent to pay back any outstanding amount into the Company’s bank account, as there would appear to be a difference of HK$35,780.00 between the amounts validated on previous occasions and the amounts actually paid to the sub-contractors so far.  I do not think it is necessary to require the respondents to give this undertaking again.  I should mention that they have given an undertaking of this kind when I made a validation order on 2 December 2005.  I would validate the amount sought in item 4 in its entirety.

9.Item 5 is MPF contribution from October 2005 to December 2005 of HK$30,871.68.  Item 6 relates to hire purchase payments for machinery in the sum of HK$143,580.32.  Item 7 relates to electricity, telecom and water charges, management fees and court fines in the sum of HK$15,230.40.  The petitioner consents to all three items in the entirety so the amounts sought will all be validated.

10.Item 8 relates to reimbursement of cash payments to Wong Ming Wah, Lau Kwong Chi and the 1^st respondent in the sum of HK$20,331.69.  I understand that the reimbursements sought for October 2005 have been considered and dealt with in the last application for a validation order.  So these amounts are disallowed: they are HK$6,082.40, HK$5,243.00 and HK$2,929.01.  For the reimbursement sought for November 2005, the petitioner will consent to the reimbursement to Lau Kwong Chi of HK$3,230.28.  As for the reimbursement to Wong Ming Wah for November 2005, an objection was raised to HK$500.00.  I have looked at the invoice in question.  I propose to allow the HK$500.00 objected to as well.  There will be a validation order in respect of all the reimbursement sought for Wong Ming Wah and Lau Kwong Chi in November 2005.

11.I make a validation order upon the 1^st and 2^nd respondents providing a similar undertaking to the court as before.  This undertaking is to provide to the petitioner proof of such payments actually made to the relevant individuals and/or companies in a form as agreed by the parties and set out in a letter of the petitioner’s solicitors to the respondents’ solicitors dated 17 October 2005, within 7 days of the payments being validated by the order to be made herein, and surplus funds not utilised for the payment of the amounts validated are to be paid back into the bank accounts of the Company.

12.On the basis of the above undertakings, I order as follows:

(1)     The payment of the sums set out in items 1 to 8 in exhibit “C” to the 11^th  affirmation of the 1^st respondent be validated, with the exception of these items: the sums of HK$13,400.00 and HK$22,033.00 in item 1 and the amounts of HK$6,082.40, HK$5,243.00 and HK$2,929.01 in item 8.

(2)     Messrs Paul Kwong & Company, solicitors be authorised to pay out the amounts aforesaid to the recipients as listed in exhibit “C” to the 11^th affirmation of the 1^st respondent.

(3)     The Bank of China (Hong Kong) Limited be authorised to debit the Company’s accounts the aforesaid sums or part thereof and transfer the proceeds to Messrs Paul Kwong and Company to enable them to pay out to the recipients as mentioned.

(4)     The Shanghai Commercial Bank be authorised to debit the Company’s accounts the sums aforesaid or part thereof and transfer the proceeds to Messrs Paul Kwong & Company to enable them to pay out to the respective recipients aforesaid.

(5)     There be no order as to the costs of this application. 

Miss Pheobe Man, instructed by Messrs Tsang, Chan & Wong, for the Petitioner

Mr Wong Tak Kwong, the 1^st Respondent, present

Madam Chan Wai Chun, the 2^nd Respondent, present