Re Charter Favour Ltd

HCCW 472/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 472 OF 2006

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Before: Hon. Kwan J. in Court

Date of Hearing: 20 November 2006

Date of Judgment: 20 November 2006

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J U D G M E N T

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1.This is a petition to wind up Charter Favour Limited (“the Company”) on the basis of a judgment debt of $133,000, being the agreed costs of the petitioner under the consent order of the petitioner and the Company in proceedings in the Lands Tribunal, LDBM No. 133 of 2003.

2.The petitioner is the incorporated owners of Million Fortune Industrial Centre.  A demand for its debt was served on the Company on 20 April 2006.  As no payment was made, the petition was presented on 1 September 2006.  It was amended on 6 October 2006.

3.The petitioning debt is not in dispute and it cannot be disputed because it is the subject of agreed costs under a consent order.  What I understand the Company to be saying in opposition of this petition is as follows.

4.Firstly, the Company has after receiving the demand from the petitioner made an offer to compromise the petitioner’s debt on these terms.  The Company has brought an appeal against the judgment given by the Lands Tribunal in favour of the owner of the 15^th floor of the building in LDBM No. 133 of 2003.  I will have more to say about this application of the Company against the 15^th floor owner.  The appeal is to be heard by the Court of Appeal on 13 December 2006.  The Company has offered to the petitioner that if the Company should lose the appeal, it would transfer the common parts and the external walls of the building to the petitioner at the Company’s costs.  The Company further undertakes to pay the petitioner forthwith all money recovered from any of the owners of the building prior to paying other debts, unless required by law.

5.This offer has been rejected by the petitioner for the reasons given in an affirmation made by the chairman of the petitioner as unrealistic and unacceptable.  The common parts and the external walls of the building are of negligible value, and the undertaking of the Company to pay all money recovered from any of the owners is but a bare promise.  I do not need to say anything more about the offer.

6.The other matter raised by the Company to oppose the petition is the earlier application against the 15^th floor owner that I have mentioned.  This was the subject of a decision of the Lands Tribunal on 6 April 2006.  What happened was that the Company had brought proceedings against the petitioner and the owner of the 15^th floor for trespass regarding the common parts of the 15^th floor.  The Company’s application against the petitioner was dismissed because the Company failed to pay the security for costs ordered by the Lands Tribunal in favour of the petitioner, so the application was proceeded with against the 15^th floor owner alone.  It should be noted that the claim of the Company in that application, even if successful, is not in the nature of a cross-claim against the petitioner.

7.In dismissing the Company’s application, it was held by the Lands Tribunal that the Company is not entitled to sue in trespass regarding the common parts of the building.  This was based on a judgment of the Court of Final Appeal in Jikan Development Limited and Another v. Incorporated Owners of Million Fortune Industrial Centre [2004] 1 HKLRD 181.  Jikan Development Limited was the predecessor in title of the Company.  Accordingly, the Lands Tribunal held that only the incorporated owners, i.e. the petitioner, would have the right to sue under the deed of mutual covenant and the Building Management Ordinance, Cap. 344 for any wrongful use of the common parts.

8.I have considered the grounds in the notice of appeal filed by the Company against the decision of the Lands Tribunal.  It does not appear to me that the Company has a genuine and enforceable claim against the owner of the 15^th floor that would result in recovery of an amount exceeding the petitioning debt.

9.I see no basis for adjourning or staying this petition pending the determination of the appeal.  I make an order to wind up the Company.  The petitioner would have its costs paid out of the assets of the Company.

Mr Lo Po Wing Anthony, instructed by Messrs Ho & Tam, for the Petitioner

Mr Sui See Chun, instructed by Messrs Kwan & Chow, for the Company & the opposing contributory, Financial Services and Systems Limited

Miss Vivian Yeung, for the Official Receiver