Re Centre Rise Trading Ltd

CACV 250/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 250 OF 2008

(ON APPEAL FROM HCCW NO. 142 OF 2007)

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Before: Hon Rogers VP, Le Pichon JA and Lam J in Court

Date of Hearing: 7 April 2009

Date of Judgment: 7 April 2009

Date of Handing Down Reasons for Judgment: 30 April 2009

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REASONS FOR JUDGMENT

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Hon Rogers VP:

1.I agree with the reasons set out by Le Pichon JA.

Hon Le Pichon JA:

2.This was an application for leave to appeal to the Court of Final Appeal under section 22(1)(a) for Hong Kong Court Final Appeal Ordinance and, additionally, under the “or otherwise” limb of section 22(1)(b) of that Ordinance.  At the conclusion of the hearing, leave was refused.  The reasons appear below.

3.On 10 February 2009, this court dismissed an appeal by the company the from a winding up order made by Kwan J on 22 July 2008 on the ground that the company was insolvent and unable to pay its debts.  The statutory demand served in March 2007 was in respect of a sum of just over US$5.6 million.  How that sum was calculated was shown in Tables A and B.

4.By the time of the hearing below, the company having challenged the calculations, the petitioner reconsidered the way in which the amount of the debt claimed had been calculated and put forward new calculations on the basis of Tables C and D which showed that the amount due and owing was in excess of US$24 million.  The judge accepted the company’s indebtedness based on Tables C and D.

5.This court dismissed the appeal holding that without going into the arguments on the basis of Tables C and D, “the basic claim which was the foundation of the statutory demand was, in essence, sound”.  It was also clear from paragraph 16 the judgment that this court “should not be taken to be disagreeing with the approach of the judge”.

Appeal as of right

6.In Morgan Stanley Emerging Markets Inc v Legend International Resorts Ltd, FAMV No.11 of 2007, the Court of Final Appeal gave a very clear explanation as to why an appeal from a winding up order made on the footing that the company was unable to pay its debts does not come within section 22(1)(a).  See, in particular, paragraphs 11 and 12 of the Determination.

7.Ms Yiu, who appeared for the company, sought to distinguish that case on the basis that, in the present case, there is a ‘finding’ on the quantum of the company’s indebtedness and that it is in excess of $1 million.  But the amount of indebtedness which founds the statutory demand, whether it be the face value it or an amount found as a fact, is simply irrelevant.  It does not alter the issue which remains the same, namely, whether the winding up order should in law have been made on the basis that the company is unable to pay its debts.  That issue does not come within the terms of section 22(1)(a).

The ‘or otherwise’ limb

8.The Court of Final Appeal has ruled that the granting of leave under the ‘or otherwise’ limbis an exceptional course.  Generally speaking, it would normally be a matter for decision by the Court of Final Appeal itself.

9.I do not consider that the reasons advanced constitute ‘exceptional circumstances’ to warrant the granting of leave under this limb.  First, the majority of this court did not proceed on the basis that it disagreed with the approach of the judge.  Second, at the appeal hearing, it was not the company’s case that it was not indebted to the petitioner.  Nevertheless, it did not seek to discharge its debts.  There is no ‘gross injustice’.  Third, as regards the sum of RMB15.6 million, in respect of which the company seeks to raise an argument under Quistclose, this is a new argument which was not run in the court below nor on appeal.  As Mr Law, who appeared for the petitioner, pointed out, the company’s suggestion that the petitioner is wrongfully holding on to that sum is misguided.  It either belongs toYuetan or, in so far as it had already been assigned to the company, the liquidators would be entitled to collect the same for distribution.

Hon Lam J:

10.I agree.

Mr Law Man Chung, instructed by Messrs Paul, Hastings, Janofsky & Walker, for the Petitioner/Respondent

Ms Elsie Yiu, instructed by Messrs Li & Partners, for the Respondent/Applicant