Lam Charm and Another v. Yung Shiu Ching and Others

HCCW279/2010
& HCCW 346/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS

NO. 279 OF 2010

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BETWEEN

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AND

COMPANIES (WINDING-UP) PROCEEDINGS

NO. 346 OF 2010

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BETWEEN

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Before: Hon Fok J, in Court

Date of Hearing: 15 December 2010

Date of Ruling: 15 December 2010

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RULING

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1.I have before me a summons by the Petitioner for the appointment of provisional liquidators of the company Hempstone Limited.

2.Before the summons came on today, the 1st to 4th Respondents in this petition issued a summons for an order that the company be wound-up.  A similar summons was also issued in a related winding-up petition, HCCW343 of 2010, in respect of De Rodeo Catering Limited.

3.The position is that the petition in HCCW343 of 2010 will come on for hearing on 10 January 2011.  This petition will also now come on at that same time.  I am not prepared to make a winding-up order today, notwithstanding the summonses that have been issued. What that means, of course, is that the 1st to 4th Respondents in this petition accept that a winding-up order ought to be made.  They also appear to accept, therefore, that there has been a breakdown of trust and confidence between the parties and that it is appropriate for a winding-up order to be made and that the trust and confidence between them, on the one hand, and the Petitioners, on the other, has irretrievably broken down.

4.As a matter of jurisdiction, in so far as the application to appoint provisional liquidators is concerned, it seems to me that the recognition that a winding-up order should be made is clear prima facie evidence that there is a reasonable prospect that a winding-up order will be made.  The question remains as to whether or not it is right in the exercise of my discretion to appoint a provisional liquidator in all the circumstances.

5.Mr Manzoni on behalf of the Petitioners has drawn my attention to the complaints of misconduct made by the Petitioners against the 1st to 4th Respondents set out in the petition.  I do not propose to go through them at length.  They are addressed in his skeleton submissions, and as he indicated in the course of his oral submissions, many of the allegations are not in fact disputed by Mr Yung, the 1st Respondent.

6.That obviously goes some way towards demonstrating that there is substance in the allegations of misconduct.  That is not to say that today’s decision amounts to a conclusive finding that that is the case, but rather, it does support, in my view, the existence of circumstances in which it would be appropriate to appoint provisional liquidators, albeit that it is possible that on 10 January next year, a winding-up order will be made in any event.

7.On the one hand, that might suggest that there is no particular urgency to appoint provisional liquidators today.  On the other hand, I am satisfied that the evidence demonstrates at least to the level of a good prima facie case that the trust and confidence between the parties has irretrievably broken down.  In the circumstances, there would be good sense, in my opinion, in appointing provisional liquidators now.

8.After any winding-up order is made, assuming that is the case, it will then be a matter to be decided in the usual way as to whether the provisional liquidators should continue as liquidators. Equally, it is possible, and I put it no higher than that, that the parties may be able to resolve their differences between now and the date when the petition is actually heard.  As I understand it, the company is solvent, or is thought to be solvent, and therefore there may be some commercial good sense in the parties seeking to reach some form of commercial resolution.

9.Accordingly, I make an order in terms of the draft at Annex 2 of the bundle of submissions from the Petitioners, although there are obviously certain changes that need to be made to the form of the draft as it now exists, but I will leave that to the Petitioners to correct and submit for approval.

(Submissions on costs)

10.I think in the circumstances it is appropriate that the costs of the application for the appointment of provisional liquidators should be paid by the 1st to 4th Respondents to the Petitioners.  This is not like an interlocutory injunction, in the sense that here we have a situation in which the Respondents have themselves asked for a winding-up order to be made today.  So the analogy breaks down and I so order.

(Submissions on certificate for counsel)

11.I certify this as fit for two counsel.

Mr Charles Manzoni QC, Mr Harry Liu and Mr Adrian Lai, instructed by Messrs Poon & Cheung, for the 1st and 2nd Petitioners (HCCW 279/2010)

Mr William Wong instructed by Messrs Tsang & Lee for the Petitioners (HCCW 346/2010)

Mr Richard Leung and Ms Connie Lee, instructed by Hon & Co., for the 1^st to 4^th Respondents (HCCW 279/2010) and for the 2^nd Respondent (HCCW 346/2010)

Official Receiver, absent