Sum Wai Min v. Horizon Shipping Co S.A.
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IN THE SUPREME COURT OF HONG KONG ORIGINAL JURISDICTION ACTION NO. 689 OF 1972 ----------------- BETWEEN
----------------- Coram : Briggs J in Court Date: 27 March 1972 ------------------------ J U D G M E N T ------------------------ 1. On March 11, 1972 the Plaintiff commenced proceedings in the Supreme Court against a company known as the Blue Marine (Far East) Ltd. and Yu Bing Fun for the sum of $84,000 being the balance owing under a check drawn in favour of the Plaintiff by Blue Marine and Yu Bing Fun, a director and the principal shareholder of that company. 2. Blue Marine (Far East) Ltd. was a company incorporated in Hong Kong. Its main if not its sole asset was a motor vessel at that time named the “Rebecca”. 3. The Plaintiff discovered that on March 7th 1972 a company called The Horizon Shipping Company S.A. was incorporated under the laws of the Republic of Panama, and that the ‘Rebecca’, renamed the ‘Selina’ was transferred to it on March 15, 1972. This company is the Defendant in the present action, and the Selina is its main if not its sole asset. 4. Yu Bing Fun, the drawer of the check, and his wife held 898 out of 902 paid up shares in Blue Marine. The same persons held 50% of the shares in the new Panamarian Company, the Defendant. 5. It is common ground that the provisions of the Fraudulent Transfers of Businesses Ordinance have not been complied with. The Plaintiff therefore claims that the Defendant is liable for the indebtedness of Blue Marine Limited to him. 6. Accordingly he issued a summons under Rule 8 of Order 44A of the Rules of the Supreme Court requesting the issue of a warrant requiring the Defendant to furnish security or to appear and show cause and to attach the m.v. Selina. 7. The summons was heard ex parte in Chambers on March 22, 1972 when I granted the Plaintiff’s request. The m.v. Selina was attached by the Bailiff and the Defendant was given until noon on March 23, 1972 to pay the Plaintiff’s claim or to furnish security for a like amount; or, in the words of the rule, “to appear before the court and show cause why he should not furnish such security”. 8. By consent the matter was argued before me on the morning of March 25, 1972. Both the Plaintiff and the Defendant were represented by counsel. I reserved judgment and, as a matter of some importance is in issue I decided to deliver my judgment in open court. 9. Mr. Asome for the Defendant made two points. First he said that the Fraudulent Transfers of Businesses Ordinance does not apply to the facts of this case. Secondly he said that Order 44A of the Rules of the Supreme Court under which these proceedings are brought only applied to persons who may be said to have some real connexion with Hong Kong. 10. The relevant section of the Fraudulent Transfers of Businesses Ordinance is Section 3(1). 11. This reads as follows:-
12. I shall refer to this Ordinance as ‘Cap.49’ in this judgment. “Business” is defined in section 2 of the Ordinance as meaning “any trade or occupation, other than a profession, carried on with a view to profit;” 13. Mr. Asome’s point is that this definition of “business” does not include shipping. In support of this he relies upon the case of Ng Kan v. Chan Pak Wing(1). 14. In that case it was held that the assignment of a junk was not a transfer of the junk-owner’s business within the meaning of what is now Cap.49. However the Court held that the junk was at least a portion of the business of the transferor, who was a fisherman. 15. The Court based its decision on 4 grounds. First that if Cap.49 were to be applied to the transfer of ships, difficult questions of International Law would be raised. Secondly that the Merchant Shipping Act of 1894 and the Hong Kong Merchant Shipping Legislation dealt comprehensively with all matter incidental to the transfer of ships and junks. Thirdly the Court referred to what is now section 3(4) of Cap.49: i.e. the particulars which must be included in the notice mentioned in Section 3(1). 16.Section 3(4) reads as follows:-
17. The Court pointed out the difficulty of complying with paragraph (c) of that section in the case of a transfer of a junk. A Hong Kong junk, it was said, has no fixed or permanent address: it operates freely and in no special location. What, then, can be inserted in the notice as the address at which he “intends to carry on business”? 18. Finally the Court referred to the difficulty of the “limit to which the word “business” should be applied”. The case of a sampan worth about $30 - $40 is mentioned. The Hong Kong of 1938 is very different from the Hong Kong of to-day. I will say at once that the last two reasons for his decision given by the Judge in Ng Kan’s case do not commend themselves to me. However there is point in the first two of his reasons. 19. Mr. Arculli seeks to distinguish Ng Kan’s case from the present case. He points out that the Defendant is a Panamarian Company. It is not a company registered in Hong Kong. Further the “Selina” or “Rebecca” is not registered in Hong Kong, it is registered under the Panamarian flag. 20. It is his contention that the true ratio decidendi of Ng Kan’s case is that the Merchant Shipping Legislation contains a complete code governing the regulation of the transfer of ships. But that legislation only deals with British shipping. It does not apply to foreign ships. The junk in Ng Kan’s case was a British junk, a Hong Kong junk. The position is different here where the ship is a foreign ship. 21. The situation we have here of a Hong Kong company transferring its only assets to a foreign company, those assets being a foreign ship, might be described as a classic situation for which Cap.49 was designed as a remedy. 22. As to the first point taken by the Court that inconvenience might arise if Cap.49 were to be so interpreted, Mr. Arculli said he could see no real difficulty. Foreign ships would be dealt with under one ordinance and British ships under other provisions of the law. 23. It was also pointed out that the third and fourth reasons given by the Court for its decision in Ng Kan’s case had no bearing on the present case. We are not here dealing with a junk. The Rebecca or Selina is reputedly worths one million dollars Hong Kong. She is a freighter and unlike a junk can easily be traced. 24. I agree with Mr. Arculli. I can see nothing in Cap.49 to exclude the shipping business from the expression “business” as used therein. I am not impressed by either the reason of or the decision Ng Kan v. Chan Pak Wing(1). However it is clearly a decision which can be distinguished in its facts from the present case in the manner in which Mr. Arculli has suggested to the Court. In my view Cap.49 clearly applies to the facts of this case. 25. Mr. Asome’s second point does not in my view alter the position. He said that interim attachment under Order 44A should only apply to persons who are ordinarily resident or who at least have more than a transitory connection with Hong Kong. He quoted the cases of Gayda v. Hyde(2) and the Continental Corporation v. Vincenzo Fidele(3). In the present case he said, both the Defendant and the ship are Panamarian and cannot be said to have more than a transitory connexion with Hong Kong. 26. The two cases quoted deal with the attachment of a foreign person who is about to leave Hong Kong: and as such they are good authority for the proposition of law put forward by Mr. Asome. But they are cases under Rule l of Order 44A and not under Rule 8 of that order. They can have no bearing in the present case. It would be impossible for the Defendant, the Panamarian Company to be attached under Rule 1 of Order 44A. And I do not think that that principle applies by analogy. 27. In the circumstances the order for attachment made on March 22, 1972 is to continue in force until further order. 28. The Plaintiff is to have his costs both for the proceedings in Chambers and of to-day. There will be certificates for counsel for the proceedings in Chambers.
R. Arculli(F. Zimmern & Co.) for Plf. M. Asome (Alexander Tsang & Co.) for Deft. (1) 1938 H.K.L.R. 48 (1) 1938 H.K.L.R. 48 (2) 1960 H.K.L.R. 223 (3) 1963 H.K.L.R. 930 |