Re Mp Engineering Co Ltd

HCCW712/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 712 OF 2009

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Before: Hon Harris J in Court

Date of Hearing: 15 August 2011

Date of Decision: 15 August 2011

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DECISION

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1.On 20 July 2011, I handed down my decision in respect of the Respondent’s application to strike out the petition. In my decision I found that in respect of the petitioning debt, which totalled $1,959,700.40, there was no bona fide defence on substantial grounds in respect of HK$1,327,902.67.

2.The petition came back on before me on 1 August 2011.  There was no dispute on that occasion that, as a result of my decision in respect of the strike-out application, that the Petitioner was entitled to a winding-up order.  However, the Respondent told me that it intended to appeal my 20 July 2011 decision and sought an adjournment of the winding-up petition until after the determination of an appeal.

3.I told Ms Cheung who appeared for the Respondent on that occasion that I did not think matters were that straightforward.  The position was that, for all practical purposes, I had decided that the Petitioner had established that it was entitled to a winding-up order.  The Companies Court does not normally stay winding-up orders pending appeals of such orders.  I took the view that, prima facie, that was the correct approach to dealing with any application to adjourn the final determination of the petition.

4.What I agreed to do was to adjourn the petition for two weeks in order for the Respondent to consider whether it was able to pay in to court HK$1,327,902.67 to secure that part of the petitioning debt in respect of which I had found there was no bona fide defence on substantial grounds and file evidence of solvency.  The petition came back on before me today.  A payment into court has been made, although not by the company but by one of its directors and shareholders, Mr Simon Chan.

5.The evidence of solvency is obscure, in large part because the Respondent does not have any audited accounts since 2007.  I have been provided with management accounts at various dates, including July 2011.  What these demonstrate, which does not appear to be substantially in dispute, is that the majority of the Respondent’s activities are with associated companies in respect of which, depending on the commercial nature of the relationship, it is either a creditor or debtor.

6.The precise financial position of the Respondent is unclear.  However, Mr Simon Chan has agreed to undertake to be liable for the payment of all the Respondent’s debts as at today’s date.  As I have already mentioned, he has already made a payment into court of 1,327,902.67. 

7.The background to this case is unusual. It is not in dispute that the Respondent owns 78 per cent of the Petitioner and it is the Respondent’s case that it, in fact, owns all the shares of the Petitioner.  I do not need to go into the circumstances in which the Petitioner came to issue the petition against the Respondent, which is dealt with in my substantive judgment.  Clearly, the case is unusual, partly because it arises from a series of disputes between associated companies and their shareholders.

8.I am satisfied that, in the circumstances, it is appropriate to adjourn the petition against the undertakings offered by Mr Simon Chan and a slightly simpler undertaking also offered by Li Kam-ming until 23 September 2011 when I will hear an application for leave to appeal my 20 July 2011 decision.  I can reconsider the position then depending on the outcome of that application.

(Submission by Petitioner re costs)

9.I direct that costs of the hearing on 1 August are costs in the petition.  Today’s costs the Petitoner should have.

Mr Keith Lau, instructed by Messrs Kelvin Cheung & Co, for the Petitioner

Mr Roy Lau, instructed by Messrs T H Koo & Associates, for the Respondent

Mr Maurice Lam, for the Official Receiver