Re Energy Group Ltd

HCCW 185/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO 185 OF 2013

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D E C I S I O N

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1.I have before me a petition to wind up Up Energy Group Limited (“Company”), which is incorporated in the British Virgin Islands, on the grounds of insolvency. As the Company is incorporated in a foreign jurisdiction and is an unregistered company for the purposes of the Companies Ordinance, the Petition is presented pursuant to section 327(3)(c). The Petitioner relies on a statutory demand to prove that the Company is unable to pay its debts.

2.As the Company is incorporated overseas prima facie it should be wound up in the jurisdiction of its incorporation.  The Hong Kong Companies Court will only exercise the jurisdiction conferred by section 327 if it is satisfied that there is a substantial connection between a foreign company and Hong Kong and that the other criteria by reference to which the court determines such petitions, which have most recently been considered by me in Pioneer Iron and Steel Group Company Limited HCCW 322 of 2010 unreported judgment of 6 March 2013, are satisfied.  It is not necessary for me to consider these in any detail.

3.As I explained in my judgment in Grand China Logistics Holding (Group) Co., Ltd HCCW 130 of 2013 unreported judgment of 19 August 2013, the Petition should state the basis on which it is alleged the court should exercise its jurisdiction.  In the absence of any such averment a petition is demurrable and is liable to be struck out.

4.The present Petition contains no averment of the basis upon which it is contended that this Court should exercise its jurisdiction to wind up the Company and in particular no reference to any connection between the Company and Hong Kong.

5.Leave to serve the Petition out of the jurisdiction was obtained from Master Au-Yeung on 16 August 2013.  The application for leave to serve out of the jurisdiction was made on the basis that the Order 11 r1(1)(d)(i) and (iii) applied.  This sub-rule applies to enforcement of a contract and has no application to a petition to wind up a company on the grounds of insolvency. The order allowing service of the Petition out of the jurisdiction is, therefore, liable to be set aside.  I would note in passing that it is unclear how, if at all, Order 11 applies to a petition to wind up an unregistered company, which does not have a place of business in Hong Kong and cannot be served pursuant to section 338 of the Companies Ordinance, but this is not a matter that it is necessary for me to determine in the present case.

6.The affirmation in support of the application for leave to serve the Petition out of the jurisdiction explains why there is a connection between Hong Kong and the Company, namely, that it has assets here.  It does not explain how the other relevant criteria are satisfied in the present case and it is unclear to me that they probably are satisfied.  In particular, it is not clear that there is any benefit to be obtained for the sole creditor of the Company that has been identified, namely the Petitioner, by granting a winding up order that could not be obtained by a writ action (or possibly in this case an arbitration given the terms of the agreements between the Parties that have given rise to the claim that underlies the Petition) and if this were to prove to be the case it is doubtful that I would be willing to make an order to wind up an unregistered company.

7.As I observe in Grand China Logistics Holdings (Group) Co., Ltd these kinds of errors are fundamental and inexcusable.  Ms Eva Sit, who appeared for the Petitioner, urged me to allow the Petition to be amended, although I have no amendments to consider, and for a new application for leave to serve an amended petition out of the jurisdiction to be made.  It does not seem to me this would be the proper course.  I have no reason at present to think that the Petitioner would be able to identify sufficient grounds to justify the court exercising its discretion, assuming, which is in dispute, that the Petitioner is owed the debt it relies on, and it is undesirable that a winding-up petition is left hanging over a company for longer than is desirable.

8.I, therefore, will strike out the Petition with costs to the Company. The Official Receiver’s costs I assess at $5,300, which shall be deducted from the Petitioner’s deposit and the balance returned to it.

Ms Eva Sit, instructed by Allen & Overy, for the petitioner

Mr Barrie Barlow SC and Mr David Chen, instructed by K & L Gates, for the respondent

Ms Vivian Yeung, instructed by the Official Receiver’s Office, for the Official Receiver