Read the full judgment text of HCCW 435/2012 on BabelCite. This Court of First Instance judgment was delivered on 28 August 2014 before Harris J.
Companies – winding up of unregistered foreign company – three core requirements for winding up in Hong Kong – sufficient connection with Hong Kong – reasonable possibility of benefit – ability to exercise jurisdiction over persons interested in distribution of assets – exercise of discretion where third core requirement not satisfied – Companies Ordinance, Cap. 32 – petition presented by Cayman Islands liquidators of China Medical Technologies, Inc. following its winding up in the Cayman Islands on insolvency grounds in July 2012 – petition concerned approximately US$355 million paid in Hong Kong through 55 cashier orders between November 2006 and December 2009 to Supreme Well Investments Limited for the acquisition of FISH and SPR medical technology, allegedly at arm's length – earlier decision of Harris J on 9 April 2014 dismissing the petition on the basis that the third core requirement was not satisfied and the case did not fall into the exceptional category – liquidators subsequently obtained new evidence and applied to reopen the trial – whether the new evidence should be admitted – whether the new evidence elevates the case to one justifying winding up despite the third core requirement not being met – Ladd v Marshall guidelines applied as flexible guidelines rather than strict rules per Rix LJ in Voaden v Champion ('The Baltic Surveyor') – more flexible test applied on application to reopen a trial rather than an appeal per Mummery LJ in Townsend v Achilleas – new documents from Bank of East Asia's New York branch, the Hong Kong Police, and pursuant to a letter of request from the Grand Court of the Cayman Islands revealed that the two Supreme Well accounts at Bank of China Hong Kong and Bank of East Asia had Mr Tsang (former director and CFO) as sole authorised signatory and that US$294.5 million of the US$355 million was transferred through Hong Kong bank accounts to companies controlled by Mr Tsang and Mr Wu (former Chairman and CEO), with only US$3 million going to Mr Chen, the alleged developer – the only person with a tangible interest objecting was Mr Tsang, whose evidence was self-serving and unreliable – application granted, new evidence admitted as credible and determinative – the new evidence demonstrated a very strong connection between Hong Kong and the Company's affairs, with events in Hong Kong central to the liquidation both for investigating potential misfeasance claims under s.277 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance and for serving the public interest in identifying offences (per Lord Walker in Re Pantmaenog Timber Timber Co Ltd) – availability of s.276 remedy in Hong Kong, not available in the Cayman Islands, is a legitimate benefit and not impermissible forum shopping – leave to re-re-amend the Petition and adduce further evidence granted, Petition listed for hearing on the Monday after the handing down of the decision, costs to be dealt with at that hearing.
Legal issues: Admissibility of new evidence and reopening the trial under Ladd v Marshall guidelines · Whether new evidence elevates the case to justify winding up despite failure to satisfy the third core requirement
Outcome: Application granted: leave granted to re-re-amend the Petition and to adduce the further evidence of Mr Borrelli; the Petition to be listed for hearing on the Monday after the handing down of the decision.
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