RE SWEE-KHENG (HONG KONG) LTD

HCCW 533/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 533 OF 2003

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J U D G M E N T

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1. This is a petition to wind up Swee-Kheng (Hong Kong) Ltd ("the Company") by a creditor, Wilfred Marble Engineering Ltd. The petition which was presented on 12 May 2003, is based on a debt of HK$610,594.81, being the amount of a cheque dated 15 December 2002 drawn by the Company in favour of the petitioner and was dishonoured.

2. The petition was initially opposed by the Company, which has filed two affirmations in opposition. Shortly before this hearing, and on 7 November 2003, the Company's solicitors wrote to the petitioner's solicitors stating that the Company would not contest the petition. As evidence in opposition has been filed and has not been withdrawn, it is still necessary to consider whether any valid ground of opposition has been raised. I have therefore heard submissions from Mr Thomas Au, who appears for the petitioner.

3. I will first set out matters which appear to be common ground.

4. Prior to February 2002, the petitioner had supplied granite to a contractor known as Megawell Engineering Ltd ("Megawell") at a site at No. 9 Durham Road, Kowloon ("the 1st Works"). Megawell had not settled the outstanding price to the petitioner when the Company took over the 1st Works from Megawell. The Company agreed with the petitioner to settle the outstanding balance, which was agreed at HK$800,000.00. Three post-dated cheques dated 31 May 2002, 30 June 2002 and 31 July 2002 for the respective sums of HK$200,000.00, HK200,000.00 and HK$400,000.00 were issued by the Company to the petitioner in payment. Only one of these three cheques in the amount of HK$200,000.00 was honoured when presented for payment.

5. The petitioner had also supplied granite to the Company at another site at the Hong Kong Station Development - Northern Site Podium ("the 2nd Works"), after the Company took over the same from Megawell in February 2002. For the granite supplied in respect of the 2nd Works the Company had issued 18 cheques to the petitioner with due dates ranging from February 2002 to August 2002. Only five of these cheques were honoured when presented for payment.

6. In August 2002, the amount outstanding in respect of the 15 dishonoured cheques issued by the Company to the petitioner in respect of the 1st and 2nd Works amounted to HK$1,760,594.75 ("the Old Cheques"). In August 2002, the Company delivered to the petitioner six post-dated cheques, with due dates from 17 August 2002 to 15 December 2002, in the total amount of HK$1,760,594.80, to replace the Old Cheques. I shall refer to these replacement cheques collectively as "the New Cheques". Of the New Cheques, only the first in the sequence in the sum of HK$50,000.00 was honoured, the remaining 5 were all dishonoured and the petitioning debt is in respect of the last cheque which is in the amount of HK$610,594.81.

7. On 25 September 2002, the petitioner brought HCA No. 3648 of 2002 against the Company claiming under the Old Cheques for the sum of HK$1,710,594.75, after giving credit for the first of the New Cheques in the sum of HK$50,000.00 and applied for summary judgment. That application was unsuccessful, as it was held by the Master hearing the application that the writ was issued prematurely, due to a principle of law that upon the receipt of the New Cheques, the original debt represented by the Old Cheque would remain, but the remedy for it was suspended until the last maturity date of the New Cheques on 15 December 2002. In view of that judgment given on 18 February 2003, the petitioner discontinued the High Court Action on 6 March 2003 and presented those of the New Cheques which had not been presented for payment on 17 March 2003. This included the cheque which was the subject of the petitioning debt. They were all dishonoured. A demand under section 178(1)(a) of the Companies Ordinance, Cap. 32 was served on the Company on 11 April 2003 and this petition was presented on 12 May 2003.

8. In the Company's affirmations, the following matters are raised in opposition.

9. Firstly, it is the alleged that the granite supplied in respect of the 1st Works was defective. As a result, the Company had suffered loss in the total sum of HK$865,246.07, made up of HK$280,000.00 being the value of the granite replaced and HK$585,246.07 being the cost of additional material, granite and labour in replacing the defective granite. Hence, the Company would have a set off or cross-claim in respect of this amount.

10. Secondly, it is alleged that the Company might not be liable to the petitioner for the sum of HK$800,000.00 being the amount the Company had agreed to pay to the petitioner when it took over the 1st Works from Megawell.

11. Thirdly, it is contended that the petitioner had elected to sue on the Old Cheques in the High Court Action and it would not be equitable for the petitioner to bring this petition on the basis of the New Cheques.

12. I am satisfied that none of the above is a valid ground of opposition.

13. On the alleged loss for the defective granite in the sum of HK$865,246.07, this was also raised by the Company in resisting the petitioner's claim for summary judgment. A bundle of invoices has been exhibited, some of which do not appear to relate to the 1st Works. I agree with the Master's assessment that this claim is unbelievable. I am fortified in this view in that even after the petitioner had indicated to the Company its intention to wind up the Company, the Company had informed the petitioner's holding company on 16 April 2003 that the admitted figure of indebtedness amounted to HK$1,657,758.01, after making relatively minor adjustments to the petitioner's figure of HK$1.7 million odd. As late as 9 June 2003, the Company had written to its head contractor asking the latter to pay 80% of the cheque issued to the petitioner being the subject of this petition. Furthermore, even if the alleged loss of the Company were to be taken into account in full, the Company would still owe the petitioner HK$845,348.74.

14. The alleged dispute as to the Company's liability to pay HK$800,000.00 in respect of the outstanding sum on the 1st Works can be dealt with shortly. The Company has not condescended to particulars in disputing its liability for this sum. I also note that this was not disputed by the Company in the O. 14 proceedings, and was raised for the first time in the 2nd affirmation filed by the Company in these proceedings in August 2003. It seems to me to be a recent invention. Besides, the amount of HK800,000.00 was due to the petitioner for the cost of granite supplied in respect of the 1st Works. If the Company is to claim against the petitioner for defective granite delivered in respect of the 1st Works, it must be on the premise that the Company is to accept liability to pay the outstanding price for the granite delivered.

15. Lastly, as for the contention that the petitioner has made an election and is estopped from pursuing its rights on the New Cheques, there is simply no election in these circumstances as a matter of law. The mere bringing of an action does not constitute a bar to fresh proceedings as it is judgment and satisfaction in the first action that would constitute a bar (United Australia Ltd v Barclays Bank Ltd [1941] AC 1). Further, election only applies where a person is confronted with two alternative and mutually exclusive courses of action. Here, when the petitioner issued the writ in High Court Action, and it is the Company's contention which was accepted by the Master, the petitioner could only sue on the indebtedness under the Old Cheques, as the due dates on four out of the six New Cheques had not been reached. There was no question of choosing between two alternative and mutually exclusive rights, when only one of them had arisen at that time.

16. I am satisfied that there is no substance in any ground of opposition raised by the Company. I therefore make a winding-up order against the Company and I order that the petitioner's costs are to be paid out of the Company's assets.