BEST CONSULTANTS LTD v. AURASOUND SPEAKERS LTD

HCCW1021/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO.1021 OF 2003

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J U D G M E N T

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1. This petition is based on a loan of $900,000. It was paid into the respondent's account on 17 May 2003 by cheque of the same date. It is the petitioner's case that the $900,000 was a loan to the respondent. There is an acknowledgement dated 16 May 2003 signed by one M.B. Li, the financial controller of the respondent, acknowledging the loan. This acknowledgement agreed "that our company will reimburse the money to Best Consultants Limited as soon as possible but no later than two weeks from the date of borrowing".

2. On the same date, another payment of $600,000 was made by Andrew Chan Wai Tsun ("Andrew Chan"), a director of the petitioner. There is a similar acknowledgement. This payment is not the subject of the petition.

3. The petition is opposed. It is the respondent's case that there is a bona fide dispute over the indebtedness. The respondent's case is supported by four affirmations filed on the respondent's behalf by one David Liu Den Chun ("David Liu"). David Liu is the son of one Arthur Liu Cheng Shou ("Arthur Liu").

4. It is the petitioner's case that the respondent is part of a group of companies controlled by Arthur Liu. These companies included :

(a) Regaltronic Limited ("Regaltronic") ordered to be wound-up by the court on 2 April 2003;

(b) Dongguan Regaltronic Electronic Company Limited ("Dongguan Regaltronic"); and

(c) Dongguan Strong Electronic Company Limited ("Dongguan Strong").

This does not seem to be disputed. The only dispute is whether control had passed from Arthur Liu to David Liu.

5. Dongguan Strong and Dongguan Regaltronic were the wholly owned subsidiaries of Regaltronic. However, since January 2003, the Dongguan Strong and Dongguan Regaltronic became the wholly owned subsidiaries of a company called Silver Tech (China) Ltd ("Silver Tech"). It is David Liu's case that Silver Tech is wholly owned by him. Since 21 August 2003 David Liu has been the legal representative of Dongguan Regaltronic. It seems that Andrew Chan at one time was connected with the respondent or Silver Tech but that has not been explored or explained at the hearing of the petition.

6. So far as David Liu's connection with the respondent is concerned, he had this to say :

"9. I [re]iterate that because of health problems, Arthur Liu resigned from the directorship of the Respondent in December 2002 so as to allow me as his son to take over the business of the Respondent..."

7. It is the petitioner's case that the $1.5 million ($900,000 and $600,000) was required because Dongguan Regaltronic had to repay the Industrial and Commercial Bank of China ("ICBC") the sum of $2 million on 17 May 2003. A loan agreement dated 15 May 2002 was produced in support.

8. According to M.B. Li, at paragraph 24 of his Affirmation, the $1.5 million borrowed from the petitioner and Mr Chan together with $500,000 in the account of the respondent were remitted to the account of Dongguan Regaltronic with ICBC. He said the application and authorisation for the remittance were signed jointly by him and the then Accounts Manager of the respondent, Madam Wong Wai Yung. Upon remittance of the funds into the account, they were automatically applied by ICBC for the repayment of the ICBC loan. And that this was done with the consent and knowledge of Arthur Liu and David Liu.

9. It is David Liu's evidence that his father resigned as a director of the respondent on 31 December 2002 because of ill-health and that since his resignation, Arthur Liu took no part in the management of the respondent. At paragraph 11 of David Liu's 1st Affirmation, he said :

"11. (c)

Ever since the resignation, Arthur Liu took no part in the management of the Respondent. Indeed, Arthur Liu has been staying in the US under medication for several months. It is his every intention that I take up the whole of the business. Arthur Liu is holding only one share of the Respondent."

10. The petitioner's case is that Arthur Liu remained in control and actively so of the affairs of the respondent. Thus, in the Affirmation of M.B. Li, he said at paragraph 12 :

"Arthur Liu exercised close control of the Respondent's affairs. For financial matters, I prepared and provided him (with copies to David Liu and Chan Wai Tsun) with weekly consolidated cash flow forecasts of the Respondent and its associate companies. The Respondent's former accounts manager, Madam Wong Wai Yung, prepared and sent to Arthur Liu (with copies to David Liu and Chan Wai Tsun) monthly statements of account of the various group companies including the Respondent. The Mainland Subsidiaries prepared daily cash (including bank accounts) movement statements."

The petitioner has also produced an e--mail to Arthur Liu on 12 May 2003 (copied to David Liu) where in paragraph 3, it said :

"We are urgently in need of HK$2 million to pay back the bank loan due on 5/17. Please help."

The e-mail reply from Arthur Liu which was also copied to David Liu, to this paragraph was a single word "Noted".

11. A fax dated 12 May 2003 from M.B. Li also shows that Arthur Liu remained in touch and probably in control. It reads :

"RE : Weekly Cash Forecast for May 2003

Please find enclosed the Weekly Cash Forecast for May 2003 for your perusal.

Please note that the total amount due from ISS is USD1.37M. We need immediate fund of HKD5.3M for operation. We have confidence that the Companies here will stop burning in May 2003 and operation will also resume normal."

The forecast cash flow, which accompanied the fax for the period 12 May to 18 May, included a repayment to be made to a bank of $2 million.

12. There is also produced an e-mail from Arthur Liu dated 29 May 2003 to a customer of the respondent, one Robert Hughes. The text of the e-mail began :

"This is Arthur Liu the chairman of the company time being I spent most of the time in states. I feel so bad about shipment delay I have learned the situation as up to day and arranged production as follows :

..."

I believe when Arthur Liu described himself as the chairman of the company, he was referring to the respondent because this was part of a series of e-mail exchanges, one of which was from Cora Fok, the merchandiser of the respondent, and these e-mails concerned complaints by a customer about late shipment.

Genuine dispute

13. Mr Anson Wong who appeared for the petitioner has drawn my attention to two decisions of Madam Justice Kwan.

14. In In re Hong Kong Construction (Works) Limited, HCCW670/2002 judgment, 7 January 2003, Kwan J set out the relevant principles :

"6. ...

(1) The burden is on the company to establish that there is a genuine dispute of the debt on substantial grounds. In this context, 'substantial' means having substance and not frivolous. An honest belief in an insubstantial ground of defence is not sufficient to avoid a winding-up order.

(2) The court should look at the company's evidence against so much of the background and evidence that is not disputed or not capable of being disputed in good faith; in other words, the evidence is not to be approached with a wholly uncritical eye.

(3) The court would caution itself against unsubstantiated and unparticularised assertions, especially where particulars and information have been sought by the other side. It is incumbent on the company to put forward 'sufficiently precise factual evidence' to substantiate its allegations.

(4) The court does not try the dispute on affidavit but is to determine whether a substantial dispute exists. In so doing, the court necessarily has to take a view on the evidence, to see if the company is merely 'raising a cloud of objections on affidavits' or whether there really is substance in the dispute raised by the company. Even where the company has obtained unconditional leave to defend in an application for summary judgment, the Companies Court is not precluded from examining the evidence and taking a view on whether the debt is disputed on substantial grounds.

..."

In the earlier decision, In re Grandfield Pacific Hotel Limited, HCCW29/2001, 3 January 2002, she said :

"10. I ask whether the evidence of the Company is believable. I caution myself about unsubstantiated and unparticularised assertions, particularly if there has been a history of information and supporting evidence sought by the other side. The Company's evidence should be looked at against so much of the background that is undisputed or is beyond reasonable dispute, in other words not with a wholly uncritical eye. I should look at the bona fides of the defence, to see whether it is obviously a 'put-up job' (see Re Safe Rich Industries Ltd.; Re Claybridge Shipping Co. SA, supra. at 575g-h).

11. In an application for summary judgment, the defendant must show that he has a fair probability of establishing a bona fide defence to obtain leave to defend. To resist a petition, the company must show that it has a bona fide defence, not a fair probability of one. It is possible that a company might on an Order 14 application convince the court that it has a fair probability of a defence but at the petition stage it might not be able to establish it has a bona fide defence. The court must come to a conclusion in the winding-up petition whether there is or is not a bona fide defence. 'The court does not dismiss a petition on the basis that a company might be able at some stage in the future to scrape together a case that might be arguable.' If the court should refuse leave to defend in an application for summary judgment, that would be the end of the matter. But if a winding-up order is made, the company's claim against the petitioner may still be pursued by the liquidator as he thinks proper, so there is no injustice in adopting a higher threshold for the company requiring it to show that it has a bona fide defence, quite apart from the public policy considerations in a winding-up (see Re ICS Computer Distribution Ltd, supra. at 443G-444A and HCCW No. 615 of 1995, p. 5)."

15. I turn to consider whether there are genuine disputes on substantial grounds.

16. Initially, as can be seen from the 1st Affirmation of David Liu, in particular, paragraphs 14 to 21, the respondent's case was that the $900,000 was dissipated by Andrew Chan through the company's factory in the Mainland and that Andrew Chan had conspired with M.B. Li to injure the company.

17. However, Mr Chan, who appeared for the respondent, in paragraph 23 of his amended submissions put it in this way : "The matter as to the dissipation of money is one of the concern on the part of the Factory in the Mainland, and not the Respondent." The factory in the Mainland was, I believe, a reference to Dongguan Regaltronic. In his oral submission, he placed little emphasis on dissipation.

18. There is really no support for the respondent's case of a conspiracy to dissipate assets. Perhaps the strength of the respondent's case can be gathered from paragraph 21 of David Liu's 1st Affirmation, where he said :

"In view of the stone walled silence of Chan and M B Li regarding the factory account(s), in particular of the whereabouts of the HK$2 million, I do strongly suspect, subject to the confirmation of the above-mentioned discovery exercise, the two might have conspired to injure the financial interest of the Respondent."

19. There is no evidence from the respondent of any dissipation of either the $900,000 or the $600,000 whether at the respondent's level or by Dongguan Regaltronic. David Liu was in control of the respondent as well as Dongguan Regaltronic. The payment of the $2 million to Dongguan Regaltronic is admitted.

20. In paragraph 19 of his 1st Affirmation, David Liu said :

"Further, such a large sum of money (HK$2 million) was indeed dissipated soon after it was sent to the Mainland. Because of staff movement and incomplete records of accounts, the Respondent experienced great difficulty in chasing the outflow of money from the accounts in the Mainland, which is still under our auditor's investigation."

One would have thought he only needed to check with ICBC whether it had received $2 million and if so, how. If ICBC had not been paid that would severely damage the petitioner's case. He also said in paragraphs 14 to 17 :

"14. On or about 21 May 2003, I was shocked when I first learned of some large sums being sent to our factory account in the Mainland and then dissipated. The Respondent did not owe the factory such large sums of money.

15. I found that a sum of HK$2 million had been sent under the direction of Chan and arranged through M B Li to our factory account from the Respondent on 19 May 2003, at which time Chan was the Legal Representative of our factory in the Mainland and was in control of the account(s).

16. Since the Respondent did not owe the factory any sum. I asked Chan about the matter. He replied that a sum of HK$1.5 million was deposited on 17 May 2003 and then sent to the Mainland. I then asked him why it was a total of HK$2 million being sent out, whether the inflow and outflow of the money were recorded in the company accounts, and whether there were transactions that required disclosure and approval by way of board resolution. He offered no explanation.

17. I asked M B Li to provide me with full details of the account of the Respondent, but he refused to do so. M B Li even said to me that either I had to live with the commands of Chan or the Respondent and other companies would have to face the fate of being wound up. The Respondent was left with no choice but to have him dismissed."

21. So, according to David Liu, he was aware of the receipt of the payment by Dongguan Regaltronic. According to him, he could not get a satisfactory explanation why it was paid to Dongguan Regaltronic or what happened to the money after it was paid to Dongguan Regaltronic. It will be recalled that it is David Liu's case that since January 2003, Dongguan Regaltronic was wholly owned by Silver Tech which in turn was wholly owned by him. Also that since 21 August 2003, he has been the legal representative of Dongguan Regaltronic.

22. Is there a bona fide dispute of the debt on substantial grounds of a conspiracy to dissipate? I think not.

23. The other dispute relied on is based on the absence of consent by David Liu to the loan. This dispute is not completely divorced from the conspiracy to dissipate assets because the likelihood of David Liu and/or his father knowing or consenting to the loan would be affected by the reason for the loan. If the loan was made for an illegitimate purpose, they might not have known or consented to it. But if the loan was for the benefit of the companies controlled by Arthur Liu and/or David Liu it is less likely that they would not have known or consented to it.

24. There is simply David Liu's denial of knowledge or consent. Is that credible? First, as a matter of common sense, the $1.5 million was paid into the respondent which was controlled by David Liu. It was used for the repayment of the ICBC loan by Dongguan Regaltronic, a company according to David Liu was wholly owned by him. There is, as I have said, no evidence of any wrongful dissipation of assets. It seems improbable that lenders would lend money to a borrower without the knowledge or consent of the borrower.

25. But there is other evidence. It will be recalled that according to the acknowledgement, the loans were to be repaid no later than 14 days of the making of the loan. By letter dated 2 June 2003 (relied on as a statutory demand), Andrew Chan wrote to David Liu (which was headed without prejudice). The letter began :

"Further to our telephone conversation on May 30, 2003, it was agreed that you will contact me today for discussion of all the outstanding issues but I did not receive your call and I have tried to call you but in vain. ..."

And then at paragraph 3 of the letter :

"Loan to Aurasound Speakers Ltd

HK$600,000 loan from Chan Wai Tsun

HK$900,000 loan from Best Consultants Ltd.

HK$60,000 loan from M. B. Li

You should fully aware of the above loans are for the repayment of loan of Dongguan Regaltronic Electronic Co., Ltd. (a wholly owned subsidiary of the Company) due to Industrial & Commercial Bank of China. We request the Company to settle the payment immediately."

26. The significance of this letter in this context is that it asserted that the loans were for the repayment by Dongguan Regaltronic to ICBC. There was no reply to this letter. According to Mr Liu, he had not replied because it was a without prejudiced letter and he had been advised that it could not be used in evidence.

27. I do not find this a plausible explanation. If, he or his father, had not authorised or consented to the loans or that the repayment to ICBC was not the purpose of the loans, it is inconceivable that he would not have replied to this letter.

28. There is also the letter dated 28 August 2003 from Messrs Daniel Lam & Co., solicitors for the petitioner, to Messrs C.Y. Lam & Co., solicitors acting for the respondent in this case. This letter was written on behalf of Andrew Chan, the petitioner and another company.

29. In paragraph 11 of the letter :

" Despite repeated demands to AuraSound including a demand made on 12 June 2003 by NLLC on behalf of Mr. Chan and Best Consultants, no re-payment at all has been made todate. Mr. Chan and Best Consultants expressly reserve all their respective rights."

NLLC (Ng, Lie, Lai and Chan) were solicitors at that time acting for the petitioner.

30. Paragraphs 8 to 10 of the letter stated :

"8. As your clients well know, in or about May 2003 DongGuan Regaltronic Electronic Co. Ltd. (a company wholly owned by Silver Tech) was in acute financial difficulties and was under strong pressure to make a repayment of its bank loan. At various meetings attended by Mr. David Liu, Mr. Chan, and Mr. M.B. Li about the time, Mr. Chan was requested to advance and procure his company (Best Consultants) to advance a total of HK$1.5 million to AuraSound Speakers Limited ('AuraSound'), company controlled or owned (directly or indirectly) by Mr. David Liu and/or his father Mr. Arthur Liu.

9. Mr. Chan did advance and procured Best Consults to advance on 17 May 2003 a total of HK$1.5 million to AuraSound as requested, on the terms that the advances were repayable no later than 2 weeks from the date of borrowing. We enclose copies of 2 acknowledgements of debt by AuraSound for your reference.

10. The advances were made and procured by Mr. Chan in good faith and at the time when he believed (and rightly so) that, inter alia, he was director and managing director of Silver Tech. Plainly, if he had been properly notified (as he should have been) of the Removal or the proposal thereof or the wrongful allegations now made against him, he would have never made and procured the making of the aforesaid advances, and Best Consultants Limited would not have made its advance."

31. However, in C.Y. Lam & Co.'s reply dated 23 September 2003, they had this to say :

"...

(B) Advances

We are only instructed to act for the above Company [Silver Tech] and Mr. David Liu. We are not in the position to comment on any allegation against AuraSound Speakers Limited. As far as Mr. David Liu is concerned, we are instructed that he had no knowledge and had never attended any such meeting as alleged.

..."

32. I should also note here that despite the reference to a demand made on 12 June 2003 (another statutory demand relied on by the petitioner), there was no suggestion from the letter dated 23 September 2003 which was written on behalf of Mr David Liu that he had no knowledge of that letter although at the material time he was in control of AuraSound.

33. Daniel Lam & Co., in their letter dated 16 October 2003, wrote :

"...

Advances

We note that you do not act for AuraSound Speakers Limited. We are instructed that our client totally disagrees with Mr. David Liu of your client. Our clients also note the absence of substantive response to matters raised in our letter of 28 August 2003.

..."

There was no reply to this letter.

34. So David Liu's allegation that he was not aware of the loans has to be viewed against such background. I find it incredible that David Liu would have said so little about the $1.5 million if the loans were indeed unauthorised or that it was part of a conspiracy to dissipate assets.

35. So I am of the opinion that there is no bona fide dispute based on substantial ground on the lack of consent or knowledge either.

36. It is also the petitioner's case that Arthur Liu was aware of the loans and that he had agreed to them. There is no denial from Arthur Liu. There is no evidence that he was sick that he was not in a position to do so. The denial was made on his behalf by David Liu at paragraph 17 of his 2nd Affirmation. For the same reasons, I rejected David Liu's assertion. I also reject this denial as not credible or not based on substantial grounds.

Statutory demand

37. The petitioner relies on the 2 June 2003 letter as a statutory demand. This was marked without prejudice and addressed to :

"Mr Liu Den Chun David
c/o Aurasound Speakers Ltd."

I do not believe that this could be a statutory demand on the respondent. It was not addressed to the respondent. Also it appears from paragraph 3 of the letter, quoted in paragraph 25 above, the request to pay was addressed to Silver Tech and not the respondent.

38. The petitioner also relies on a letter dated 22 June 2003 written by Ng, Lie, Lai and Chan, solicitors for the respondent. This was sent by post and by fax. It was sent by ordinary post but there is no evidence of actual receipt. The respondent puts the petitioner to proof of proper service. There is no positive assertion on the part of the respondent that the letter had not been received.

39. Mr Wong has referred me to a decision of Morritt J (as he then was) In re a company (No.008790 of 1990), reported in 1991 BCLC at page 561. This is a decision that a demand for payment of a debt sent through the post and actually delivered to the company's registered office constituted good service for the purpose of section 123 of the Insolvency Act 1986. The statutory demand was served by registered post so there was evidence of actual delivery. Morritt J said that section 123 of the Insolvency Act, which is for material purposes identical to section 178(1)(a) of the Companies Ordinance, required the statutory notice to be served on the company by leaving it at the registered office of the company. He said that the requirement :

"... leaving it at the office, indicates that the person who has to prove service has to prove that it arrived. ..."

40. That was to be contrasted with section 725 of the 1985 Companies Act (our section 356), which provided :

"... a document may be served on a company by leaving it at or sending it by post to, the registered office of the company. ..."

If sending the notice by post was permitted, that would only require one to prove postage and "unless it is returned through the dead-letter office, that is deemed after a suitable period after posting to have been received" (page 562i). He went on to say at page 563 that :

"... The draftsman of s 123, for the reasons indicated by Nourse J, namely the potentially serious consequences of service of a statutory demand, has required the creditor seeking to rely on it to prove that it was left at the office, not merely that he put it in the post box."

Thus understood, Morritt J's decision does not help the petitioner.

41. Mr Chan has referred me to a decision of Madam Justice Le Pichon (as she then was) In re Galaxy Electro-Plating Factory Ltd [2000] 1 HKLRD 876. There, she was dealing with a statutory demand which was sent by ordinary post. She held that the evidence of posting and the fact that the letters sent by ordinary post were not returned was not sufficient evidence of receipt, she said at page 880 :

" To satisfy the statutory requirements, the burden is on the petitioner to prove that the statutory demand arrived. In the case cited above, there was no difficulty because that was common ground. In the present case, there is evidence that the letters containing the demand were posted. But that is not sufficient. There is also evidence that the registered offices of Galaxy and Courage did not change between March (when the demands were sent) and October (when the petition was served) and remained unchanged as at 7 December 19999. Also the letters sent by ordinary post were not returned. As to the registered letters, in the case of Galaxy, surprisingly, the post office has not race of any record of the registered letter. In the case of Courage, the letter sent by registered post was returned to the petitioner on 12 April 1999.

Is that sufficient evidence of receipt?

In my judgment, it is not. Whilst confirmation of delivery of a packet which has been sent by registered post obtained from the post office would in my view be sufficient evidence of receipt, this was not the case in either Galaxy or Courage. In these circumstances, absent an admission of receipt by the relevant company, I have to conclude that service of the demand in each case did not comply with the requirements laid down in s.178(1)(a). The petitioners are therefore unable to rely on the deemed inability to pay debts."

42. Mr Wong also relied on section 8 of the Interpretation and General Clauses Ordinance :

" Where any Ordinance authorizes or requires any documents to be served or any notice to be given by post or by registered post, whether the expression 'serve' or 'give' or 'send' or any other expression is used, the service or notice shall be deemed to be effected ... shall be deemed to have been effected at the time at which the document or notice would be delivered in the ordinary course of post."

43. However, section 8 only applies if the ordinance authorises or requires the document to be served by post or by registered post. Here, when one compares the language of section 178(1)(a) with section 356, I do not think it can be said that section 178(1)(a) authorises service by post. What the judgments of Morritt J and Le Pichon J show is that section 178(1)(a) would not preclude service by post if it could be shown that it was actually delivered. It is immaterial whether it was delivered by a postman, by an agent or by the petitioner himself. Here, there is no positive evidence of service. On the authorities and having regard to the language of section 178(1)(a), I am of the view that evidence of posting and non-return of the letter as a dead letter are insufficient to prove delivery.

44. It is the petitioner's case that the letter had been sent by fax and received by the fax machine of the respondent. Is service by fax sufficient?

45. Mr Chan has referred me to Griffith Producers Co-operative Company v. Calabria (1997) 15 ACLC 19, a decision of the Supreme Court of New South Wales Equity Division. McLelland CJ in equity said :

"... that a statutory demand under the Corporations Law is sufficiently analogous to a document initiating legal proceedings to attract special considerations of the kind Woolf LJ attributed to such documents. Service of such a document on a corporation, being an artificial entity with no physical existence, must in my view be effected formally in accordance with the applicable statutory procedure..."

46. The judgment of Woolf LJ (as he then was) which he referred to was Hastie and Jenkerson v. McMahon [1990] 1 WLR 1575. There, it was held by the English Court of Appeal that a list of documents was effectively served by one party on another by fax to the other party's solicitors. But at page 1579, Woolf LJ said :

"Special consideration supplied to writs and other documents used for initiating legal proceedings and nothing in this judgment is intended to apply to such document."

47. In re a company, 1985 BCLC 37, Nourse J (as he then was) held that sent by telex was not sufficient service of a statutory demand because it was a solemn document with potentially serious consequences.

48. Having regard to the authorities, with which I respectfully agree, I believe that service by fax does not comply with section 178(1)(a).

49. There is evidence from which I could infer that the respondent had knowledge of the demand of 12 June 2003. However, knowledge is insufficient. Section 178(1)(a) requires service by delivery. It may be that, and there is evidence in support of this view, that the faxed copy was indeed received, but if that was not a permissible mode of service, I do not believe its actual receipt, or knowledge of its content, makes any difference.

Insolvency

50. A statutory demand is merely a means of proof of insolvency. So if I am nevertheless satisfied that the respondent is unable to pay its own debts, the petition may still be granted. See Bozell Asia (Holdings) Ltd v. CAL International Ltd [1997] 1 HKLRD 1.

51. Also when a debt which is not substantially disputed remains unpaid, an inference could be drawn that it was unable to pay its debt. See Talyors Industry Flooring Ltd v. M & H Plant Hire (Manchester) Ltd [1990] BCLC 216. See also Ah Feng International Trading Limited v. Honour Link International Development Ltd [1999] 3 HKC 116 at page 123D-E, where Le Pichon J said :

"... Moreover, if a debt that is not substantially disputed is unpaid, the court may infer that the company insolvent : see Re United Strength Ltd [1992] 1 HKC 386; Cornhill Insurance plc v. Improvement Services Limited [1986] 1 WLR 114."

52. Here, there is also evidence of other liabilities of the respondent. There are four outstanding judgments against the respondent which have not been paid. The respondent applied to Madam Justice Kwan on 28 April 2004 to stay, inter alia, those proceedings that was granted by the learned judge on the basis that, having regard to the pending petition, there should be fair distribution of its assets in the event of an order being made.

53. In my opinion the respondent had no reason not to pay those judgments if it were not otherwise unable to pay its debts. Their non-payment as well as the non-payment of the petitioner's loan are materials in which I could infer that the respondent is unable to pay its own debts and I do so infer.

54. For the above reasons, the petition is granted.

55. The parties are to provide written submission on costs within 14 days of this decision.