吉林省成順經貿有限公司 v. THE REGISTRAR OF COMPANIES

HCMP 2309/2019

[2020]HKCFI 1631

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2309 OF 2019

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D E C I S I O N

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Background

1.  This is an application for the restoration of Raison Leather Company Limited (“the Company”) to the Companies Register pursuant to s 765(4) of the Companies Ordinance (Cap 622).

2.  The Company was incorporated on 8 January 2015 under the Companies Ordinance as a company limited by shares.

3.  On 28 September 2018, the Registrar of Companies published a notice in the Gazette that the name of the Company has been struck off the Companies Register and the Company has been dissolved since the date of the publication of that notice.  According to the Companies Registry’s records, the Company was dissolved due to its failure to file its annual returns as required under the Companies Ordinance (Cap 622).

4.  The Applicant applies to have the Company restored on the basis that there is a potential claim that it seeks to institute against the Company.

5.  The Applicant was incorporated in the PRC on 18 May 2011 via registration with the Changchun Administration Bureau for Industry and Commerce as a company limited by shares and it has been carrying on the business of mining and trading in raw materials including iron ore and other metals.  The Applicant’s case, according to the materials filed herein, can be summarised in the following paragraphs.

6.  The Applicant and another Hong Kong company, namely, Hong Kong Sindanol Limited (“Sindanol”), have been business partners in trading, amongst others, construction materials, metal, and mining products since 2015.  According to the evidence filed in the present proceedings, the Applicant and Sindanol were engaged in mining operations in Venezuela, whereby the Applicant agreed to act as an agent to procure and co‑ordinate mining projects and Sindanol would in return pay commissions to the Applicant.

7.  In March 2015, with the benefit of the input from the Applicant, Sindanol entered into two iron ore sales contracts with SeAH Japan Co., Ltd. (“the Iron Ore Sales Contracts”).  The Applicant also signed two guarantees at about the same time to undertake all risks exposed to Sindanol in relation to the Iron Ore Sales Contracts.

8.  However, for the purpose of receiving the commissions, the Applicant which did not have a bank account holding US dollars, required the assistance of the Company which agreed to be responsible for holding the monies received in relation to the relevant transactions.  In July 2015, Sindanol entered into an agency agreement with the Company (which apparently acted for and on behalf of the Applicant) whereby it was agreed that after the transactions under the Iron Ore Sales Contracts were completed, monies would be paid into the Company’s account (after deduction of any agreed service charges).  It appears from the documents that the Applicant would give directions to Sindanol regarding the amounts required to be paid into the Company’s account as commissions payable to the Applicant.

9.  The Iron Ore Sales Contracts were completed in around January 2016.  It is the Applicant’s case that it would be entitled to commission in the sum of USD878,000 from Sindanol.

10.  On 20 January 2016, the Applicant directed Sindanol to pay a sum of USD878,000 into the bank account of the Company in settlement of the balance of the commission and Sindanol did so accordingly on 25 January 2016.  On the same day, the Applicant and the Company signed an agreement (“the Trust Agreement”) whereby the Company agreed to hold on trust the commission received for and on behalf of the Applicant.

11.  Sindanol was subsequently informed by the Hong Kong Police that the Company was suspected to have engaged in money laundering activities, which caused its bank account to be frozen.

12.  On the basis of the information obtained from the Hong Kong Police, the Applicant instructed its solicitors to commence civil proceedings in Hong Kong for the purpose of recovering the money deposited with the Company’s bank account pursuant to the Trust Agreement.

13.  However, the Applicant has been unable to commence proceedings against the Company due to the fact that it has been struck off the Companies Registry.  Hence, the present application.

14.  In fact, before the present proceedings were commenced, Sindanol had taken out a similar application for the restoration of the Company.  According to the submissions filed by the Applicant’s solicitors, after Sindanol’s application had been filed, it was discovered that the proper party to bring a civil action against the Company should be the Applicant instead of Sindanol.  Hence, Sindanol decided not to proceed with its application.  Prior to Sindanol’s discontinuance of its application in January 2020, the Applicant commenced the present proceedings by way of an Originating Summons filed on 17 December 2019.  

15.  Having been served the Originating Summons and the Affirmation of Zhou Wen Li filed on behalf of the Applicant (“Zhou’s Affirmation”) in this action, the Companies Registry in a letter dated 15 January 2020 asked the Applicant’s solicitors to confirm if the Hong Kong Police have been informed of the present application.

16.  On 3 March 2020, the Companies Registry further wrote to the Applicant’s solicitors stating as follows:-

“In principle, the Registry maintains a neutral stance in the 2^nd restoration application. Before the court considers whether the Applicant is a party where an application under section 765(4) of the [Companies] Ordinance can be made and if it is just that the Company be restored to the Companies Register under section 767(2) of the Ordinance, the Applicant may be required to provide further explanations and/or evidence on why the directors or the sole shareholder of Sindanol have failed to proceed with the 1^st restoration application; and whether the Hong Kong Police has any views on the subject application made by 吉林省成順經貿有限公司 instead of Sindanol. In view of the aforesaid, please therefore fix a date for the hearing of the 2^nd restoration application.”

17.  On 12 May 2020, the Companies Registry wrote a letter to the Court:-

(1)  informing the Court that no asset or property of the Company has been received and held by the Companies Registry as bona vacantia after its dissolution;

(2)  applying to be excused from attending the hearing of the Originating Summons on 2 June 2020; and

(3)  stating that if an order for restoration of the Company is to be granted, (a) the Applicant shall pay the costs of the Companies Registrar in the sum of HK$6,000; and (b) the Applicant shall deliver to the Companies Registrar an [official] copy of the court order within 7 days from the date of the order.

18.  I understand that the terms proposed by the Companies Registry (as set out in paragraph 17(3) above) are agreeable to the Applicant.

Matters clarified at and after the hearing

19.  At the hearing on 2 June 2020, I sought clarifications from the Applicant’s solicitors in relation to possibly some clerical errors with respect to the contents of Zhou’s Affirmation.  The Applicant’s solicitors also accepted that the matters raised in the Companies Registry’s letters dated 15 January 2020 and 3 March 2020 had not been addressed in the evidence.  In the circumstances, the Applicant’s solicitors agreed to file another affirmation for the purpose of dealing with all the matters canvassed at the hearing and directions were given accordingly.

20.  On 3 June 2020, the 2^nd Affirmation of Yik Sau Wan was filed and the following points were addressed:-

(1)  2 typographical errors in Zhou’s Affirmation were rectified;

(2)  evidence was provided to answer the Companies Registry’s questions, as raised in its letter dated 3 March 2020, on why Sindanol’s application was discontinued; and

(3)  it was confirmed (in response to the Companies’ Registry’s letter dated 15 January 2020) that the Hong Kong Police, who had been informed of the present application, had no objection to the same.

Reasoning and Order

21.  Upon considering all the materials, I cannot say that there is no bona fide dispute as to whether the Company did owe the Applicant money.  The relevant parties should be left to resolve the dispute “in the appropriate forum and in the appropriate way” (see Re Active System Trading Ltd., unrep., HCMP 5173 of 2003, 17 May 2004, Tang J (as he then was), §§10-11) and it is not for this court in the context of the present application to comment on the strengths or weaknesses of the Applicant’s intended claim (see Re Cretec Electronics (H.K.) Limited, HCMP 653/2014, 12 September 2014, Ng J, §16).

22.  Further, the fact that the Company may be insolvent should not be a decisive factor in this application.  The creditor (ie the Applicant) should be allowed to pursue its claim in the usual way (see Re Active System Trading Ltd. (above), §12).

23.  By reason of the above, I am satisfied, in the exercise of my discretion, that this application has met the requirements under s 765 of the Companies Ordinance and it is just for the Company to be restored to the Companies Register.

24.  I now make the following order:-

(1)  The Company ie Raison Leather Company Limited (Company Registration Number: 2189679), be restored to the Companies Register.

(2)  The Applicant do deliver to the Registrar of Companies a sealed copy of this Order for registration within 7 days from the date of this Order.

(3)  Costs of this application in the sum of HK$6,000 be paid by the Applicant to the Registrar of Companies forthwith.