XCHRX Re Chung Wo Construction Co. Ltd.

HCCW104/97

HEADNOTE

Companies Ordinance (Cap. 32) s. 186 - Limitation period - Power of Court after winding-up order to grant leave to commence proceedings retrospectively.

HCCW 104/97

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING UP) NO. CWU 104 OF 1997

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D E C I S I O N

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1. In this matter, a Petition to wind up the company was presented on 25th February 1997. The petitioning creditors were represented by the Director of Legal Aid and they were, as I understand it, all employees. The company was insolvent and was wound-up on 16th April 1997 at an unopposed hearing.

2. Subsequent to that order, one of the employees of the company, namely Chan Yiu Ming, the present applicant, was given leave by consent to proceed with an Employees Compensation claim against the company on 1st June 1998. It was then desired to bring common law proceedings for personal injury on his behalf.

3. His solicitors wrote to the Official Receiver on 3rd June 1999 asking if there was any objection to such common law proceedings being commenced and pointed out that the limitation period expired on 12th June 1999.

4. The Official Receiver indicated by letter the next day that there was no objection, on condition that there should be no enforcement of any judgment obtained without leave of the Court. A consent summons to this effect was taken out dated 7th June 1999 and lodged with Court.

5. However, the Order giving leave to commence proceedings was not made by the Master until 14th June 1999 which was apparently two days after expiry of the limitation period.

6. Meanwhile, since the Official Receiver had expressed no objection, the solicitors for the applicant issued a Writ on 11th June 1999 in the hope of avoiding limitation problems.

7. However, there are on the Court file, letters from solicitors for an Insurance Company, namely Ming An Insurance, alleging that failure to comply with section 186 of Companies Ordinance made the Writ a nullity. They plainly may have in mind a limitation defence for the Company.

8. The present application is by the Plaintiff for liberty to proceed with the action or for an order giving leave retrospectively to commence the action which has in fact been started. I am told that Notice of this application has been given to the solicitors for the insurance company, but they have evidently chosen not to air their views today. The Court has received a letter dated 27th July 1999 from the Official Receiver confirming that there is no objection to such leave being granted retrospectively.

9. I have put down my reasons for granting the relief sought because of the interest of the Insurance Company which I have noted.

10. Section 186 of Companies Ordinance states, so far as material, as follows, namely: -

"When a winding-up order has been made .... no action or proceedings shall be .... commenced against the company except by leave of the court, and subject to such terms as the court may impose."

11. In Wilson v. Banner Scaffolding Ltd. The Times, 22nd June 1982, Milmo J. held that a writ issued without leave after a winding up order was made was a nullity. However, since the case involved a personal injury claim, the Court directed that the time limit could be overridden under the relevant provisions of the Limitation Acts.

12. The view of Milmo J. as to nullity was followed by Rattee J. in In re National Employers Mutual General Insurance Association Ltd. [1995] 1 B. C. L. C. 232. The earlier decision was followed on the ground that it involved a natural construction of the words in the section.

13. However, in Re Saunders (A Bankrupt) [1997] Ch. 60. Lindsay J. reviewed extensively the 19th century English cases which had apparently not been cited in the earlier decisions. He also extensively reviewed many Commonwealth cases as to the power of Court to grant leave nunc pro tunc to commence an action and held, on the basis of his review of the authorities that granting such leave was within the Court's power.

14. For the reasons set out in that case, it is my view that I should follow the approach adopted in Re Saunders. I am satisfied that I do have the power to make the retrospective order sought.

15. Accordingly, I make the following Order by consent of the Applicant and the Official Receiver, namely, that the Applicant do have leave to commence proceedings for personal injuries against the Company, such leave to take effect as from 10th June 1999, on the undertaking of the Applicant that he will not enforce any judgment in such proceedings without the leave of the court. No order as to costs.