LI TIN SANG ADAM v. POON BUN CHAK AND OTHERS

HCCW1196/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO.1196 OF 2004

---------------------

----------------------

----------------------

----------------------

J U D G M E N T

-----------------------

1. The summons which lies before me for determination was issued by Farrow Star Limited, the 5^th respondent in these proceedings.  The proceedings are a petition taken out by the petitioner petitioning the court to make a winding-up order against the 6^th respondent, Giant Wizard Corporation, a British Virgin Islands (“BVI”) company.

2. The 5^th respondent is also a BVI company.  It is a shareholder in the 6^th respondent and clearly is a proper party to be served with the petition.

3. The 5^th respondent seeks :

“	1.	an order that (purported) service of the Petition on the 5th Respondent and all subsequent proceedings be set aside;
	2.	an order declaring that the Petition has not been duly served on the 5th Respondent;
	3.	a declaration that in the circumstances of the case the Court has no jurisdiction over the 5th Respondent in respect of the subject-matter of the Petition or the relief or remedy sought in the Petition;
	4.	such other relief as may appear to the Court to be appropriate; and
	5.	an order that the Petitioner do pay to the 5th Respondent its costs of the Petition herein and of this application to be taxed;
	on the grounds that:––
		(a)	the 5th Respondent is an unregistered foreign corporate entity;
		(b)	the 5th Respondent has at no material time had any financial controller; member, officer or servant; chairman, president, clerk, secretary, treasurer or other similar officer in Hong Kong;
		(c)	the 5th Respondent has at no material time carried on any business in Hong Kong; and
		(d)	the 5th Respondent has at no material time had any address, place of business, or office in Hong Kong.”

4. By a consent order, it was agreed that the petitioner had leave to file an affidavit in opposition within 21 days and the 5^th respondent had leave to file a reply within 21 days thereafter and no further affidavits could be filed without the leave of the court.

5. The application was initially based upon the petitioner’s efforts to effect service within the jurisdiction.

6. However, within the time limit prescribed the petitioner filed an affirmation proving service on the Registered Agent of the 5^th respondent in the BVI.  No leave was obtained from the court to serve the petition without the jurisdiction.

7. At the commencement of the adjourned hearing of the summons before me, Mr Benjamin Yu, SC who represented the petitioner sought leave from me to file a further affidavit outside the time limit referred to proving service on the Registered Agent of the 5^th respondent.  The difference between this affirmation and the earlier affirmation proving the same evidence was that the 5^th respondent had obtained leave to serve the petition outside the jurisdiction of the court.

8. This leave had been obtained consequent upon an ex parte application to a master for leave for this.

9. I must say immediately that I do not think that it was a proper or appropriate step for the petitioner to seek to obtain leave ex parte having regard to the fact that the very issue for determination in the summons before me related to the service of process upon the 5^th respondent.

10. The petitioner’s solicitors informed the 5^th respondent’s solicitors that they had obtained this order on 1 December.

11. The first issue for me to determine on this application was whether the petitioner should be granted leave to file the latest affirmation proving service on the 5^th respondent’s Registered Agent after leave had been obtained for service to be effected out of the jurisdiction.

12. Having regard to the shortage of time available, I made an order that the application should proceed on a de bene esse basis so far as this issue was concerned and that when I delivered my judgment I would give reasons if necessary for my determination on the issue.

13. I accept the validity of the submission made by Mr Yu that I should not just consider whether or not the petitioner had proceeded in a proper manner but what the interests of justice required.  In this connection what was germane was whether the 5^th respondent had suffered any prejudice as a consequence of leave having been obtained ex parte.

14. It is trite law that it is open to a party the subject of an ex parte order to have it set aside at short notice.

15. The 5^th respondent perhaps understandably decided to leave the matter open until the hearing of the present summons.

16. I enquired of Mr Kenneth Kwok, SC who acted for the 5^th respondent what prejudice his client would suffer if I granted the leave sought and he said that his difficulty was that he had insufficient time to enable him to establish whether there were grounds available to his client to apply to set aside the ex parte order.

17. With respect I do not consider this to be a satisfactory answer.  The 5^th respondent had 12 days to make relevant inquiries and to give instructions to its legal advisors and I am of the view that the interests of justice require that leave be granted to the petitioner to file this additional affirmation.

18. I am of the view that once this affirmation is permitted to be filed it has been proved that the 5^th respondent has been validly served with the petition.

19. I will however make short observation upon whether the earlier service without leave on the Registered Agent constituted good service.

20. It is not necessary for me to consider the question of the service of the petition within the jurisdiction as Mr Yu appeared to accept that there were contested factual issues in relation to this and having regard to the subsequent service upon the Registered Agent, it was otiose to pursue the question of service within the jurisdiction.

21. Order 6 rule 7 of the Rules of the High Court provides that no process is to be served out of the jurisdiction unless leave has been obtained.

22. Order 11 rule 2 provides :

“(2)	Service of a writ out of the jurisdiction on a defendant is permissible without the leave of the Court provided that each claim made by the writ is –
	(b)	a claim which by virtue of any written law the Court of First Instance has power to hear and determine notwithstanding that the person against whom the claim is made is not within the jurisdiction of the Court or that the wrongful act, neglect or default giving rise to the claim did not take place within its jurisdiction. (25 of 1998 s. 2)”

23. I accept the validity of Mr Yu’s submission that the “claim” which is being referred to in the order is the winding-up of the 6^th respondent.  This would be in conformity with the judgment of Devlin J (as he then was) at page 57 of West Wake Price & Co. v. Ching [1957] 1 WLR 45 :

“This difficulty, in spite of all the attractiveness of Mr. Paull’s argument, seems to me to be, if not decisive, at least enough to drive me back to a favourable reconsideration of the ordinary and primary meaning of the word ‘claim’.  If the word is to be used with any precision, it must be defined in relation to the object claimed.  The grounds for the claim or the causes of action which support it can give it colour and character, but cannot give it its entity.  If you say of a claim against a defendant that it is for £100, you have said all that is necessary to identify it as a claim; but if you say of it that it is for fraud or negligence, you have not distinguished it from a charge or allegation.  In particular, if you identify a claim as something that has to be paid (and that is how it is referred to in the Q.C. clause), it must be something that is capable of separate payment: you cannot pay a cause of action.  It follows, I think, that if there is only one object claimed by one person, then there is only one claim, however many may be the grounds or the causes of action which can be raised in support of it: likewise, where several claims are each dependent on the same cause of action (as, for example, where one cause of action leads to alternative claims for an injunction, damages or an account or other different forms of relief), there remains only one cause of action, however many claims it may give rise to.  In my judgment there is in each of these actions against the assured only one claim and I have therefore to consider whether this ‘mixed’ claim is a claim in respect of negligence within the meaning of the policy.”

24. However, I do not think that this assists him.

25. The legislation which provides for the winding-up of unregistered companies is section 327 of the Companies Ordinance, Cap. 32.

26. The relevant part of this section reads :

“327.  Winding up of unregistered companies
	(1)	Subject to the provisions of this Part, any unregistered company may be wound up under this Ordinance, and all the provisions of this Ordinance with respect to winding up shall apply to an unregistered company, with the exceptions and additions mentioned in this section.
	(2)	No unregistered company shall be wound up voluntarily under this Ordinance.
	(3)	The circumstances in which an unregistered company may be wound up are as follows –
		(a)	if the company is dissolved, or has ceased to carry on business, or is carrying on business only for the purpose of winding up its affairs;
		(b)	if the company is unable to pay its debts;
		(c)	if the court is of opinion that it is just and equitable that the company should be wound up.”

27. It is evident from the judgment of Barnett J in Re S (A minor) that in interpreting Order 11 rule 1(2)(b) the legislation being relied upon to obviate the requirement of obtaining leave must be specific.

28. In the present case, I do not think that it is clear that the exemption could be extended to the 5^th respondent which is only a party to the petition and not the subject matter of the winding-up order sought.

29. Winding-up Rule 25 does not assist the petitioner as there is nothing in the rule to make it applicable to service out of the jurisdiction.

30. Order 65 rule 3(1) also does not assist the petitioner for the same reason.

31. All of this leads me to the conclusion that the 5^th respondent’s application would have been successful but for the petitioner obtaining leave to serve them out of the jurisdiction.

32. However, the leave was obtained and service upon the 5^th respondent has now been proved.  That being the case the 5^th respondent’s application must be and is dismissed.

33. I make an order nisi that the 5^th respondent should have their costs up to the date when the Master gave leave ex parte for service out of the jurisdiction and that thereafter there be no order for costs.