WEALTHY LAND INVESTMENTS GROUP LTD v. FLORESCENT HOLDINGS LTD

HCCW 440/2020

[2022] HKCFI 649

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO 440 OF 2020

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JUDGMENT

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1.  Wealthy Land Investments Group Ltd (the “Petitioner”), a BVI company, seeks to wind up Florescent Holdings Limited (the “Company”) also a BVI company, based on the Company’s failure to comply with the statutory demand served on it by the Petitioner.

2.  The matter came on for hearing on 10 February 2022 when the Company applied for leave to file the affirmation of Zhu Genrong (“Mr Zhu”) dated 7 February 2022 (“Zhu 1^st”) who at the relevant time and until February 2020 was the sole director of the Company.

3.  After hearing the parties, the court granted leave to the Company to file Zhu 1^st with leave to the Petitioner to file a reply affirmation on or before 16 February 2022 and adjourned the substantive hearing of the petition to 25 February 2022.  The Company was ordered to bear the costs thrown away as a result of the adjournment.

4.  At the adjourned hearing, the Company applied for and was granted leave to file the 2^nd affirmation of Mr Zhu notarised in the Mainland on 23 February 2022 (“Zhu 2^nd”) in response to the Petitioner’s reliance on a cheque dated 6 July 2018.

5.  At the conclusion of the hearing, judgment was reserved which I now give.

Background facts

6.  The Petitioner agreed to grant the Company a loan of $250 million (the “Loan”) pursuant to a Loan Agreement dated 21 December 2017 for a term of 18 months at an interest rate of 13% per annum and a default interest rate of 26% per annum subject to certain conditions precedent being fulfilled prior to the drawdown date.  The loan was guaranteed by Mr Zhu.

7.  As security for the Company’s performance of its repayment obligations under the Loan Agreement, the Company pledged (the “2017 Pledge”) to the Petitioner the equity interest in 411,872,000 shares (the “Pledged Shares”) of Huazhang Technology Holding Limited (“Listco”), of which 311,872,000 shares (the “Shares”) would be entrusted in the cash account of Great Roc Capital Securities Limited (“Great Roc”) with the remaining 100 million shares entrusted in the margin account at Guotai Junan Securities (Hong Kong) Limited (“Guotai”).

8.  The Company’s primary assets are its controlling shareholding in Listco.

9.  On the same day, the Petitioner, the Company, Kaiser Financing Company Limited (“Kaiser”) and the Guarantor entered into a supplemental agreement (the “1^st Supplemental Agreement”) under which the Loan would be provided as to $200 million by the Petitioner and as to the remaining $50 million by Kaiser as the 2^nd lender and the Petitioner and Kaiser would enjoy rights as lenders and pledgees in proportion to the funds advanced by them respectively.

10.  Upon satisfaction of the conditions precedent stipulated in the Loan Agreement, the Loan was drawn down on 5 January 2018[1] and matured on 6 July 2019.  The Loan was repayable within 5 working days after maturity.

11.  On 6 July 2019, the Petitioner, Kaiser and the Company entered into a further supplemental loan agreement (the “2^nd Supplemental Agreement”) which

(1)  extended the term of the Loan by 6 months to 6 January 2020 (the “extended period”);

(2)  provided for interest to be paid to the Petitioner at the rate of 24% per annum and for Kaiser to waive interest during the extended period;

(3)  revised the default interest rate to 48% per annum;

(4)  provided for a fee of $13 million for arranging the extension to be paid to the Petitioner but that no such fee shall be charged by Kaiser.

12.  The Petitioner, Kaiser and the Company entered into a pledge agreement dated 6 July 2019 (the “2019 Pledge”) under which the Loan was secured by the same number of shares in Listco.

13.  The Company’s defence is that it has a bona fide dispute with the Petitioner on substantial grounds: the nub of its defence is that Loan Agreement is unenforceable because it contravenes §§2 and 23 of the Money Lenders Ordinance (the “MLO”).

Applicable legal principles

14.  The following extract from the judgment of Kwan J (as she then was) in Re Hong Kong Construction (Works) Limited, unrep., HCCW670/2002, 7 January 2003 neatly encapsulates the relevant principles[2]:

“6. ...The relevant principles may be stated as follows:

(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.”

The Petitioner’s case

15.  The Petitioner (incorporated in 2006) is part of the Foo Lum Properties Ltd (the “Group”) which focuses on property investments.  The Petitioner serves as an investment holding company within the Group, holding investments comprising shares in listed companies.

16.  According to the Petitioner[3], the Company through Kaiser[4] approached the Petitioner for a loan of $250 million.  Prior to 21 December 2017 when the Petitioner entered into the Loan Agreement, it had never made any loan to anyone.

17.  The Petitioner maintains that it is not a moneylender: it has never advertised nor held itself out to be in the business of making loans.  In any event, the loan is an exempted loan within Part 2 of Schedule 1 to the MLO: the transaction falls within the exemption in §5 of Part 2, alternatively, the security for the loan created a floating charge such that the exemption in §2(b)(ii) applies.

18.  Although Company is an unregistered company, the court has jurisdiction under section 327 of the Companies Winding Up Miscellaneous Provisions Ordinance (“CWUMPO”) to wind up such a company provided 3 core requirements are satisfied: see Silver Starlight Limited v China Citic Bank Corporation Limited, Tianjin Branch [2021] HKCA 1248; [2021] HKCLC 1347 at [23].

The issues

19.  The issues are:

(1)  whether the Petitioner is an unlicensed moneylender within §2 of the MLO;

(2)  whether the exemptions under §§2(b)(ii) and 5 of Part 2, Schedule 1 of the MLO (the “Part 2 exemptions”) apply; and

(3)  whether the court should exercise its jurisdiction under section 327 of the CWUMPO.

The moneylender issue

20.  It is the Company’s case that the Petitioner is an unlicensed moneylender[5] such that the Loan Agreement and the security arrangement are prima facie unenforceable under Section 23 of the MLO subject to any relief that the Court may grant.

21.  It is common ground that the determination of whether a person is a moneylender is a matter of fact to be determined by the court for each case and, necessarily, must depend on its own facts: see Chan Miu Chu Zoe v Choi Chiu Yuk, unrep., HCA 698/2012, 21 February 2014 at §21a.

22.  Zhu 1^st relates that a business associate of Mr Zhu, one Yan Kam Cheong (“Mr Yan”) introduced Mr Zhu to One Show Raw Materials Company Limited (the “Intermediary”) in late 2017 when the Company needed to raise funds of $200 million.

23.  On 1 October 2017, the Company and the Intermediary entered into an agreement whereby (for a fee of $4 million) the Intermediary would refer a lender to the Company for $250 million.

24.  The Intermediary subsequently referred Kaiser and the Petitioner to the Company.  Mr Zhu was informed by Mr Yan and the Intermediary that the Petitioner would advance $200 million to the Company and Kaiser would also on the face of it advance $50 million to the Company with documentation to that effect.  However, the $50 million to be advanced by Kaiser (a licensed money lender) would have to be repaid immediately and Kaiser’s involvement was to facilitate the loan arrangement with the Petitioner and make it appear more legitimate.

25.  As the Company was in urgent need of funds, Mr Zhu did not enquire further although he was puzzled as to why it was necessary to involve Kaiser.

26.  As instructed by the Intermediary and Mr Yan, Mr Zhu on behalf of the Company executed all documentation including the Loan Agreement, the 1^st Supplemental Agreement and the 2017 Pledge that had been prepared for execution.

27.  On 7 January 2018 the Company received a cashier’s order dated 4 January 2018 for $250 million.  On 8 January 2018, the Company issued a cheque of $61,200,000 to Mr Yan of which $50 million was to be repaid to Kaiser via Mr Yan and the remaining $11.2 million was a repayment to Mr Yan in respect of matters unrelated to the Loan concerning Kaiser and the Petitioner.

28.  On the same day, the Intermediary was paid[6] its commission of $4 million.

29.  In July 2019, as the Company required more time to repay the Loan, Mr Zhu executed documentation extending the Loan and the 2019 Pledge with the Petitioner and Kaiser.  Mr Yan who was involved with the documentation explained that Kaiser’s involvement was necessary as a matter of formality and procedure although the sum advanced by Kaiser had been repaid.  Since Kaiser was not charging interest for the extended period, Mr Zhu did not enquire further.

30.  Mr Look-Chan Ho, counsel for the Petitioner, sought to challenge Mr Zhu’s credibility[7] and to discredit his account of the Company’s repayment of $50 million to Kaiser the day after the $250 million loan was drawn down.  He maintained that Kaiser remained a creditor based on 7 contemporaneous documents.

31.  One of those documents is a cheque dated 6 July 2018 for $16.25 million as interest payment on the loan of $250 million.  The Petitioner transferred[8] $3.25 million or 20% of that amount to Kaiser.  It was said that that must mean that the Company paid interest on Kaiser’s share of $50 million making up the Loan which contradicts Mr Zhu’s account of repayment to Kaiser.

32.  Mr Zhu explained that on 5 July 2019 (the day prior to the signing of the 2^nd Supplemental Agreement), the $3.25 million was refunded to the Company via Mr Yan’s arrangement.  In support, he exhibited the Company’s bank statement dated 31 July 2019 showing a deposit of $3.2 million on 5 July 2019.  The balance of $50,000 was said to have been made in cash.

33.  The Petitioner made the point that the payer of the $3.2 million cheque was not identified and that it was only made year later.

34.  As regards the other 6 documents relied on, they consist of a number of documents that form part of the documentation for the Loan and 2 audit confirmations signed by the Petitioner at the request of Kaiser’s auditors.

35.  In my view, what is stated in those 6 documents as evidencing the Kaiser loan is “neutral” as they are equally consistent with the need to maintain the facade of Kaiser’s involvement as a party to the Loan which is the Company’s case.

36.  What I consider to be particularly troubling from the Petitioner’s account are the following matters:

(1)  If Kaiser/Mr Yan (as is accepted) was instrumental in introducing the Company to the Petitioner who entered into the Loan Agreement on 21 December 2017 to provide the Company with a loan of $250 million, the Petitioner has not explained why it should, on the very same day, enter into the 1^st Supplemental Agreement to bring in Kaiser as the lender of $50 million of the $250 million to be advanced.

(2)  It simply does not make sense when Kaiser itself is in the business of financing. Why would Kaiser forego the business opportunity and involve the Petitioner at all?

(3)  As the Loan Agreement and the 1^st Supplemental Agreement are professionally drawn documents, it defies belief that all the documents constituting the Loan transaction had not been drawn up in advance.  There is clearly more to the Loan transaction than meets the eye.

(4)  On the Petitioner’s case, there is equally no explanation[9] why Kaiser should forego its share of the very substantial fee (of $13 million) for the Loan extension for 6 months.

(5)  Equally inexplicable is why Kaiser should waive interest on the $50 million it had advanced for the extended period unless (as is the Company’s case) the $50 million was repaid the day after the Company received the funds.

37.  Those matters aside, the following factors are relevant in the context of evaluating the nature of the Loan transaction:

(1)  the Petitioner and the Company had no pre-existing relationship;

(2)  the amount advanced was substantial and the rate of interest was significant;

(3)  income derived from the loan by the Petitioner for each of 2 consecutive years concerned (2018 and 2019) constituted more than 98% of its annual income[10]; and

(4)  Kaiser was in the business of making loans and prima facie, there is no discernible reason why the Petitioner was not itself engaging in a similar line of business along with Kaiser.

38.  The Petitioner submitted that the carrying on of a “business” requires a degree of repetition, system and continuity.  Accordingly, a single loan (which is the present case), is generally insufficient to cause a lender to be treated as a “moneylender” within §2(1) of the MLO, citing Link Excellent Limited v Ruijun Technology Limited, unrep., HCA 1993/2016, 6 November 2017.

39.  Those remarks were made based on the evidence[11] before the court in that case.  As earlier noted, whether a person is a moneylender in relation to a particular transaction is highly fact-sensitive: the number of transactions made by the lender is not the determining factor.  Even one transaction may be sufficient: see Chan Miu Chu Zoe at §21b and §21 above.

40.  On the facts of the present case, I consider that the Company has made out an arguable case that the Petitioner is a moneylender.

41.  I now turn to consider the Part 2 exemptions on which the Petitioner relies.

(A) The §5 exemption

42.  §5 reads as follows:

“A loan made by a company or a firm or individual whose ordinary business does not primarily or mainly involve the lending of money, in the ordinary course of that business.”

43.  It was said that the Company was going about the market using an intermediary to raise funds with its shares in Listco as the key driver.  As the Petitioner had a special interest in holding shares in listed companies, for it to make the Loan was entirely consistent with the Petitioner’s investment holding business.

44.  Central to the Petitioner’s contention is that the grant of the Loan to the Company was no more than making an investment in the Company and is similar to holding shares in Listco since those shares (which form the Company’s assets) would constitute the security for the Loan.

45.  The court was referred to the judgment of Mr Recorder Patrick Fung SC in Re Fung Kwok On, William, unrep., HCB 9590/2008, 6 August 2010 where, at §33, it was held that the evidence in that case indicated that the loan was in reality only an investment which was being made by the Petitioner into the Company’s business.

46.  The observations made in that case need to be seen in their proper context.  Factually, that case is materially different.  The investment made by the petitioner in that case was by way of a convertible loan which could be converted into the share capital of the company when the contemplated joint venture took shape which it never did.  That decision (being distinguishable on the facts) cannot assist the Petitioner.

47.  The submission that granting the Loan was akin to the Petitioner’s ordinary business[12] of holding investments in listed shares is misconceived.  The acquisition of listed shares to hold as an investment is fundamentally different in nature to granting a loan secured by listed shares.  They are different activities and generate different returns.

48.  The revenue stream from the Loan is known at the outset whereas dividend income is uncertain and unknown until it is declared.  It is telling that the sheer size of interest income received from the Loan during each of the 2 years in question completely dwarfs interest income derived by the Petitioner from its investment holdings.

49.  Further, as Ms Tara Liao, counsel for the Company submitted, to fall within the exemption in §5, it has to be shown that the Loan was made in the ordinary course of the Petitioner’s business.  There is no evidence that the Loan was made in the ordinary course of the Petitioner’s investment holding business.  Moreover, if it was made in the ordinary course of business for Kaiser, why would it not be the case for the Petitioner?

50.  In my view, the Petitioner has failed to show that the §5 exemption is applicable.

(B) The floating charge exemption

51.  If the security created by the 2017 Pledge and the 2019 Pledge (collectively the “Pledges”) is a ‘floating charge’, it would be exempted under §2(b)(ii) of Part 2.

52.  The issue therefore is whether the security created by the Pledges is a floating charge.

53.  By the 2017 Pledge, the Company pledged, in favour of the Petitioner, “the equity interest in 411,872,000 Shares of [Listco]” held in the accounts of custodians, namely Great Roc and Guotai.  The Company agreed to sign all relevant share transfer documents for the Petitioner’s custody.

54.  On the same day as the Loan Agreement (21 December 2017) the Company and the Petitioner sent a joint letter to Great Roc which, after informing it of the Loan Agreement and the 2017 Pledge, inter alia, enjoined Great Roc from permitting or authorising any person to deal in or dispose of the shares held by Great Roc without the prior consent of the Petitioner.

55.  By the 2019 Pledge, the Company pledged, in favour of the Petitioner and Kaiser, the same equity interest in Listco and delivered a blank transfer document signed by the Company in respect of the equity interest to the pledgees.

56.  §3.2 of the 2019 Pledge prohibited the Company from entering into any transaction to sell, lease, withdraw, transfer or otherwise dispose of the Pledged Shares except as otherwise permitted under §4.3 (a provision that allowed the Company to deal with the dividends of the Pledged Shares prior to the occurrence of an event of default).

57.  On 26 July 2019, with the consent of the Petitioner[13], the shares previously held by Great Roc were transferred to another brokerage account of the Company held with Elstone Securities Limited (“Elstone”).

58.  Mr Ho submitted that the hallmark of a floating charge is where the chargee is not able to control the assets subject to the charge.  Reference was then made to an exchange of correspondence between the Petitioner’s solicitors and the solicitors for Elstone in November 2021.

59.  After informing Elstone of the current proceedings, the Petitioner as pledgee instructed Elstone not to trade or otherwise dispose of the Shares without the Petitioner’s prior written consent and to provide information relating to the Shares.  Elstone’s reply was to the effect that it is not bound by the “Relevant Agreements” as it is not a signatory and absent a relevant court order, Elstone would not comply with the Petitioner’s instructions or notices in relation to the Shares.

60.  Mr Ho complained that although the Petitioner has a security interest, it is not even able to locate the Shares and the Petitioner has no “control” over the Shares.  He then cited a number of authorities said to support the proposition that for a charge to be a floating charge, the chargee must be able to control the charged assets as a matter of legal right and actual fact.

61.  The court was referred to Agnew v CIR [2001] 2 AC 710 where the Privy Council had to consider the question whether a charge over the uncollected debts of the company which leaves the company free to collect them and use the proceeds in the ordinary course of its business is a fixed charge or a floating charge[14].

62.  Lord Millett considered that the correct approach in deciding whether a charge is a fixed charge or floating charge is as follows:

“…the court is engaged in a 2-stage process. At the first stage it must construe the instrument of charge and seek to gather the intentions of the parties from the language they have used. But the object at this stage of the process is not to discover whether the parties intended to create a fixed or a floating charge. It is to ascertain the nature of the rights and obligations which the parties intended to grant each other in respect of the charged assets. Once these have been ascertained, the court can then embark on the second stage of the process, which is one of categorisation. This is a matter of law. It does not depend on the intention of the parties.”

63.  The first step in the process is to construe the Pledges and to gather the intention of the parties from the language they used.  It is noteworthy that the shares pledged are not a floating body of assets but a clearly identified number of shares of Listco “as a first priority pledge[15]”.

64.  Except for dividends received prior to the 2019 Pledge becoming enforceable, the Company was prohibited from creating a guarantee or entering into any transaction to deal with the Pledged Shares or doing any act which may result in the depreciation, loss or impairment of the security without the Petitioner’s consent[16].

65.  Further, the fact that Company executed an undated Security Settlement Instruction in respect of the Shares held at Great Roc and an undated instrument of transfer and sold notes in favour of the Petitioner in respect of the Pledged Shares point to the Company’s lack of autonomy contemplated under the Pledges and the high degree of control vested in the Petitioner.

66.  In re Yorkshire Woolcombers Association Limited [1903] 2 Ch 284 at 295, Romer LJ mentioned 3 characteristics of the floating charge, namely:

“(1) If it is a charge on a class of assets of a company present and future; (2) if that class is one which, in the ordinary course of the business of the company, would be changing from time to time; and (3) if you find that by the charge it is contemplated that, until some future step is taken by or on behalf of those interested in the charge, the company may carry on its business in the ordinary way as far as concerns the particular class of assets I am dealing with.”

67.  Lord Millett considered the third of the characteristics the hallmark of a floating charge.  A company’s ability to carry on business without the consent of the charge holder is inconsistent with the fixed nature of the charge.

68.  Pausing there, while what the Petitioner considers to be the “hallmark” for a floating charge is different, its focus being on the chargee’s position rather than the chargor’s ability to carry on its business without the consent of the charge holder, they are but 2 sides of the same coin.   

69.  In Agnew, it was held (at §32) that in construing the intention of the parties when creating the debenture:

“the only intention which is relevant is the intention that the company should be free to deal with the charged assets and withdraw them from the security without the consent of the holder of the charge; or, to put the question another way, whether the charged assets were intended to be under the control of the company or of the charge holder”.

70.  Reference was made to In re Cosslett (Contractors) Ltd [1998] Ch 495[17] where Millet LJ (as he then was) held (at 510):

“The essence of a floating charge is that it is a charge, not on any particular asset but on a fluctuating body of assets which remain under the management and control of the chargor, and which the chargor has the right to withdraw from the security despite the existence of the charge. The essence of a fixed charge is that the charge is on a particular asset or class of assets which the chargor cannot deal with free from the charge without the consent of the chargee. The question is not whether the chargor has complete freedom to carry on his business as he chooses, but whether the chargee is in control of the charged assets.”

71.  In so far as the Petitioner attaches significance to the final sentence of the passage from Cosslett, it is clear that the relevant time for ascertaining the parties’ intention is when the security was created and not, as the Petitioner appears to suggest, when it attempts to enforce the security.

72.  That analysis is consistent, inter alia, with Re Beam Tube Products Ltd [2007] 2 BCLC 732 which (at §§28-32) considered both Agnew, Cosslett and Brightlife[18].

73.  In Beam Tube on the issue of the proper characterisation of the security created (at §§35-38[19]), it is clear that the intention has to be ascertained at the time the security was created.  Blackburne J held it to be irrelevant to the characterisation of the charge that the collection account was not in fact set up and it was also irrelevant that several months after the execution of the debenture the company found itself restricted from freely using the proceeds of the book debts as a result of the setting up of the ‘blocked’ account.  The nature of the debenture is to be ascertained on the date it was created and not at the date of its enforcement.

74.  The Petitioner also cited Secure Mortgage Corp Ltd v Harold [2020] BCC 855 at §20.3 which states:

“A floating charge is distinct from a fixed charge in the sense that the chargor is at liberty to carry on the business and, in doing so, to deal with the assets of the business without first obtaining the consent of the charge holder.”

75.  In the Yorkshire case, Agnew, Cosslett, Beam Tube and Secure Mortgage the court’s focus was on the chargor’s right to withdraw charged assets from the security despite the existence of the charge, in other words the chargor’s autonomy in dealing with its assets without the consent of the charge holder.

76.  The Petitioner’s proposition focuses on the fact that the Petitioner does not have actual control in that Elstone failed to be cooperative at the time the Petitioner sought to exercise its rights under the 2019 Pledge.

77.  The Petitioner’s reading of Agnew, Cosslett and Beam Tube that the chargee must have actual control in addition to having the legal right over the assets when the security is enforced is not consistent with the authorities considered above.  The time for ascertaining the nature of the security is at the date of its creation.

78.  Applying the criteria laid down in the authorities mentioned above, it is clear that the Company as chargor had no autonomy over the assets charged at the time the Pledges were created.  That necessarily means that the security created is not a floating charge.

79.  I accept the Company’s submission that the fact that the Petitioner was unable to enforce the charge which was created as a fixed charge cannot convert it into a floating charge.

80.  For the reasons stated above, I do not consider that the floating charge exemption can have any application in the present case.

81.  It follows that the Company has demonstrated that it has a bona fide dispute on substantial grounds that the Loan Agreement and the 1^st and 2^nd Supplemental Agreements are unenforceable under § 23 of the MLO.

82.  Accordingly, there are triable issues even if relief under the proviso to §23 is invoked: see Re Hawkins Development Limited, unrep, HCCW 215/2007, 21 August 2009 at §§108-110.

Contravention of §22 of the MLO

83.  It should be mentioned that the Company also highlighted provisions of §22 of the MLO that are arguably breached.

84.  Under the 2^nd Supplemental Agreement, the interest rate is 24% per annum and the penalty interest rate is an annual interest rate of 48%.  It is the Company’s case that §22 is arguably breached.

85.  §5.5[20] of the Loan Agreement provides that if any loan or interest becomes due and payable, interest is payable on the sums due and unpaid at the default interest rate[21].  It was submitted that it may give rise to interest on unpaid interest (the payment of compound interest) which would contravene §22(1)(a).

86.  Further, as the rates of default interest under the Loan Agreement (26%) and the 2^nd Supplemental Agreement (48%) are both higher than the interest rate for the Loan without (24%), §22(1)(c) is arguably contravened.  The proviso to §22(1) does not apply because the default rate is not the same rate in respect of the principal apart from any default.

87.  As to the exercise of the court’s discretion under §22(2), the court will have to examine a wide range of matters and each case will have to be decided on its own facts: see Easy Fortune Property Ltd v Yung Chun Him [2019] HKCA 1055 at §§65 and 67.

88.  Ms Liao submitted (and I agree) that given the arguable breaches of the MLO and features that could support the finding of a deliberate and sophisticated attempt to evade the statutory controls, there is also a bone fide dispute on substantial grounds under §22 of the MLO.

Jurisdiction

89.  The court has power under section 327 of the CWUMPO to wind up a foreign company.  It is common ground that 3 core requirements are required.  There is also no issue that the 1^st and 2^nd of the core requirements are satisfied.

90.  The 3^rd core requirement is that the court must be able to exercise jurisdiction over one or more persons interested in the distribution of the Company’s assets.  Whether Kaiser (which is a Hong Kong company) has any entitlement in the distribution of the Company’s assets depends on whether the loan of $50 million was genuine which is a matter that can only be resolved at trial.

91.  Whether or not the 3^rd core requirement is satisfied will depend on whether Kaiser was in fact repaid on 8 January 2018.  If it had been repaid, the court will not have jurisdiction to wind up the Company.

Conclusion

92.  For the reasons set out above, the petition falls to be dismissed.

93.  There is to be an order nisi of costs in favour of the Company with certificate for counsel, such costs to be summarily assessed and payable forthwith.

94.  The Company is directed to lodge its statement of costs within 7 days of this Judgment; the Petitioner to lodge its statement of objections within 14 days thereafter and the Company to lodge its reply (if any within 7 days thereafter.

95.  The summary assessment will be dealt with on paper.