RE CHINA UNICOM (HONG KONG) LTD

HCMP 2106/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2106 OF 2015

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DECISION

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1. I have an originating summons before me issued pursuant to s. 316(4) of the Companies Ordinance, Cap. 622, seeking to extend time for the delivery of the return of the allotment by the Company in respect of debentures in an aggregated nominal amount of RMB 2.5 billion issued on 24 July 2014, from 25 August 2014 to 4 December 2014.

2. Section 316 requires that within one month after an allotment of debentures or debenture stock, a company must deliver to the Registrar a return of the allotment in a specified form.  Sub-section (3) of that section provides that if a company contravenes sub-section (1), the company and every responsible person of the company commits an offence and is liable to a fine at level 4 and a further fine of HK$ 700 for each day during which the offence continues.

3. In line with similar provisions in the Ordinance, the section contains a provision that allows a company which has failed to deliver a return in compliance with sub-sections (1) and (2) to make an application to the court for the period be extended, sub-section (5) provides that the court may extend the period under sub-section (4) only if it is satisfied that (a) the failure to deliver the return was accidental due to inadvertence; or (b) that it is just and equitable to extend the period.  Sub-section (6) provides if the court extends the period for delivery of a return, any liability already incurred by the company or a responsible person of the company is extinguished. 

4. In the present case the allotment of debentures in question was the second allotment issued by the Company.  In respect of the first the Company had made the return required by s. 316 within the specified time period.  Unfortunately due to what I am satisfied was inadvertence, it was not noticed until after that time period expired that the Company had failed to return the required allotment in respect of the second set of debentures in respect of which this application is made.

5. When the Company’s staff noticed this oversight, it wrote on 4 December 2014 to the Companies Registry, attaching a return of allotment, apologising for the delay in filing it and asking the Companies Registry whether they considered it necessary for an application be made to the court for an extension of time. 

6. Unfortunately the Companies Registry did not reply to that letter.  I do not think that any blame can be attached to the Companies Registry’s staff for this.  As Ms Sze, who appeared for the Registrar today explained, the Companies Registry receives somewhere in the order of 7,000 documents each day and it is understandable that when the front line staff receive returns of allotments and letters they may not necessarily recognise that a reply is required.

7. The Registry noticed sometime later that the allotment had been filed out of time and, presumably not noticing the Company’s letter, issued on 18 August 2015 a summons laying information against the Company before the Eastern Magistrates’ Courts in respect of breaches of s. 316(1) and 316(3) of the Companies Ordinance.

8. It was that summons that caused the Company to issue the application currently before me.  I am satisfied on the evidence before me that the failure to return the allotment on time was the result of inadvertence and if an application had been made when the Company first noticed the mistake, I have little doubt that the application would have been readily granted, probably on the papers.

9. I asked the parties to attend court on this occasion because I wanted to consider what if any impact issue of a summons might have on the court’s approach to this kind of application.  It seems to me to be clear from the language of s. 316(6) that despite the fact that information has been laid, the High Court has the power to grant an extension of time which would have the fact of extinguishing liability in respect of any offence that has been committed even if by the time the order is granted, information has already been laid.  The position might be different, although this is not a matter that I am required to decide, if a plea had been entered, although I assume that this is probably a fairly academic point, as normally any such plea would be guilty and the matter would have been disposed of summarily.

10. That having been said it seems to me that generally speaking once a summons has been issued, the High Court should be slower to grant extensions of time than might otherwise be the case.  It would certainly seem rather strange if the consequence of a summons being issued was nearly always that an application was made to the High Court which determines the application on its merits and it would only be if an extension of time was declined that the matter came on before the Magistrate.

11. It follows that generally speaking once a summons has been issued, the court will be required to be satisfied that there is some special circumstance which justifies the court approaching the application, in much the same way as it would normally approach an application made reasonably promptly after the time for the filing of an allotment has expired. 

12. I accept in the present case that there are circumstances which justify the court granting an order, and not being deflected from doing so by the fact that information has been laid.  It is quite clear that the failure to file the required allotment in the present case arose as a result of inadvertence by the Company, and that the Company behaved responsibly in writing to the Companies Registry about this.  It is unfortunate that the Company did not simply issue the application at that time which might have been the more prudent course, but it does not seem to me that the course it did adopt was irresponsible.  Similarly it is unfortunate that the Companies Registry did not reply to the letter, or identify the fact that the letter was on file before issuing the summons, but it does not seem to me that this oversight is a matter in respect of which much blame attaches given the administrative nature of the task involved, and the amount of paper work the staff of the Companies Registry are required to deal with.  In other words the fact that the application was not made until after the summons was issued is simply the consequence of an unfortunate set of facts.  I will therefore grant the extension of time sought in the originating summons.  So far as the applicant is concerned, there be no order as to costs. 

13. So far as the Companies Registry’s costs are concerned, I make an order that HK$1,500 is paid by the Company to the Registrar on a gross sum basis in respect of its cost of attending this application.