RE CHINA CHUANGYU INTERNATIONAL INVESTMENT (HK) LTD

HCCW 376/2024

[2025] HKCFI 869

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO 376 OF 2024

_______________

_______________

__________________________________

REASONS FOR JUDGMENT

__________________________________

1.  By a petition presented on 26 June 2024 (“Petition”) the petitioner, Takson Sportswear Limited (“Petitioner”), seeks a winding-up order against China Chuangyu International Investment (HK) Limited (“Company”) on insolvency ground. The Petition was referred by Master Maurice Lam to this Court for considering whether the Petition should be dismissed for want of prosecution. At the hearing, the Petition was dismissed for want of prosecution with the costs of the Official Receiver to be paid out of the deposit. These are the reasons for my judgment.

2.  The Petition relies on the Company’s failure to comply with a statutory demand served on 9 April 2024 requiring it to pay the sum of HK$584,480. The debt represented the balance of the amount said to have been owed by the Company to the Petitioner under 2 tenancy agreements entered into between them in September 2019.

3.  However, apart from presenting the Petition and filing a  verifying affidavit on 27 June 2024, the Petitioner has not taken any active step to prosecute the Petition.

4.  At the 1^st callover hearing before a Master on 4 September 2024, the Petition was adjourned to 16 October 2024 as the Petitioner had not advertised the Petition in newspaper and gazette. It was only until 27 September 2024 that the requirement for advertisement and gazette was compiled with.

5.  Despite a lapse of 8 months, the Petitioner still has not complied with the procedural requirements prescribed by the Companies (Winding up) Rules (Cap. 32H) (“CWUR”) despite repeated reminders from the court:

(1)  On 10 October 2024, the court raised a number of requisitions on the Petition. As no answer was forthcoming, at the 2^nd hearing on 16 October 2024, the Petition was adjourned to 27 November 2024.

(2)  At the 3^rd hearing on 27 November 2024, the Petitioner’s solicitors failed to attend the hearing. The Petition was further adjourned to 4 December 2024. A letter was issued to the Petitioner’s solicitors requiring them to explain their absence.

(3)  The Petitioner’s solicitors again failed to attend the 4^th hearing on 4 December 2024. Nor did they answer the requisitions raised by the court.

(4)  The court issued another letter to the Petitioner informing them that the Petition was further adjourned to 10 January 2025 with the warning that the Petition might be dismissed for want of prosecution if they fail to take step to prosecute the same.

(5)  It was only until 18 December 2024 that the Petitioner’s solicitors sent a letter to the court to explain that their failure to attend the previous hearings was due to resignation of the staff responsible for keeping the schedule of hearing dates, and the handling solicitor was not aware of the hearings.

(6)  The Petitioner’s solicitors attended the 5^th hearing on 10 January 2025 but no progress had been made in answering the requisitions. The Petition was further adjourned to 19 February with an “unless order” in the following terms:

“Unless by 4:00 pm on 7 February 2025 the Petitioner do answer all the requisitions raised by the Court on 10 October 2024, the Petitioner shall be deemed to have elected not to further pursue with the present winding-up petition.”

(7)  The Petitioner’s solicitors did not answer the requisitions. Nor did they attend the 6^th hearing. On the same day, the court issued a letter to the Petitioner’s solicitors informing them that the Petition would be listed for hearing before a Companies Judge on 24 February 2025 for considering whether to dismiss the Petition for want of prosecution.

6.  At the hearing before this Court, the Petitioner through counsel confirms that it has no objection to the court dismissing the Petition for want of prosecution.

7.  The way in which the Petitioner and the Petitioner’s solicitors have conducted the proceedings is unacceptable.

(1)  Winding up petition is a draconian proceeding and should only be resorted to if a petitioner has a genuine wish to seek a winding-up order against the company. The court expects a petitioner to prosecute a winding up petition with due dispatch. This includes answering the requisitions raised by the court, complying with the procedural requirements under the CWUR and obtaining a Registrar certificate without due delay[1] and attending any hearings scheduled for the petition.

(2)  It is irresponsible for a petitioner to present a winding up petition against a company and fail to take step to comply with the procedural requirements and answer the requisitions raised by the court.

(3)  It is also abusive for the petitioner to do so. Once a petition is presented, the company will be adversely affected by the petition as it cannot dispose of any assets or move its funds deposited in the bank accounts (even in the ordinary course of business) without a validation order granted by the court under s.182 of the Companies (Winding up and Miscellaneous Provisions) Ordinance (Cap. 32).

(4)  If a petitioner no longer wishes to pursue the petition, the proper course should be to apply for leave to withdraw the petition (if it has not been advertised) or to have the petition be struck out or dismissed (if it has been advertised) as soon as practicable.

8.  In future, if a petitioner fails to answer the requisitions raised by the court or to obtain a Registrar certificate within 3 months from the date of the petition or fails to attend any hearing of the petition, in the absence of any good reasons, the Master may likely refer the Petition to a Companies Judge for dismissal for want of prosecution without issuing any warning letter to the petitioner’s solicitors. The court may also order costs against the petitioner on a higher scale to reflect the disapproval of the court on such conduct of the petitioner.