RE WANG FULL CONSTRUCTIONS LTD

HCCW 479/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 479 OF 2007

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J U D G M E N T

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1.  This is a creditor’s petition to wind up Wang Full Constructions Limited (“the Company”).  The petitioner is Chau Yee Chai Henry trading as San Harvest Engineering Company.  The amount of the debt demanded by the petitioner in the demand served on 25 September 2007 was $313,300.00, for goods and services supplied by the petitioner to the Company regarding installations at the Hong Kong International Airport and is made up as follows:

(1)     $294,000.00, being 70% of the price and the outstanding balance for 35 sets of stainless steel racks supplied by the petitioner to the Company in May 2007; and

(2)     $19,300.00, being the price for maintenance works concerning a water tray and the supply and installation of a metal support.

2.  Until 18 June 2008, the Company was represented by solicitors.  The solicitors have obtained leave to cease to act for the Company.  The Company filed 2 affirmations by Leung Chi Wai (“Leung”), who claimed to be its foreman, to oppose the petition on the ground that the petitioning debt is disputed bona fide on substantial grounds.  The Company has not appeared at the hearing today notwithstanding it has received notice of this hearing.

3.  I would first relate the background matters not in dispute.

4.  The Company was engaged in the business of the provision of engineering and maintenance services.  In March 2007, Union Contractors Limited (“UCL”) obtained a contract from the Airport Authority to supply and install 57 sets of metal racks in the Airport.  The racks must be made of stainless steel grade 316.  UCL sub-contracted the works to Leung Hing Building Construction Limited (“Leung Hing”) and Leung Hing further sub-contracted the works to the Company.

5.  The site agent of the Company at the time was Lee Wang Yip (“Lee”), who introduced Leung to the petitioner.  The petitioner sent the Company a quotation dated 29 March 2007 in respect of 35 sets of the racks, at the unit price of $12,000.00.  This was accepted by the Company, and 30% of the price was paid to the petitioner in April 2007 as deposit, as required under the quotation.

6.  It is not in dispute that the 35 sets of racks were delivered by the petitioner to the Airport in May 2007.  The petitioner issued 2 invoices to the Company dated 7 May 2007 for the outstanding balance of $294,000.00.  The invoices were not paid.

7.  The ground for disputing liability raised by the Company was that the petitioner did not deliver to the Company a certificate of the supplier to verify that the stainless steel used in the manufacture of the racks was of grade 316.  It was further alleged that the petitioner had admitted to Leung orally in early September 2007 that the stainless steel used was of grade 304, which was inferior.  Finally, it was claimed that the Company had rejected the racks in September 2007.

8.  The petitioner denied he had ever told Leung that the stainless steel used was of a different and inferior grade.  More importantly, the petitioner has adduced evidence to show that he had provided the supplier’s verification certificates to Lee before Lee left the Company’s employment in May 2007 and he exhibited the copy certificates retained by him.  These certificates bore the chops of the suppliers and certified that the stainless steel used was of the type 316L, being the low carbon version of grade 316, which complied with the required standard.  The petitioner said he had told Leung in June 2007 about the delivery of these certificates to Lee.

9.  In Leung’s second affirmation in answer, he disputed that the Company had ever received the certificates from Lee and alleged that he was unable to contact Lee after Lee left the employment of the Company.

10.  The petitioner procured Lee to make an affirmation in reply.  Lee confirmed that he had received the certificates from the petitioner and he had placed them in the document in-tray of the Company, in accordance with the normal practice of the Company.  Lee had no reason to think the certificates did not come to the notice of Leung.

11.  According to Lee, the Airport Authority has already used chemicals to test whether the racks supplied were made of grade 316 and the suppliers’ certificates are no longer necessary.  That was why the Authority was content to fully settle the contract price with UCL which in turn paid Leung Hing.  Lee produced a letter from UCL dated 28 March 2008 to confirm that UCL has not received any complaints from the Authority regarding the quality of the 35 racks supplied in May 2007, that it has fully paid the progress payment in the contract price of the 35 racks to Leung Hing, except the final amount which it will release after settlement of the final amount by the Authority, and that the Authority has already used chemicals to test whether the racks supplied were made of grade 316 stainless steel.

12.  It is pertinent to note that Leung was and is the sole shareholder and a director of Leung Hing at all material times.  His statements in his first affirmation that he was very worried how Leung Hing would take action against the Company, how much compensation the Company would need to pay Leung Hing as a result, that the Company has not revealed to Leung Hing the stainless steel used for the racks was of a different grade (as alleged by him) and that was why the Company has not yet taken action against the petitioner, are wholly disingenuous.

13.  As to Leung’s allegation that the racks were rejected by the Company in September 2007, there is no dispute on the evidence that the racks are in use at the Airport, when the affirmation of Lee was filed in April 2008.  There is no return of the racks to the petitioner.

14.  The grounds raised by the Company in disputing liability to settle the debt of $294,000.00 are simply incredible.

15.  The other items of claim against the Company, in the amount of $19,300.00, were fully supported by documents.  There were quotations issued to the Company countersigned by Lee on the Company’s behalf in March 2007, reports issued by the Authority on the completion of these works in April 2007, invoices issued by the petitioner to the Company in May 2007, and the confirmation letter of UCL to the petitioner dated 28 February 2008 that it had paid to Leung Hing the price in full for these works.

16.  The Company has no or no credible reason for disputing the liability for this claim either.

17.  The Company has failed to establish a bona fide dispute of the petitioning debt on substantial ground.

18.  I make an order to wind up the Company.  The petitioner’s costs are to be paid out of the Company’s assets.