RE LONG ENGINEERING MANAGEMENT LTD

HCCW 386/2025

[2026] HKCFI 834

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO 386 OF 2025

_______________________

_________________________

_______________________________

J U D G M E N T

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1.  Dixie Engineering Company Limited (the “Petitioner”) presented a petition on 26 June 2025 to wind up Long Engineering Management Limited (the “Company”) based on the Company’s failure to pay the Petitioner the amount of HK $917,066.83 (the “Debt”) it demanded in a statutory demand (“SD”) issued to the Company on 3 June 2025. At the conclusion of the hearing judgment was reserved which I now give.

Background facts

2.  On 24 June 2020, the Highways Department of the HKSAR Government (the “Highways Department”) awarded the Main Contract of its construction project of Contract No. HY/2019/21 (the “Project”) to the Petitioner.

3.  The Petitioner entered into a written subcontract agreement on 16 September 2020 with Long Engineering Limited (“LEL”) subcontracting the works under the Main Contract to LEL (the “Sub-Contract Works”).

4.  LEL sub-contracted part of the Sub-Contract Works to the Company (the “Sub-subcontract”), primarily for the provision of labourers (the “Sub-subcontract Works”). The work site of the Project was in Tuen Mun (the “Work Site”).

5.  On 15 January 2025, the Petitioner wrote to LEL, alleging that LEL had failed to attend to the Work Site and to proceed with the Sub-Contract Works which LEL disputes. The Petitioner does not have any contractual relationship with the Company (being a lower tier sub-sub-contractor) or its employees.

6.  On 17 January 2025, the Petitioner terminated its Sub-Contract with LEL. It evicted LEL and then denied entry to the Company and their staff to the Work Site and removed their belongings and assets therefrom without consent.

7.  The SD issued on 3 June 2025 was in respect of the Debt which is said to arise solely from payments made by the Petitioner of outstanding wages owed by the Company to 28[1] of its employees who worked on the Project (the “Employees”) pursuant to section 43C of the Employment Ordinance, Cap 57 (“EO”).

8.  While letters from the Petitioner’s solicitors (“NWK”) dated 9 and 17 June 2025 informed the Company of the SD having been ‘served’ pursuant to section 178 (1) (a) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance Cap 32, those letters did not enclose a copy of the SD despite the Company’s request. The Company only obtained a copy of the same by collecting it from NWK’s office.

9.  The Company’s solicitors (“Chin”) responded by their letter dated 23 June 2025 specifically disputing the Petitioner’s entitlement to the Debt on various grounds, including the following:

•  the Petitioner’s termination of LEL’s Sub-Contract was unlawful and invalid;

•  it constructively terminated the Company’s Sub-subcontract, compromising the Company’ ability to comply with its duties under the EO (to provide work and place of work for its employees);

•  such conduct caused a multitude of legal proceedings between the Company and its employees and gave rise to costs the Company had to incur and in respect of which it would seek to recover as damages; and

•  the Company disagreed with the amounts of ‘wages’ paid by the Petitioner to the employees whose entitlement to the same is disputed.

10.  The Company claimed that the Petitioner had solicited and induced its employees to breach their employment contracts and work for the Petitioner directly.

11.  The Petitioner did not respond to the Company’s invitation to withdraw the SD. Instead, it presented the Petition 3 days later.

The Petition

12.  The Petition is a four-page document which did not address any of the points raised in Chin’s letter disputing the Debt. It never attempt to communicate with the Company its reasons for disputing the amounts of wages paid to the employees.

13.  The sole legal basis of the Petitioner’s claim to be entitled to be paid the Debt is pursuant to section 43F (1) of the EO which provides that if a principal contractor pays to an employee any wages under section 43C, the wages so paid shall be a debt by the employer of that employee to the principal contractor.

14.  Section 43C deals, inter alia, with the joint and several liability of a principal contractor and superior sub-contractor to pay the wages of employees of sub-contractors. In the present case, the Petitioner is the principal contractor, LEL is a superior sub-contractor and the Company is a sub-sub-contractor for the Project.

Whether the Company has raised a bona fide defence

15.  The key issue is whether the Company is able to demonstrate that it has a bona fide defence to the Petitioner’s claim for payment of the Debt.

16.  The Company contends that the Petitioner’s payments to the Employees are not payments pursuant to section 43C[2].

17.  For present purposes, the 4 subsections of section 43C may be summarised as follows:

(1)  if any wages become due to an employee employed by a sub- contractor to perform on any work the sub-contractor has contracted to perform and such wages are not paid within the period specified, the principal contractor and every superior sub-contractor are jointly and severally liable to the employee;

(2)  the joint and several liability of the principal contractor and superior sub-contractor are subject to specified limitations;

(3)  subject to (4) below, liability for the wages payable under subsection (1) does not arise unless a notice under section 43D is received by the principal contractor or superior sub-contractor; and

(4)  where any claim in respect of wages payable under subsection (1) is filed with the Labour Tribunal and an award or order is made in favour of the employee, the wages shall be paid as directed and in the absence of any direction within 30 days of the making of the award or order.

18.  In connection with subsections (3) and (4) above, no liability arises unless there are valid section 43D notices or claims have been filed by some of the Employees with the Labour Tribunal and an award or order is made in respect of each of those claims. In the present case, the Labour Tribunal has not made any award or order in respect of any of the Employees.

19.  In the circumstances, the existence of valid section 43D notices is determinative. It is necessary to consider closely the provisions of section 43D as to what would constitute a valid section 43D notice. Of critical importance are subsections (1) and (3):

(a)  subsection (1) sets out 5 categories[3] of information required for a valid section 43D notice; and

(b)  subsection (3) states that no liability to pay any wages under section 43C to the employee of the subcontractor can arise if that employee fails to serve a notice on the principal contractor under subsection (1).

20.  It was not until the Petitioner filed the affirmation of Raymond Cheng (“Mr Cheng”) on 29 August 2025 (“Cheng 1^st”) in reply to the affirmation of Chan Chi Man (“Mr Chan”) dated 8 August 2025 (the “Chan 1^st”) that the Petitioner disclosed documents[4] said to support the wage claims.

21.  Mr Cheng dealt with the Employees’ claims on behalf of the Petitioner. In §6 of his affirmation (filed in reply to Chan 1^st), he describes the batch of documents in CR 1 as follows:

“Each of the Employees had either issued a notice of claim to the Petitioner under section 43D of the Employment Ordinance or lodged a claim in the Labour Tribunal against the Company as direct employer and the Petitioner as the main contractor of the Project. The Petitioner does not have a complete set of the claim forms lodged by the Employees in its possession but only have those provided by the Labour Tribunal.” (Emphasis added)

22.  The 1^st page of CR 1 is an undated “Request for Advancing of Wages” (the “Request”) made by 11 individuals itemising outstanding wages for the month of December 2025. However, those individuals claim to be employed by LEL rather than the Company. In any event, only 4 of those names match the names of the Employees named in the “List[5]”.

23.  The remaining documents in CR 1 (the “remaining documents”) relate to claims made by 23 individuals, seemingly in the Labour Tribunal (the entity identified in Cheng 1^st as the recipient of the claims lodged). As Mr Cheng acknowledged, the Petitioner does not have a complete set of the claim forms lodged by the Employees. CR 1 consists of documents said to be provided to the Petitioner by the Labour Tribunal.

24.  The Company contends that the documents disclosed by the Petitioner do not constitute valid section 43D notices. In Wing Lee Engineering & Technical Services Ltd v Alliance Building Services Engineering Limited, CACV 275/2006, unrep., 27 April 2007, the Court of Appeal held (at §§33-38) that section 43F of the EO is not engaged if no section 43D notices have been served on the principal contractor, even if payment was made by it to an employee of the subcontract.

25.  It was only at the hearing that Mr Vincent Li, counsel for the Petitioner made submissions concerning the remaining documents but did not address the points raised in §22 above concerning the Request.

26.  The Court was taken to the agreed translation[6] of a representative sample of Part II of Labour Department Form 136 (a) (the “LD Form”). The representative sample relates to a claim made by Chan Ka Fai[7] (“Claimant Chan”). His LD Form, in pertinent part, is reproduced below:

“

LRD Ref. No.:________

Part II

Important Notice/Disclaimer:

The Labour Department does not represent or endorse the accuracy or reliability of any of the information or content of the claim stated below. … produced by … claimant alone … need to be verified or clarified during the conciliation meeting where both parties could produce further evidence (e.g. employment records) for the said purposes.

In order to facilitate conciliation, a copy of this page will be provided to the party being claimed against for reference before the party being claimed against.

Name of Claimant: Chan Ka Fai (in block letters) Signature of Claimant: (signed)

I wish to claim the following:	Amount
Wages: (from 2 December 2024 to 31December 2024)	$25850
…
Overtime pay: (from 4 December 2024 to 31 December 2024)	$1098
…
Total amount :	$26948
…

…

LD 136(a) (Rev. 2023)”

27.  Mr Li referred to the prefix “LRD” to the reference number appearing at the top right-hand corner and the last line of the LD Form, submitting that they show that the LD Form emanates from the Labour Department. The 1^st paragraph states that the amount claimed was to be verified or clarified at the conciliation meeting at which both parties (Claimant Chan and the unidentified person(s) against whom the claim is made) would have the opportunity to produce further evidence.

28.  The List shows that the Petitioner paid the amount (shown in the form exhibited) claimed by Claimant Chan on 17 January 2025. Mr Li submitted that the payment was the result of the conciliation meeting concerning Claimant Chan’s claim. Cheng 1^st (at §8) reads as follows:

“I attended various conciliation meetings which were arranged by the Labour Department for resolution of the Employees’ wage claims, as well as hearings in the Labour Tribunal, as the Petitioner’s representative. The Company was represented by one Ms Mandy Chow [(“Ms Chow”)] in most of these meetings/hearings. In all of the meetings/hearings which I attended, [Mr Chan] was not there. The stance taken by [Ms Chow] in these meetings/hearings was that the Company would not dispute the outstanding wages, but she had no instruction from the Company to make any payment.”

29.  The approach taken by the Petitioner is that:

(i)  all the payments made by the Petitioner and set out in the List are based on the outcome of various conciliation meetings/Labour Tribunal hearings;

(ii)  the Company was represented by Ms Chow at most of the meetings/hearings which Mr Cheng attended and Ms Chow did not dispute the outstanding wages claimed; and

(iii)  the LD Form coupled with declarations exhibited in the CR 2 (considered in §32 below) operate as ‘deemed’ notices for the purposes of section 43C (3).

30.  Pausing there, the schedule attached to LEL’s letter to HD dated 5 February 2025[8] upon which Mr Li relies lists Ms Chow as one of LEL’s employees and not the Company’s. Mr Joey Chan, counsel for the Company informed the Court that he has instructions that Ms Chow an LEL employee represented LEL and not the Company at some of the conciliation meetings. It would appear that the Petitioner relies on Cheng 1^st at §8[9] for his submission that Ms Chow was representing the Company and nothing more.

31.  Apart from being ambiguous, the passage from Cheng 1^st (cited in §28 above) is deficient in many respects. To mention the most obvious (but by no means exhaustive) matters:

(i)  Mr Cheng does not list the dates of hearings he attended nor the claim(s) that those hearings concerned. In other words, the hearings were unparticularised in many respects.

(ii)  In Claimant Chan’s case, 3 payments were made to him on different dates. The LD Form exhibited relates to the 1^st payment. There is no explanation concerning the other payments and why the Petitioner paid them.

(iii)  No recipient is identified on the LD Form. The employee may claim against any one or more of the parties liable under the EO to pay his wages. Thus, they include the Petitioner, LEL and the Company.

(iv)  As the Petitioner admits, CR 1 is incomplete[10]. It is not understood why that should be so. Presumably, the Petitioner received a notice/request to attend the conciliation meetings. If so, there must have been some written communication from the Labour Department. Moreover, it sheds no light on whether the Petitioner made any request for the full set of documents from the Labour Department.

(v)  Conciliation meetings are not the same as Labour Tribunal hearings.

(vi)  What constitutes an “outcome” of a conciliation meeting is not explained nor its legal effect (if any), nor the relationship (if any) between conciliation meetings and Labour Tribunal proceedings.

(vii)  What is very clear from the evidence is that no Labour Tribunal award or order has ever been made in respect of the Employees.

32.  CR 2 consists, inter alia, of declarations signed by 12 of the 28 Employees. CR 1 and CR 2 together do not constitute valid section 43D notices as they do not comply with the requirements for a valid section 43D notice. The declarations in CR 2 appear to record private settlement arrangements with the Petitioner, with each of the 12 confirming that he would not pursue claims against the Petitioner regarding wage liabilities owed by the Employee’s employer.

33.  Valid section 43D notices require that they be in writing, stating 5 categories of information including the address of the place of employment of the employee. This information may be important because under section 43C (2) the liability of the principal contractor to pay wages jointly and separately applies to subparagraph (a) only. If the staff concerned is an office worker who is not working at the Work Site, the Company will know that section 43C does not apply to that employee.

34.  Apart from the above, the Company takes issue with whether one of the 27 individuals “Cheung Yuen” [張源] named in the List was an employee of the Company[11]. There is no section 43D notice in relation to this individual upon which the Petitioner could rely. Instead, in §18 of his affirmation Mr Cheng states that he “personally handled the wage claim of [張源] but gives no explanation as to why he considered it appropriate to mark [張源] as an employee of the Company, rather than LEL, in his own record.

35.  As appears from the Company’s letter sent in response to the SD[12] that preceded the presentation of the Petition, another core issue of dispute is whether the payments made by the Petitioner to the Employees can properly be characterised as a payment of wages made pursuant to section 43C.

36.  As elaborated in Chan 1^st at §21, it is a standard term in the employment contracts of the Company to pay a daily rate to the Employees as an advance payment for setting off against statutory holidays and annual leave (the “Statutory Payments”) that the Employees may be entitled in the future. Section 43C is only engaged “if any wages become due to an employee who is employed by a sub-contractor and such wages are not paid within the period specified in section 23, 24 or 25 [of the EO]”. Thus, a statutory debt can only arise to the extent that there is a default in payment of wages under the EO. Payments made by the Petitioner above what the Company owes the Employees are not recoverable and advance payment and over-payment of wages are lawfully deductible from an employee’s wages.

37.  It is clear from the employment contracts exhibited by the Company that the daily rate paid to the Employees that the advance payment is not a token amount but appears to be over 42% of the daily rate. In the circumstances, the Company is obviously entitled to question and challenge the amounts claimed by the Employees and paid by the Petitioner as unpaid wages without more.

38.  Having perused the documents in CR 1 and 2, I agree that even when read together they are not valid section 43D notices.

39.  Insofar as they are said to reflect claims lodged with the Labour Tribunal (which cannot be the case[13]), they cannot assist the Petitioner since they are not “awards or orders” of the Labour Tribunal within section 43C (4).

40.  I should mention that at the hearing the Petitioner’s opening submissions attached considerable significance to correspondence that took place between February and April 2025 summarised in the table below:

Date	Sender	Recipient
05/02/2025	LEL	HD[14]
10/03/2025	LEL and the Company[15]	Engineer of the Project[16]
13/03/2025	LEL	Mannings
17/03/2025	Chin	Ng Kwok Keung[17]
25/03/2025	LEL	HD[18]
15/04/2025	NWK[19]	Chin

41.  The thrust of the Petitioner’s submissions as regards the correspondence set out above is that it was meant to exert maximum pressure on the Petitioner to pay the wages of the Employees and to dissuade Employees from claiming against the Company even though the Company as employer had a non-delegable duty to pay wages to its Employees. But the letters did no more than point out to the Recipient(s) the Petitioner’s contractual obligations as the principal contract under the EO. The EO expressly provides for the employees’ entitlement to obtain information about the principal contractor for the purpose of exercising their rights.

42.  As regards the letters sent to HD, the Petitioner was not the intended recipient of any of those letters. They were written by LEL who complains that the Petitioner’s failure to pay Sub-contract payments to LEL gave rise to financial difficulty for LEL to pay the employees. Its claims against the Petitioner is being litigated in other proceedings.

43.  In short, little assistance can be derived from those letters.

44.  Finally, I turn to Mr Li’s reliance on the ‘deeming’ provision in section 43C (3). His submission is entirely misplaced. Properly read, the word ‘deem’ refers to service and not ‘notice’. The EO does not contain any mechanism to replace a notice in writing by oral discussions or some other informal matters.

Conclusion

45.  I have no hesitation in concluding that the Company has demonstrated that it has a bona fide defence to the Debt. It has shown a strong case that there are no valid section 43D notices to support the Debt, such that the Petitioner cannot rely on section 43F (1).

46.  Further, in the 23 June letter, the Company outlined its case against the Petitioner for wrongful inducement of breach of contract on the part of employees. The timing and rapid development of the events in a short time in mid-January supports the Company’s contention that the termination and the eviction had long been planned by the Petitioner and well in advance of its abrupt termination of LEL’s Sub-contract in mid-January. The List shows that 9 of the Company’s employees who became employed by the Petitioner started receiving their 1^st payment from Petitioner between 13 and 17 January 2025. LEL’s contract was only terminated on 17 January 2025. This state of affairs cries out for an explanation and that is properly a matter for discovery which will only take place if there is a trial.

47.  If the poaching of employees did occur, one direct loss from the tort is the outstanding payment in lieu of notice from the employees and could well have resulted in the Company’s economic loss from the termination of the Sub-contract and eviction from the Work Site.

Petitioner's obligation to provide sufficient information on the facts relied upon in its Petition

48.  Mr Joey Chan referred to Re China Oceanwide Group Limited [2023] HKCFI 455 where (at §§20-32) Linda Chan J considered the requirement in some detail. Of particular relevance are §§28 and 30:

“28. It seems to me that the requirement discussed in In re Fildes Bros. Ltd apply equally, if not with greater force, to a petition presented by a creditor on insolvency ground. Unlike a ‘just and equitable’ petition which is determined after a trial with the benefit of pleadings, list of documents and witness statements filed by the parties, a petition presented by a creditor is almost invariably determined by the court summarily, without any pleadings, discovery or witness statements. It is all the more important for the court to insist that a petitioner must set out its case and the facts relied upon in the petition so that the company would know what case it has to meet at the hearing. Indeed, it is necessary for the court to insist on such requirement as otherwise the company and the court would have to trawl through the affirmations and the exhibits filed by the parties, which are often voluminous as the affirmants (and those advising the parties) seems to think that they can raise any facts and exhibit any documents in support even though such facts have not been pleaded in the petition.

…

30. The above principles are well-established and should be familiar with practitioners. However, it has become increasingly common for a petitioner to present a winding up petition against a company which only contains an averment that the company failed to satisfy the statutory demand served upon it as the basis for contending that the company is insolvent and unable to pay its debts. The present case is a paradigm example. The Petition is a 3-page document but the hearing bundles contain over 1,626 pages. It is of course unobjectionable for the petitioner to take this course if at the time it presented the petition, it was not aware of any bona fide dispute on substantial grounds in respect of the debt and the company had not challenged the statutory demand.”

49.  Given the Company’s letter dated 23 June 2025 sent in response to the SD making known its stance that it disputes the Debt, the Petitioner could not but have known that the Company would oppose the Petition. The Company disputes, inter alia, the correctness of the salaries paid to the employees. Further, it claims damages for the Petitioner’s wrongful solicitation and inducement of the Employees to breach their employment contracts with the Company by abandoning their duties and working directly for the Petitioner, causing loss to the Company. In other words, it is a claim for the tort of inducing breach of contract.

50.  Without making any response to the Company’s letter, the Petitioner presented its 4-page Petition supported by a short affirmation that did not answer any of the grounds of opposition made by the Company. Notably, it never sought to communicate with the Company.

51.  A call-over hearing was scheduled to take place on 20 October 2025 before Linda Chan J. On 13 October 2025, the parties made a joint application by way of Consent Summons for an order, inter alia, that the Petition be adjourned for argument with 3 hours reserved. The response from the Judge contained in the Court’s letter of 16 October 2025 reflects the views she had expressed in Re China Oceanwide. She opined that “The dispute raised by the Company is not one which should be determined in winding up proceedings and the Petition should be withdrawn[20]”.

52.  To succeed on its Petition, the Petitioner has to prove its claim against the Company by proving that it has valid section 43D notices and/or Labour Tribunal awards or orders. Instead, as is clear from §§ 20-42 above, its case is sieve like, riddled with holes.

53.  Mr Li’s complaints that some of the points taken by the Company in its written submissions did not feature in Chan 1^st and that the Company had ample time to apply for leave to file an affirmation in response to the matters raised in Cheng 1^st are disingenuous. It would not be right for the Company to initiate rounds of exchange of affidavits/affirmations to try and resolve those differences. By the very fact that the Company had written to the Petitioner challenging its entitlement to the Debt, it was for the Petitioner to seek to resolve the issues before presenting the Petition.

54.  It belies a failure to understand the Petitioner‘s obligation as explained in Re China Oceanwide which Mr Li distinguished on the basis that the Petitioner had given sufficient information to the Company for it to know facts and grounds they have to meet when it had not.

55.  At the hearing, Mr Li sought to dismiss the relevance of Re China Oceanwide on the basis that the facts in that case were very different (relating to redemption of senior notes/debenture). He insisted that the Petition was not a simple averment but contained sufficient information to let the Company understand or know the facts and grounds they have to meet in opposing the Petition.

56.  The Petitioner simply brushed aside the very pertinent remarks made in the Court’s letter dated 16 October 2025. While the Petitioner accepts that the hearing bundles now before the Court would have been before the Judge, Mr Li submitted that after his clarification at the call over hearing on 20 October 2025 that there was no contractual relationship between the Petitioner and the Company, the Judge ‘agreed’ that this case should be adjourned for substantive argument.

57.  That explanation does not sit happily with the substance of the Court’s letter of 16 October 2025, in particular the comments made by the Judge in the last paragraph. The Consent Order was made at the hearing which was 4 days after the Court’s letter, the Petitioner having decided to press ahead with the Petition.

58.  The Petitioner chose not to heed the Judge’s clear warning as to costs should it proceed with the Petition. In the circumstances, the Petitioner’s conduct merits a costs order that would mark the Court’s displeasure.

Order

59.  The Petition is dismissed.

60.  Having regard to §58 above, I make an order nisi that the costs of the Petition be to the Company with certificate for counsel, such costs to be paid forthwith and on an indemnity basis.

61.  It is directed that

(i)  the Company do lodge its statement of costs within 14 days hereof;

(ii)  the Petitioner do lodge its list of objections (if any) to the statement of costs (limited to 2 pages) within 14 days thereafter; and

(iii)  the Company do lodge its reply (if any) limited to one page within 7 days thereafter.