Re Techful Investment Ltd.

CACV 202/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 202 OF 1999

(On appeal from Companies Winding-up Proceedings No. 315 of 1999 )

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J U D G M E N T

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Rogers, J.A. :

1. This matter arises out of a winding-up petition. The winding-up petition is dated 9th April 1999 and was presented on a very simple basis. There was a judgment entered on 23rd July 1998 for a sum of $1,768,627. The order was amended twice, finally on 8th February 1999. There was a demand for payment on 12th February 1999. Then followed the winding-up petition.

2. The petition was supported by an affirmation of Mr. Yeung, which was dated 9th April 1999, verifying the petition. Under rule 32(1) of the Companies (Winding-up) Rules, it is provided that :-

"Affidavits in opposition to a petition that a company may be wound up by the court shall be filed within 7 days, or such longer time as the court may direct, of the date on which the affidavit verifying the petition is filed and notice of the filing of every affidavit in opposition to such petition shall be given to the petitioner or his solicitor on the day on which the affidavit is filed."

Neither the company nor anybody on its behalf filed any such affidavit in opposition to the petition.

3. The first hearing of the winding-up petition was before Master Kwan in Court exercising jurisdiction under section 180A of the Companies Ordinance, sub-section (1) of that section reads :-

"(1) Subject to general rules limiting the power conferred by this section, the jurisdiction of the court under this Part may, in the case of an unopposed petition for winding-up by the court, be exercised by the Registrar of the High Court."

4. The hearing before Master Kwan took place on the 26th May. We have been told today that there was filed with the Court, on the 25th May, a copy of the Board minutes in Chinese of Techful Investment Limited. The directors attending there were Mr. Pun and Mr. Mai, Mr. Pun was the Chairman. It was resolved that the company appointed Mr. Mai to represent the company to attend the relevant application for winding-up hearing and to defend. That document was not drawn to the attention of the Master nor, as I have said, was it drawn to our attention until this afternoon. Had it not been for that document, my decision in this case would be different.

5. What took place at the hearing was that Mr. Mai attended and he asked the Master for an adjournment, he said to the Master :-

"Owing to various reasons, it was not until the 12th May and 20th May that (we) discussed with the creditor, through their solicitor, about the settlement agreement as well as the amount and terms of repayment. However, we received a reply only yesterday, on 25th May, that the creditor did not accept our proposal of settlement. As far as we understand, there is so far only one creditor applying for a winding-up order against our company. We believe that there are still chances to reach a settlement with the creditor. (One of the solutions) among others would be to increase the amount of repayment. I am now asking you Master to adjourn the matter for 2 weeks so that we can have enough time and can continue to negotiate the terms of settlement tomorrow."

6. The stance taken by those representing the petitioner at the hearing was that they wished to have no such negotiations and they pressed the Master for an immediate winding-up order. On that basis, the Master was quite justified, it seems to me, in taking the view that there was no prospect for any negotiations. The other side, in the negotiations, namely, the petitioner was declaring itself unwilling to negotiate and any basis for an adjournment simply fell away.

7. At the end of the hearing, as has been identified in paragraph 11 of Mr. Mai's affirmation, Mr. Pun addressed the Master but the Master was unwilling to listen. What he said was :-

"Sorry I want to say something. I want to say, we are not defending, (we're) only asking for one week to ....."

And then the Master interjected :-

"Right, I'm very sorry. I've given your representative an opportunity. I can't hear."

8. As Mr. Scott, S.C. has said it is perhaps open to question exactly what Mr. Pun wanted to say as he did not finish his sentence, although it does seem fairly obvious.

9. At the first hearing of this appeal, we were told that the statement of affairs was to be filed last Friday, the day after the hearing. It was not so filed. We were not told the reasons that an extension was requested from the Official Receiver. One can only surmise that this company has certain difficulties because at the last hearing, I asked Mr. Scott, S.C., who appeared on behalf of the company, whether he was prepared to confirm to the Court that the company was solvent. He was not prepared to so confirm nor to undertake to file an affidavit in that respect.

10. It is quite clear that when there is no opposition to a petition for winding-up, the Master does have jurisdiction. Simply because a representative jumps up and says, "I ask for an adjournment.", unless it is an adjournment to oppose the petition, the company cannot be taken as opposing the petition. Simply seeking the indulgence of the Court to put off the evil day for no valid reason does not, it seems to me, take away the jurisdiction of the Master under section 180A which is given except in cases where the company opposes the petition. Opposition to a Petition is not constituted by the making of a request on behalf of a company that it would prefer a winding-up order to be made on some other day, particularly where there is no valid reason.

11. But, in the present circumstances, we have, as I have said, a copy of the Board resolution in which it is said that the company wishes to defend the petition. In those circumstances then, of course, the company should be permitted to defend it. The matter should have been remitted to the Judge the following Monday and the Judge would, it seems to me, have been entitled to make a winding-up order if no affidavit has been filed under rule 32, as indeed it had not been, within the time limited by that rule.

12. For those reasons, and those reasons only, I would be prepared to allow this appeal.

Godfrey, J.A. :

13. I am of the opinion that, in the events which happened in this case, the master did not have before her such an "unopposed petition" as is contemplated by section 180A(1) of the Companies Ordinance, Cap. 32.

14. Accordingly, the master had no jurisdiction to make the order which she did make, and I do not think it would be helpful further to expand on this in this judgment, since the point may call for consideration again in future cases in which the facts are different.

Nazareth V-P:

15. The question in this appeal, as it is identified, is a very short one. It is whether the petition was "an unopposed petition for winding-up". If the answer is in the affirmative, then the master would have had jurisdiction and the appeal would have to be dismissed. If the answer were in the negative, the appeal would have to be allowed. What was asked on behalf of the company was that the matter be adjourned for two weeks or so, so that it could negotiate a settlement - a settlement of which the petitioner plainly wanted no part. In the ordinary way, if the petition were unopposed, it would have been granted immediately. It was the company's stance that prevented this. That, in my view, on the particular facts plainly constituted opposition to the petition. It obstructed the immediate granting of the petition. The clear effect of that was that the petition was opposed, so it was not an unopposed petition. It follows that the appeal must be allowed.

16. I, therefore, also agree that the appeal must be allowed.