RE LEAN TA TRANSPORTATION LTD

HCCW 383/1997

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 383 OF 1997

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D E C I S I O N

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1. This is a summons by the liquidators of Lean Ta Transportation Limited ("the Company") under section 268 of the Companies Ordinance, Cap. 32. The liquidators apply for an extension of time to disclaim onerous property of the Company and for leave to disclaim such property.

2. The property in question is the shares owned by the Company over various pieces of land in Yuen Long ("the Land"). They are DD 105 lot 1270 section A; DD 105 lot 1271 section A; DD 105 lot 1312 section A; DD105 lot 1313 remaining portion; DD 105 lot 1314 remaining portion; DD 105 lot 1315 remaining portion; DD 105 lot 1318 remaining portion; and DD 101 lot 43 section B sub-section one. The Land Office records show that the Company owns two out of six shares ("the Share of Land") as a tenant in common of the Land.

3. Early on, the liquidators had commenced preparation for selling the Share of Land but were met with a number of difficulties.

4. Firstly, there is the loss of title deeds. The liquidators have not been able to locate the title deeds of the Share of Land from the books and records of the Company. In November 1998, they had written to the solicitors acting for the Company in previous land transactions and the solicitors had replied that all title deeds relating to the sale and purchase of the Share of Land had been returned to the Company. In October 2000, the liquidators had sought legal advice as to how the title deeds could be reconstituted and were advised that the costs for obtaining copies of the title deeds for the Land could range from HK$6,000 to HK$30,000 per lot, i.e. between HK$48,000 and HK$240,000 for the Land. I should mention that only a very limited amount of assets of the Company has been realized, according to the first affirmation of the liquidators filed in support of this application in February 2003. The cash with the Company only amounted to HK4,228.21. Since their appointment, the liquidators have already incurred costs in excess of HK$100,000 in relation to the Share of the Land which cannot be repaid.

5. Secondly, the liquidators had sought advice from professional estate agents and valuers on the prospects for disposing of the Share of Land and were advised that the Share of Land is unlikely to be saleable.

6. Prior to 1999, they had been informally advised by Vigers that the estimated value of the Land would be between HK$2.8 million to HK$5.6 million, so the value of the Share of Land would be 1/3 of the estimated value. However, before any sale a formal valuation would be required and for a formal valuation to be done, it would be necessary to carry out a site survey costing HK$50,000. Further, there would be other costs of disposal including advertising and the costs of estate agents. Vigers had approached several potential buyers for the Share of Land but none had shown interest. The main reasons were that the Company was holding the Share of Land as a tenant in common; there was no exact boundary to the Share of Land and no proper identification of the site; potential buyers did not want to be involved in a transaction which would bring legal complications; besides, the Land is agricultural land.

7. Since 1999, the liquidators had liased with another valuer Messrs Victor Morris and Yau (now Dovebid (HK) Limited; "Victor Morris") on the prospects to sell the Share of Land, on the basis that advice was to be given by Victor Morris at no costs unless the Share of Land would be successfully disposed of. In April 2002, Victor Morris advised the liquidators that the Share of Land was not likely to be saleable for these additional reasons: the other co-owners were not interested in a possible sale of the Share of Land to them; the Land is in an odd shape with difficult access to the site; four potential buyers have been approached but none were interested. Victor Morris advised surrender and disclaimer of the ownership over the Share of Land.

8. Demands for rent and rates were made in 1999 for three lots which formed part of the Share of Land in the total sum of HK13,901.70. The liquidators were subsequently notified that of these three lots, one lot is subject to both rent and rates.

9. The liquidators sought an extension of time to exercise their power to disclaim the Company's interest in the Share of Land. Their progress of obtaining information about the Share of Land has been hindered by the absence of books and records and the statement of affairs, and that the directors are not contactable or cooperative. It was explained that there was no intention to delay the application as the liquidators had to seek advice from professional estate agents and valuers and it took time for the valuers to approach potential buyers on their behalf.

10. I am satisfied that it would be appropriate to grant an extension of time in this instance.

11. On 18 February 2003, I gave directions that the liquidators should give notice of the application for leave to disclaim to the co-owners of the Land who should have an opportunity to be heard on the application, and the liquidators should file further evidence on their efforts to locate the other co-owners.

12. The liquidators served a notice of intended disclaimer to the co-owners on 15 and 16 May 2003. One of the entities served, being Treasure Wise Limited ("Treasure Wise"), filed a notice on 29 May 2003, claiming an interest in DD 105 lot 1318 remaining portion, DD 101 lot 43 section B sub-section one, DD 105 lot 1270 section A, DD 105 lot 1271 section A and DD 105 lot 1312 section A ("the Claimed Properties"). The nature and extent of Treasure Wise's interest as appeared from its notice is that its predecessor in title had agreed and covenanted with the Company and the predecessor in title of the other co-owners by virtue of a Deed of Partition dated 14 November 1988 that each would grant unto the other, a full uninterrupted right of way over and along the Claimed Properties, and that the said right of way is vested in Treasure Wise.

13. Apart from Treasure Wise and telephone enquires received from two co-owners Luen Tai Leather Company Limited and Lean Shen Transportation Limited (they were explained the effect of the Notice served by the liquidators and the present application and were asked to seek independent legal advice if necessary), no notice has been received from any co-owner claiming interest over the Land.

14. Notice of the hearing today was given by the liquidators to the Official Receiver and the other co-owners. None of the co-owners have attended the hearing today.

15. On 15 July 2003, the solicitors acting for Treasure Wise wrote to the liquidators stating that they do not object to the application of the liquidators and would not attend the hearing.

16. Under section 268(2), the disclaimer shall operate to determine, as from the date of disclaimer, the rights, interest and liabilities of the Company, but shall not affect the rights or liabilities of any other person. So the rights of co-owners, including Treasure Wise, would not be affected and Treasure Wise would continue to enjoy the right of way over the Claimed Properties.

17. As of today, the liquidators have not received any demands for rate and government rent other than in respect of the tenement of DD 105 lot 1270 section A. The liabilities of the Company to pay rent and rates would not be thrown on to the other co-owners. The Commissioner of Rating and Valuation is empowered to apportion rateable values under the Government Rent (Assessment and Collection) Ordinance, Cap. 515. There is also evidence before the court of an informal apportionment by the Commissioner of Rating and Valuation in the assessment for the tenement of DD 105 lot 1270 section A.

18. In the circumstances, I propose to grant the application of the liquidators. I make the following orders:

(1) the time for the liquidators to exercise their power to disclaim the Company's interest in the Share of Land be extended to seven days from today;

(2) leave to the liquidators to disclaim the Company's interest in the Share of Land; and

(3) the costs of this application be treated as an expense of the liquidation.