RE DUNCAN INTERIOR LTD

HCCW 10/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 10 OF 2009

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J U D G M E N T

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1.  I have before me a petition presented by Kwok Hon Po Anthony, trading as AFA Design Company against Duncan Interior Limited (“the Company”).

2.  The petition is founded on a demand for a debt of $170,000.00.  The demand was served on the Company on 15 December 2008 and the petition was presented on 5 January 2009.

3.  The petitioner now seeks leave to withdraw the petition.  I give leave to the petitioner to do so.  The only issue outstanding is the question of costs.  The petitioner seeks an order that no order be made as to the costs of these proceedings.  The Company seeks an order that the petitioner is to pay the costs of the Company incurred in defending the petition on an indemnity basis.

4.  The reason why the petition is withdrawn is because the petitioner has considered the affirmations in opposition filed by the Company on 24 and 28 February 2009, and has been advised by his solicitors it would not be appropriate to proceed with the petition in view of the dispute raised by the Company regarding the petitioning debt.

5.  It is contended by the petitioner that he should not have to pay the Company’s costs as the Company did not make known to him that his claim would be disputed until after the presentation of the petition.

6.  The petitioner has filed 2 further affirmations to deal with the issue of costs and the Company by its director and major shareholder, Tang Kin Cheung, has filed 1 further affirmation on the question of costs.

7.  It is not necessary to recite the evidence filed.

8.  I am satisfied of two things.

9.  Firstly, it is not correct for the petitioner to say that before the presentation of the petition, he did not have any idea that the claim of $170,000.00 would be disputed by the Company, or more appropriately, by the other shareholder, Mr Tang.  The Company has two shareholders, one being Mr Tang, and the other is the petitioner’s wife, Madam Leung So Mui.  She was also the other director of the Company until she was removed and a new director appointed by Mr Tang in February 2009.

10.  Mr Tang has exhibited two Chinese letters from him to the petitioner and Madam Leung dated 7 and 14 August 2008, in which he raised squarely a dispute regarding the debt of $170,000.00 and the reasons therefor.

11.  Secondly, I am of the view that the Company did not have a functioning board of directors at the time the petitioner’s solicitors sent a demand letter to the Company dated 5 December 2008 and served a statutory demand on the Company on 15 December 2008, and that no answer was made to those letters as a result.  Although Mr Tang and Madam Leung were appointed directors, they vacated office on 5 March 2008 being the last day on which the first annual general meeting could have been held by virtue of the relevant provision in the articles of association.  Mr Tang and Madam Leung could not even agree on an agenda to hold an annual general meeting.  It would be far fetched to expect the Company to make an effective response to the petitioner’s demands for debt in these circumstances.

12.  Mr Tang issued an originating summons on 27 November 2008 and got leave to convene an annual general meeting on 18 December 2008.  This petition was presented on 5 January 2009.  The annual general meeting was held on 5 February 2009 and resolutions were passed removing Madam Leung and appointing a new director in her place.  It was after the annual general meeting that the affirmations in opposition of the petition were filed by Mr Tang on behalf of the Company. 

13.  This petition should not have been brought by the petitioner.  I agree with the Company’s counsel that it is an abuse of process.  The petition for the winding up of the Company was presented on the basis of a debt which the petitioner knew has been in dispute.  It would be appropriate to order the petitioner to pay costs to the Company on an indemnity basis, and I make an order accordingly.