IRONWOOD CAPITAL MANAGEMENT LTD AND OTHERS v. KTH RECOVERY FUND II LTD AND OTHERS

HCMP 596/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 596 OF 2007

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D E C I S I O N

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1.  This is an application by originating summons by Ironwood Capital Management Limited, KTH Investments Limited and Chinese Enterprises Investments Development Limited, for directions to effect service of a demand under section 327(4)(a) of the Companies Ordinance, Cap. 32 on three respondents, KTH Recovery Fund II Limited, KTH Capital Management Limited and KTH Capital Limited.  The applicants are the 2^nd, 7^th and 8^th defendants in High Court Action No. 2381 of 2004.  The respondents are the 1^st, 3^rd and 4^th defendants in that High Court action.

2.  The originating summons was served on the respondents at the last known principal place of business of the respondents in Hong Kong, being Suite 2109, Two Pacific Place, 88 Queensway, Hong Kong, by leaving the same at that address and by ordinary post sent to that address.  The letters by post were returned unclaimed.  By virtue of section 338(2)(b)(ii), this was proper service of the originating summons on the respondents.  They have not appeared today.

3.  The respondents are companies incorporated in the Cayman Islands.  They had established a place of business in Hong Kong.  They are therefore oversea companies within section 332.  Hence, Part XI of Cap. 32 applies to the respondents.  Under section 333 in Part XI, any oversea company which has established a place of business in Hong Kong shall, within one month of establishment of its place of business, deliver to the Registrar of Companies for registration, documents and information as specified in that provision.  The respondents did not comply with section 333.

4.  Under section 338(2) of Part XI, where any oversea company makes default in delivering to the Registrar the name and address of a person resident in Hong Kong authorized to accept service of process or notices, such document may be served on the company by the mode of service specified in sub-sections (a) or (b).  If there is still a place of business established by the company in Hong Kong, the document may be served by leaving it or sending it by post to that place of business.  If, however, the company no longer has a place of business in Hong Kong, the document may be served by sending it by registered post to its registered office, and a copy thereof by registered post to its principal place of business (if any), in the place of its incorporation at the respective addresses thereof registered under section 333(1)(c); or if no such addresses have been registered, by leaving it or sending it by post to any place in Hong Kong at which the company has had a place of business within the previous three years.

5.  In other proceedings between the applicants and the respondents, the applicants have relied on the last mentioned provision in section 338(2)(b)(ii) and effected service of process at the address in Pacific Place, even though the respondents have ceased to carry on business at that address.

6.  The applicants are desirous of serving a demand on the respondents under section 327(4)(a), with a view to presenting a petition to wind up the respondents if they should fail to comply with the demand to pay the debt within three weeks.  The debt arose out of costs orders made in the applicants’ favour in the High Court action and other proceedings.

7.  The allocaturs were sent to the solicitors on record for the respondents, Messrs Richards Butler, but Richards Butler replied they have no instructions to accept service of the demand.

8.  Under section 327(4)(a), it is provided that the demand may be served on the company by leaving the same at its principal place of business, or by delivering it to any officer of the company, or by otherwise serving the same in such manner as the court may approve or direct.

9.  The applicants say that if they serve the demand at the “principal place of business”, they are afraid that the service may be subject to challenge, as the respondents have ceased to carry on business at the address in Pacific Place.  They are not able to deliver the demand to any officer of the respondents.  The only officers they know are a couple by the name of Wang Du and Vivian Li Ding.  These individuals do not reside in Hong Kong, and their whereabouts are not known to the applicants.

10.  So they seek directions from the court that they may be allowed to serve the demand on the respondents by serving the same at the respondents’ last known place of business in Hong Kong and on the respondents’ solicitors in Hong Kong, Richards Butler.

11.  It seems to me that section 338(2) can be relied on in this situation without the need of coming to court for directions.  The section covers not only the service of process but notices as well, and would include a demand under section 327(4)(a).

12.  The fact that other modes of service are provided in section 327(4)(a) does not, in my view, mean that section 338(2) may not be relied on in addition.

13.  Although I do not think the present application is strictly necessary, I am prepared to accede to the directions sought, as I consider I do have power under section 327(4)(a) to give directions for service of the demand in an appropriate case.

14.  Here, apart from serving the respondents at the last known place of business in Pacific Place, the applicants wish to serve the demand on a partner in Richards Butler who has the conduct of the High Court action for the respondents.

15.  I think this is appropriate, given that Richards Butler are the solicitors on record in the High Court action.  They are also the solicitors on record for two of the respondents in other proceedings and an order for substituted service has been made by a Master that the writ in a related action is to be served on Mr Wang and Madam Li by serving the same on a partner of Richards Butler.

16.  I therefore make an order in terms of paragraph 1 of the originating summons, but I do not make any order as to costs.