HONG KONG PROPERTY SERVICES (AGENCY) LTD. v. PIONEER VENTURE INTERNATIONAL LTD.

CACV 236/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 236 OF 1998

(ON APPEAL FROM CWU NO. 503 OF 1998)

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J U D G M E N T

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Liu, J.A.:

1. We have had the assistance from counsel for the petitioner, the respondent in the instant appeal. At the conclusion of his submission, I do not find it necessary to call upon Ms Lan for the appellant, nor Ms Mc Kenna for the Provisional Liquidator.

2. The facts that led to the presentation of the winding-up petition are not altogether material. Suffice it to say that the petition was presented by the petitioner, the respondent in this appeal, to wind up the appellant company. Subsequent to the presentation of the petition and its due service on the appellant company, pursuant to r. 32 of the Companies (Winding-Up) Rules the appellant company caused to be filed a Notice of Opposition which recited an affirmation filed on behalf of the appellant company in opposition to the petition presented. Needless to say, and it is not a matter in dispute, that the said affirmation, one from Leung Kwok-kei of the appellant company, had been filed before the hearing of the petition. Therefore, when the matter was called before Master Chung, the court had, on record, a Notice of Opposition and the said affirmation of Leung Kwok-kei, both filed in opposition to the petition presented.

3. What fell to be decided was whether Master Chung had jurisdiction to entertain the petition, and it would appear that attention should have been focused on whether the opposition put in place, as evidenced by the said notice and the said affirmation, had been withdrawn or was withdrawn at the hearing. Miss Barbara Chan, solicitor for the appellant company, attended upon Master Chung at the hearing of the petition which had been amended. In her affirmation filed on 2 January 1999, the admission of which in this appeal has not been resisted, solicitor categorically stated that she approached the Official Receiver at the hearing and apprised him formally of the appellant's intended opposition. Miss Chan had it placed on record in her affirmation that she also informed the Master of the opposition of appellant company to the winding-up petition and sought an adjournment for arguments to be heard at a date to be fixed. Assistant solicitor for the firm acting for the petitioner has also filed an affirmation, again the admission of which in this appeal has not been opposed. The affirmation was filed on 6 January 1999 in which Mr Dennis Chan had this to say:

"Insofar as I can remember, Ms Barbara Chan did not inform Master Chung that the company (Appellant herein) opposed the said Petition."

4. We have thus this controversy which, in my view, need not be resolved. The matter hinges, in my judgment, upon whether or not opposition as evidenced by the said notice and the said affirmation of Mr Leung had been withdrawn. Clearly, opposition to the petition as presented was not withdrawn before the Master, nor had it ever been withdrawn by the appellant company.

5. It is agreed on all hands that under s. 180A(1) of the Companies Ordinance, a master sitting in companies winding-up has only jurisdiction to entertain an unopposed petition. As it stood, the petition presented at the hearing by Master Chung was not an unopposed one. In conclusion, the Master had no jurisdiction to entertain the amended petition or make the winding-up order he did. This appeal, clearly, should be allowed and the winding-up order of the Master should, in my view, be set aside.

6. Ms Mc Kenna for the Provisional Liquidator in her written skeleton submissions has succinctly stated the law in her neutral stance. It would appear that Ms Mc Kenna is unable to advance any plausible argument in opposition to the order sought by the appellant in this appeal.

7. After the order made by Master Chung but before it was perfected, the appellant company wasted no time in securing a hearing before Master Lok who exercised the very same winding-up jurisdiction as that purportedly exercised by Master Chung. It is trite law that when an order made is not perfected, it is not a final order and the matter may be reopened so that it could be rehashed with a view to rectifying whatever obvious shortfall in the hearing at which it was made. Any order that was made by Master Lok, which was or might be taken as contrary to this very basic principle cannot, in my judgment, be supported and, therefore, cannot be sustained.

8. The appeal against the winding-up order made on the amended petition, therefore, succeeds. Insofar as it is necessary to dispose of the order made by Master Lok, it need simply be set aside. I would, therefore, allow the appeal, set aside the winding-up order and also set aside the orders made by the masters.

Leong, J.A.:

9. For the reasons given by my Lord Liu, J.A. I agree that both the appeal against Master Chung's order and the appeal against Master Lok's order should be allowed and that both orders should be set aside.

Pang, J. :

10. I agree with the judgment of my brother, Liu J.A . I might venture to add my views on the appeal against Master Lok's Order dated 9 September 1998.

11. It was submitted by Mr Ng for the Respondent that the Appellant should have gone before Master Chung who granted the winding-up order. In support of this contention, Mr Ng relied on In re Suffield v. Watts Ex parte Brown, (1888) 20 QBD 693 and Millensted v. Grosvenor House (Park Lane) Ltd, [1937] 1 KB 717. With respect, the two decisions cited do not advance the Respondent's case.

12. In Craig v. Kanseen [1943] 1 All ER 108, it was the view of the English Court of Appeal that a party was entitled to set aside an order which is a nullity ex debito justitiae. Master Chung's Order was clearly a nullity for it was made without jurisdiction. When the parties went before Master Lok, the Court, in its inherent jurisdiction, could set the order aside on its own motion before it was perfected and an appeal was not necessary. For these reasons, the appeal against Master Lok's order should be allowed.

(After submission on costs)

Liu, J.A.:

13. We have had the benefit of the submission of Mr Ng on the question of costs. We need not trouble Ms Lan or Ms Mc Kenna. The matter seems to us to be fairly straightforward. A jurisdictional error was obviously committed and the error was realised by most, if not all, concerned. Mechanics was being discussed in the interim as to how the proceedings could be resurrected. Mr Ng is perfectly correct that no appeal could be allowed by consent without a hearing in the SAR at the moment.

14. But as the matter stands, what is important to bear in mind is the staunch resistance put up by the petitioner at the hearing of this appeal. The appeal was contested and lost. When the petition as amended came to be heard by the Master, the Notice of Opposition and the said affirmation evidencing the appellant company's opposition to the petition were in the court's record. The question of jurisdiction was not a clouded issue. Nevertheless, for reasons best known to itself the petitioning company urged the Master to make a winding-up order. The position can be said to be crystal clear. The Master should never have been invited to make the winding-up order. Even after the making of the winding-up order, when the matter came before another Master when the first Master sat at another venue of our courts, resistance was further mounted to prevent the order pronounced but not yet perfected from being disturbed.

15. From first to last, it is clear that the petitioning company wantonly sought a winding-up order in the realisation that the Master could not entertain the petition when it was opposed. It is not suggested that opposition had at any time been withdrawn. The winding-up order made by the Master without jurisdiction was wantonly sought to be sustained before another Master and in this court when the appeal came to be heard this morning. In the circumstances, costs were wasted.

16. No good reasons have been advanced by counsel for the petitioning company for such wanton waste of costs which would have to be borne, in our view, by the petitioning company, and displeasure of this court should be reflected in an order for costs to be taxed on a common fund basis, both for the appellant as well as for the Provisional Liquidator whose first claim is believed to be against the appellant company. We, therefore, make the following orders:

(1) Appeal be allowed, both against the winding-up order and order made by Master Chung and also the order made by Master Lok;

(2) The orders, including the winding-up order, against the appellant company be all set aside;

(3) Costs of the appeal and below before the two Masters be costs for the appellant and the Official Receiver/Provisional Liquidator against the petitioning company, such costs to be taxed on a common fund basis;

(4) For the removal of doubt, if any, the costs of the Provisional Liquidator and the Official Receiver payable or primarily payable by the appellant company or out of its assets be reimbursed by the petitioner, and the petitioner be, itself, responsible for costs or any excess in terms of costs on a common fund basis over and above those claimable by the Provisional Liquidator and Officer Receiver against the appellant.

17. Lastly, this court is asked to make an order remitting the petition to the companies judge, and we seek the assistance of Ms Mc Kenna so as to satisfy ourselves that under the Winding-up Rules or provisions of the Companies Ordinance, such an order for remission is permissible and necessary. It is explained that merely for saving further costs, it would be desirable, if possible, for this court to make an order remitting, if that is the right word, the petition to the companies judge to entertain.

18. Therefore, insofar as it is permissible, we order that the petition be remitted to the judge in the companies court for the amended petition to be heard.