HANG YICK PROPERTIES MANAGEMENT LTD v. ALBERT FUNG CONSTRUCTION ENGINEERING COMPANY LTD

HCCW 367/2022

[2024] HKCFI 983

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO 367 OF 2022

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JUDGMENT

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Introduction

1.  This is the substantive hearing of the Petition presented on 11 October 2022 (“Petition”) whereby the Petitioner seeks a winding up order against Albert Fung Construction Engineering Company Limited (“Company”) on the ground of non-compliance with a statutory demand dated 11 April 2022 for slightly over HK$500,000 (“Debt”).

2.  The Petitioner’s case is straightforward. By virtue of section 178(1)(a) of the Companies (Winding-up and Miscellaneous Provisions) Ordinance, Cap 32, the Company is deemed to be unable to pay its debts.

3.  The Debt arose out of a Final Award save as to Costs dated 1 September 2020 (“Final Award”) made in arbitral proceedings between the Company as claimant and the Petitioner as respondent. Under the  Award, it was ordered that inter alia:

a.  The Company shall pay the Petitioner the sum of HK$394,236.90.

b.  The Company shall pay the Petitioner simple interest on the said sum of HK$394,236.90 at the rate of 1% above the best lending rate(s) published from time to time by HSBC for the period 26 January 2018 to the date of the Award, and thereafter simple interest at judgment rate(s) until full payment.

4.  The Debt set out in the statutory demand consists of (i) HK$394,236.90, (ii) HK$62,235.41, being the accrued interest on HK$394,236.90 from 26 January 2018 to 1 September 2020, and (iii) HK$50,807.95, being the accrued interest on HK$394,236.90 from 2 September 2020 to 11 April 2022.

5.  The Company was incorporated in Hong Kong in July 2004 under the then Companies Ordinance, Cap 32.

6.  The Petition is opposed by Mr So Siu Leung (“Mr So”), a contributory holding 19,000 shares in the Company[1]. Mr So has filed 2 affirmations in opposition filed on 19 October 2022 and 21 February 2023 (“So 1” and “So 2” respectively). He has also filed a skeleton argument for the purpose of the substantive hearing.

Brief Background

7.  The following background facts are taken from the Interim Award on Liability dated 12 January 2015 (“Interim Award”) and Final Award.   

8.  By a contract in writing made on or about 16 January 2012 (“Contract”), the Company agreed to carry out certain building and drainage alteration and additional works for the Petitioner at the Basement and Ground Floor inside and on the footway and carriageway outside a residential development known as Evergreen Place (“Evergreen Place”), 18 Ma Fung Ling Road, Yuen Long, New Territories (“Project”) at the original price of HK$1.9 million odd. 

9.  The Company was the main contractor of the Project.

10.  The Petitioner was the property manager of Evergreen Place and entered into the Contract as the agent of all the owners of Evergreen Place. At all material times, the Petitioner was acting on the instructions of the Owners Committee of Evergreen Place in dealing with the Company.

11.  Disputes arose as to the Project and upon the application of the Company, the President of the Hong Kong Institute of Architects and the President of the Hong Kong Institute of Surveyors jointly appointed Mr Cheung Kwok Kit of Deacons (“Arbitrator”) as the sole arbitrator.

12.  The Company’s claim was for payment in the sum of HK$1,562,394.60 together with certain declaratory reliefs. The Petitioner denied liability and counterclaimed for certain declaratory reliefs and common law damages as further or alternative relief.

13.  By Order for Directions dated 16 June 2014, the Arbitrator directed that there should be a split hearing on liability and quantum. The hearing on liability took place between 22 and 24 October 2014.

14.  By the Interim Award, the Arbitrator ruled that:

a.  The Company’s claim be dismissed.

b.  The Petitioner succeeded in its counterclaim on the question of liability.

15.  The Arbitrator further made the following declarations:

a.  The Company had wrongfully determined/terminated the Contract by its purported notice dated 13 September 2012.

b.  Alternatively, the Company had issued its purported determination/termination notice dated 13 September 2012 unreasonably and/or vexatiously.

c.  The Petitioner had rightfully determined/terminated the Contract by the Employer's Notice of Determination dated 11 October 2012.

d.  The Petitioner be entitled to employ and pay other persons to carry out and complete the remaining and/or outstanding Works.

e.  The Company should allow or pay to the Petitioner the amount of any direct loss and/or damage caused to the Petitioner by the determination.

f.  Upon completion of the Works and the verification within a reasonable time of the accounts therefor, the Architect should certify the amount of expenses properly incurred by the Petitioner and the amount of any direct loss and/or damage caused to the Petitioner by its determination.

16.  After the issue of the Interim Award, the Petitioner applied to the Arbitrator for assessment of damages by its solicitors’ letter dated 30 June 2016.

17.  Upon hearing the parties’ factual and expert witnesses as well as their oral submissions at the hearing held on 3, 4 and 8 October 2019 and 22 and 23 April 2020, and after considering their written submissions and documents of the case, the Arbitrator made the Final Award as set out above.

18.  The Company had not lodged any appeal against the Interim Award or the Final Award.  There was also admittedly no application to set aside the two Awards even though fraud is alleged.

Deliberation

19.  The Petition is opposed by Mr So on 4 grounds:

a.  The principal ground is that the Interim Award and the Final Award were obtained by the fraud of the Petitioner. (Ground 1)

b.  There is non-compliance with Rule 26 of the Companies (Winding-up) Rules, Cap 32H (“Rules”). (Ground 2)

c.  There is non-compliance with Rules 32(2) and 29 of the Rules. (Ground 3)

d.  There is a bona fide dispute to the Debt on substantial grounds. (Ground 4)

Ground 1 - fraud

20.  At para 3 of So 1, So summarised this ground of opposition by alleging:

“…the interim arbitral award dated 12/1/15 and the final arbitral award (save as to costs) dated 1/9/2020 made in the Arbitration proceedings between Petitioner and Respondent were obtained by the fraud of Petitioner with grounds being set out in the following paragraphs.”[2]

21.  Instead of setting out, succinctly or otherwise, the grounds relied upon in establishing fraud, what follows in So 1, inter alia, is a series of sections with the following headings which highlight the points Mr So seeks to make in each section:

i.     “The pleaded case of Petitioner in the Arbitration”: paras 5 – 10.  (Section 1)

ii.    “Respondent for the Petition filed hard evidence and expert evidence which could refute the pleaded case of Petitioner in the Arbitration”: paras 11 – 19. (Section 2)

iii.   “Petitioner failed to submit expert evidence to support its pleaded case despite the expert evidence was required to adduce by Petitioner on 6/6/14”: paras 20 – 23. (Section 3)

iv.   “Respondent for Petition’s hard evidence and expert evidence (which could refute the pleaded case of Petitioner of the Arbitration) was not allowed to be dealt with and tried in the hearing of liability on 22-24/10/2014”: paras 24 – 34. (Section 4)

v.    “The critical liability issue of dispute and Respondent for Petition's hard evidence and expert evidence (which could refute the pleaded case of Petitioner of the Arbitration) were still being ignored in the Arbitration”: paras 35 – 41. (Section 5)

vi.   “The pleaded case of Petitioner of the Arbitration was refuted by Respondent for Petition's hard evidence and expert evidence in the hearing of quantum”: paras 42 – 52. (Section 6)

vii.  “The pleaded case of Petitioner of the Arbitration having been refuted by Respondent for Petition's hard evidence and expert evidence in the hearing of quantum was ignored”: paras 53 – 60. (Section 7)

22.  According to para 21 of Mr So’s skeleton argument, paras 5 to 60 ie Sections 1 to 7 set out the detailed facts relating to “the Petitioner’s untrue pleaded case in the Arbitration”. It is therefore to those Sections that this court now turns to examine the merits of Ground 1.

23.  In Section 1, Mr So purports to set out (i) in para 5, his summary of the Petitioner’s Amended Statement of Defence in the Arbitration, and (ii) in para 7, extracts of the paras referred to in his summary ie paras 50, 74, 78 and 79.

24.  For ease of reference, Mr So’s summary and his extracts are reproduced below:

a.  Under para 5:

“i. [The Company] deliberately left out the Contract works inside the Premises whilst doing the Contract works outside the Premises during the work implementation and after 15/9/12 and we refused to do the Contract works inside the Premises despite Architect’s (Petitioner’s) requests in its warning letter dated 19/9/12 and letter of default dated 22/9/12 leading to the issuance of the termination letter dated 11/10/12 by Architect (summarized from Paragraph 50 and 74) and

ii. [The Company] had not done the daily housekeeping and maintenance work of the Temporary Traffic Management (TTM) setup at the carriageway outside the Premises after 15/9/12 and instead it was done by Petitioner (summarized from Paragraph 78 and 79)”.

b. Under para 7:

“i. Paragraph 50 states :-

‘Further or alternatively, as at the date of the alleged termination/determination (i.e. 13th September 2012):-

a. The Claimant (Respondent for the Petition) (as the Main Contractor) had mainly completed most of the required works outside Evergreen Place; and such part of the Works under the Contract was more lucrative and less difficult.

b. At all material times (in or about late August and/or early September 2012), the Claimant (Respondent for the Petition) had not hired or engaged any sub-contractor(s) for carrying out the remaining works inside Evergreen Place; such part of the Works (inside Evergreen Place) was less lucrative and more difficult.’

ii. Paragraph 74 states:

‘Despite the Respondent’s (Petitioner’s) (and its Architect’s) repeated requests and/or demands (including the letter dated 19^th September 2012), the Claimant (Respondent for the Petition) had failed and/or refused to resume work under the Contract; the Architect had issued the notice of determination (by the Employer) dated 11^th October 2012 by registered post and email pursuant to Clause 25(1) with the full grounds stated thereof (for The Employer’s Notice of Determination dated 11^th October 2012).’

iii. Paragraph 78 states:

‘Paragraph 33 of Statement of Claim dated 26/3/13 (i.e. Claimant (Respondent for the Petition) continued to maintain the TTM setup in carriageway as the status of 15/9/12 by maintaining the barriers, road signs, flashing lights and traffic light in position, replacing faulty flashing lights and its batteries as necessary and checking the operation of the traffic light with adjustment or repair as necessary during (working) daily inspection till 27/11/12.) is denied.’

iv. Paragraph 79 states:

‘The Respondent (Petitioner) avers that:-

a. The Claimant (Respondent for the Petition) was only instructed to leave the TTM (as it was at the time) pending further instruction.

b. The Claimant (Respondent for the Petition) had not done the alleged maintenance, replacement or repair works (whether as alleged or at all).

c. Instead, the Respondent (Petitioner) had carried out the necessary maintenance, replacement, adjustment and repair works for the TTM.’

25.  In Section 2, Mr So purports to set out or summarise (i) the exhibits to the witness statement of Mr Leung Ka Shing for the Company dated 21 July 2014, (ii) Mr So’s exchange with Mr Tse Leung Yau of the Highways Department in October 2012, (iii) what happened at 2 handover meetings said to be held on 15 September and 17 October 2012, (iv) the contents of the Company and the Petitioner’s Provisional Expert Reports, and (v) what happened at a meeting of the parties’ experts said to be held on 23 September 2014.

26.  In gist, what Mr So seeks to do is to select certain evidence adduced in the Arbitration which he thinks is in the Company’s favour in order to refute the Petitioner’s pleaded case – just as the section heading suggests.

27.  The gist of Section 3 is as the section heading suggests save and except that Mr So also refers to the Company’s Expert Report dated 7 October 2014 with the supplement opinion which, not surprisingly, was in the Company’s favour.

28.  In Section 4, Mr So purports to set out a chronology of events from 10 to 22 October 2014 regarding the attempted submission of the Company’s supplemental expert report and the Arbitrator’s ruling that the so-called TTM issue should not be tried at the hearing of liability but at hearing of assessment of damages.

29.  This led to Mr So’s complaint (i) at para 29, that the Company was “not allowed to present [its] witness statement and evidence regarding the TTM issue and [its] expert evidence of the dispute issue of liability required and raised by Petitioner… At the end, [the Company’s] evidence and expert evidence of the critical liability issue of dispute were not dealt with and tried in the hearing of liability”, and (ii) at para 32, that the Interim Award had failed to address “the critical liability issue of dispute of Petitioner’s pleaded case (i.e. we deliberately left out the Contract works inside the Premises whilst doing the Contract works outside the Premises during the work implementation and after 15/9/12 and we refused to do the Contract works inside the Premises despite Architect’s (Petitioner’s) requests in its warning letter dated 19/9/12 and letter of default dated 22/9/12)…”

30.  In Section 5, Mr So selectively sets out certain “facts” in the course of the arbitral proceedings after the Petitioner had applied for assessment of damages and alleges there were procedural failures on the part of the Arbitrator.

31.  Sections 6 and 7 follow the same pattern as the previous Sections. Mr So selectively sets out certain “evidence” before the Arbitrator at the hearing on assessment of damages which was apparently in the Company’s favour and submits, as suggested in the Sections’ headings, that (i) the Petitioner’s case had been refuted by such evidence and (ii) the Final Award was wrong in failing to address or give effect to (i).

32.  In So 2, Mr So starts off by purporting to give a summary of So 1. He then exhibits what is said to be the transcripts of the video record of the joint site measurement and handover meeting on 17 October 2012 and the specified portion of the voice record of the pre-trial directions meeting held on 27 June 2019 for the hearing of assessment of damages, the Owners’ Committee meeting held on 8 October 2012 and the hearing of assessment of damages held on 3 and 4 October 2019. Lastly, he purports to set out extracts of “key sentences” from the transcripts to support the facts and grounds stated in So 1. In other words, So 2 is an elaboration of the evidence and approach in So 1 but does not really explain the grounds in support of the alleged fraud.

33.  All in all, save for a bare allegation of fraud on the Petitioner’s part, this court is unable to find any evidence which substantiates it to the standard commensurate with the gravity of the allegation.

34.  As stated earlier, the materials put forward by Mr So are highly selective. It should be noted that the trial on liability took 3 days from 22 to 24 October 2014 while the hearing on assessment of damages, which resulted in the Final Award took 5 days on 3, 4 and 8 October 2019 as well as 22 to 23 April 2020. Factual witnesses were called and audio recordings were submitted at the trial on liability, as recorded in the Interim Award. No doubt pleadings were also submitted by the parties so as to frame the issues on liability. Pleadings, witness statements, expert reports, written opening and closing submissions were submitted by the parties for the assessment of damages, as recorded in the Final Award. Factual and expert witnesses were also called and cross-examined by the Petitioner’s Counsel and Mr So, again as recorded in the Final Award.

35.  In truth, it seems to this court that Mr So is simply seeking to attack the Petitioner’s pleaded case and evidence adduced in the arbitral proceedings, with a view to attacking the Arbitrator’s findings and Orders in the Interim and Final Awards. Essentially, he is trying to re-argue the Company’s case in the hope that this court will find the Arbitrator erred in not rejecting the Petitioner’s case and finding in favour of the Company instead.

36.  In view of the above, this court is of the firm view that Ground 1 is entirely without substance and must be rejected. That is not dispositive of the Petition since this court must also consider whether Mr So’s 2 affirmations can establish a bona fide dispute on substantial grounds in respect of the Debt, to which this court now turns.

Ground 4 – bona fide dispute on substantial grounds

37.  It is elementary that under section 73(1) of the Arbitration Ordinance (“AO”), an award made by an arbitral tribunal pursuant to an arbitration agreement is final and binding on the parties.

38.  It is equally elementary that the burden is on the Company to demonstrate by sufficiently precise factual evidence that there is a bona fide dispute on substantial grounds in respect of the Debt. This applies  whether the petition is based on a judgment debt or a debt under an arbitral award: Re Sun Fung Timber Co Ltd [2021] HKCA 1660 at [23] – [28].

39.  In support of this Ground, Mr So has cited Re Sun Fung Timber Co Ltd at [30] and [34] apparently for the proposition that (i) for the purpose of resisting the petition on the basis that there is a bona fide dispute, it was not necessary for the opposing contributory to prove that the petitioner had committed fraud, and (ii) the relevance of fraud or collusion in the present context is to rebut the prima facie evidence of indebtedness based on a judgment (or an award in the present case): in deciding whether to “go behind” a judgment (or an award in the present case) upon which a petition debt is based, the court in bankruptcy or winding-up proceedings is not tasked with making findings of fact in relation to fraud or collusion but rather with forming a view on the available evidence before it as to whether there is a bona fide dispute on the judgment debt.

40.  These propositions are of course correct but the context in which they are laid down by the Court of Appeal must be understood.

41.  Re Sun Fung Timber Co Ltd was an appeal by the petitioner against the judgment of Chung J who dismissed a winding-up petition presented against Sun Fung Timber Company Limited. The petition was based on a debt allegedly owed by the company to the petitioner under an arbitral award. Ground 2 of the appeal was that the judge failed to consider the high threshold[3] required for alleging fraud and wrongly reversed the position by putting the petitioner, who was the holder of the Award, “on trial to answer every question”. It was in this context that the Court of Appeal held that it was not necessary for the opposing contributory to prove that the petitioner had committed fraud to the high standard required. Rather, the test was simply whether on the available evidence there was a bona fide dispute on the debt, which is well-established in both bankruptcy and winding-up cases.

42.  In cases involving a debt based on a judgment, it would be fruitful to refer to another Court of Appeal decision in Re Tam Mei Kam unrep, CACV 87 of 2012, 8 May 2013. That decision is relevant to the present case since it was cited with approval in Re Sun Fung Timber Co Ltd and the principles set out there were treated as equally applicable to cases involving a debt based on an arbitral award.

43.  At [22.1] – [26.2] of Re Tam Mei Kam, Yuen JA explained the bankruptcy court’s approach where a debtor opposing a petition based on a judgment debt as follows.

“22.1 The bankruptcy court will treat a judgment for a sum of money as prima facie evidence that the judgment debtor is indebted to the judgment creditor for that sum.

22.2 As prima facie evidence of indebtedness, it may be rebutted and that is what is meant by “going behind” the judgment…

…

23. In other words, the reason why a bankruptcy court is not conclusively bound by a judgment debt is so that (in appropriate circumstances) it can inquire whether there was actually bona fide consideration for it. Of course apart from opposing creditors at the petition seeking to impugn the judgment debt, the judgment debtor himself can also seek to do so, especially if the judgment had been obtained by default. See Fletcher, The Law of Insolvency, 4^th ed. p.163 para.6-116:

“One justification for the existence of this power is that a debtor might connive with others to allow a number of bogus default judgments to be entered against himself by his ‘allies’, who could rescue some of his estate on his behalf by later proving for the debts in the bankruptcy. But the far more usual occasion for invoking this doctrine is when it is the debtor who will otherwise suffer injustice, and this is particularly capable of occurring when the judgment was obtained by a compromise of action or by default. A default judgment, by its very nature, involves a one-sided presentation of the facts which may lack objectivity and may even be inaccurate or unfair …”.

However that is not to say that in every case the bankruptcy court should exercise its powers of inquiry simply for a judgment debtor to get a second bite of the cherry and conduct parallel proceedings to review a judgment which he has lost or to avoid its execution.

24. The rationale discussed above should guide the approach to be taken by the bankruptcy court when a judgment debtor opposes a petition on the ground that he challenges the judgment debt.

…

26.2 Where the judgment debtor is unlikely to be able to pursue an application to set aside or an appeal for procedural reasons eg where there has been gross and inexcusable delay, the bankruptcy court may consider his case to see if he can rebut the prima facie evidence of indebtedness. Before arriving at a decision, the bankruptcy court will consider the circumstances in which the judgment was obtained. At one end of the spectrum, the court may decide to dismiss the petition even if a regular judgment had been obtained in default, e.g. if service of a writ had been effected on the judgment debtor’s previous address and he can clearly establish a substantial defence. At the other side of the spectrum is a petition based on a judgment obtained after a full trial on the merits. In the latter situation, the general principle is that the bankruptcy court would inquire into such a judgment only if the judgment debtor can show fraud, collusion or miscarriage of justice, the latter term having been described as “something from which [the court] can conclude that had there been a properly conducted judicial process it would have been found, or very likely would have been found, that nothing was in fact due to the claimant” (Dawodu v American Express [2001] BPIR 983 quoted in Watts at [48]).” (emphasis added)

44.  In the present case, the Interim Award and the Final Award were obtained after a full trial on the merits. This court has carefully considered and analysed what is set out in So 1 and So 2 in relation to Ground 1 above. Having done so, this court is not satisfied that the evidence is sufficiently precise to show there is a bona fide dispute on substantial grounds in respect of the Debt. This is because (i) the materials put forward by Mr So are highly selective compared to what must have been presented to the Arbitrator at the trial of liability or assessment of damages, (ii) the materials are geared towards proving an unfounded allegation of fraud, and (iii) in truth, Mr So is trying to re-argue the Company’s case in the arbitral proceedings ie to get a second bite of the cherry and conduct parallel proceedings to review the two Awards. Applying [26.2] of Re Tam Mei Kam, this court is not satisfied on the evidence that fraud, collusion or miscarriage of justice is shown, not only not to the high standard required by the Court of Final Appeal in Nina Kung v Wang Din Shin supra, which is unnecessary for the present purpose, but not even to the standard required in resisting a winding up petition ie of showing a bona fide dispute on substantial grounds in respect of the Debt.

45.  For these reasons, Ground 4 must also be rejected.

Grounds 2 and 3 – non-compliance with the Rules

46.  These two relatively simple procedural grounds can be dealt with briefly -  they are both entirely without merits and must be rejected.

47.  The 1^st alleged non-compliance is that the Petitioner’s verifying affirmation dated 12 October 2022 was made by Mr Ho Kam Hing (“Ho” and “Ho 1” respectively), senior property manager of the Petitioner, instead of by its “director, company secretary, or other principal officer” as required by Rule 26. That is Ground 2.

48.  Rule 26 provides:

“Every petition for the winding up of a company by the court shall be verified by an affidavit referring thereto. Such affidavit shall be made by the petitioner, or by one of the petitioners, if more than one, or, in case the petition is presented by a corporation, by some director, company secretary, or other principal officer thereof, and shall be sworn after and filed within 4 days after the petition is presented, and such affidavit shall be sufficient prima facie evidence of the statements in the petition.”

49.  Mr Ma’s answer is two-fold.

50.  First, there is a formal authorisation letter dated 7 October 2022 signed by a director of the Petitioner to confirm that Ho was duly authorised to take and conduct the present winding up proceedings on behalf of the Petitioner against the Company, including inter alia to sign, affirm, and execute all necessary legal documents ie the supporting affirmations in connection with the proceedings.

51.  Second, he relies on Re Cheong Yip Finance (Hong Kong) Ltd urep, HCCW49 of 1978, 21 December 1978 Simon F.S. Li J, in which a statutory demand issued under section 178 of the then Companies Ordinance, as well as a verifying affidavit sworn under rule 26 of the then Companies (winding-up) Rules, by the petitioner’s solicitor were held to be valid.

52.  The arguments put forward by the contributories and the reasons given by the learned Judge for rejecting them can be found in pp 3 to 6 of Re Cheong Yip Finance (Hong Kong) Ltd as follows.

“Learned counsel for the contributories contends that the statutory bankruptcy notice has not satisfied section 178 of the Companies Ordinance. Section 178 of the Companies Ordinance provides that:

‘A company shall be deemed to be unable to pay its debts, if a creditor… to whom the company is indebted… has served on the company… a demand under his hand requiring the company to pay the sum so due….’

It is argued that the creditor, the Moscow Narodny Bank served a notice not under its hand. He develops his argument by reference to section 36 of the Companies Ordinance which provides that:

‘A document or proceeding requiring authentication by a company may be signed by a director, secretary or other authorized officer of the company and need not be under his common seal.’

…

Set in opposition to this argument, Mr. Dicks, learned counsel for the petitioner, has drawn my attention to the case of re Tomkins. In that case the company served a bankruptcy notice signed by an authorised person rather than by a director, secretary. In other words, it was signed by an authorised officer of the company. At page 479, Lord Justice Rigby said,

‘‘…I do not think that the Legislature by section 148 intended to impose upon a limited company the task of appointing a person who within any recognised definition of the term must be an officer of the company… but, in my opinion, any person bona fide chosen by a company to be their agent for the presentation of a petition in bankruptcy becomes thereby an officer of the company for the purpose. Accordingly, the person who was originally nominated by the company in this case, though only a clerk of the company and not in any ordinary sense an officer of the company before he was appointed under the seal of the company, became thereby, sufficiently for the purpose of the Act, an “officer” of the company to present this petition. It follows that the petition was a good petition from the first…’

…

I now come to the question of verification. The same applies to the question of verification. It is said that it has not complied with rule 26 of the Companies Winding- up Rules. Rule 26 provides that:·

‘Every provision [sic] for the winding up of a company or subject to the supervision of the court, shall be verified by an affidavit referring thereto. Such affidavit shall be made by the petitioner, or by one of the petitioners, if more than one, or in case the petition is presented by a corporation, by some director, secretary or other principal officer thereof, and shall be sworn after and filed within four days after the petition is presented, and such affidavit shall be sufficient prima facie evidence of the statements in the petition.’

Again in this instance, the affidavit, verifying the petition, was signed and sworn by one Mr. Cotterill, a solicitor acting for the Moscow Narodny Bank.

Similar objections are raised because it is contented that Mr. Cotterill is not an officer of the company. In the case of re African Farms Limited the headnote reports that:

‘Rule 29 of the Companies (Winding-up) Rules, 1903, which provides that a petition for winding up a company shall be verified by an affidavit made by the petitioner, is merely directory as to the kind of an affidavit to be accepted as prima facie evidence of the statements in the petition…’

In this case Mr. Justice Warrington said at page 642,

‘I have looked into the practice, and have ascertained that there have been many cases, some of which are unreported, in which an affidavit other than that of the petitioner has been accepted. I have also spoken respecting the matter to Buckley J., to whom the company business has been assigned. He has pointed out to me, and I in turn now desire to point out, that r. 29 does not state what is to be the result of non-compliance with its provisions. The rule does not say that the petition is in that case to fail. The rule is merely directory as to the kind of affidavit to be accepted as evidence. That leaves it open to the Court, in a proper case, to accept an affidavit which in an ordinary case coming before the Court would be accepted as sufficient evidence….’

(emphasis added)

53.  Having regard to the above, it is not fruitful to debate whether or not Ho counts as a “principal officer” of the Petitioner. Even assuming for the sake of argument that he is not, it is still entirely appropriate to accept Ho 1 as sufficient verifying evidence of the Petition. This is especially so since the Petition essentially recites the Final Award and the statutory demand, the existence (as opposed to the validity) of which is not in dispute. There is also no issue raised by the Company or Mr So about service of the statutory demand on the Company or its non-compliance with it.

54.  Lastly, even again assuming for the sake of argument that there was non-compliance with Rule 26, this court is entitled to invoke Rule 209 and hold that the non-compliance is a mere irregularity which has not caused any injustice to the Company, substantial or otherwise. This is because this court cannot see any injustice to the Company by virtue of the fact that Ho 1 was put forward to verify the Petition and none has been suggested by Mr So.

55.  The next alleged non-compliance is that the Petitioner has deliberately failed to file its affirmation in reply to So 1 and So 2, in breach of Rule 32(2). Mr So also submits that because the Petitioner has failed to comply with Rules 26 and 32(2), the Registrar’s Certificate issued on 16 March 2023 is invalid by virtue of Rule 29. That is Ground 3.

56.  Rule 32(2) provides:

“An affidavit in reply to an affidavit filed in opposition to a petition shall be filed within 3 days of the date on which notice of such affidavit is received by the petitioner or his solicitor.”

57.  It is true that the 2^nd affirmation of Ho was filed on 9 May 2023. But it was filed pursuant to leave granted by this court at a hearing on 17 April 2023 without opposition from Mr So. Hence there is nothing to the point that it was not filed within 3 days of either So 1 or So 2.

58.  The point about non-compliance with Rule 29 and the invalidity of the Registrar’s Certificate is incomprehensible.

59.  Rule 29 provides:

“After a petition has been presented, the petitioner or his solicitor, shall, on a day to be appointed by the Registrar, attend before the Registrar and satisfy him that the petition has been duly advertised, that the prescribed affidavit verifying the statements therein and the affidavit of service (if any) have been duly filed, and that the provisions of the rules as to petitions for winding-up companies have been duly complied with by the petitioner.”

60.  That was exactly what the Petitioner/its solicitor has done according to the court’s record. Master Hui was satisfied with the matters that he was required to be satisfied with and issued a Registrar’s Certificate accordingly.

Disposition and costs order nisi

61.  The Company is hereby ordered to be wound up.

62.  In view of the active and unreasonable opposition to the Petition, there shall be an order nisi that Mr So Siu Leung should bear the Petitioner’s costs of the Petition, to be taxed if not agreed, and paid forthwith, certificate for counsel, except for the Petitioner’s costs of presenting and advertising the Petition which costs would have been incurred irrespective of opposition and shall be paid out of the assets of the Company: Re China Cultural City Ltd [2020] HKCFI 1947. This costs order nisi shall become absolute unless an application is made to vary the same within 14 days from the date of this judgment.