RE WING FUNG CONSTRUCTION (H.K.) LTD

HCCW 807/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 807 OF 2004

____________

____________

_____________

D E C I S I O N

_____________

1.  This is the adjourned hearing of part of a summons not disposed of under section 182 of the Companies Ordinance, Cap. 32.  The application was taken out by the directors of Wing Fung Construction (H.K.) Limited (“the Company”) to validate payments made in the ordinary course of business notwithstanding the presentation of the winding-up petition.

2.  I refer to my decision on 2 December 2005 on the background of the application.

3.  The hearing today relates to items I and J in the schedule to the summons.  The total amount sought to be validated in the summons is HK$715,910.20, the respondents now seek to validate only an amount of HK$616,511.44.

4.  The petitioner’s counsel has criticised the respondents for not preparing the evidence in support of their applications in a proper manner, the difference of nearly HK$100,000.00 in the amount initially sought to be validated and the revised amount is an illustration of the lack of care on their part.  I agree.  This is of no help to anyone, least of all to the respondents themselves, as much time and effort would have to be spent to ensure that there are no double payments, and that the items claimed have not been paid out previously in an earlier validation order.  The fact that this kind of close scrutiny is required would only lead to a delay in processing the application of the respondents.

5.  The petitioner’s main ground for objecting to the application is that the respondents have not given a clear explanation of an amount of HK$244,691.31, being the remaining sum that should have been paid to the Company by Sun Fook Kong (Civil) Limited (“Sun Fook Kong”) under payment certificate No. 14 in November 2004 after having paid the employees and sub-contractors of the Company directly.  The petitioner says no validation order should be made until the respondents have provided a satisfactory explanation of the whereabouts of the said sum.  According to the documents adduced by the respondents, the cheque for the said sum issued on 23 December 2004 was lost, and the Company had written to Sun Fook Kong on 6 July 2005 informing the latter about this and asking Sun Fook Kong to issue a replacement cheque.

6.  I have clarified with the 1^st respondent today that the additional sum in respect of the lost cheque was accounted for by Sun Fook Kong and paid to the Company under payment certificate No. 19.  So it seems to me that the respondents have now given a sufficient explanation for the said sum.

7.  The petitioner has set out in his 15^th affirmation which of the items in the application for validation would be consented to, which ones would be the subject of objection and his reasons therefor.

8.  The total amount he consents to be validated is HK$397,123.23, out of a total of HK$616,511.44.  They have been set out in detail in his 15^th affirmation.  I do not propose to repeat them here.

9.  To the amount consented to by the petitioner, I would add the following to be validated:

(1)     an amount of HK$15,060.00, supported by document B45 exhibited to the 10^th affirmation of the 1^st respondent, being the payments of lai see to the Company’s employees in Chinese New Year; and

(2)     an amount of HK$500.00, being a payment for a wreath of flowers supported by document B46 exhibited to the 1^st respondent’s 10^th affirmation.

10.  I am satisfied that the two items mentioned above could properly be regarded as expenses in the ordinary course of business of the Company.

11.  I would disallow all the other items sought to be validated as I am not satisfied that the expenses were incurred in the ordinary course of business of the Company or that the documents produced by the respondents in support of these items are adequate.

12.  I make a validation order in respect of the amount of HK$397,123.23 for the reimbursement to various individuals of the payments made for the Company as set out in the schedule exhibited as exhibit 115 to the 15^th affirmation of the petitioner, and of the amounts of HK$15,060.00 and HK$500.00 for reimbursement to the 1^st respondent of the said sums for the purposes that I have mentioned.  The validation order is made on the undertaking as before, and that is to provide to the petitioner proof of such payments actually made to the relevant individuals and/or companies in a form as agreed by the parties and set out in the letter of the petitioner’s solicitors to the respondents’ solicitors dated 17 October 2005, within 7 days of the payments being validated by the order made herein, and that the surplus funds not utilised for the payment of the amounts validated are to be paid back into the bank accounts of the Company.

13.  I further order that Messrs Paul Kwong & Company, solicitors, are to be authorised to pay out the sums validated to the recipients as stated above and that the Bank of China (Hong Kong) Limited be authorised to debit the Company’s account in the sums I have mentioned and transfer the said sums to Messrs Paul Kwong & Company to enable the solicitors to pay out to the recipients described. 

14.  Regarding the costs of this application which I have reserved on the last occasion and of today, I see no reason at all the petitioner’s costs should not be borne by the 1^st and 2^nd respondents and I so order.