RE BGA HOLDINGS LTD (Formerly Known as BEIBU GULF OCEAN SHIPPING (GROUP) LTD)

HCCW 251/2019

[2024] HKCFI 592

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMI NISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP)  PROCEEDINGS NO 251 OF 2019

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DECISION

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1.  This is the Contributories’ application for leave to appeal (insofar as necessary)  against the Decision of this Court dated 3 January 2024 ([2024] HKCFI 51)[1].  There are 5 Grounds of Appeal set out in the draft Notice of Appeal. 

2.  The first issue for determination is whether the Contributories are entitled to appeal as of right.  In terms of jurisdiction, the appeal of the Contributories is governed by ss.13(2)(a), 14(1)  and 14AA(1)  of the High Court Ordinance, Cap 4.  Collectively, they provide, inter alia, that leave to appeal is generally required for an appeal against an interlocutory judgment or order. 

3.  Next, O 59, r 4(1)  provides for the time for filing notice of appeal as follows :

“4. Time for appealing (O. 59, r. 4)

(1)  Except as otherwise provided by these rules, a notice of appeal must be served under rule 3(5)  within—

(a)  in the case where leave to appeal to the Court of Appeal is required under section 14AA (not being a case to which sub-paragraph (b)  applies)  or section 14(3)(e)  or (f)  of the Ordinance, 7 days after the date on which leave to appeal is granted;

(b)  in the case of an appeal from a judgment, order or decision given or made in the matter of the winding up of a company, or in the matter of any bankruptcy, 28 days from the date of the judgment, order or decision; and

(c)  in any other case, 28 days from the date of the judgment, order or decision concerned.  (L.N. 152 of 2008)”

[emphasis added]

4.  It is at least arguable that the way in which r 4(1)(b)  was carved out suggests that leave is not required for an appeal against a judgment, order or decision made in matter of winding up or bankruptcy.  However, it must be remembered that those rules do not provide for the juridical basis of an appeal in such matters.

5.  In Re Lee Siu Fung Siegfried (No 2) [2018] 3 HKLRD 765, G Lam J (as he then was)  considered, inter alia, the provisions of O 59, r 4(1)  in the context of an appeal against a decision made in bankruptcy proceedings.  It was held that the jurisdiction for such appeal was grounded on s.98(2)  of the Bankruptcy Ordinance, Cap 6, and no leave was required for the appeal.  However, the learned Judge observed that there was no equivalent legislative provision in relation to companies winding up, “as a result of which O 59, r 4(1)(a)  and (b)  seems to be infelicitously worded as far as appeals in winding up matters are concerned” [21]. 

6.  It must be accepted that there are cases which demonstrate that leave to appeal against interlocutory decision on winding up matters was required: see Re Joy Rich Development Ltd [2022] HKCFI 3489; Re Grande Holdings Ltd [2016] 1 HKLRD 435; Hong Kong Civil Procedure 2024, vol 1, [59/21/5] and [59/21/6]. 

7.  In the premises, I hold that leave is required for the Contributories’ appeal if it is one against an interlocutory decision. Whether the Decision is an interlocutory decision is the second issue.

8.  The applicable test is trite and can be found in Shell Hong Kung Ltd v Yeung Wai Man Kiu Yip Co Ltd (2003)  6 HKCFAR 222, [26] and [31].

9.  I am of the view that the Decision is an interlocutory decision.  First, it was obvious that the appointment of Liquidators did not finally dispose of the winding up proceedings. 

10.  Second, I agree with Mr Ho, who appeared for PBM with Mr Sik, that the exercise of discretion by the Court in appointing liquidators concerned what was in the best interest of the liquidation.  The Court did not determine the “rights” of the Contributories or PBM.  They had no “right’ to have their preference adopted by the Court.

11.  Third, despite the appointment of the Liquidators they may be removed in the future (on ground(s)).  Further, their decisions may be subject to challenge.  There is thus no real finality. 

12.  Fourth, I fail to see how the appointment of the Liquidators was a matter “going to the root” or a “dominate feature” of the liquidation (Shell, [31]).  Rather, the Liquidators were appointed to serve an important role in the conduct of the liquidation subject to the supervision of the Court.

13.  Finally, I do not believe that the case of Re Legend International Resorts Ltd, unrep, HCCW 1139/2004, 8 February 2011, is of assistance to the Contributories.  In that case, DHCJ L Chan (as he then was)  held in the context of a security for costs application that an application to remove liquidators was a final decision.  However, there is a clear distinction between a removal application which will determine the serious misconduct alleged against the liquidators (see Re Legend, [13])  and an appointment application.

14.  For these reasons, I hold that the Decision is an interlocutory decision.

15.  I turn to the final issue whether leave to appeal should be granted in this case.  It is trite that reasonable prospects of success must be shown before leave is granted (the “some other reason” limb is not relied upon).  Further, in this case where the exercise of discretion of the Court is challenged, the Contributories must demonstrate that the Court had erred in principle or that the discretion was exercised in a manner that is plainly wrong.  

16.  Ground 1 seeks to challenge the Court’s view (Decision, [34])  that there was little substance to the Contributories’ case of conflict of interest on the part of Greenwood and Bailey based on HCA 1891/20, which sought to resurrect Chu’s case that the PBM Loan had been discharged (Decision, [20(1)]). 

17.  This Ground is difficult to understand when the status of the PBM Loan was decided in the SO Decision against the Company (under Chu’s control at the time)  and consequently the Company was wound-up. The appeal against both the SO Decision and the winding-up order had been idling for 2 years (Decision, [14]-[16]).  The Liquidators (including Greenwood and Bailey)  must in the circumstances abide by the SO Decision.  There is no merit in the Ground.

18.  Ground 2 contends that the Court erred in taking into account the fact that the Company’s remaining assets were represented by the recovery action against Chu and his associates (Decision, [36]).  I agree with Mr Ho that this is a non-point.  The existing knowledge of Greenwood and Bailey over the recovery action was highly relevant to cost-efficiency and was considered by the Court (Decision, [12], [21] and [47]).

19.  Ground 3 challenges the Court’s treatment of the Contributories’ allegations over the suitability or integrity of Greenwood and Bailey.  It has not been suggested that the observation made in [26] of the Decision on how the Court should approach disputes over the appointment of liquidators is wrong.  Nor has it been demonstrated that the Court had erred in holding that (to resolve a dispute of such nature): “[t]he burden is on the accusers to make out their case of lack of integrity supported by credible evidence.  There is no burden on PBM to chase down every hare.” (Decision, [39]).  I fail to see why for the purpose of resolving the dispute over the appointment of Liquidators, the Court could not have regard to recent decisions of the BVI Courts and this Court which were relevant to the allegations made by the Contributories (Decision, [37]-[38]).

20.  As emphasised by Mr Ho, the complaint of conflict of interest was not a black or white question.  It was considered by the Court, which took the view that the risk of conflict could be effectively managed (Decision, [22(6)] and [45]).  There is little merit in this Ground.

21.  Ground 4 is a regurgitation of the Contributories’ cost arguments.  That issue was dealt with in [47] to [49] of the Decision.  I fail to see any basis to suggest that the Court had wrongly exercised its discretion in this regard.  There is no substance in this Ground.

22.  Ground 5 challenges the Court’s refusal to appoint a COI.  It is very difficult to see any merit in it.  It was an insolvent liquidation and it was unnecessary for a COI to consist of any contributories (Decision, [56]).  Further, the only asset of the Company was represented by the claims against Chu and his associates.  The Court was unable to see how a COI (with Contributories under Chu’s control)  would achieve any useful purpose (Decision, [57]).  It has not been demonstrated how the Court had wrongly exercised its discretion in these circumstances.

23.  For these reasons, the Contributories’ Summons filed on 17 January 2024 is dismissed with costs to PBM to be summarily assessed.  PBM is to lodge and serve a Statement of Costs within 5 days from today.  The Contributories are to respond to the Statement of Costs of within 5 days thereafter, limited to 3 pages printed in A4 paper with font size 13, 1.5 line spacing and margins not less than 1 inch.  PBM is to reply within 3 days thereafter limited to 2 pages with the same format.

24.  Lastly, I am grateful to counsel for their assistance.