LEUNG KAI HUNG AND ANOTHER v. CHOI TZE KIT SAMMY, JOINT AND SEVERAL LIQUIDATOR OF RICHFAME DYNASTY LTD (IN LIQUIDATION) AND OTHERS

HCCW 401/2005

[2018] HKCFI 1532

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO 401 OF 2005

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D E C I S I O N

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1.  This application concerns the company Richfame Dynasty Limited (in liquidation), which held 23 car parking spaces in a property called “Fortune House, Fanling”. The car parks were mortgaged to Yu Tai Hing as security for the loans of a related company. That company defaulted on the loans and the mortgagee took possession of the car parking spaces.

2.  The company was wound up in July 2005 because it failed to pay management fees for the car parking spaces to the incorporated owners. Three creditors filed proof of debt with the liquidators, namely, Yu Tai Hing, the incorporated owners and the Inland Revenue.  In April 2010 the liquidators were released and the company was ordered to be dissolved. 

3.  In 2013, however, the borrower company and Yu Tai Hing and others reached a settlement, as a result of which Yu Tai Hing was repaid and released and discharged the mortgage on the car parking spaces in September 2013. 

4.  Accordingly, an application was made to have the dissolution of the company declared void and to have the company reinstated, which was granted by Harris J in HCMP 5/2014, upon certain undertakings by the contributories.  The contributories have since applied for the winding‑up of the company to be stayed, pursuant to section 209 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, Cap 32.

5.  I adjourned the application when it first came before me last year because not all relevant information was, in my view, available, including the statement of affairs, which had not been filed.  The application has now been revived and further affirmations filed to deal with the outstanding matters. 

6.  Insofar as the applicants suggest that I expressed the view that the statement of affairs was a mere formality on the last occasion, I think they were mistaken.  The responsibility for making a statement of affairs is a serious one and not to be ignored as simply a matter of formality.  That said, it has now been filed, and while Mr Chong is correct to say that there had been previous failure to comply with the obligation to file a statement of affairs, I do not think it was fatal to an application for stay.  The real questions are, inter alia, whether there are matters that should still be investigated and whether all information that can reasonably be obtained is now available.

7.  A statement of affairs has now been filed and supplemented by explanation on further affirmations.  The liquidators have confirmed that they have conducted further investigations and enquiries into the company’s affairs.  Apart from a number of possible liabilities that they say may need to be dealt with and their concern for the provision for certain fees and expenses, they have not identified any matter or transaction that requires further investigation.

8.  The company seems to me to be amply solvent, since it is obvious that in the current property market the value of the 23 car parking spaces would exceed any of the possible liabilities mentioned by the liquidators.  The members are all in favour of a stay of the winding‑up.  There seems to me to be no detriment to public commercial morality or the public interest for the winding‑up to be stayed, and I would accordingly so order, to allow the company to go back to a going concern so that its property can be dealt with by the rightful owner.

9.  The terms of the order itself, including the measures offered to make provision for possible liabilities and outstanding costs, fees and expenses, have been settled in the course of this hearing, essentially with the agreement of the applicants and the liquidators.  The Official Receiver has taken a neutral stance in this matter.

10.  Therefore, an order will be made in those terms.