XCHRX RE SOUTHERN CROSS HAT MANUFACTURING LTD.

HCCW 60/1995

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING UP PROCEEDINGS NO. 60 OF 1995

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D E C I S I O N

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1. This is an application by the Official Receiver by way of summons dealing with a matter which had been in contention between the Official Receiver and the Liquidators of this Company, but which apparently is now no longer disputed.

2. The matter arises from the fact that the Liquidators of the Company had paid certain moneys into a business account of the firm and not into a trust or client account.

3. Section 202 of the Companies Ordinance provides that every liquidator other than the Official Receiver shall pay money received by him as liquidator to the Companies Liquidation Account, or upon the approval by the Official Receiver, to any other bank account specified by the liquidator. Section 202(3) provides that the liquidator of a company which is being wound up by the court shall not pay any sums received by him as liquidator into his "private banking account".

4. The matter that had been disputed by the Liquidators previously was as to the meaning of the words "private banking account". It had been contended by the Liquidators that the business banking account of the firm was not a "private banking account" for the purposes of section 202(3).

5. It is the case that there is no definition of "private banking account" in section 202(3). However in the context, especially in the light of section 202(1) which requires that all moneys received by liquidators in that capacity should be paid into the Companies Liquidation Account, it is clear to me that "private banking account" in section 202(3) must mean any banking account which is not the Companies Liquidation Account in section 202(1) or another account which is authorised by the Official Receiver in the proviso to section 202(1).

6. Accordingly, I am prepared to declare that the Liquidators of this Company had been in breach of section 202(3) of the Companies Ordinance when they made payments into their business banking account in 1998 and 2000.

7. Apparently, the parties have agreed that there should be no order as to the costs of the summons or the appearance before me today.