Re Choi Yiu Kee Iron Works Ltd.

HCCW96/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP NO. 96 OF 2002

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J U D G M E N T

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1. This is a petition for the winding-up of a company known as Choi Yiu Kee Iron Works Limited.

2. The petitioner is an ex-employee of the Company. A Labour Tribunal Award was obtained by the petitioner against the Company last year on 26 June 2001 in the sum of about $69,000. Apart from the petitioner, there are five supporting creditors who are also ex-employees of the Company. The total amount of the Labour Tribunal awards in favour of these supporting creditors is about $700,000 odd, exclusive of interest which would have accrued since June 2001.

3. A statutory demand was presented by the petitioner against the Company in December 2001 but no amount has been paid. The petition was presented on 25 January 2002.

4. The Company has through its directors filed a number of affidavits. It is suggested by the Company that there are short-term cash flow problems and the Company has asked for an adjournment to August 2002 on the basis that it will receive sufficient payments by then to pay off the petitioner and the supporting creditors.

5. On the last occasion I gave leave to Miss Yeung (who had been given leave by a Master to represent the Company) to file a further affidavit to show how the Company says it is going to pay the petitioner in the near future. What has been presented to me is a bundle containing documents relating to retention monies to which the Company says it is entitled. There is a helpful schedule of the receivables by way of these retention monies.

6. There are a total of eight items here on this schedule. The first item in the schedule is in relation to a project where the retention period lapsed in May 2001 and in relation to this project, the retention amount is $269,300. Miss Yeung says that the Company and the main contractor there are about 80% into the setting off process and she says that when this setting off process is completed soon, the Company is likely to get $269,300 and possibly even up to $300,000. However, that is not enough to pay off the petitioner and the supporting creditors. I have therefore got to see if the Company has any further materials which would enable me to exercise my discretion not to order the Company to be wound up now as it is clear that it is unable to pay its debts as and when they fell due.

7. In relation to the second and third items on the schedule, the retention periods lapse in January 2002 and June 2002 respectively. However, it is only to be expected that some time would have to be taken for the setting off to take place and for payment to be made. Given the time taken in relation to the first item, I am not satisfied that in the near future, any monies coming in relation to items 2 and 3 would be available to pay off the petition.

8. As for items 4 to 7, the retention periods lapse in August and November respectively of 2002, and it has not really been suggested by Miss Yeung that monies in relation to these projects would be available to the Company in the near future.

9. However, Miss Yeung has said that for item no.8 in relation to a project at Sau Mau Ping which has not yet finished, the main contractor there has promised to speed up the process of setting off and the retention monies in that item is in the sum of about $652,000 odd. Miss Yeung says that the "boss" of the main contractor has promised her that he would speed up the setting off process and would issue a cheque to her, she says, all within two months.

10. However, I am not satisfied that in relation to this item no. 8 that this amount would be forthcoming within as short a period as two months. The work has not even been completed and it would of course have to be noted that the person in charge of the construction company is not the developer of the site. He himself would have to get paid by the Government, which is the employer in this case, and that would of course entail another setting off process. Since it is not suggested that the main contractor would be paying out of his own pocket, I am not satisfied on the materials before me that this $600,000 odd dollars would be made available within the next two months.

11. Accordingly I see insufficient materials to exercise my discretion not to grant the winding up order and I would therefore make the usual winding-up order.