Re Precast Piling and Engineering Co. Ltd.

HCCW 1220/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP NO. 1220 OF 2001

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DECISION ON SUBSTITUTION OF PETITIONER

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1. In this case, a petition was presented in November 2001 by Compact Construction Engineering Company Limited on the basis of a District Court judgment in a sum of less than $500,000. The matter was then adjourned until today when the Petitioner's counsel informed the court that the matter has been settled with the Company and that the Petitioner wished to have the petition dismissed.

2. A creditor by the name of Sumikin Bussan International (HK) Ltd has applied to be substituted as petitioner. This creditor relies on a judgment debt in the sum of about $2.4 million together with interest, which judgment was given by a master on 14 March 2002.

3. The application for substitution has been opposed by the Company on two grounds, first that it wishes to appeal against the Order 14 judgment, and secondly on the basis that no statutory demand had been served by the applicant for substitution.

4. I have referred the parties to my decision in Re Hon Seng Engineering Limited [2001] 2 HKLD 295. I see no reason to depart from the decision that I have given in that case. Basically the approach that I thought should be taken in an application for substitution is that if all that the Company does at the application for substitution is to contend, but without having adduced evidence, that it disputes the debt of the applicant for substitution, then the court may order the substitution and give directions for the filing of evidence so that the Company may subsequently, if it wishes to, apply to strike out the petition on the ground that there was a bona fide disputed debt on substantive grounds.

5. However, if at the hearing of the application for substitution, the Company has already adduced evidence to show that it bona fide disputes the applicant's debt on substantial grounds, then that issue should be determined by the court first before making an order for substitution, because materials would then have been placed before the court to enable it to arrive at an opinion whether the applicant would have a right to present an petition under Rule 33.

6. As indicated above Rule 33 provides that:

"When a petitioner...consents to withdraw his petition or to allow it to be dismissed [amongst other grounds], the court may, upon such terms as it may think just, substitute as petitioner any creditor who in the opinion of the court would have a right to present a petition and who is desirous of prosecuting the petition."

7. In the present case, I take the view on the basis of this judgment debt that the Applicant would have the right to present a petition and it is clear that it is desirous of prosecuting the petition.

8. In my view, the absence of a statutory demand is not fatal to an application to lodge a petition. It is not a matter of whether the applicant would suffer any prejudice if this petition were to be dismissed and it would have to present the petition afresh. The crux of the matter is that this is a court sitting in its winding-up jurisdiction. A petition to wind-up a company is a class remedy and there would be obvious disadvantages should a fresh petition be presented as a liquidator's powers and the voiding of transactions would be postponed in the case of a fresh petition.

9. Accordingly I would allow the application for substitution and I will give the usual directions namely, that the Applicant should file an amended petition within 7 days to be verified by an affirmation within 7 days thereafter.