CHOW GREGORY CHI CHONG (also known as GREGORY CHOW) v. THE REGISTRAR OF COMPANIES

HCMP 2490/2017

[2018] HKCFI 2251

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2490 OF 2017

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REASONS FOR JUDGMENT

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1.  Mr Chow Chi-Chong (also known as Gregory Chow) (“the Applicant”), a shareholder of Man Fung Land Investment Company Limited (“the Company”) which was wound up voluntarily on 5 August 1971 and dissolved on 27 July 1972, applied by a notice of Originating Motion dated3 November 2017, pursuant to sections 252(1), 290(1), (1A) and (2) of theCompanies (Winding Up and Miscellaneous Provisions) Ordinance, Cap 32 (“the Ordinance”), for the following orders:

 (1) an extension of time for the Applicant to seek relief under section 290(1A) of the Ordinance;

 (2) a declaration that the dissolution of the Company is void;

 (3) that Mr Lam Wing Yi Jerry be appointed as the liquidator of the Company pursuant to section 252(1) of the Ordinance; and

 (4) incidental orders and orders relating to costs.

2.  The Registrar of Companies is neutral to this application.

MATERIAL FACTS

3.  The Company was incorporated in Hong Kong on 19 September 1963, with an object of, inter alia, to “purchase, taken on or in exchange, or hire otherwise acquire any land … and any rights … to any land … heldor enjoyed for such consideration whether wholly or partly of a pecuniary nature as the Company shall think fit, and to develop and turn to account any land acquired by the Company or in which it is interested.”

4.  The Applicant’s late father, Mr Chow Ting Pong (“Mr T P Chow”), was one of the three subscribers, as well as one of the first directors of the Company.

5.  On 17 October 1963, 100 shares in the Company (representing a 4% shareholding) were allotted to the Applicant who was not aware of such allotment at the relevant time until very recently.

6.  The Company was involved in the business of real estate development.  By a special resolution of the shareholders of the Companydated 5 August 1971, the Company was wound up voluntarily and Mr Lam Ming Kwong (“Mr M K Lam”) was appointed as the liquidator for the purposes of such winding up.

7.  On 26 April 1972, the final general meeting of members of the Company was held.  In this final general meeting, there was no mention that the Company had any undisposed landed property. 

8.  On 27 April 1972, a copy of the liquidator’s final statement of account was sent to the Registrar of Companies, which recorded that all the Company’s debts, liabilities and obligations had been discharged and that the net assets of the Company (consisting of cash at bank and in hand) had a value of HK$1,620.13.  In the said final statement of account, it was not recorded that the Company had an undisposed landed property. 

9.  On 27 July 1972, pursuant to section 239(4) of the then Companies Ordinance, the Company was dissolved three months after its final general meeting.

10.  The Applicant has been living in the USA and spending most of his time there since 1948.  He is a renowned economist and scholar.  In 1970, he joined Princeton University and has continued with his teaching and research there up to now.

11.  Prior to his demise in 1993, Mr T P Chow never mentioned to the Applicant anything about the Company, nor the fact that 100 shares (representing a 4% shareholding) were allotted to him on 17 October 1963.  Nor had the Applicant ever heard anything about the Company and its properties and affairs from any of his siblings or any other family members.  Both of the Applicant’s parents and all his siblings, apart from his fourth elder sister, Ms Chow Lingfai, have all passed away, but Ms Chow Lingfai has never been a shareholder or director of the Company.

12.  It is only on 19 August 2017, some 45 years after the dissolution of the Company, that the Applicant heard about the Company and its undisposed of landed property for the first time, when he received an email from Mr Amos Chan, the representative of an interested buyer of an undisposed landed property of the Company (the “Interested Buyer”).

13.  The Applicant then instructed Messrs Henry Wai & Co, Solicitors to investigate into the matter.

14.  What transpired is that on 30 September 1963, Marine Lot No 479 (the “Lot”) was assigned to and became vested in the Company.  Subsequently, the Lot was divided into two sections by a deed poll dated 29 April 1967 (“the Deed Poll”), namely, SA of the Lot and the Remaining Portion of the Lot (“RP of the Lot”).  As shown in the plan annexed to the Deed Poll, SA of the Lot is a small strip of land of a size of 7 feet 6 inches × 15 feet 9 inches.

15.  RP of the Lot and its adjacent lot, namely the Remaining Portion of Marine Lot No 484, were later developed into a multi-storey building called “Man Fung Building” (“the Building”), as shown in the Deed of Covenant dated 31 August 1967.

16.  While all the shops, flats and other units of the Building owned by the Company were sold before its winding up on 5 August 1971, SA of the Lot has never been disposed of and is still registered in the name of the Company despite its dissolution.

17.  Unfortunately, the liquidator of the Company, Mr M K Lam had passed away in early 1986, and his firm M K Lam & Co has been removed from the register of CPA firms for non-renewal of its registration since 1998.  Further, due to lapse of time, no further information on the records of Mr M K Lam and his firm is available from the Hong Kong Institute of Chartered Public Accountants.

18.  In the circumstances, it is not possible to ascertain from the directors and the liquidator of the Company who all passed away at different times why SA of the Lot has remained undisposed of before the Company was dissolved.

19.  This Court is informed that Mr Amos Chan had indicated that the Interested Buyer is desirous of purchasing SA of the Lot at HK$6.5 million.

RECENT DEVELOPMENTS

20.  First, the Applicant has duly ascertained from the Governmentand the Government has confirmed that it has not taken physical possessionnor control or management of SA of the Lot as bona vacantia.  The Lands Department has also confirmed that it has no plan for development of the SA of the Lot, and the Respondent has remained neutral.

21.  Secondly, the Applicant has secured consents of the successors-in-‌title of three out of four of the other shareholders, namely, Mr C K Chow, Mr C N Chow and Ms L C Chow.  They are all satisfied that the ‘reactiviation’ of the Company is and will be for the benefit of the Company and its shareholders.  They do not intend to manage, run or otherwise be involved in the management of the ‘reactivated’ Company.  They consent to the winding up and dissolution of the ‘reactivated’ Company after the distribution of the net proceeds of the sale of the SA of the Lot to the shareholders or their respective successor-in-title.  They arealso satisfied with the reasonableness of the proposal for costs and expenses.

22.  I agree with Ms Yan, acting for the Applicant, that there is no strict legal or formal requirement that consent from all shareholders of the company to be ‘reactivated’ must be obtained before such ‘reactiviation’.  section 290 of the Ordinance provides:

“ (1) Subject to subsection (1A), in the case of a company which has been dissolved under section 226A, 227, 239 or 248, the court may at any time within 2 years of the date of the dissolution, on an application being made for the purpose by the liquidator of the company or by any other person who appears to the court to be interested, make an order, upon such terms as the court thinks fit, declaring the dissolution to have been void, and thereupon such proceedings may be taken as might have been taken if the company had not been dissolved.

(1A) The liquidator of the company or any other person who appears to the court to be interested may at any time apply to extend the period of 2 years referred to in subsection (1) and the court may so extend, on such terms and conditionsas seem to it just and convenient, if it is satisfied that there are exceptional circumstances justifying the extension.” (Emphasis added.)

23.  I am of the view that the Applicant is a person interested under section 290(1) and (1A) of the Ordinance by virtue of his pecuniary interest in the Company as the only surviving shareholder out of all the Company’s shareholders immediately before its dissolution.  The rest of the shareholders have already passed away at different times.

24.  Given that the Government has confirmed that it has not taken physical possession nor control or management of SA of the Lot as bona vacantia, there is every reason for the Applicant to apply to revive the Company so that it can proceed to deal with an interested buyer in the potential sale of the SA of the Lot, not only to the interest of the Applicant, the Company’s shareholders before dissolution, but also for a better use of a scarce resource in Hong Kong.

LEGAL PRINCIPLES

25.  In Leung Kai Hung v Wu Shek Chun Wilfred, unreported, HCMP 5/2014, 21 March 2014, Harris J said:

“ Section 290 gives the Court a wide discretion to extend time for these kind of applications and to determine whether or not they are to be granted. The Court has on previous occasions made similar orders in order that property can be restored to a company. Examples are Ko Tak Wing v Secretary for Justice & Another HCMP 4053/2003 and Re Toland Development Ltd HCMP 30/2006.”

26.  In Re Hanluck Investments Limited HCMP 2758/2017, unreported, 6 June 2016, Deputy High Court Judge Marlane Ng at paragraph 46 said:

“ Whilst ordinarily the purpose of an application under section 290 of the Ordinance is ‘either to enable the liquidator to distribute an overlooked asset or a creditor to make a claim which he has not previously made’, such provision should not be limited to a situation in which a liquidator is quite unaware of an asset belonging to a company, and that it is apt to cover analogous situations such as where a liquidator is aware of an asset but unaware that that asset has any realisable value.”

27.  In Re Chan Brothers Investment Company Limited HCMP 4053/2003, unreported, 9 October 2003, Barma J (as he then was) said:

“ 10. As a matter of merits, it seems to be that the application is clearly justified as it will enable the Company to realize the property, which belongs to it, for the benefit of its members.

11. So far as an extension of time is concerned, having regardto the fact that the existence of the property did not come to light untilafter the expiry of the 2-year period, the difficulty in ascertaining the members’ wishes as to whether and how to proceed, and the fact that the application is not opposed, I am satisfied that exceptional circumstances exist justifying an extension of the period of 2 years mentioned in s.290(1) of the Ordinance.  I therefore extend that period to enable this application to be made and will make a declaration in the terms sought.”

ANALYSIS

28.  Applying the above legal principles to the facts of this case, I am satisfied that the present application should be granted.  First, this applicationfalls within the ordinary purpose under section 290 of the Ordinance.  The fact that the SA of the Lot is still being registered under the Company’s name and remains undisposed of did not come to light under after the expiry of the two-year period.  Due to the lapse of time, it is now impossible to ascertain from the then liquidator the reason for the omission of SA of the Lot in his final statement of account.

29.  Secondly, the Applicant, who has been living in the USA since1948 and spends most of his time there, only came to aware of the existence of SA of the Lot when he was approached by email by a representation of the Interested Buyer.  He thereafter acted promptly in seeking legal advice and had taken out this application as soon as reasonably practicable.

30.  Thirdly, no prejudice has been caused to anyone by reason of the substantial long period of delay.

31.  Fourthly, the Respondent does not oppose this application.  The Government is not claiming rights over SA of the Lot and the Applicant has tried his very best to ascertain the wishes of the descendants of the shareholders.

32.  Fifthly, the Applicant has also undertaken to pay all outstandingannual license fees and late penalty payments of the Company that are due, as well as the legal costs of the Respondent in relation to these proceedings. Such agreed legal costs being HK$5,000 according to the Respondent’s letter dated 21 November 2017.

33.  Although the delay is a period of 45 years, the Applicant was only aware of both his interest as a shareholder and the existence of SA of the Lot when he was approached by a representative of the Interested Buyer.  He did not sit on it upon his discovery for a period of 45 years.  The revival of the Company would only be beneficial with no harmful consequences to any parties.  The Applicant cannot be said to be at fault.

34.  Ms Yan very fairly drew to the attention of this Court the case of Leonart Ltd v Turn Fine Development Ltd [2001] 3 HKLRD 353.  I agree that the case is distinguishable.  Deputy High Court Judge Muttrie at paragraph 28 said:

“ Here it would be for the shareholders to bring their action and prove that the sale was without their authority. There is no absolute bar against sale for them to rely on as there is in the case of sale by a mortgagee to himself. I do not think it is necessary to disregard the question of laches and acquiescence as did the judge in Tang Ying Ki & Others v Maxtime Transportation Ltd [1996] 1 HKLR 150, [1996] 3 HKC 257. Obviously there is a strong likelihood that if any action were ever allowed to get off the ground in the first place, it would fail on these grounds.”

35.  In the present case, it is clear from all the relevant land searches and title documents that the Company is still the registered owner of SA of the Lot, which is still undisposed of and the shareholders wishes to sell it.  In other words, there are no perceivable difficulties for the Company to sell SA of the Lot for the benefit of its shareholders through a newly appointed liquidator.

36.  As a matter of law, as a result of the court’s declaring the dissolution of a company void and reviving a company the office of the former liquidator revives such that he remains as a liquidator of that company.  (See Commissioner of Inland Revenue v Registrar of Companies[1998] 1 HKLRD 875 per Yuen J (as she then was) at 877H and Re China Ample Development Limited HCMP 907/2015, unreported, 7 May 2015 per Godfrey Lam J at §6.)  However, as Mr M K Lam, the liquidator of the Company before its dissolution had passed away, it is appropriate for this Court to exercise its power under section 252(1) of the Ordinance to appoint a new liquidator.

37.  This Court is satisfied that Mr Lam Wing Yi Jerry is a fit and proper person to be appointed as the new liquidator of the Company.

DISPOSITION

38.  In the premises, I granted the following order at the hearing:

 (1) The period of 2 years referred to in section 290(1) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, Cap 32 (“the Ordinance”) be extended to the date of the Order herein;

 (2) The dissolution of Man Fung Land Investment Company Limited (Registration No 9262) (“the Company”) be declaredto have been void pursuant to section 290(1) of the Ordinance;

 (3) Mr Lam Wing Yi Jerry, a Certified Public Accountant, of Bentleys CPA Company Limited of Units 1909–13, 19/F, Tai Yau Building, 181 Johnston Road, Wanchai, Hong Kong, be appointed as the liquidator of the Company pursuant to section 252(1) of the Ordinance;

 (4) The Applicant shall cause the Company Number 9262 to be mentioned together with the name of the Company whenever the Company is referred to in any document;

 (5) A sealed copy of the Order to be made be delivered by the Applicant to the Registrar of Companies for registration of the Company within 7 days of the date of the Order herein pursuant to section 290(2) of the Ordinance;

 (6) The Applicant shall cause the liquidator to file all the outstanding liquidator’s statements, with the Registrar of Companies pursuant to section 284 of the Ordinance within 180 days of the date of the Order herein;

 (7) The Applicant shall cause the Company to comply with section 770 of the Companies Ordinance, Cap 622 relating to the change of prohibited name;

 (8) The Applicant shall cause the Company to comply with section 771 of the Companies Ordinance, Cap 622 relating to the change of same or similar name;

 (9) The Applicant shall pay the costs of the Registrar of Companies in the sum of HK$5,000.00 being the agreed costs of this application in lieu of taxation within 7 days from the date of the Order herein; and

 (10) The costs of this application be paid out of the assets of the Company, to be taxed if not agreed.

39.  Finally, it remains for this Court to thank Ms Yan for her helpful submissions and assistance rendered to this Court.