WOTTA CO. LTD. AND ANOTHER v. THOMAS BRIAN STEVENSON AND ANOTHER

HCMP 3965/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 3965 OF 1999

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J U D G M E N T

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1. This is an application by the contributories of Hua Hin (S) Company Limited (in voluntary liquidation) for a permanent stay of the voluntary winding up of the company under Sections 209 and 255 of the Companies Ordinance Chapter 32 of the Laws of Hong Kong.

2. Section 209(1) provides that

"The Court may at any time after an order for winding up, on the application either of the liquidator, or the Official Receiver, or any creditor or contributory, and on proof to the satisfaction of the court that all proceedings in relation to the winding up ought to be stayed, make an order staying the proceedings, either altogether or for a limited time, on such terms and conditions as the court thinks fit."

3. By S. 255(1) of the Companies Ordinance, S. 209(1) can be applied to a voluntary winding up. Section 255(1) provides:

"The liquidator or any contributory or creditor may apply to the court to determine any question arising in the winding up of a company, or to exercise, as respects the enforcing of calls, or any other matter, all or any of the powers which the court might exercise if the company were being wound up by the court."

4. The company in question was incorporated in Hong Kong in November 1972. By 1988 the sole beneficial owner of the shares of the Company was a company called Wotta Company Limited who is the 1st Applicant in these proceedings. The other shareholder was and is Descona Limited, the 2nd Applicant which holds its shares as nominee or trustee for the 1st Applicant.

5. On 21st November 1997, the board of directors of the Company resolved that an Extraordinary General Meeting of the Company should be held for a voluntary winding up, and on the same day the directors made a declaration of solvency in accordance with the provisions of the Companies Ordinance.

6. On 24th November 1997, the EGM was held and at that EGM the two Applicants, being the only two members of the Company, consented to the voluntary winding up of the Company. Mr. Thomas Brian Stevenson and Mr. Matthew O'Driscoll were appointed joint liquidators. Their Notice of Appointment was dated 15 December 1997.

7. However, by two affirmations of Mr. Ding Jack Sung dated 7 September 1999 and 2 December 1999, the court is being asked to permanently stay the voluntary winding up of the Company. The reason given by Mr. Ding was that the Company was set up for the purposes of investment in a joint venture company formed in Indonesia for the purposes of exploiting a concession given to the joint venture company. As events turned out, the joint venture company did not obtain the concession as such, but only certain rights. The rights were distinguishable from the concession in that the rights entitled the holder to work with different concession holders in relation to the timber industry in Indonesia. The joint venture company continued to carry on business in the timber industry in Indonesia but on a smaller scale due to the political circumstances at the time.

8. However, following the recent political changes in Indonesia, it is the view of Mr. Ding as the director of the 1st Applicant, that the joint venture company could now reapply for new concessions or further rights of a similar nature. However, since the Company had previously been approved by the Foreign Investment Co-ordination Board in Indonesia, it is thought that it would be better, as it were, to stay the winding up of the Company so that the Company could continue as the foreign investor in the joint venture company in its proposed new operations.

9. The court can exercise its power under Section 209 on such terms as it thinks fit. The test is whether it would be just and beneficial to do so. The burden is upon the Applicants to make out a sufficient case for a stay, see in Re Calgary and Edmonton Land Co. Ltd. [1975] 1 W.L.R. 355.

10. In exercising the court's discretion, the court must of course look at whether sufficient grounds have been given by the Applicants. In my view, sufficient grounds have been given by the Applicants in the present case in that they now wish the Company to be able to continue as the foreign investor in the joint venture company for which there are certain hopes for the continuation of business possibly on a higher scale in Indonesia.

11. In considering the application, the court must of course take into account the wishes of the various parties involved in a voluntary winding up. As I have indicated, this company has only two members of which one is a nominee, and the application is actually being made by the two members. There are no unpaid creditors and the liquidation accounts are simple. There are no liabilities.

12. As far as the liquidators are concerned, the expenses of liquidation including the liquidators' remuneration have either been paid or provided for, and the liquidators have confirmed that there are no irregular matters or transactions which ought to be investigated.

13. There is no opposition from the Official Receiver to the application and there are no public interests involved such that the court should not exercise its discretion in favour of a stay, see Krextile Holdings Pty. Ltd. v. Widdows [1974] V.R. 689.

14. In the circumstances, I would make an order in terms of the draft order annexed to counsel's submissions.