RE PRESSURE VESSELS MANUFACTURING CO LTD

HCCW 1005/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 1005 OF 2002

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D E C I S I O N

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1.  This is a summons issued by the liquidators of Pressure Vessels Manufacturing Co. Ltd (“the Company”) on 21 July 2004 under section 221 of the Companies Ordinance, Cap. 32, for an order that Mr Chan Kin Hang Danvil (“Mr Chan”) of Messrs K H Chan & Co., certified public accountants, be examined on oath in relation to the affairs of the Company and that Mr Chan do produce such documents in his possession, power or custody as set out in the schedule to the summons.

2.  Mr Chan was the former provisional liquidator and liquidator of the Company when the Company went into voluntary liquidation under section 228A on 26 July 2002.  An order was made for compulsory winding up of the Company on 9 December 2002.  The present liquidators were appointed by an order on 19 May 2003.

3.  In the preliminary examination conducted by the Official Receiver as the provisional liquidator of the Company with a director of the Company, Mr Samson Chan Kam Hoo, on 20 December 2002, Mr Samson Chan informed the Official Receiver that all the Company’s books and records have been delivered to Mr Chan.  This was confirmed in a subsequent meeting the liquidators had with Mr Samson Chan on 10 September 2003.

4.  The Official Receiver wrote to Mr Chan on 6 January 2003, requesting return of all books and accounting records of the Company.  On 27 January 2003, Mr Chan sent to the Official Receiver the documents and a set of car keys as set out in the covering letter.  The documents returned to the Official Receiver were not complete, as on 14 May 2003, the Official Receiver wrote to Mr Chan, referring to the accounting records returned by him on 22 April 2003 and noting that the accounting records mainly covered the period starting from April 2001.  Further, the records provided do not form a complete set of accounting records for the period from April 2001 to the date of the winding-up order on 9 December 2002.  Some accounts in the general ledger only contained monthly summarised total and it would appear that the Company had maintained separate sub-ledgers for such accounts.  The Official Receiver listed the sub-ledgers found missing in the relevant books of account and requested Mr Chan to confirm immediately by return of fax whether any books and accounting records of the Company are still in his custody.  He was required to deliver to the Official Receiver all books and accounting records of the Company under section 211.

5.  It is not clear what reply if any was made by Mr Chan to this letter of the Official Receiver.  On 11 July 2003, the liquidators wrote to Mr Chan referring to the said letter of the Official Receiver and requesting him to provide the books and accounting records as set out therein and to return any other books and accounting records still in his custody.

6.  No reply of Mr Chan was made to the letter of the liquidators, despite follow-up letters on 5 August 2003, 19 August 2003 and 9 September 2003.

7.  On 18 May 2004, the liquidators’ solicitors wrote to Mr Chan attaching a list of questions they wanted to ask him and requesting a response within 21 days.  The documents the liquidators would wish him to provide were once again set out in the letter.  There was no reply to this either.

8.  In Mr Chan’s affirmation in answer, he did not even address the question whether he still has in his custody the documents and accounting records of the Company, or any of the questions in the list of the questions attached to the letter of the liquidators’ solicitors dated 18 May 2004.  He merely stated the assistance he had already provided to the Official Receiver or the liquidators.  His affirmation is wholly inadequate.

9.  In his oral submission today, Mr Chan asserted that he has provided all the books and records of the Company in his custody to the Official Receiver.  There is no explanation why he has not responded to the earlier requests to deliver up any documents that may be in his custody.

10.  The liquidators clearly require the books and accounting records of the Company to discharge their duties.  They have been hampered in their efforts to recover a debt of over $2 million from a debtor because of the lack of supporting documents for the debt.

11.  The only appropriate way to proceed is to order Mr Chan to be examined on oath and to provide such documents in his possession, power or custody relating to the Company.

12.  I make an order as sought in the liquidators’ summons in terms of paragraphs 1 and 3 thereof.  I give leave to the liquidators to set down the examination for hearing before a Master with an estimated length of 3 hours.  I order that the costs of this application and the costs of the examination to be borne by Mr Chan and that the costs are to be taxed if not agreed.