RE NON-NO FASHION WHOLESALE LTD.

HCCW 688/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO. 688 OF 2001

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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 called Non-no Fashion Garment Limited.

2. The grounds of the Petition is that there is a judgment debt in the sum of slightly more than $2.3 million being damages for trespass awarded by Cheung J (as he then was) in High Court Action No. 20335 of 1998. The Petition is also based upon a debt in the sum of $12,800.00 being costs ordered to be paid by the Company to the Petitioner by Master Cannon in another action, being High Court Action No. 8575 of 1994. The Statutory Demand was served in May 2001 and that was not satisfied. In July 2001, the present Petition was presented.

3. In relation to High Court Action No. 20335 of 1998, that matter was heard by the Court of Appeal in CACV 168 of 2001. The appeal was dismissed on 8 August 2001. An application was made for leave to appeal to the Court of Final Appeal.

4. In the meantime, the Company applied for a stay of execution and that application for stay was dismissed by the Court of Appeal on 19 September 2001. Reasons for the Decision refusing the stay of execution were handed down by the Court of Appeal on 20 September 2001.

5. Today is the adjourned hearing of the Petition to wind up the Company. It is established law as set out in Re Amalgamated Properties of Rhodesia (1913) Ltd [1917] 2 Ch. 115 at 121-123 that the mere fact that a company is seeking to appeal the judgment on which the petition is based is not per se adequate to oppose a winding-up order. As a judgment creditor, the Petitioner is, prima facie, entitled ex debito justitiae to a winding-up order unless there is strong proof that the Petition is being improperly made for an ulterior motive. Here there is no or no adequate evidence that the Petition is being so presented.

6. On the contrary, in CACV 168/01, the Court of Appeal has dismissed the Company's application for a stay. At p.8 of the Reasons for Decision, the Court of Appeal said that the proposed appeal was entirely without merit, and for that reason alone there could be no justification for granting the stay of execution or the stay of insolvency proceedings which apparently was also sought by the Company on 19 September 2001.

7. The Court of Appeal considered that under the principles set out in Ladd v Marshall [1954] 1 WLR 1489, it was extremely unlikely that the application of the Company for the adducing of fresh evidence would be accepted. The Court of Appeal at p.7, paragraph 11 of the Reasons for Judgment said that whilst it was difficult for the court to assess the chances of an appeal against its own decision being successful, it could be said that since there were now concurrent findings of fact in two courts, the chances of an appeal being successful were considerably reduced.

8. In any event, as far as this court is concerned, the grant of a winding-up order today is not equivalent to a permanent termination of the application for leave to appeal. Liquidators can always carry on any applications for leave to appeal or even the appeal itself if they consider that the merits of the appeal make it worthwhile, although of course there are also considerations as to funding.

9. The director who has appeared for the Company today, Mr Kwan, would certainly be free and indeed ought to be anxious to assist the liquidators in considering whether to proceed with the appeal. Liquidators are officers of the court and therefore it cannot be said that they have themselves any particular agenda, and they should certainly be free from any influence of the Petitioner. Accordingly, the mere fact that the action which commenced as HCA 2055/98 and which was the subject of appeal in CACV 168/01 is on its way to the Court of Final Appeal does not itself, in my view, offer me any or any sufficient grounds to exercise my discretion not to grant a winding-up order.

10. Further, the Petition has also been based on a $12,800.00 debt which was the subject matter of an order made by Master Cannon in another action. I have been shown today the order which is a Consent Order and from which there has been no appeal nor a stay. Consequently even under that order, the Petitioner would be entitled to a winding-up order. The director who appeared on behalf of the Company today, Mr Kwan, has offered to make payment of that sum into Court even though he has been told that there is no question of the Court re-visiting the Consent Order. He has on more than one occasion said that he was not going to pay this debt to the judgment creditor but would only make the payment into court. Therefore even on the smaller amount, the winding-up order should be granted.

11. Finally, there are no other creditors who have appeared to oppose this winding-up Petition. In the circumstances, in the exercise of my discretion, I will make the usual winding-up order.