XCHRX LAU YI HO EDWIN v. LIAISON FORCE LTD.

HCMP 2924/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2924 OF 2001

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J U D G M E N T

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1. This is an application under Section 298A of the Companies Ordinance. Section 298A provides that:

"A receiver of the property of a company appointed under the powers contained in any instrument may apply to the court for directions in relation to any particular matter arising in connection with the performance of the functions of such receiver, and on any such application the court may give such directions, or may make such order declaring the rights of persons before the court or otherwise, as the court thinks just."

2. In the present case, the Applicant as receiver of the property of the Company is asking for an order that he be at liberty to sell or otherwise dispose of all chattels, furniture and documents found in the property known as Flat A, 14th Floor, Block 3, The Tolo Place, Sunshine City, No. 628 Sai Sha Road, Shatin, New Territories (which I shall refer to hereafter as "the Property").

3. I am satisfied with the service of this summons as it has been served at the registered office of the Company and it has also been advertised in a Chinese newspaper.

4. The evidence of the Applicant shows that in February 1997, the company entered into a mortgage with the Sin Hua Bank (which I shall refer to hereafter as "the Bank"). In a judgment dated 20th February 2001 under High Court Action No. 136 of 2001, the Company was adjudged liable to pay the Bank the sum of $3.2 million odd together with interest at the rate of 19.5% per annum from 6th November 2000 to 20th February 2001 and thereafter at judgment rate. Up to the date of the affirmation of the Applicant on 8th June 2001, the judgment debt was still unsatisfied.

5. The terms of the mortgage included a provision whereby the Bank may appoint receivers in the event of default by the Company. Such default had occurred and by a deed of appointment dated 29th November 2000, the Applicant together with another person who has since resigned were appointed joint and several receivers of the Property.

6. Shortly thereafter on 1st December 2000, the receivers went to inspect the Property and posted outside the main entrance a set of notices saying that the receivers would take physical possession of the Property in two days' time and required any occupier of the Property to remove any furniture, sundries or chattels inside.

7. About five days later, the receivers returned to the Property for the purposes of taking possession. It would appear from the documents that the Property had been occupied as a residence but that it was no longer so occupied. The management fees of the Property had been outstanding since 1st October 2000. There were various furniture inside the Property. Photographs taken show the usual furniture that can be found in any residence including some clothes, but there were also some documents found in what might be called a home office. The receivers then posted up at the entrance of the Property another set of notices asking for the removal of all the chattels inside within seven days from 5th December 2000.

8. It would appear from the annual returns of the Company that the Property had been used as a residence for a director, Mr Chan Hon Biu. Consequently, the receivers wrote to the said director, Mr Chan, at various addresses known to the Bank and also to another director whose residential address was in the United States. The receivers also wrote to the Company Secretary in Hong Kong.

9. Further time was given by the receivers in those correspondence for the Company or its directors to collect the chattels. However, that has still not been done and there was no response from the company or any of its directors or the Company Secretary.

10. Attempts have also been made to contact the Company and its directors through advertisements in the newspapers.

11. Since it is now June 2001 and no one has taken any steps to collect these chattels since December 2000, it is clear to me that these chattels including documents have been abandoned by the former occupants.

12. Consequently, I am satisfied that the receivers should be at liberty to sell or otherwise dispose of all chattels, furniture and documents found in the property and I would order that the proceeds of any such sale, after the costs of sale or disposal, should be applied towards repayment or reduction of the judgment debt. I would further order that the costs of the Applicant of this application be paid out of the sale proceeds of the chattels or the Property, as the case may be, to be taxed if not agreed.