RE CINTEX CO LTD

IN THE COURT OF APPEAL

1987, No. 133
(Civil)

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JUDGMENT

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Cons, V-P delivered the judgment of the Court:

1. These proceedings concern a company incorporated in 1984 to run a restaurant, the actual business commencing in 1985. The shares of the company are held equally between the four Petitioners on the one side and 'China Profit Investment Limited' on the other. China Profit has been represented throughout the proceedings below by two individuals, referred to by the trial judge as the 1st and 2nd Respondents. These two gentlemen have been responsible since the commencement of business for the day-to-day running of the restaurant.

2. Since September 1986 at least feelings have been running high between the two sides. It is not necessary to recount in detail what happened at various acrimonious meetings. It is sufficient to say that in the course of time the Respondents took action in the High Court to restrain the 1st Petitioner from acting as Chairman of the Company, and in due course the petitioners took similar action against the Respondents. Both actions were consolidated and set down for trial in May of this year.

3. The day before the trial the Petitioners presented a petition to wind up the Company and obtained a stay of the High Court proceedings. The petition was based on the just and equitable ground. When it came to be heard Jones, J., in a reserved decision delivered this morning, concluded there was deadlock within the Company and made an order. We understand that he was asked to give a stay of 21 days pending consideration of an appeal to this Court, but that he refused; he gave no reason for his refusal other than to say it was a matter for the discretion of the Court. We have taken the matter this afternoon as a matter of urgency. China Profit, through their counsel Mr. Rogers, have given the usual undertaking as to damages.

4. The basic grounds of the appeal - a Notice which the Respondents have undertaken to file has been drafted - are that the judge was wrong to find deadlock and that he overlooked a number of equitable factors which should have influenced his discretion not to grant an order for winding up.

5. Having regard to the necessarily short arguments presented to us, we are not persuaded that the appeal is unarguable. Nevertheless Miss Mok, for the Petitioners, argues against a stay on the ground that the application now requested - a stay pending appeal - is different from that sought from the judge. We do not see that as any significant distinction. The fact of the stay itself is the matter of primary importance.

6. Alternatively she suggests that as running a restaurant is very much a cash business there is the possibility that the Respondents, having the day-to-day running of the business under their control, may improperly deal with the cash to the detriment of the Company. It is sufficient to say that we have no reason to think so.

7. An affirmation had been filed on behalf of the Respondents setting out in simple language what might well be termed "the irreparable damage" that will be done to company if the winding up order is permitted to continue and the Official Receiver take immediate possession. It has been read to us and we do not propose to repeat it. In any event the circumstances speak for themselves.

8. For these reasons we take the view that, providing the appeal can be expeditiously heard, it is proper that there should be a stay of execution pending the hearing thereof, and we so order.