RE SKY FINDER LTD.

IN THE SUPREME COURT OF HONG KONG

COMPANIES (WINDING-UP)

NO. CWU 402 OF 1991

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J U D G M E N T

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1. I granted a compulsory winding up order in favour of Core Resources (Far East) Ltd. (the petitioner) on the 17th February against Sky Finder Limited (the company) and I now set out my reasons for this decision.

2. On the 16th December 1991, the petitioner presented a petition for a compulsory winding up order against the company on the grounds that the company is insolvent and unable to pay its debts. The petition is based upon a judgment debt obtained under 0.14 of the Rules of the Supreme Court before Master Beeson on the 6th November 1991 for the sum of $486,544.97 in respect of a dishonoured cheque.

3. An appeal against the decision of Master Beeson was dismissed by Kaplan J. on the 5th December 1991. Although a further appeal has been made to the Court of Appeal, the company has not obtained a stay of execution. It is indeed significant that the company refused an offer by Master Beeson for a stay of execution pending appeal provided that the judgment debt was paid into court. The company's only asset is stated to be a sum of $5,000 held in a bank account.

4. An affirmation in opposition to the petition was filed on the 27th January 1992 by Mr H.M. Samucha, a director and shareholder of the company. In the affirmation he refers to the circumstances that led to the drawing of the cheque that was subsequently dishonoured and asserts that the company has cross-claims against the petitioner that he wishes to institute on behalf of the company in California. In fact, Mr Samucha's American lawyers stated in a fax of the 10th September 1991 to the petitioner solicitors that it was intended to institute proceedings against the company, but no proceedings have in fact been taken. Further, the company has had every opportunity to adduce evidence of the cross-claims in the Hong Kong proceedings, but such claims were not put forward.

5. In support of his submission that I should exercise my discretion by refusing to make a winding up order, Mr Wong, counsel for the company, cited Re L.H.F. Wools Ltd. [1969] 3 All ER 882 where it was held that the court has a discretion to stand over a petition when there is a genuine cross-claim against the petitioner. However, in that case, the company had already commenced proceedings against the petitioner in Belgium upon evidence that clearly revealed that the company had a genuine cross-claim. The facts of that case have no relevance to the present petition. In this case the petitioner has a judgment debt and although the company has lodged an appeal, no stay of execution, as I have said, has been granted.

6. In the circumstances, the petitioner was entitled ex debito justitiae to a compulsory winding up order with costs.