UMBRELLA FINANCE CO LTD v. JIM WARDELL AND OTHERS

HCMP 1436/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1436 OF 2004

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J U D G M E N T

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1. In this application under section 290 of the Companies Ordinance Cap.32, the applicant seeks an order declaring the dissolution of Emex Investment Limited ("the Company") to have been void and for consequential relief. The applicant is a secured creditor of the Company. The 1st respondents are the former liquidators of the Company, the Registrar of Companies and the Secretary for Justice are joined as the 2nd and 3rd respondents. The purpose of reinstating the Company is to enable the applicant to properly assign certain properties charged by the Company pursuant to the power of sale under a legal charge. All the respondents have no objection to this application.

2. The Company was ordered to be wound up by the court on 27 March 2002, on the petition of the Bank of China (Hong Kong) Limited ("BOC"). On 18 July 2003, an order was made for the release of the 1st respondents as the liquidators and for the dissolution of the Company.

3. By a legal charge dated 2 August 1997, the Company charged four properties in Island Place Tower, Island Place, No. 510 King's Road, North Point, Hong Kong ("the Properties") in favour of the Kwangtung Provincial Bank as security for banking facilities. By a transfer of mortgage dated 23 December 2003, BOC as the successor corporation of the Kwangtung Provincial Bank, assigned all legal and beneficial interest in the Properties to the applicant. As in February 2004, the Company is indebted to the applicant under the facilities for $93 million odd. A demand for the debt was served on the Company on 25 February 2004 and on 1 March 2004, the applicant appointed receivers and managers of the Properties.

4. Pursuant to clause 18(5)(a)(ii) of the charge, the receivers and managers had exercised the power of sale and entered into a provisional sale and purchase agreement dated 19 May 2004 to sell the Properties. Completion is to take place not before 19 July 2004.

5. But for the dissolution of the Company, there would be little doubt of the power of a mortgagee to assign the legal estate of the charged property to a bona fide purchaser without the need to join the mortgagor in the assignment, as it is provided under section 53(1) of the Conveyancing and Property Ordinance, Cap.219 that where a mortgagee or receiver sells under an express or statutory power of sale, the assignment shall operate to assign to the purchaser the mortgagor's estate in the land. In the present situation, there is both a statutory power of sale and an express power of sale in the legal charge.

6. The applicant is concerned that the dissolution of the Company may give rise to a difficulty in the assignment of the Properties. The effect of a dissolution is that any undisposed of property of a company that is dissolved becomes bona vacantia. There may be a question if section 53(1) would apply in a situation where the mortgagor no longer exists; the power of the receivers and managers to act on behalf of the mortgagor under clause 18(5)(a)(ii) in the charge may likewise be questionable.

7. The applicant thinks it would be a simpler, quicker and less expensive mode if the Company is reinstated by an order of the court than having to deal with requisitions concerning the dissolution of the Company and its effect on the power of sale of the applicant.

8. In the circumstances, it is appropriate to grant the relief sought by the applicant. The dissolution of the Company is declared to have been void and the 1st respondents are appointed the joint and several liquidators of the Company. I grant other consequential orders and directions as per the draft order submitted to me.