THE INDUSTRIAL AND COMMERCIAL BANK OF CHINA, SHENZHEN BRANCH v. HANLUCK INVESTMENTS LTD.

HCCW 1096/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO.1096 OF 1999

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R E A S O N S

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1. This is a creditor's petition. The underlying debt is a judgment debt obtained by the petitioner in the Intermediate People's Court in Shenzhen on 12 May 1999. At the hearing of the petition, a winding-up order was made. The reasons appear below.

2. The petitioner is The Industrial and Commercial Bank of China, Shenzhen Branch. The underlying debt arose from credit facilities granted by the petitioner under a facility agreement dated 14 May 1997. The petition was opposed by the Company but not by any of the creditors. Hollywood Palace Company appeared as a supporting creditor. Guangdong Development Bank filed a notice of its intention to appear at the hearing of the petition but did not in fact appear.

3. Leung Chiu, a director of the Company, filed three affirmations in opposition to the petition. The grounds of opposition were :

(1) that the Company was not insolvent in that it has office premises in Shenzhen worth more than the debt; and

(2) that it was deriving income from a toll road project in Xin Hui in which it has a 45% interest and which commenced business on 1 March 2000.

4. So far as the office premises are concerned, there is evidence that they had been put up for auction on four occasions and failed to be sold. The asking price was in fact less than the amount of the debt. As regards income from the toll road, Mr Leung's evidence was that it was estimated that the monthly income would be more than RMB4.5 million. But the document relied upon as substantiating the toll road income is unsatisfactory. It would appear that the amount was simply extrapolated from the first three weeks' operation but the figures would not appear to be net figures. The 'profit' element is wholly unclear. In any event, the board of management has apparently approved the use by the respondent of only HK$1.2 million towards a repayment of the debt which, in Hong Kong dollar terms, is of the order of $18 million.

5. On the evidence, the Company has not shown that it is solvent or that it is in a position to discharge the debt.

6. Counsel for the Company took additional technical points. First, it was submitted that the letter of authorisation by the petitioner being effected under the chop of the petitioner and signed by its lawful attorney was defective in that there was no corporate seal. It is well known that some overseas companies do not have a corporate seal. In such a case, the court has inherent jurisdiction to waive the requirement in an appropriate case. It is to be noted that under the new practice direction (PD 3.3) effective 1 April 2000 which was released to the profession at the beginning of March, provision is made for the case where the corporate petitioner does not have a seal. The procedure is set out in para.4. The petitioner has in fact complied with the new procedure though at the relevant time it had not technically come into effect. If it were necessary to do so, I would certainly exercise my discretion to waive the requirement. Accordingly, the objection is not well taken.

7. Counsel for the Company further relied on authorities such as In re St Thomas' Dock Co. (1876) 2 Ch. 116, In re Great Western (Forest of Dean) Coal Consumers' Co. (1882) 21 Ch. 769 and In re Amery China Building Co., Ltd [1982] HKLR 236 in support of his application that the court should exercise its discretion in refusing to grant the winding-up order but to stand it over for six months. These are cases concerned with the exercise of the court's discretion where the majority of the creditors oppose the making of a winding-up order. In the present case, the opposition is not from creditors but only from the Company where wholly different considerations apply. In In re Amery China Building Co., Ltd, the opposition came from creditors and contributories but Liu J recognized that the latter attracted less weight and generally become material only if the debts were not likely to exhaust the assets.

8. In my judgment, on the facts of this case, the authorities cited are not on point. There is no reason why a winding-up order should not be made.