CHEN MUHUA (also known as WINKY CHAN) AND ANOTHER v. THE JOINT AND SEVERAL LIQUIDATORS OF JOY RICH DEVELOPMENT LTD

HCCW 146/2013

[2022] HKCFI 3415

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO 146 OF 2013

________________

________________

BETWEEN

________________

__________________________________

REASONS FOR DECISION

__________________________________

1.  I have before me two applications by Winky Chan and Chan Yuen Wa (the “Chen sisters”). They are as follows:

(1) the “430 Summons” dated 25 April 2022 whereby the Chen Sisters seek leave to use the name of Jot Rich Development Limited (“Joy Rich”) to make a counterclaim against Mr Liu Yi Dong (“B Lau”), Mr So Yuen Chun (“Daniel So”) and Greatstep International Limited (“Greatstep”) in HCMP 430/2013 for and on behalf of Joy Rich.

(2) the “Fameway Summons” dated 13 May 2022 whereby the Chen Sisters seek leave to:

(a) use the name of Joy Rich to bring fresh legal proceedings against Fameway Finance Limited (“Fameway”) and B Lau on the causes of action set out in the draft Statement of Claim (“Draft SoC”) annexed to the Fameway Summons (“Intended Action”), and to conduct the Intended Action for and on behalf of Joy Rich; and

(b) use the name of Joy Rich to set aside the default judgment dated 29 October 2012 (“Default Judgment”) entered by Fameway against Joy Rich and to defend HCA 510/2012.

2.  They are connected with the consequences of a judgment I delivered on 31 August 2022 dismissing the Liquidators’ application to take over the defence of HCMP 430/2013 brought against the Company by Revelry Gains Limited. Subject to the question of leave the Liquidators will appeal that decision. I was, therefore, initially puzzled as to why the position adopted in their skeleton argument for the present two applications was neutral. It seemed to me that as the present applications are connected with the subject of HCMP 430/2013 I would have expected the Liquidators to oppose them or seek their adjournment pending the determination of the prospective appeal. After discussion with Mr Ko, who appeared for the Liquidators, it became clear that what the Liquidators anticipated was that I would grant the applications and if they are successful with their appeal they would seek to take over conduct of the proceedings the Chen Sisters by the present applications propose to commence.

3.  I stood the matter down in order for Counsel to see if they could agree orders to dispose of the applications. This they did. They are as follows:

“ORDER IN FAMEWAY SUMMONS

1. Leave be granted to the Applicants to use the name of the Company to bring fresh legal proceedings against FAMEWAY FINANCE LIMITED (‘Fameway’) and LIU YI DONG (also known as LAU KWOK WAH BENJAMIN or BEN LAU) (‘Mr Lau’) for and on behalf of the Company on the causes of action set out in the draft Statement of Claim annexed hereto (‘Intended Action’), and to conduct the Intended Action for and on behalf of the Company. For the avoidance of doubt, the Applicants shall be empowered to use the Company’s name to apply for interlocutory injunction(s) in connection with the causes of action set out in the draft Statement of Claim;

2. Leave be granted to the Applicants to use the name of the Company in HCA 510/2012 to set aside the default judgment dated 29 October 2012 entered by FAMEWAY FINANCE LIMITED against the Company (‘Default Judgment’) and to defend HCA 510/2012 for and on behalf of the Company;

3. The leave granted in paragraphs (1) and (2) above is on the following conditions:

(1) The Applicants be solely responsible for their costs and any adverse costs order for bringing the Intended Action and defending HCA 510/2012 in the name of the Company.

(2) A deed duly executed by the Applicants be provided to the Liquidators within 7 days indemnifying the Company against:

(a) any future costs, charges and expenses in connection with or arising out of the Intended Action and HCA 510/2012, to be taxed in the liquidation if not agreed;

(b) any post-liquidation interest on the debt secured by the Mortgage dated 9 September 2010 for such period as the court may deem just and appropriate.

(3) An amount of HK$500,000 be paid by the Applicants into Court, to be applied to any such costs, charges or expenses if and when incurred. The Liquidators have liberty to apply to the court for further sums of money to be paid by the Applicants for the same purpose.

(4) The Liquidators be informed by the Applicants from time to time as to the progress of the proceedings:

(a) The Applicants be obliged to provide copies of all future documents (including bot not limited to orders, affirmation and exhibits) in connection with the Action to the Liquidators as and when such documents are filed and/or received.

(b) The Applicants be obliged to inform the Liquidators as soon as practicable any hearing dates in the Action and the outcome of any hearings and interlocutory applications.

(c) The Liquidators and their legal advisers be allowed to attend any hearings in connection with the Action under a watching brief.

(d) Any costs and expenses (including legal costs) incurred by the Liquidators under this sub-paragraph (4) be covered by the indemnity given by the Applicants referred to in sub-paragraph (2)(a) above, to be taxed in the liquidation if not agreed.

(5) The Applicants shall not compromise with Fameway and/or Mr Lau in the Intended Action and HCA 510/2012 without first obtaining an approval from the court.

5. There be generally liberty to apply; and

4. Costs be reserved until the determination of the appeal in CACV 381/2022, with certificate for 2 counsel for the Applicants.”

“ORDER IN HCMP 430 SUMMONS

1. Leave be granted to the Applicants to use the name of the Company in HCMP 430 of 2013 to make a counterclaim against REVELRY GAINS LIMITED, LIU YI DONG (also known as LAU KWOK WAH BENJAMIN or BEN LAU), SO YUEN CHUN and GREATSTEP INTERNATIONAL LIMITED for and on behalf of the Company;

2. There be generally liberty to apply; and

3. Costs be reserved until the determination of the appeal in CACV 381/2022, with certificate for 2 counsel for the Applicants;”

4.  As can be seen from orders it is agreed that there be liberty to apply, which allows the Liquidators, if successful with their appeal, to return and seek an order that they take over the proceedings referred to [1].