Re Sport Electronic Ltd.

HCCW 401/1992

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO. 401 OF 1992

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D E C I S I O N

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1. By a petition presented in December 1992, an order was sought for the winding-up of a company known as Sport Electronic Limited. On 20 January 1993, a winding-up order against this Company was made.

2. Subsequently, the Official Receiver provided a report to the court stating that it would be appropriate for the summary procedure to be used because it was believed that the property of the Company would not exceed more than $200,000.00. Consequent upon that report, a master made an order on 23 March 1993 for the summary procedure to be adopted.

3. The next year, on 16 December 1994, the Official Receiver indicated that he intended to apply for release on the ground that he had only been able to realise about $6,000.00 odd from the Company's assets which sum was insufficient for payment of the creditors. Apparently, there were 3 creditors, being the Inland Revenue Department (which had a claim for about $1,200.00), the Asia Commercial Bank Limited (with a claim for $300,000.00 odd) and Casil Semi-conductor Limited (which had a claim for about $700,000.00 odd). An order in terms was granted to the Official Receiver for release on 18 January 1995 and the Company was subsequently dissolved on 27 January 1997.

4. However, in late 1999 a firm of solicitors acting for the owners of a property, being Flat C, 4th Floor, Block 2, Whampoa Garden, Site 9, Kowloon, wrote to the Official Receiver informing the Official Receiver that the Company had a charging order absolute on the property. A land search provided to the court indicates that the property is owned at present by 3 joint tenants, all by the surname of Cheng, one of whom is Cheng Sin Hei. The particulars shown in the land search showed that on 22 May 1990, a charging order absolute was imposed upon the property in favour of the Company (Sport Electronic Limited), against, amongst others, Cheng Sin Hei, trading as a partner in a firm known as Union Company in High Court Action No. A1472 of 1990. The charging order in that action showed that the interest of Cheng Sin Hei, as one of the joint tenants in the property, stood charged with payment of $239,939.00 being an amount due from the 3rd named Defendant, Cheng Sin Hei, to Sport Electronic Limited on a judgment of the court dated 2 April 1990, together with interest on the sum of $239,939.00 at the rate of 10.8% per annum from 5 March 1990 to 2 April 1990, fixed costs and interest on the judgment debt. It would appear from the land search that this charging order absolute is now a first charge on the property.

5. Consequently, on 9 April 2001, the Official Receiver issued the present Notice of Motion asking for a declaration pursuant to section 290 of the Companies Ordinance that the dissolution of Sport Electronic Limited be declared void and for an order that the period of 2 years referred to in section 290(1) of the Ordinance be extended so that he could take proceedings as liquidator of the Company against the property in question so that the creditors of the Company could have some distribution.

6. The law is quite clear that the purpose of an order under section 290 of Companies Ordinance is to permit the distribution of an asset which was overlooked in the liquidation. It would appear to me that this first charge on this property is such an overlooked asset and that it would be in the interests of the creditors in the liquidation of Sport Electronic Limited to look to the property for some distribution. There has been some delay in this matter and I am conscious of that but it would now appear that the Official Receiver has received some funding from a creditor which was apparently also the Petitioner in the Petition to wind up.

7. In the circumstances, I would grant an order in terms of the motion. It would of course be up to the Official Receiver to take advice to see to the merits of the intended proceedings against this property.

8. At this stage it would appear to me that any prejudice that may be suffered by the owners of the property is not a matter for this court's consideration in these proceedings, and even if that were to be relevant, at the moment I see no grounds for declining to make an order in terms of the motion.