XCHRX BALSAM LTD. v. CHAU CHIU NUNG and Others

IN THE COURT OF APPEAL

1995 No. 23
(Civil)

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J U D G M E N T

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1. This is an application for stay of an order of Deputy Judge Beeson appointing receivers. We do not have the benefit of written reasons from Deputy Judge Beeson but she was clearly satisfied that the circumstances justified the appointment of receivers when she refused to order a stay.

2. On 15th December Stuart-Moore J. made an order requiring full disclosure of all assets by the 3rd defendant Mainway (Far East) Ltd. ("Mainway"). On 29th December CHUI Mei-lin disclosed assets based on accounts of Mainway as at 30th November. She said that this was done because in accordance with, and I use her words, "general accounting factors" she could not update generally without a view of the completed accounting documents for December and further that if she had done so she might have "presented a misleading picture". She did not say that it would have been impossible for her to have complied with the court's order indicating, should she have thought it necessary, areas where adjustment might later have had to be made. Complaint, justified in my view, is made by Mr. Side, who appears for the plaintiff in this action, that this was a failure to comply with the order. He submits that the information furnished was piecemeal and was not up to date and that this referred to different dates and was not a sufficient and proper compliance with the order. That was a serious matter in itself. However since that time further developments occurred.

3. The business premises of the 3rd defendant, which is a trading company, are situated at Flats A and B Real Sight Commercial Building, Kowloon. The office note paper of the company bears this address. These premises are worth $3.81m. Leaving aside the debts owed to the company, some of which, common sense tells one, may never be recovered, these two flats are the only substantial assets of the company. By a consent order made on 22nd December at the inter partes hearing which followed the ex parte order of Stuart-Moore J., Wong J. continuing the ex parte order, ordered that Mainway must not dispose of or deal with or diminish its assets. Thereafter Mainway, as detailed in the letter from its solicitors dated 21.1.94 (sic) took certain steps. These are set out as follows:

"We are instructed that the 3rd Defendant is at the moment negotiating with Wise Kind to enter into a lease to rent Mainway's premises together with the fixtures and fittings. Nothing more that has been done. No lease has been entered into. A survey report is being obtained to ascertain the proper rent that Mainway should be charging. Any rent that may be received will be preserved as Mainway's assets or paid to the eceivers as the case may be.

Depending on the contents of the surveys reports, and if Wise Kind is willing to enter into the lease, Mainway will do whatever that is necessary to effect the lease, including obtaining your consent. In view of your client's conduct towards Wise Kind, they may not now be willing to enter into any lease."

I emphasize the following passage:

"But in anticipation of the possibility of a lease being entered into between Mainway and Wise Kind, Mainway has changed the address of its registered office at 7th floor, Real Sight Commercial Building, 122-124 Woo Sung Street to 7th Floor Printing House, 6 Duddell Street. And in the meantime, they have been given provisional occupation on a no commitment basis: hence no doubt they have been using client's fax machine."

It seems clear that Mainway has now allowed a third party who is not contractually bound to payment or to preserve the property to occupy its premises and to use its fax machine. It seems, further, although this is not expressly stated, that the third party also has under its control Mainway's fixtures and fittings. There has been no explanation by way of affidavit as to this state of affairs but I am told that counsel who appeared formerly for Mainway, informed the court that Mainway not only abandoned its offices but also abandoned its business operations. In such circumstances I am quite satisfied that Deputy Judge Beeson was right to refuse the application for a stay. This application is dismissed with costs to the plaintiff.