RE CHUNGSHAN COMMERCIAL ASSOCIATION, HONG KONG

HCCW 32/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 32 OF 2009

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D E C I S I O N

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1.  This is an application by the Chungshan Commercial Association, Hong Kong (“the Association”) for a validation order for withdrawals to be made from its bank account to pay the petitioner to discharge the petitioning debt so that the winding-up petition may be withdrawn and dismissed.  The total amount to be withdrawn from the bank account in the present application is $6,477,552.31.

2.  The petitioning debt is made up of taxed costs of the petitioner, which the Association is liable to pay as a result of various court orders and allocaturs.  The total amount claimed is in excess of $7.9 million.

3.  Disputes had arisen between the petitioner and the Association in relation to the exact amounts that should be paid to the petitioner.

4.  On 29 April 2009, an agreement was reached between the petitioner and the Association in relation to the amount that should be paid to the petitioner.  It was agreed that the Association is to pay the petitioner $4,277,552.31 and Messrs Kennedy’s, solicitors, $2.2 million, in full and final settlement of all the petitioner’s claims against the Association, within two days after a validation order is obtained from the court.

5.  The Association is a charitable organization, so the Department of Justice has appeared in this application.  I understand there is no objection from the Department of Justice to a validation order.

6.  The Official Receiver does not, however, support the application contending that a case for a validation order has not been made out.

7.  In my view, it is clearly in the interest of the Association that the settlement sums should be paid to the petitioner, so that the Association’s debt to the petitioner may be discharged and the winding-up petition be withdrawn, and that the charging order registered against property belonging to the Association may be vacated.

8.  The Association is solvent.  The evidence adduced before the court is that there is a very substantial cash deposit in the Association’s name held in a bank account to the extent of $61 million.  The Association has more than sufficient funds to settle the claims of other unsecured creditors after payment is made to the petitioner.

9.  This is clearly a suitable case to exercise my discretion to grant a validation order.  I therefore make an order in terms of paragraphs 1, 2 and 3 of the summons.