RE GLOBALINK TECHNOLOGY DEVELOPMENT LTD

HCCW 670/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 670 OF 2006

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J U D G M E N T

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1.  This is a creditor’s petition presented by Wang Hwa Shan seeking to wind up Globalink Technology Development Limited (“the Company”).

2.  The petitioner’s solicitors issued a summons about 3 weeks before the hearing, seeking an order that they should cease to act for him.  An order was made by a Master on 6 February 2008.  The petitioner has since been acting in person.  He is absent today. 

3.  On 26 September 2006, the petitioner served a demand on the Company pursuant to section 178(1)(a) of the Companies Ordinance, Cap. 32, seeking payment of US$206,077.40.  As the demand was not complied with, the petitioner presented his petition under section 177(1)(d) on 27 December 2006, on the ground that the Company is unable to pay its debts as they fall due.  The petitioner has filed four affirmations, his main affirmations are his 3^rd and 4^th affirmations.  The Company has filed two affirmations in opposition, contending that there is a bona fide dispute of the petitioning debt on substantial grounds.  These affirmations were made by Madam Ting Tsz Yan and her younger brother Ting Ming Kai.

4.  The basis on which the petitioner alleges that the Company is indebted to him may be stated as follows.

5.  In March 2005, the petitioner and Mr Ting reached an oral agreement on behalf of the Company.  Mr Ting agreed with the petitioner to manufacture and sell to him 16,000 pairs of sneakers to be delivered to the United States on or before 31 July 2005 at the total price of US$206,077.40, which is the amount of the petitioning debt.

6.  In mid 2005, the petitioner paid US$75,000 in cash to Mr Ting who was then in New York as part payment of the purchase price.  For the balance of US$131,077.40, this amount was remitted by the petitioner by wire transfer on seven occasions between 4 April 2005 and 1 July 2005 and deposited into the foreign currency savings account of the Company at the Bank of China (Hong Kong) Limited.  The Company failed to comply with the oral agreement to deliver the goods to the petitioner in the United States.  Hence, it is obliged to return to the petitioner the amount of the purchase price he had paid in full.  Prior to the issuance of the statutory demand in September 2006, on 25 November 2005, the petitioner’s solicitors had written to the Company alleging breach of the oral agreement and seeking payment of US$206,077.40.

7.  The Company does not deny it has received by wire transfer from the petitioner the sum of US$131,007.40.  However, it alleges that the amount was received by the Company on behalf of Mr Ting, as the Company had agreed to lend its account to Mr Ting to receive amounts in US dollars remitted by the petitioner.

8.  The Company claims that there was no contractual relationship of any kind between the Company and the petitioner and that at all times Mr Ting represented a Mainland company, Kit Sung (International) Trading Company Limited (“Kit Sung”), when he entered into a verbal agreement with the petitioner for the sale and purchase of the goods.  Upon receipt of the remittance from the petitioner, the Company had within a short time and on Mr Ting’s instructions remitted the amount in full to the designated recipients of Mr Ting and the Company did not derive any benefit at all in these transactions.

9.  In her affirmation, Madam Ting stated that the majority shareholder and director of the Company is a Macau resident Loi Lun Fat.  She is Mr Loi’s assistant and has been entrusted with the management of the day to day business of the Company.  Mr Ting did not work for the Company and has never held any position in the Company.

10.  In early 2005, Mr Ting requested the Company to lend him its foreign currency account in Hong Kong for his business use for a temporary period, as he expected some amounts in US dollars would be remitted to him.  With the consent of Mr Loi, Madam Ting agreed that Mr Ting could use the Company’s bank account for such purpose.  In the bank documents exhibited by Madam Ting, they indicated that the Company had, within a day or two of receipt of the amounts remitted by the petitioners, transferred all such sums to the person or account designated by Mr Ting.

11.  In Mr Ting’s affirmation, he stated that he is the manager of Kit Sung and carried on the business of manufacturing shoes in Quanzhou, Fujian Province.  In March 2005, the petitioner came to Quanzhou and negotiated with Mr Ting for the purchase of sneakers.  In the negotiation, Mr Ting had produced his business card showing that he was representing Kit Sung.  He claimed that he was acting on Kit Sung’s behalf when he entered into the oral agreement with the petitioner to manufacture and sell to the petitioner 16,392 pairs of sneakers, to be shipped to the United States in two containers at the unit price of RMB80 per pair and that the total purchase price in US dollars amounted to US$168,123.  Further, the petitioner agreed that on receipt of the goods, he would pay the freight charges at US$75,000 per container.  Mr Ting denied that the amount of US$75,000 received from the petitioner was part of the purchase price.  Moreover, the amount was not given to him in New York and he has never been to the United States.  He stated that in June 2005, the petitioner remitted US$75,000 to his bank account in the Mainland.  He produced a document from a bank in the Mainland showing that on 17 June 2005, he had remitted RMB596,480 to a person surnamed Lee.  Mr Ting claimed that the petitioner must have received the first container of goods before paying US$75,000, and that on receipt of funds from the petitioner, he had in turn paid the local agent the freight charges in RMB.

12.  In his affirmation in reply, the petitioner merely stated that US$75,000 was paid as a deposit for the purchase price of the goods and did not make any direct response to the allegation that he must have received the first container of the goods before he made payment.  He just reiterated that the total purchase price was US$206,077.40, without explaining how this amount was arrived at or what was the unit price of the goods.  He did not deny that US$75,000 was remitted to the account of Mr Ting in the Mainland.

13.  Regarding the issue who was the contracting party in the oral agreement made with the petitioner, this dispute could only be resolved after hearing evidence of the parties under cross-examination.

14.  As for Mr Ting’s allegation that he was the representative of Kit Sung in making the agreement with the petitioner, it does not appear to me to be prima facie unreasonable or incredible.  In his affirmation in reply, the petitioner admitted that he knew the manufacturer was Kit Sung.  I also noticed that in the seven wire transfer forms produced by the petitioner, one of them for the remittance of US$24,734 bore hand-written Chinese characters meaning “Ting (Fujian Kit Sung)”.

15.  The petitioner also admitted that before he issued a solicitors’ demand letter to the Company on 25 November 2005, he had sent a letter from his Mainland lawyers to Kit Sung on 22 November 2005.  He explained that this was at the suggestion of Mr Ting, to put pressure on Kit Sung to complete production of the goods as soon as possible.

16.  I am of the view that the Company has raised a bona fide dispute on substantial grounds regarding the identity of the contracting party and this issue should first be resolved in a civil action in the normal way.  There is also a dispute as to whether the contracting parties had complied with their respective obligations under the oral agreement.

17.  There is a dispute as to the amount of the purchase price, whether this was US$206,077.40 or US$168,123 as alleged by Mr Ting.  The petitioner claims that the Company is obliged to return to him the full amount he paid being US$206,077.40 on the basis that he has not received any of the goods.  Mr Ting, however, has claimed that the petitioner must have already received half of the goods before he paid US$75,000 as freight charges.

18.  Mr Ting has further alleged that the second container of goods had been shipped to the United States in August 2005 and the petitioner had failed to pay the freight charges for the second container or settle the balance of the purchase price in the sum of US$37,045.60 (US$168,123 – US$131,077.40).

19.  I am inclined to think that the above disputes are also substantial disputes and should not be resolved in the winding-up proceedings.

20.  A petition for winding up is not a means to enforce payment of a disputed debt.  The petitioner has no locus to present a creditor’s petition to wind up the company if the debt is disputed by the company for bona fide reasons on substantial grounds.  In this instance, the Company has produced sufficient evidence to discharge its onus of establishing a disputed debt.  There is no basis to wind up the Company and the petition must be dismissed. 

21.  As for the costs of these proceedings, the Company has not made any response to the petitioner for some time notwithstanding the demand letter issued by the petitioner’s solicitors in November 2005 and the statutory demand in September 2006.  The first detailed response from the Company setting out its grounds for disputing the petitioner’s debt was in the first affirmation of Madam Ting filed on 27 February 2007.  For the costs up to 27 February 2007, I would make no order as to costs, save that the Official Receiver’s costs are to be paid out of the petitioner’s deposit.  In respect of the costs incurred after 27 February 2007, I order the petitioner to pay the Company’s costs on a party and party basis, to be taxed by a Master in the event of dispute as to the amount.