RE GREAT MEGA DESIGN & BUILD LTD

HCCW 153/2026

[2026] HKCFI 3872

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO 153 OF 2026

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REASONS FOR JUDGMENT

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1.  At the callover hearing of the Petition presented on 2 March 2026[1]by the petitioner, Surpass Construction and Engineering Limited (釗研建築工程有限公司) (“Petitioner”), seeking to wind up Great Mega Design and Build Limited (英萬設計及營造有限公司) (“Company”) on the ground that it is insolvent and unable to pay its debts, I dismissed the Petition and ordered the Petitioner to pay (1) the costs of the Petition to the Company, to be assessed by way of gross sum assessment, and (2) the costs of the Official Receiver in the amount of $5,300 be paid out of the deposit.  These are the reasons for my judgment.

Background

2.  The following facts are not in dispute.

3.  The Company is a Hong Kong company and carries on business as a registered general building contractor.  It is the main contractor of a construction project at 14 Essex Crescent (“Project”).

4.  At the meeting held on 26 March 2024, it was orally agreed between Mr Au Chi Yeung Chadwick (“Au”) (on behalf of the Petitioner) and Mr So Chi Wang (“So”) (on behalf of the Company) that the Company would engage the Petitioner to provide project management services for the Project[2].

5.  According to the Discussed Budget (as defined in §16 below), the estimated project time line was that by the end of January 2025, the Project would proceed to the stage of obtaining “OP”, presumably a reference to occupation permit. 

6.  After the Project commenced, the employer, Richfield Group Holdings Limited (“Employer”), experienced financial difficulties which resulted in temporary suspension of the works for the Project from the latter half of December 2024 to the end of January 2025[3].

7.  The Petitioner ceased to provide project management services to the Company on 1 April 2025. 

8.  The Company continued to work on the Project and the same was completed in February 2026.  To date, no agreement on the final account has been reached between the Company and the Employer[4].

9.  Upon the consent summons filed by the parties on 15 June 2026, the Company agreed to pay the entire amount of the Debt (as defined in §11 below) into court pending determination of the Petition and on the same day, DHCJ Segal made a validation order authorising payments into and out of the Company’s bank accounts for the purposes of paying the debts and expenses of the Company. 

10.  On 16 June 2026, the Company paid $1,890,368 into court in compliance with the condition stipulated in the validation order.

Petitioner’s pleaded case

11.  In the statutory demand served upon the Company on 23 December 2025 (“SD”), there was a table listing 10 items with a total amount of $1,890,368 (“Debt”) as follows:

When incurred	Description of debt	Amount due
(a) 8 July 2024	Outstanding fee under the invoice for interim payment for 14 Essex Crescent	A sum of HK$100,000 from 7 August 2024
(b) 9 August 2024	Outstanding fee under the invoice for interim payment for 14 Essex Crescent	A sum of HK$100,000 from 8 September 2024
(c) 3 September 2024	Outstanding fee under the invoice for interim payment for 14 Essex Crescent	A sum of HK$200,000 from 2 October 2024
(d) 5 October 2024	Outstanding fee under the invoice for interim payment for 14 Essex Crescent	A sum of HK$200,000 from 4 November 2024
(e) 8 November 2024	Outstanding fee under the invoice for interim payment for 14 Essex Crescent	A sum of HK$150,000 from 7 December 2024
(f) 10 December 2024	Outstanding fee under the invoice for interim payment for 14 Essex Crescent	A sum of HK$150,000 from 9 January 2025
(g) 13 January 2025	Outstanding fee under the invoice for interim payment for 14 Essex Crescent	A sum of HK$210,000 from 12 February 2025
(h) 8 February 2025	Outstanding fee under the invoice for interim payment for 14 Essex Crescent	A sum of HK$260,000 from 7 March 2025
(i) 7 March 2025	Outstanding fee under the invoice for interim payment for 14 Essex Crescent	A sum of HK$150,000 from 6 April 2025
(j) 8 April 2025	Outstanding fee under the invoice for interim payment for 14 Essex Crescent	A sum of HK$370,368 from 7 May 2025
	Amount of Debt:	HK$1,890,368

12.  This was followed by a paragraph entitled “Particulars of the debt” which described the Debt in this way:

“Pursuant to the agreements entered between the [Petitioner] and the [Company] between March and June 2024 (“the Agreements”), the [Petitioner] provided project management services and paid third party fees on behalf of the [Company] according to the Agreements on the varies [sic] dates between June 2024 and April 2025.  The [Company] failed to make full payment for the project management services and third party fees as stated above.  The total outstanding debt amount owed by the [Company] to the [Petitioner] is in the sum of HK$1,890,368 as of the date of this statutory demand.”

13.  In the SD, each of the 10 items was described as “Outstanding fee under the invoice for interim payment for 14 Essex Crescent” and the amount claimed varied. 

14.  The lack of particularity in respect of the Debt remained when the Petition was presented. The Petitioner’s entire case was pleaded in §§5-6 of the Petition[5] as follows:

“5. Pursuant to the agreements entered between the Petitioner and the Company between March and June 2024 (‘the Agreements’), the Petitioner provided project management services and paid third party fees on behalf of the Company according to the Agreements on the varies [sic] dates between June 2024 and April 2025. The Company failed to make full payment for the project management services and third party fees in the total outstanding [sic] of HK$1,890,368 (‘Amount of Debt’).

6. On the 23^rd December 2025, the Petitioner through its solicitors, Messrs. Jesse H.Y. Kwok & Company, served a statutory demand dated 23^rd December 2025 (‘the Statutory Demand’) on the Company under Section 178(1)(a) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong) by leaving the same at [address of the registered office] requiring the Company to pay the said Amount of Debt within 3 weeks from the date of service of the Statutory Demand.”

Company’s case

15.  The Company disputes the terms upon which the Petitioner was engaged and contends that at the meeting on 26 March 2024, it was orally agreed that the Petitioner would provide project management services to the Company in respect of the Project on the following terms[6] (“26/3 Oral Agreement”):

(1)     The budget costs of the Project would be $30 million; 

(2)     The Petitioner would be entitled to “the surplus of the budgeted costs” after deducting the actual costs and expenses incurred in relation to the Project including all sub-contractor’s costs;

(3)     During the Project, the Petitioner should be responsible for paying the costs of preliminary works, which would be paid out of the total budget of the Project after the Project had been completed; and

(4)     Further details of the payment terms of the Petitioner’s remuneration were to be discussed and agreed.

16.  The Company relies on an email dated 27 March 2024 (one day after the engagement of the Petitioner) as evidence of the 26/3 Oral Agreement, where Au referred to the meeting with So and attached a document which he described as “discussed budget” (“Discussed Budget”) for the Company’s information and review[7].  In the Discussed Budget, there were the following items:

(1)     “Estimated Cost Break Down”: the works under “Preliminary” amounted to $7.6 million, and the works under “Builder’s Works” amounted to $17.4 million. 

(2)     “Allocation of Budget”: total budget $30 million, minus Construction Cost $25 million, minus “Contingency” $2 million, “Balance for SCE Management Fee (guaranteed received)” $3 million.  The Company says that it never agreed that the project management fee would be “guaranteed”[8].

(3)     Under “Remarks”:

(a)     “All sub-contractors are selected by GMBD[9], SCE[10] carry out the management by the management team”

(b)     “SCE responsible for the cost of preliminary”

(c)     “Payment term TBC”.

17.  The Company contends that the reference to “TBC” meant “To be Confirmed”[11].

18.  The Company says that during the breakfast meeting on 8 March 2025 (“8 March 2025 Meeting”) it was agreed between Au and So that[12]:

(1)     The Petitioner would cease to provide project management services in respect of the Project from 1 April 2025; and

(2)     The Petitioner would be entitled to a reasonable sum for the services it had provided to the Project, but such sum would only be calculated and paid upon agreement of the final account between the Employer and the Company after the Project had been completed.

19.  According to the Company, there were some WhatsApp messages between Ms Gloria Wong of the Company (“Wong”) and Au on 11 March 2025 wherein[13]:

(1)     Au expressly acknowledged that the “Profit part would be further discussed”, which the Company contends was a reference to the project management fees mentioned in the Discussed Budget. 

(2)     Wong responded saying that the “project cost” could not be calculated at the time as the Project had not been completed, and the total costs and expenses to be deducted from the budget of the Project had not been finalized in any final account between the Employer and the Company. 

20.  In his email dated 29 March 2025, Au referred to:

(1)     The 8 March 2025 Meeting whereby the Petitioner agreed to terminate the project management services from 1 April 2025;

(2)     The discussion on 13 August 2024 “regarding the change of our management fee”, and attached a document showing an “Alternative Management Fee” for the period from June 2024 to February 2025 at “monthly fix fee” of $150,000.  In the same document under “Remarks”, it was stated that “Payment should be settled within 30 days after our submission of interim payment’ and “If OP rescheduled to after Feb-2025, the monthly management fee will keep $150,000/month”.

21.  The Company does not accept that the Petitioner was entitled to be paid in the manner stated in Au’s email dated 29 March 2025, given that under the 26/3 Oral Agreement, the parties agreed that the project management fee would only be calculated and paid upon agreement of the final account between the Employer and the Company, and the same was confirmed at the 8 March 2025 Meeting [14].

22.  On 9 April 2025, Au sent a WhatsApp message to Wong asking inter alia when the project management fee could be calculated (“關於單工程嘅management fee, 預算幾時計埋?”), to which Wong replied that she had been arranging meetings with contractors to discuss the work and reduction in price, and she was unable to confirm when the amount could be calculated (“現在約緊判頭傾工程同傾減價, 未預算到幾時”).

23.  The Project resumed after termination of the Petitioner’s project management services and was completed in February 2026. Since then, the Company has been discussing the final account with the Employer and expects to reach an agreement in June 2026. The Company intends to pay the project management fees which the Petitioner is reasonably entitled to pursuant to the 26/3 Oral Agreement and as further agreed at the 8 March 2025 Meeting[15].

24.  As regards the Debt claimed in the SD:

(1)     Items (a)-(f) and (i) are project management fees unilaterally submitted by the Petitioner.  For the reasons stated in §§15-23 above, the Company denies that it was liable to pay the same.  In the interim payments certified by the Company, the project management fees were expressly excluded from the interim payments to the Petitioner, and the Petitioner never objected to such exclusion.  Save for the project management fee and certain “costs and expenses”, the Company had certified and made interim payments to the Petitioner before the Petitioner terminated the project management services.[16]

(2)     As regards the amounts claimed by the Petitioner for “costs and expenses”, according to the 26/3 Oral Agreement, the Petitioner shall be responsible to pay the costs of the preliminary works for the duration of the Project.  Nevertheless, the Company at its discretion reimbursed the Petitioner for such costs by settling the invoices submitted by the Petitioner on an interim basis[17].

(3)     Item (g) comprises project management fee of $150,000 and a sum of $60,000, being half of the monthly costs of supervisory and technical staff for December 2024.  The Company already paid 50% of the costs to the Petitioner on the basis that the Project had been suspended for half a month in December 2024.  The Petitioner was not entitled to claim the balance[18].

(4)     Item (h) comprises project management fee of $150,000 and $110,000 as the monthly costs of supervisory and technical staff for January 2025.  The Project was suspended in January 2025 pending delivery of building materials and the Petitioner was not entitled to claim the same.  Out of good faith, the Company had paid $10,000 to the Petitioner as an allowance, and the Petitioner was not entitled to claim the balance ($110,000).[19]

(5)     Item (j) comprises project management fee of $150,000 and $220,368 being the remaining balance of other “costs and expenses”.  The balance was subject to a contra-charge of HK$131,250 by reason of the mis-management on the part of the Petitioner leading to additional hacking off of concrete works having been carried out at the drainage pipes of the Project.  Without prejudice to the Company’s position that it was not liable to pay the Debt, it will settle the remaining balance of $89,118 under item (j) as soon as possible[20].

Petitioner’s new case

25.  Having seen So 1^st, the Petitioner changed its case on how the Debt arose.  In Au 2^nd, the Petitioner abandons its case on the “agreements” said to have been reached between March and June 2024 and, instead, alleges that:

(1)     On 26 March 2024, Au and So reached an oral agreement on terms that (a) the Petitioner would provide project management service to the Company in consideration of a fee of $3 million, (b) which shall be receivable by the Petitioner in any event, (c) the project period was estimated to be 10 months, (d) the Petitioner would pay the costs of the items under “Preliminary” in the Discussed Budget and would be reimbursed by the Company; and (e) the suppliers for the works under “Builder’s Works” would directly bill and be paid by the Company[21] (“P’s Oral Agreement”).

(2)     Au’s email of 27 March 2024 recorded P’s Oral Agreement and the inclusion of the words “guarantee received” next to management fee indicated that the Petitioner would receive the fee in full in any event[22].

(3)     The project management service commenced in June 2024.  In August 2024, So requested the Petitioner to reduce its fee.  In his WhatsApp message sent on 15 August 2024, Au agreed to the reduction and sent a PDF file setting out the payment schedule with reduced fee at $1.35 million, which should be paid within 30 days (“P’s Revised Oral Agreement”).  The Company continued to default on payment of the management fee and “certain other sum”.  [23]

(4)     In April 2025, So started to chase Au for payment through WhatsApp, relying on various voice messages sent during the period from 26 April to 26 August 2025.  At no point did Au or the Company say that the Petitioner was not entitled to the fee because the final account was not ready or that the payment would be subject to deduction of the final costs and expenses incurred in the Project[24]. 

(5)     The Company’s position is “illogical”[25].

(6)     The Project was completed in February 2026.  Certain sums of the costs of “Preliminary”, which he says are items (g), (h) and (j) in the SD, remain unpaid.  The Company tries to justify the non-payment by saying that (i) the works were suspended due to the Employer’s financial difficulty and (ii) there was mis-management on the part of the Petitioner.  However, even according to the 26/3 Oral Agreement, the parties never agreed that the Company would have no obligation to pay the “Preliminary” costs in the event that the Project was suspended and he denies that there was any mis-management[26].

Discussion

26.  In my judgment, it is an abuse of process for the Petitioner to present the Petition and the same should be dismissed in limine. 

27.  First, the SD and the Petition fall foul of the principles governing statutory demand and petition, which have been stated in Re Pacific Cultural Hospitality Development (HK) Limited [2022] HKCFI 905, §25(1)-(3):

“(1) A statutory demand is an important document. It serves to inform the debtor of the way in which the debt arose so that he would know what course he should take in the light of the information given. It is ‘the straight and narrow gateway’ through which a creditor must pass in order to establish the debtor’s apparent inability to pay the debt demanded in order for a bankruptcy petition to be presented (TSB Bank plc v Platts (No 2) [1998] BPIR 284 at 288H-290A, applied in Re Leung Cherng Jiunn [2016] 1 HKLRD 850, at §13).

(2) Whilst the statutory code affords the Court a degree of flexibility in dealing with an application to set aside a statutory demand for defects, this is not to be taken as a charter for slipshod in preparation of statutory demands. If a statutory demand is defective, the Court will be alert to see whether those mistakes have caused or will cause any prejudice to the debtor. Where the debt in issue was not a large sum, it could not be said the defect would have made no difference in that the debtor would not have paid anyway and no prejudice would have been suffered (Re Leung Cherng Jiunn, §§15-16, citing In re A Debtor (No 1 of 1987) [1989] 1 WLR 271 at 280D-E, per Nicholls LJ). The same principle applies to a statutory demand issued by a petitioner to a company.

(3) A statutory demand for a claim for unliquidated damages is ineffective (French, Applications to Wind Up Companies, 4^th ed., §7.160; Butterworths, Company Law (Winding Up and Miscellaneous Provisions) Handbook, 4^th ed., §178.05).  The debt must exist in liquidated form as at the date of presentation of the petition.  Consequently, a person claiming unliquidated damages in contract or in tort, but who has not yet obtained judgment, lacks standing to present a winding up petition (Fletcher, The Law of Insolvency 5^th ed., §21-007; Re Longmay International Ltd, HCCW 268/2012, 29 May 2013, §6, per Ng J).”

28.  There is no plea or particulars on the “agreements” said to have been entered into between March and June 20024, including when and in what manner were these “agreements” reached and the terms of such “agreements”.  Nor is there any plea on the particulars of the Debt, and the precise basis for saying that each of the 10 items stated in the SD had become due and payable as at the date the SD was served on the Company. 

29.  Even having considered the evidence filed by the Company, the Petitioner still does not apply for leave to amend the Petition to rectify the deficiency and properly plead its case on the “agreements” (to the extent that it still relies on the same) and the Debt.  The Petition is demurrable and should be dismissed.   

30.  Second, it is clear from Au 2^nd that the Petitioner seeks to put forward a new case which has never been mentioned in the SD and is inconsistent with the case pleaded in the Petition.  Instead of relying on the (unparticularised) “agreements” said to have been entered into between March and June 2024, which Au confirmed to be true, the Petitioner now claims that the parties entered into P’s Oral Agreement on 26 March 2024 and P’s Revised Oral Agreement in August 2024.  It is abusive for the Petitioner to put forward inconsistent factual cases on the “agreements” which gave rise to the Debt and maintains that that both cases are true.   

31.  Third, the only basis for seeking a winding up order against the Company is that the Company had failed to comply with the SD such that it is deemed unable to pay its debts under section 178(1)(a) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32).  This requires a debt which was “absolutely due” or “presently payable” so that contingent or prospective liabilities may not be the subject of a statutory demand (Maple Trade Finance Inc v Huge Best International Ltd, HCCW 389/2010, 22 June 2011, §§45-46, per DHCJ Coleman SC (as he then was)).

32.  There is at least a bona fide dispute on substantial ground that the Debt was not due or payable at the time the SD was served on the Company, having regard to the following facts and matters:

(1)     The issues as to when the oral agreement(s) were reached between the parties and what were their terms are hotly disputed.  They are not issues which can or should be determined by the court summarily.  The court will have to hear both parties (and their witnesses) on the terms of the oral agreement(s) and any subsequent variations thereto.  When this matter is raised with the Petitioner’s counsel, he is unable to offer any response. 

(2)     The Company’s case is not one based on bare assertions, but is supported by contemporaneous documents discussed in §§16-22 above.  In particular, although there was reference to “guaranteed received” in the Discussed Budget, that was in the context of Au sending the Discussed Budget for So to consider and review.  On its face, it was nothing more than the Petitioner’s proposal on the amount of the project management fee, which was consistent with the payment term being “TBC”. 

(3)     The Company’s case that the project management fee would only be calculated and payable after the final account had been completed is consistent with (a) the WhatsApp messages dated 9 April 2025 where Au asked Wong when the project management fee could be calculated, and Wong’s reply that she was unable to calculate the same at that time.  On the face of these messages, the project management fee was not due and payable at that time; and (b) the fact that the management fee had been excluded from all interim payments made by the Company to the Petitioner in the past, to which the Petitioner did not raise any objection. 

(4)     There is also dispute about the Petitioner’s entitlement to demand payment of the 3 items of “costs and expenses” which cannot be resolved summarily.  The Company’s case that the Petitioner shall be responsible for paying the “Preliminary” costs is supported by the Discussed Budget.  As regards the contra-charge, it is impossible for this Court to determine if the Company was entitled to make the deduction when all that the Petitioner says is to deny that it had mis-managed the Project such that the Company was not entitled to make any deduction. 

33.  In my view, it is a misuse of the summary proceedings of winding up when the Petitioner knew that the terms upon which the Petitioner was engaged to provide project management service to the Project were in dispute and that such dispute could not be resolved by way of winding up proceedings. 

34.  For completeness, Mr Tsui places much emphasis on the fact that the Company paid the entire amount of the Debt into court on 16 June 2026, and also paid $89,118 to the Petitioner last Friday, and argues that payment into court is not a security for the Debt and therefore not a ground for resisting the winding-up petition, citing Re NT Pharma International Company Limited [2023] 5 HKC 352 at §26. The argument is misconceived. 

(1)     In Re NT Pharma, there was no dispute that the petitioning debt was owed, such that it was for the company to demonstrate that there were good reasons to justify withholding the money from the petitioner.  A debtor company cannot force a creditor to accept payment into court as “security” for a cross-claim which the court did not find to be a serious cross-claim.  By contrast, the Company has shown that the Debt is bona fide disputed on substantial ground and the dispute is not one which can or should be determined in winding up proceedings. 

(2)     Although it is not necessary for the Company to demonstrate its solvency where it has shown that the Debt is bona fide disputed on substantial ground, the fact that the Company  was able to pay the entire amount of the Debt into court shows that it is not insolvent or unable to pay its debts. 

(3)     As regards the payment of $89,118, it would not have the effect of validating the SD or the Petition, both of which were premised on the entire Debt being due and payable at the time the SD was served.