JAMES WARDELL AND JACKSON IP, Joint and Several Liquidators of KIN MING TOY MANUFACTORY LTD (In Liquidation) v. CHENG SHING KI AND ANOTHER

JAMES WARDELL AND JACKSON IP, Joint and Several Liquidators of KIN MING TOY MANUFACTORY LTD (In Liquidation) v. CHENG SHING KI AND ANOTHER

The court held both impugned payments did not constitute dispositions of the company’s property for the purposes of s182. The first payment (increase in overdraft) did not, on the facts and characterisation advanced, amount to a disposition. The second payment was made from proceeds that were subject to the bank’s charge (by contract and at common law), so those monies were charged assets and not company property susceptible to avoidance under s182; accordingly the summons was dismissed.

Citation
[2018] HKCFI 2057
Parties
Petitioner (joint and Several Liquidators of Kin Ming Toy Manufactory Limited (in Liquidation)): James Wardell and Jackson Ip; 1st Respondent: Cheng Shing Ki; 2nd Respondent: Bangkok Bank Public Company Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
22 August 2018
Case Number
HCCW402/2015
Procedural Posture
Companies Winding Up Proceedings (cap 32) / Hearing of Summons for Declarations in Winding Up; Decision on Summons (22 August 2018)
Outcome
Summons dismissed
Legal Topics
Avoidance of Dispositions Under S182, Misfeasance Under S276, Charged Assets and Proceeds of Sale, Overdraft and Security for Future Advances, Construction of Charge
Source Language
EN
Company Law Insolvency Law Banking Law Security Interests Avoidance of Dispositions Under S182 Misfeasance Under S276 Charged Assets and Proceeds of Sale Overdraft and Security for Future Advances +1 more

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Parties

James Wardell and Jackson Ip

Petitioner (joint and Several Liquidators of Kin Ming Toy Manufactory Limited (in Liquidation))

Cheng Shing Ki

1st Respondent

Bangkok Bank Public Company Limited

2nd Respondent

Procedural Posture

Companies Winding Up Proceedings (cap 32) / Hearing of Summons for Declarations in Winding Up; Decision on Summons (22 August 2018)

Legal Issues

  1. 1 Whether post‑petition payments of HK$1,100,000 (4 Jan 2016) and HK$1,000,000 (7 Jan 2016) were dispositions of company property void under s182
  2. 2 Whether the proceeds of sale deposited on 7 Jan 2016 were subject to the bank’s charge
  3. 3 Whether an increase in an overdraft can constitute a disposition where the bank holds security for future advances

Ratio Decidendi

The court held both impugned payments did not constitute dispositions of the company’s property for the purposes of s182. The first payment (increase in overdraft) did not, on the facts and characterisation advanced, amount to a disposition. The second payment was made from proceeds that were subject to the bank’s charge (by contract and at common law), so those monies were charged assets and not company property susceptible to avoidance under s182; accordingly the summons was dismissed.

Court Disposition

Summons dismissed

Orders

  • Summons dismissed
  • Costs reserved (to be addressed on hearing)