SULANSER CO. LTD. (in liquidation) AND ANOTHER v. CHINA ALLIED HOLDINGS LTD. AND OTHERS

SULANSER CO. LTD. (in liquidation) AND ANOTHER v. CHINA ALLIED HOLDINGS LTD. AND OTHERS

The court found on the facts that the assignment was made with the principal/dominant intention of preferring Tianjin International (via China Allied) and of defrauding other creditors at a time when enforcement of an arbitration award and judgment was imminent; although consideration of HK$5,000,000 was paid, China Allied had notice of the intent to defraud and thus the disposition was voidable under s.60 CPO and constituted a fraudulent preference under s.266 CO, and the Property is held on constructive trust for the companys creditors (including Tianjin International).

Citation
SULANSER CO. LTD. (in liquidation) AND ANOTHER v. CHINA ALLIED HOLDINGS LTD. AND OTHERS
Parties
1st Plaintiff (company in Liquidation): Sulanser Company Limited (in liquidation); 2nd Plaintiff (liquidator): The Official Receiver and Liquidator of Sulanser Company Limited; 1st Defendant: China Allied Holdings Limited; 2nd Defendant (shareholder/director of China Allied): Philip Fei; 3rd Defendant (shareholder/director of China Allied): Yu Kwong Sen
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
22 January 1999
Case Number
HCA8001/1995
Procedural Posture
Civil Action to Set Aside Disposition / Insolvency Proceedings / Judgment (trial)
Outcome
Assignment of the Property set aside as fraudulent disposition and fraudulent preference; Property held on constructive trust for Sulansers creditors and reliefs granted to the Plaintiffs.
Legal Topics
Fraudulent Disposition Under S.60 CPO, Fraudulent Preference Under S.266 CO, Constructive Trust, Voidable Transactions, Creditor Preference and Insolvency Timing
Source Language
EN
Conveyancing and Property Companies Insolvency Equity and Trusts Fraudulent Disposition Under S.60 CPO Fraudulent Preference Under S.266 CO Constructive Trust Voidable Transactions +1 more

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Parties

Sulanser Company Limited (in liquidation)

1st Plaintiff (company in Liquidation)

The Official Receiver and Liquidator of Sulanser Company Limited

2nd Plaintiff (liquidator)

China Allied Holdings Limited

1st Defendant

Philip Fei

2nd Defendant (shareholder/director of China Allied)

Yu Kwong Sen

3rd Defendant (shareholder/director of China Allied)

Procedural Posture

Civil Action to Set Aside Disposition / Insolvency Proceedings / Judgment (trial)

Legal Issues

  1. 1 Whether the transfer of the property on 10 January 1995 was a fraudulent disposition under s.60 CPO
  2. 2 Whether the transfer constituted a fraudulent preference under s.266 Companies Ordinance
  3. 3 Whether the consideration of HK$5,000,000 was an undervalue

Ratio Decidendi

The court found on the facts that the assignment was made with the principal/dominant intention of preferring Tianjin International (via China Allied) and of defrauding other creditors at a time when enforcement of an arbitration award and judgment was imminent; although consideration of HK$5,000,000 was paid, China Allied had notice of the intent to defraud and thus the disposition was voidable under s.60 CPO and constituted a fraudulent preference under s.266 CO, and the Property is held on constructive trust for the companys creditors (including Tianjin International).

Court Disposition

Assignment of the Property set aside as fraudulent disposition and fraudulent preference; Property held on constructive trust for Sulansers creditors and reliefs granted to the Plaintiffs.

Orders

  • Transfer/assignment of the Property to China Allied declared voidable and set aside
  • Property to be held on constructive trust for the liquidator for the benefit of all creditors of Sulanser (including Tianjin International)