JOINT AND SEVERAL PROVISIONAL LIQUIDATORS OF HSIN CHONG CONSTRUCTION CO LTD (PROVISIONAL LIQUIDATORS APPOINTED) v. THE CHINESE UNIVERSITY OF HONG KONG AND OTHERS

JOINT AND SEVERAL PROVISIONAL LIQUIDATORS OF HSIN CHONG CONSTRUCTION CO LTD (PROVISIONAL LIQUIDATORS APPOINTED) v. THE CHINESE UNIVERSITY OF HONG KONG AND OTHERS

The summons was dismissed because the PLs had no justification to seek directions under section 200(3): the application sought to outsource a commercial decision the PLs had already taken; there was no genuine dispute or creditor challenge requiring court determination; the PLs lacked prior court sanction to commence the proceedings while provisional liquidators; and the factual/legal issues identified did not support the necessity of the application. Costs were ordered against the PLs and the court invited submissions on depriving the PLs' rights to remuneration and cost recovery.

Citation
[2020] HKCFI 2434
Parties
Applicants: Joint and several provisional liquidators of Hsin Chong Construction Company Limited (provisional liquidators appointed); 1st Respondent: The Chinese University of Hong Kong; 2nd Respondent: Westwood Limited; 3rd Respondent: RAFT (E&M) Engineering Limited; 4th Respondent: Huns Engineering Company LMITED; 5th Respondent: Pyrofoe Engineers Limited; 6th Respondent: Skyforce Engineering Limited; 7th Respondent: KONE Elevator (HK) Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
18 September 2020
Case Number
HCCW239/2018
Procedural Posture
Companies (winding Up) Proceedings / Application for Directions Under Section 200(3) During Provisional Liquidation
Outcome
Summons dismissed
Legal Topics
Provisional Liquidation, Directions Under Section 200(3), Retention Monies, Direct Payment Clauses to Subcontractors, Pari Passu Principle, Set Off, Requirement for Court Sanction
Source Language
EN
Company Law Insolvency Trust Law Civil Procedure Equity Provisional Liquidation Directions Under Section 200(3) Retention Monies +4 more

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Parties

Joint and several provisional liquidators of Hsin Chong Construction Company Limited (provisional liquidators appointed)

Applicants

The Chinese University of Hong Kong

1st Respondent

Westwood Limited

2nd Respondent

RAFT (E&M) Engineering Limited

3rd Respondent

Huns Engineering Company LMITED

4th Respondent

Pyrofoe Engineers Limited

5th Respondent

Skyforce Engineering Limited

6th Respondent

KONE Elevator (HK) Limited

7th Respondent

Procedural Posture

Companies (winding Up) Proceedings / Application for Directions Under Section 200(3) During Provisional Liquidation

Legal Issues

  1. 1 Whether provisional liquidators properly sought directions under s200(3) in respect of distributions to nominated subcontractors
  2. 2 Whether retention monies were held on express trust by the employer for the subcontractors
  3. 3 Whether existence of set-off mechanism negates existence of a trust over retention monies

Ratio Decidendi

The summons was dismissed because the PLs had no justification to seek directions under section 200(3): the application sought to outsource a commercial decision the PLs had already taken; there was no genuine dispute or creditor challenge requiring court determination; the PLs lacked prior court sanction to commence the proceedings while provisional liquidators; and the factual/legal issues identified did not support the necessity of the application. Costs were ordered against the PLs and the court invited submissions on depriving the PLs' rights to remuneration and cost recovery.

Court Disposition

Summons dismissed

Orders

  • Summons dated 2 July 2020 dismissed
  • Costs of and occasioned by the Summons to be paid by the provisional liquidators to Huns Engineering Company Limited, to be assessed by way of gross sum assessment