WING HONG CONSTRUCTION LTD (In Compulsory Liquidation) v. HUI CHI YUNG AND OTHERS

WING HONG CONSTRUCTION LTD (In Compulsory Liquidation) v. HUI CHI YUNG AND OTHERS

The court allowed the defendants' appeal and ordered security for costs of HK$2,000,000 because the plaintiff, in compulsory liquidation, failed to rebut the presumption of insolvency by credible testimony; the liquidators did not satisfactorily show inability (as opposed to unwillingness) of backers to provide funds, the balancing exercise favoured defendants, the public interest factor was insufficient to outweigh the need to protect defendants, and there was no jurisdiction to order security against creditors or liquidators.

Citation
WING HONG CONSTRUCTION LTD (In Compulsory Liquidation) v. HUI CHI YUNG AND OTHERS
Parties
Plaintiff (in Compulsory Liquidation): Wing Hong Construction Limited; 1st Defendant: Hui Chi Yung; 2nd Defendant: Hui Chi Yang; 3rd Defendant: Yiu Kai Yeuk (Raphael); 4th Defendant: China National Culture Group Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
18 August 2017
Case Number
HCA1423/2015
Procedural Posture
Action (high Court, Court of First Instance) / Appeal From Master's Decision on Security for Costs; Hearing in Chambers Before Recorder Pow Sc; Judgment 18 August 2017
Outcome
Appeal allowed; security for costs ordered against plaintiff
Legal Topics
Security for Costs, Liquidation, Insolvency Presumption, Fiduciary Duties, Funding of Litigation
Source Language
EN
Company Law Insolvency Law Civil Procedure Costs Security for Costs Liquidation Insolvency Presumption Fiduciary Duties +1 more

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 5 Authorities cited 9 Party arguments 2 Amounts and remedies 2
Sign in to unlock

Parties

Wing Hong Construction Limited

Plaintiff (in Compulsory Liquidation)

Hui Chi Yung

1st Defendant

Hui Chi Yang

2nd Defendant

Yiu Kai Yeuk (Raphael)

3rd Defendant

China National Culture Group Limited

4th Defendant

Procedural Posture

Action (high Court, Court of First Instance) / Appeal From Master's Decision on Security for Costs; Hearing in Chambers Before Recorder Pow Sc; Judgment 18 August 2017

Legal Issues

  1. 1 Whether security for costs should be ordered under section 905 Companies Ordinance
  2. 2 Whether the plaintiff (in liquidation) is insolvent or of doubtful solvency and has rebutted the presumption of insolvency
  3. 3 Whether ordering security would stifle a bona fide claim pursued by liquidators and creditors

Ratio Decidendi

The court allowed the defendants' appeal and ordered security for costs of HK$2,000,000 because the plaintiff, in compulsory liquidation, failed to rebut the presumption of insolvency by credible testimony; the liquidators did not satisfactorily show inability (as opposed to unwillingness) of backers to provide funds, the balancing exercise favoured defendants, the public interest factor was insufficient to outweigh the need to protect defendants, and there was no jurisdiction to order security against creditors or liquidators.

Court Disposition

Appeal allowed; security for costs ordered against plaintiff

Orders

  • Plaintiff to give security for the 1st to 4th defendants' costs in the sum of HK$2,000,000 by paying that sum into court within 28 days from the date of the Order
  • Solicitors' costs incurred up to October 2016 in the sum of HK$1,292,257.00 to be taxed if not agreed on a party‑and‑party basis and payable forthwith