HO MAN KIT and Kong Sze Man Simone the Joint and Several Liquidators of Auragem Company Limited (in creditors’ voluntary liquidation) v. SURE LEAD LTD

HO MAN KIT and Kong Sze Man Simone the Joint and Several Liquidators of Auragem Company Limited (in creditors’ voluntary liquidation) v. SURE LEAD LTD

The plaintiffs failed to prove the requisite intention to gift and did not establish that there was a transaction on terms providing no consideration; mere transmission of money without evidence of dealings does not establish a transaction at an undervalue. On that basis the claim in respect of transactions at an undervalue must be dismissed.

Citation
[2019] HKCFI 2914
Parties
Joint and Several Liquidator (plaintiff): Ho Man Kit; Joint and Several Liquidator (plaintiff): Kong Sze Man Simone; Company (in Creditors' Voluntary Liquidation): Auragem Company Limited; Company (in Creditors' Voluntary Liquidation): Eternal Diamonds Corporation Limited; Recipient of Transfers / Defendant: Sure Lead Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
2 December 2019
Case Number
HCMP2019/2018
Procedural Posture
Applications Under the Companies (winding Up and Miscellaneous Provisions) Ordinance / Originating Summons Hearing and Judgment
Outcome
Plaintiffs' claims in relation to transactions at an undervalue were dismissed for failure to prove intention to gift or that a no‑consideration transaction had been entered into.
Legal Topics
Transactions at Undervalue, Unfair Preference, Liquidators' Recovery Actions, Procedural Objections to Affidavits/affirmations
Source Language
EN
Company Law Insolvency Transactions at Undervalue Unfair Preference Liquidators' Recovery Actions Procedural Objections to Affidavits/affirmations

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Parties

Ho Man Kit

Joint and Several Liquidator (plaintiff)

Kong Sze Man Simone

Joint and Several Liquidator (plaintiff)

Auragem Company Limited

Company (in Creditors' Voluntary Liquidation)

Eternal Diamonds Corporation Limited

Company (in Creditors' Voluntary Liquidation)

Sure Lead Limited

Recipient of Transfers / Defendant

Procedural Posture

Applications Under the Companies (winding Up and Miscellaneous Provisions) Ordinance / Originating Summons Hearing and Judgment

Legal Issues

  1. 1 Whether the bank transfers (total US$180,400) were gifts or transactions at an undervalue under sections 265D/265E/266/266B of the Ordinance
  2. 2 Whether the transfers constituted unfair preferences because the companies were insolvent
  3. 3 Whether the affirmations of Jeffrey Paragas were procedurally defective and inadmissible

Ratio Decidendi

The plaintiffs failed to prove the requisite intention to gift and did not establish that there was a transaction on terms providing no consideration; mere transmission of money without evidence of dealings does not establish a transaction at an undervalue. On that basis the claim in respect of transactions at an undervalue must be dismissed.

Court Disposition

Plaintiffs' claims in relation to transactions at an undervalue were dismissed for failure to prove intention to gift or that a no‑consideration transaction had been entered into.

Orders

  • The originating summonses seeking declarations that the transfers were gifts/transactions at an undervalue and void were dismissed.