CHENG ERIC TAK KWONG v. EMAGIST GROUP LTD AND OTHERS

CHENG ERIC TAK KWONG v. EMAGIST GROUP LTD AND OTHERS

Because the company is solvent and carries on an active business, and the directors have shown reasons an intelligent and honest man could reasonably hold, the court will grant validation for payments made in the ordinary course and for the company's reasonable legal costs in HCA 1659/2012; a petitioning contributory must adduce compelling evidence of likely injury to the company to defeat such an order.

Citation
CHENG ERIC TAK KWONG v. EMAGIST GROUP LTD AND OTHERS
Parties
Petitioner: CHENG ERIC TAK KWONG; 1st Respondent: EMAGIST GROUP LIMITED; 2nd Respondent: LEE SHIU YIN BONIFACE; 3rd Respondent: EMAGIST ENTERTAINMENT LIMITED
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
21 September 2012
Case Number
HCCW306/2012
Procedural Posture
Companies (winding Up) No 306 of 2012 / Chambers Decision on Validation Order Following Presentation of Petition
Outcome
Validation order granted in respect of payments in the ordinary course and the company's reasonable legal costs in HCA 1659/2012; ancillary procedural directions and costs order made.
Legal Topics
Validation Order, Shareholder Dispute, Directors' Powers, Payment of Company Expenses, Companies Ordinance Section 182
Source Language
EN
Company Law Insolvency Law Civil Procedure Validation Order Shareholder Dispute Directors' Powers Payment of Company Expenses Companies Ordinance Section 182

Case Brief

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Parties

CHENG ERIC TAK KWONG

Petitioner

EMAGIST GROUP LIMITED

1st Respondent

LEE SHIU YIN BONIFACE

2nd Respondent

EMAGIST ENTERTAINMENT LIMITED

3rd Respondent

Procedural Posture

Companies (winding Up) No 306 of 2012 / Chambers Decision on Validation Order Following Presentation of Petition

Legal Issues

  1. 1 Whether payments made in the ordinary course of business after presentation of a petition are void under section 182 of the Companies Ordinance and may be validated
  2. 2 Whether specific exceptional items (notably legal costs) require distinct validation despite company solvency
  3. 3 What burden a petitioning contributory must meet to oppose a validation order in respect of a solvent company

Ratio Decidendi

Because the company is solvent and carries on an active business, and the directors have shown reasons an intelligent and honest man could reasonably hold, the court will grant validation for payments made in the ordinary course and for the company's reasonable legal costs in HCA 1659/2012; a petitioning contributory must adduce compelling evidence of likely injury to the company to defeat such an order.

Court Disposition

Validation order granted in respect of payments in the ordinary course and the company's reasonable legal costs in HCA 1659/2012; ancillary procedural directions and costs order made.

Orders

  • Notwithstanding the presentation of the Petition dated 21 August 2012, unless otherwise ordered by the court any payment or other disposition of property made on or after 21 August 2012 in the ordinary course of the business of the Company shall not be void by virtue of section 182 of the Companies Ordinance.
  • Payments of all reasonable legal expenses incurred by the Company in HCA 1659 of 2012 shall not be void by virtue of section 182 of the Companies Ordinance.