RE RIGHT TIME CONSTRUCTION CO LTD

RE RIGHT TIME CONSTRUCTION CO LTD

Payments made to the respondent after presentation of the winding-up petition were dispositions of company property within s.182 and are void; the court refused to validate the payments because the respondent knew of the company’s insolvency, the payments reduced assets available to unsecured creditors, were not in...

Source-derived case information.

Citation
RE RIGHT TIME CONSTRUCTION CO LTD
Parties
Applicants/joint Liquidators: T. B. Stevenson; W. K. Timso; A. K. P. Yung (Joint Liquidators, Ernst & Whinney); Company/in Liquidation: Right Time Construction Company Limited (In Liquidation); Respondent/sub Contractor: Wong Kwong Kee trading as Wong Kwong Kee (Engineering); Petitioner/creditor: Bank of Tokyo Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
26 July 1988
Case Number
HCCW97/1987
Procedural Posture
Companies Winding Up / Chambers Application by Joint Liquidators for Declaration/validation Order After Presentation of Petition and After Winding Up Order
Outcome
Declaration that challenged payments are void under s.182; liquidators entitled to recover the sum of $208,781; order nisi for costs on a common fund basis.
Legal Topics
Void Dispositions Under S.182 Companies Ordinance, Validation Orders, Fraudulent Preference (s.266), Priority of Unsecured Creditors
Source Language
en
Company Law Insolvency Void Dispositions Under S.182 Companies Ordinance Validation Orders Fraudulent Preference (s.266) Priority of Unsecured Creditors

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Parties

T. B. Stevenson; W. K. Timso; A. K. P. Yung (Joint Liquidators, Ernst & Whinney)

Applicants/joint Liquidators

Right Time Construction Company Limited (In Liquidation)

Company/in Liquidation

Wong Kwong Kee trading as Wong Kwong Kee (Engineering)

Respondent/sub Contractor

Bank of Tokyo Limited

Petitioner/creditor

Procedural Posture

Companies Winding Up / Chambers Application by Joint Liquidators for Declaration/validation Order After Presentation of Petition and After Winding Up Order

Legal Issues

  1. 1 Whether payments made after presentation of petition constituted dispositions of company property and were void under s.182 of the Companies Ordinance
  2. 2 Whether the court should exercise its discretion to validate those payments
  3. 3 Whether the payments amounted to a fraudulent preference under s.266 (alternative, not actively pursued)

Ratio Decidendi

Payments made to the respondent after presentation of the winding-up petition were dispositions of company property within s.182 and are void; the court refused to validate the payments because the respondent knew of the company’s insolvency, the payments reduced assets available to unsecured creditors, were not in the ordinary course of business and there was no justification for preferring the respondent.

Court Disposition

Declaration that challenged payments are void under s.182; liquidators entitled to recover the sum of $208,781; order nisi for costs on a common fund basis.

Orders

  • Declaration that the two payments are void under s.182 of the Companies Ordinance
  • Order that the respondent pay the sum of HKD 208781 to the joint liquidators