Hong Kong Case Law: Decisions & Judgments | LexChat

Topic

Running account principle

Legal area

Court

24 Feb 2025

CHEN YUNG NGAI KENNETH and SUN WING SZE (being the Joint and Several Liquidators of BEST YEAR ENTERPRISES LTD (In Liquidation)) v. Sin Kwok Lam AND ANOTHER

Citation

[2025] HKCFI 741
Court

Court of First Instance
Case number

HCMP973/2022

The court found the Company was insolvent at the time of the payments; Enhance Pacific received the payments as conduit/agent for Mr Sin so they were effectively payments to Mr Sin; Mr Sin failed to prove any oral assignment, subrogation or secured interest and failed to establish running account or absence of desire to prefer; accordingly the three payments totalling HK$14,300,000 were unlawful unfair preferences under s266 and must be set aside and repaid by Mr Sin.
20 Oct 2000

Re Wing Hong Woo Co. Ltd.

Citation

Re Wing Hong Woo Co. Ltd.
Court

Court of First Instance
Case number

HCCW532/1995

The liquidator's summons was dismissed because (1) the running account principle meant transactions before 8 September 1995 were not preferential; (2) unutilized letters of credit did not constitute company indebtedness and could not be set aside; (3) the repayments of HK$7,000,000 and HK$2,772,982.91 were funded by the Bank to third parties and were not payments out of the company's assets and therefore did not diminish the company's estate; and (4) the liquidator failed to prove the dominant intention to prefer the Bank or its guarantor for the remaining payments.