1939-07-26 — Page 9

THE CHINA MAIL, JULY 26, 1939.

Page

IMPORTANT JUDGMENT IN CHING KEE CASE Activities Treasonable According To Chinese Law

Winding-Up Order Granted

and commerce.

pany in China is the process of dis- Can it then be said that the company solution, and the circumstances are is carrying on business in the Colony such that in any judgment this court when its ostensible agents purport to ought to make an order for the wind-act under a contract which is illegal ing up of the local branch of the com- by the law of China which is clear- ly the proper. law? The answer must The second and third of Mr. Potter's be no. The parent company in China and the local branch is without law- ful representation in the Colony.

pany.

A

tion of the present relations between

ground necessarily involve a considera- is in process of compulsory winding up China and Japan.

of on

which

de-

&

He Was

of

"The fact that certain foreign nationals (Japanese) are in contempt of an order of a competent

In July 1987 hostilities between these MR. SHELDON'S. CONTENTIONS court is no reason why I should disregard that two countries broke out, and at this Mr. Sheldon has submitted three order or fail to treat it with proper respect."

date are still raging. As a result of interesting arguments in opposition these hostilities the Japanese are in to the making of the order prayed. This sentence formed part of a judgment delivered effective occupation of Chefoo and Tristly, he contends, the fact that the the adjacent country, and of all the local branch of the company is pre- by Sir Atholl MacGregor this morning, in maritime coast of the Republic of cluded by existing circumstances from which he made an order for the winding up of the Imperial Japanese Government pu- is not in itself & ground for making China. The effect of Proclamations of carrying on business in the Colony the Ching Kee Steam Navigation Company.

blished in August and September 1987 a winding-up order, and he relies on is that it is impossible for ships un- the case of In re Middlesborough As- der the Chinese flag to trade in Chinese sembly Rooms Co. (1878) 14 Ch. D. Sir Atholl MacGregor, giving judg-so crippling the powers of the com-waters without being subject to imme- 104: In that case a company formed ment, said, in part:-

panies that, if not extinct, they could diate seizure by the naval forces of for building and letting The Ching Kee Steam Navigation no longer exhibit any of the signs of Japan. The question whether in these rooms resolved, owing to trade

assembly --Company Limited, was duly incorpor-life. At the best the bank, as a legal circumstances a state of war exists bepression, to suspend work, and did ated and registered as a company with corporation, deprived as it was of its tween China and Japan has been raia so suspend work for more than a limited liability under the laws of the assets and its corporators, became no ed by Mr. Sheldon on behalf of those year. A shareholder presented Republic of China on 1st April, 1920. more than a legal conception.

Its who oppose the petition. The various petition for winding-up. The head office of the company has at branch in England, if an old metaphor affidavits filed on behalf of the parties supported by one-eighth in value of all material times been in Chefoo in may be employed, is now a submerg to this action are reasonably explicit the shareholders whereas the petition Shantung Province of North China. ed wreck Hoating on the ocean

this question. The affidavit of The business of the company is

was opposed by four-fifths in value. As a branch of the ori Jun Ke Choy filed on 29th March in In these circumstances the Court throughout has been that of shipown- ginal bank it appears, however, to have support of the petition refers in Appeal held that a winding-up order ers, carriers by sea, and other busi or to have had creditors in this coun- paragraph 7 to "the outbreak of hos- ought not to be made. In my opinion ness in connection with shipping. try, and if the petition before me is tilities between China and Japan"; his that case is easily distinguishable. It Since the year 1920 the company has properly presented I am For opinion later affidavit of 3rd April refers in was a petition for the winding-up of had a branch office in Hong Kong. both that the bank has ceased legally paragraph 17 to "the blockade of Ja- an English Company whereas here I The facts, so far as they are mater to carry on business, and that it is panese naval forces exercised against have to consider a petition for the ial to this application, can be sum-just and equitable that it should be all Chinese vessels"; and Mr. Matsu-winding-up of the local branch of a marised quite briefly. The company wound up. The essential features of moto in his affidavit of 16th May in foreign competent Court. I know of' owns and operates twenty steamships. the case are, indeed, of a simple char opposition to the application likewise Eleven of these vessels are chartered acter.

no authority for keeping alive A corporation created and es-refers in paragraph 9 to "the outbreak branch where the parent trunk is in to Japanese interests, three are en-tablished under a foreign legal system of hostilities between China and Ja process of dissolution. Secondly, he gaged in ordinary shipping businesss, has been allowed by our laws to carry pan." These considered statements on

argues, the Supreme Court of China and the other six have since August on business and to incur debts in this affidavit are entitled to, and must re- has made an order which is entirely 1987 been lying in the waters of the country. Its corporate powers, if not ceife due weight, but fortunately for nugatory. The only assets within the Colony. The only local activity of the its corporate existence, have been me sitting as a court of first instance, jurisdiction of that court are fourteen company during that period has been destroyed in its country of origin. It the matter is concluded by two recent that one of the vessels was from No- cannot be doubted that in such rent judgments. In the local case of Ford sie hated on Chefoo or Dairen, and, notwithstanding the order of the vember 1938 to 25th February 1939 stances the Court, if it has jurisdic-Y. Steinman and others, which is un- court these ships are still trading. chartered for use as a storage hulk, tion, ought to make an order

reported, the Full Court of this Co-This court will not make a useless or The Dairen Kisen Kabushiki Kaisha, will secure as far as possible the pay-lony in judgments delivered as early ineffective decree (Ferguson vs. Wil- ...a corporation" established under the ment of all just claims against the cor

as December 1937 held that such

son L.R.2. Chancery Appeals. p.77.) laws of Japan was appointed to act -:as agents of the company in 1939, and Poration." An order was made for the state of war existed as to justify Ball-That argument is based on two fal-

compulsory winding-up of the

ors on peacetime articles from refus lacies. In the first place the company ing to serve on a voyage into the coast has within the jurisdiction of COMITY OF NATIONS

al waters of China or Japan. More court substantial assets and it has recently the Court of Appeal in Eng not been suggested that any

order In his speech in the case of Lazard land have considered the same ques- which I make will not be immediately Bros and Co. v. Midland Bank (1933)tion in the case of Kawasaki Kisen effective so far as these assets are The District Court of Chungking,glish courts have long since recognis- 3. S. Co., Ltd. (1989) I.A.E.R. 819 fact that certain foreign nationals A.C.289 at 297-Lord-Wright says: "En- Kabushiki Kaisha of Kobe v. Mantham concerned. In the second place the having been duly authorised in that behalf by an

ed as juristic persons corporations es- where Sir Wilfred Greene M.R. in up- order of the Supreme tablished by foreign law in virtue of holding the decision of the arbitrator competent court is no reason why I are in contempt of an order of s Court of China, in February 1989 or the fact of their creation and continu-who found that the owners were justi- should disregard that order or fail dered the immediate dissolution of the ance under and by that law. Such re-fied in cancelling a charter party which to treat it with proper respect. The company and appointed three liquida- cognition is that to be by the comity contained the clause "Charterers and tors. From that decision an appeal of nations. Thus in Henriques v. Dutch owners to have the liberty of cancell (1907) Appeal Cases 326 is

case of de Jager vs. A.G. for Natal Was taken to the First Divisional West India Co. (1728) 2 Lord Raymond ing this charter party if war breaks authority for the proposition Court of the Supreme Court of China, 1582, 1535) the Dutch company were out involving Japan" spoke of his hap- the company in Chefoo is still subject

direct tr

that which on 30th May dismissed the ap- permitted to sue in the King's Bench piness to be able to avoid coming to a to the jurisdiction of the peal. That decision is final.

The present application is based on per instruments whereby by the law feelings of common sense. Mr Sheldon in delivering the judgment of

on evidence being given "of the pro- conclusion which would violate all his courts. A Lord Loreburn there sald Chinese

three grounds:

of Holland they were effectually creat has been driven to argue that the Judicial Committee "The protection of the (1) That there has been a winding-up ed a corporation there." But as the judgment, In each of these cases has a State does not cease merely because order made by a court of compe- cretaion depends on the act of the relation only to the facts of the par- the State forces, for strategical tent jurisdiction in the country in foreign state which created them the ticular case. That is true, but the other reasons, are temporarily with- which the company was incorpor annulment of the act of creation by point at issue In each of these cases drawn, so that the enemy for ated, and, as a result of that wind-the same power will insolve the dis-was just the one which I have to de- time exercises the rights of an army ing-up, the corporate powers of the solution and non-existence of the cor-cide, and these judgments apply to in occupation. On the contrary, when company have been destroyed in poration in the eyes of English law, the facts of the case now before me as the country of its origin;

The will of the sovereign authority cogently as they do to the facts of the of its rightful sovereign wrongs done such territory reverts to the control (2) That the company has in fact ceas which created it can also destroy it. cases in which they were delivered during the foreign occupation

ed to carry on business in the Co-English law will equally recognise the Sir Wilfred Greene's recourse to the cognisable by the ordinary courts." lony; and (3) That it is just and equitable that one, as the other, fact.

touchstone of "common" "sense fortifies the company should be wound up.r. Sheldon on this point has refer-me in my conclusion, not only on the

“HIGH TREASON": The substratum of the company Bank of South Australia (1886)

cases In Te. Commercial authorities which I have cited but has gone. It is a shipping com Ch.D. 174 and In re Matheson Bro- conditions on the China coast, that g 38 also on my inescapable knowledge of pany, and cannot carry on legiti- mate business because of the risk thers Lt. (1884) 27 Ch.D. 225. These state of war exists between China and of seizure of their vessels.

cases, tried while the Companies Act Japan, and has existed at all times by 1862 was still in force, decided only that material to this application. onemy forces. The only avenues the English Courts have jurisdiction to

D.K.K.K. CLAIM - of business open to the company wind up a branch in England of a for- In January. 1989 the local office of holding 1600 shares it is opposed by are either illegal trading with the enemy or work extraneous to the lgn company despite the pen the

the latter case Kay J. says "What lony. dency of foreign liquidation. In ese

K

the local representatives of that cor- poration purported to assume duty as agents of the company in Hong Kong as from 1st February 1939.

THREE GROUNDS

true objects of the company such

pany.

red to two

com-

is the effect of the winding up order Daire

a

this

or

the

are

In the third place, he maintains the contributòries are. the best jud- ges as to whether there is any danger to the local assets of the is company. Their considered view shown by the fact that whereas the petition is presented by contributories was closed and its Chin- 50,000 in value, and it is a familiar departed from the Co- and settled principle that a court will February 1939 the not interfere with a domestic forum. Kisen Kabushiki Kaisha pur-It is perhaps not surprising that the dent either in the province of Shan- betung which is in Japanese occupation or in Dairen in Manchukuo should desire to trade with the enemy. It may, for aught I know be a profitable undertaking: It is in any event more pri ble than having the company's.

up in harbour” or forcibly

as the chartering of their vessels for use as hulks within this har-which it is said has been made in New ported to act at nts of the com- majority of the contributories, resi

Zealand ? This court upon principles pany in this Colony.

bour:

"SUBMERGED WRECK”

of international comity, would not in these circumstances can it On the first of these grounds Mr. doubt have great regard to that wind said that the company is still carry Potter relles on the case of In re The ing up order and would be influenced ing on business in the Colony? Mr. Russian Bank for Foreign ade thereby, but the question of jurisdic- T. F. Lo, a well qualified and acknow. (1988) 1- Chancery 746. In

the Russian “revolutionary

--of 1917 and the following

out on and to the in banking companie: "Russla

case tionis

more

nt question, and the ledged expert in Chinese law has filed a winding up order a lengthy de #setting out in the

imon'....

does not take clearest terms

of this statu