Extracted
from the
SOUTH CHINA MORNING POST
dated
27th July, 1939.
66
(1)
STATE OF WAR EXISTS
CHIEF JUSTICE
JUSTICE ON HOSTILITIES BETWEEN CHINA AND JAPAN
WINDING UP OF SHIPPING FIRM
Written judgment on the petition brought by the Shiang Kee, otherwise known as the China Merchants Steam Navigation Co., Ltd., for the winding up of the Hongkong Branch of the Ching Kee Steam Navigation Co., Ltd. was delivered by the Chief Justice, Sir Atholl MacGregor in the Supreme Court yesterday.
His Lordship granted the petition, holding that as the Company in China was in process of dissolution, an order for the winding up of the Hongkong branch ought to be made.
In the course of his judgment, His Lordship referred to the Sino-Japanese hostilities and said.—“Not only on the authorities which I have cited but also on my inescapable knowledge of conditions on the China coast, a state of war exists between China and Japan, and has existed at all times material to this application."
the
The petitioners were represented by Mr. Eldon Potter, K.C., and Mr. H. C. Macnamara, instructed by Mr. D. L. Strellett, of Geo. K. Hall Brutton and Co. Mr. H. G. Sheldon, K.C., and the Hon. Mr. Leo D'Almada, Jnr., instructed by Mr. H. J. Arm- strong of Deacons, opposed petition on behalf of the following shareholders: Hsu Chin-tang (4,394 shares), Hsu Teh-yen (3,754), Cheng Teh-chun (2,502), Kao Yung-tong (2,044), Kao Cheung-chang (1,584), Yu Weh-ting (1,420), Yu Wei-fan (1,000), Li Yu-hsiang (70), Cheng Pen-ching (6,377), Cheng Chung-yu (6,176), Chang Chi-yu (5.623), Chang Pen-fah (5,429), Chang Hsin-teh (4,836), Chang Ming-teh (4,500) and the Dairen Kishen Kaisha, who are creditors to the amount of $47,157.32. All of them are of Dairen.
In his Judgment the Chief Justice said:
The Ching Kee Steam Navigation Company Limited, which hereafter in this judgment I shall refer to as "the company" was duly incorporated and registered as a company with limited liability under the laws of the Re- public of China on April 1, 1920. The head office of the company has at all material times been in Chefoo. The business of the company is and throughout has been that of ship- owners, carriers by sea, and other business in connection with shipping. Since the year 1920 the company has had a branch office in Hongkong. The company is an unregistered company so far as the laws of this Colony are concerned, and the jurisdiction voked in this application is that con- ferred on this Court by Section 313 of the Companies Ordinance 1932, the material provisions of which are:-
Provisions of Law
in-
313 (1) (b) The circumstances in which an unregistered company may be wound up are as follows:- (i) If the company is dissolved, or has ceased to carry on business, or
is carrying on business only for the purpose of winding up its affairs;| (iii) If the Court is of opinion that it is just and equitable that the company should be wound up. 313 (2) Where a company incorporated outside the Colony which has been carrying on business in the Colony ceases to carry on business in the Colony, it may be wound up as an unregistered company under this Part of the Ordinance notwith- standing that it has been dissolved or otherwise ceased to exist as a company under or by virtue of the laws of the country under which it! was incorporated.
The facts, SO far as they are material to this application, can be summarised quite briefly. The Com- pany owns and operates twenty steamships. Eleven of these vessels are chartered to Japanese interests, three are engaged in ordinary ship- ping business, and the other six have, since August, 1937, been lying in the waters of the Colony. The only local activity of the Company during that period has been that one of the vessels was from November 1938 to February 25, 1939 chartered for use as a storage hulk.
The Dairen Kisen Kabushiki Kaisha, a corporation established un- der the laws of Japan, was appointed to act as agents of the Company in 1939, and the local representatives of that corporation purported to assume duty as agents of the company in Hongkong as from 1st February 1939. Chungking's Order
The District Court of Chungking, having been duly authorised in that behalf by an order of the Supreme Court of China, in February 1939 or- dered the immediate dissolution of the Company and appointed three liquidators. From that decision an appeal was taken to the First Divi- sional Court of the Supreme Court of China, which on May 30 dismissed the appeal. That decision is final.
The present application is based on three grounds:
of
been a
(i) That there has winding-up order made by a court
in competent jurisdiction
the country in which the company was incorporated, and, as a result of that winding-up, the corporate powers of the Company have been destroyed in the country of its origin;
(ii) That the Company has in fact ceased to carry on business in the Colony; and
(iii) That it is just and equitable that the Company should be wound up. The substratum of the Company has gone. It is a shipping company, and cannot carry on legitimate busi- ness because of the risk of seizure of their vessels by enemy forces. The only avenue of business open to the Company are either illegal trading with the enemy or work extraneous to the true objects of the company such as the chartering of their vessels for use as hulks within this harbour.
Mr. Potter's Case
On the first of these grounds, Mr. Potter relies on the case of In re The Russian Bank for Foreign Trade (1933) Chancery 745. In that case the Russian revolutionary legislation of 1917 and the following years had put an end to the juristic existence of banking companies incorporated in Russia, and it was held that the im- possibility of a branch of such a Russian bank continuing to function according to its incorporating statutes was a sufficient ground for a winding-
up order. In delivering judgment Maugham J (as he then was) said: "The decrees as regards banks whose seats and principal offices were taken over by the state, must be regarded as so crippling the powers of the companies that, if not extinct, they could no longer exhibit any of the signs of life. At the best the bank, as a legal corporation, deprived as it was of its assets and its corporators, became no more than a legal con- ception. Its branch in England, if an old metaphor may be employed, is now a submerged wreck floating on, the ocean of commerce. As a branch of the original bank it appears, how- ever, to have or to have had creditors in this country, and if the petition before me is properly presented I am of opinion both that the bank has ceased legally to carry on business, and that it is just and equitable that it should be wound up. The essential ¦ features of the case are, indeed, of a simple character. A corporation created and established under a foreign legal system has been allow- ed by our laws to carry on business and to incur debts in this country. Its corporate powers, if not its cor- porate existence, have been destroyed in its country of origin. It cannot be doubted that in such circums- tances the Court, if it has jurisdic- tion, ought to make an order whith will secure as far as possible the payment of all just claims against the corporation." An order was made for the compulsory winding-up of the
.npany.
English Ruling
In his speech in the case of Lazard Bros. & Co. v. Midland Bank (1933) A.C.289 at 297, Lord Wright says: "English courts have long since re- cognised as juristic persons corpora- tions established by foreign law in virtue of the fact of their creation and
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