Company law - liquidation - order for production of documents under s.221(3) - meaning of documents "relating to the company" - included at least matters "concerning promotion, formation, trade, dealings, affairs or property of company" in s.221(1) - Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.32) s.221(1), (3)
Words and phrases - "relating to the company" - Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.32) s.221(3)s.27
T, a former director and chief financial officer of the subject company in liquidation (C), was allegedly involved in two transactions by which about USD355 million was transferred from C to entities connected with its main beneficial shareholder. The liquidators (Ls) sought production of an extensive range of documents by T said to concern: (a) the value and recoverability of any actual or contingent causes of action potentially available to C, including against T; and (b) assets of C under the control of T, his wife or other persons or entities (the Documents). Under s.221(3) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.32), "The court may require [any officer of the company] to produce any books and papers in his custody or power relating to the company …". Ls argued that "relating to the company" in s.221(3) should be given the same meaning as "concerning the promotion, formation, trade, dealings, affairs or property of the company" in s.221(1) which specifies the matters on which a person may be examined on oath under s.221(2). The Judge dismissed Ls' application, holding that the scope of s.221(3) was materially narrower than that of s.221(2). Ls appealed.
Held, allowing the appeal and making the orders for production sought by Ls, that:
- The legislative history, and purpose of s.221, namely to enable liquidators to carry out their duties as effectively, quickly and economically as possible, and the language of the section called for a wide interpretation of the court's powers under it. Section 221(3) should be read as covering at least the same material as s.221(2) read with s.221(1). Both oral examination and documentary production were ultimately directed to the same purpose and should have the same, or at least a very similar, scope and extent. Further, the phrase "relating to" was of considerable width and all the matters in s.221(1) could be regarded in a general sense as "relating to" the company (Commissioners of Inland Revenue v Maple & Co (Paris) Ltd  AC 22, Joint & Several Liquidators of Kong Wah Holdings Ltd v Grande Holdings Ltd (2006) 9 HKCFAR 766 applied; Re Weihong Petroleum Co Ltd (No 2)  2 HKLRD 747, Re Nardu Co Ltd  4 HKLRD 165 not followed). (See paras.13, 18-31, 35, 39.)
- Accordingly, the Documents, although widely defined, did relate to C, in that they were either relevant to: (a) the tracing of C's assets and perhaps, the recovery of the same from their ultimate recipients; and (b) the assessment of whether the potential claims against T (which were assets of C as choses in action) were worth pursuing in terms of whether T might have the means to satisfy any judgment against him. (See paras.40-42.)
This was an appeal by the liquidators of the subject company against the judgment of Harris J on 6 February 2015 dismissing their application for production of documents under s.221(3) of the Companies (Winding up and Miscellaneous Provisions) Ordinance (Cap.32) by the former director and chief financial officer of the subject company (see  2 HKLRD 27). The facts are set out in the judgment.