In May 2018, the Wealthy Bank agreed to grant Victory Limited, a private company incorporated in Hong Kong in 2000, a loan for HK$10 million secured by a charge over the companys assets. The debenture agreement stated that:

Victory Limited hereby charges all its stock and book debts to the bank and will hold all the proceeds on behalf of the bank in account number 050193 at Wealthy Bank and will not withdraw money from the account without first notifying the bank in writing. Further Victory Limited will not create any additional security over any of its assets in favour of any other creditor ranking in priority or pari passu with this charge without the prior written consent of the Bank.

This arrangement later proved impractical as cash flowed in and out of the account every day and the Bank did not insist on receiving notification every day of withdrawals. In December 2018, Victory Limited needed additional funds and created a fixed charge over its office building in favour of Efficient Bank for HK$15 million.

The two charges in favour of Wealthy Bank and Efficient Bank respectively were duly registered

In September 2020, Ingress Limited, a trade creditor of Victory Limited, issued a winding up petition against Victory Limited in the High Court and the Court appointed a provisional liquidator in October 2020. Ingress Limited claims that metal components supplied to Victory Limited or part of the money proceeds of sale of completed products remain its property, on the basis of the following clause in the sale of goods contract

All components supplied remain the property of Ingress Limited until payment has been received. Ingress Limited reserves the right to receive an appropriate proportion of the value of any finished product or the proceeds of sale if components have not been paid for by Victory Limited.

(a) Advise the provisional liquidator as to the nature and validity of the charges in favour of Wealthy Bank and Efficient Bank and their respective priority.

(15 marks)

(b) Can Ingress Limited claim ownership of the components or part of the proceeds of sale from the liquidator, irrespective of the charges granted by Victory Limited?

(10 marks) (Total: 25 marks)

Refer to relevant case laws and statutory ordinance to support your answer