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Bio-chem Technology (Hk) Ltd v Bio-chem Technology (Hk) Ltd

Judgment Cited authorities 10 Cited in Precedent Map Related
Vincent
Judgment Date22 March 2019
Neutral Citation[2019] HKCFI 1156
Judgement NumberHCMP375/2019
Citation[2019] 2 HKLRD 1087
Year2019
Subject MatterMiscellaneous Proceedings
CourtCourt of First Instance (Hong Kong)
HCMP375/2019 BIO-CHEM TECHNOLOGY (HK) LTD v. BIO-CHEM TECHNOLOGY (HK) LTD

HCMP 375/2019

[2019] HKCFI 1156

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 375 OF 2019

_____________

IN THE MATTER of Bio-Chem Technology (HK) Limited
and
IN THE MATTER of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32)

_____________

BETWEEN
BIO-CHEM TECHNOLOGY (HK) LIMITED
(生化科技(香港)有限公司)		 Plaintiff
and
RICH LEAF INTERNATIONAL (HK) LIMITED
(旺業國際(香港)有限公司)		 Defendant

_____________

__________

Before: Hon ST Poon J in Chambers (Open to Public)

Date of Hearing: 22 March 2019

Date of Decision: 22 March 2019

__________________________

Reasons for Decision

__________________________


Introduction

1. This is the Plaintiff’s application for an interlocutory injunction to restrain the Defendant from presenting a petition for winding-up against the Plaintiff based on 2 statutory demands in respect of a costs order payable by the Plaintiff to the Defendant in the proceedings HCA 476/2017.

2. At the end of the hearing I granted the injunction on condition that the Plaintiff do pay into court a sum of money equal to the amount of the outstanding costs and interest by 4 pm on Monday, 25 March 2019 and that the Plaintiff’s costs be in the cause of the Originating Summons.

3. I have indicated that I will hand down the written reasons for my decisions, which I now do.

Costs Order in HCA 476/2017

4. In HCA 476/2017, the Plaintiff claimed against the Defendant for a sum of USD3,870,125 being allegedly outstanding purchase price in respect of 4 supply contracts of certain feed additive.

5. An application was taken out by the Defendant to stay the proceedings on the ground that the dispute has to go for arbitration pursuant to an arbitration clause provided in the contracts between the parties.

6. The stay application was heard before Deputy High Court Judge Sherrington and the learned judge ordered[1] that the proceedings be stayed pending the parties’ arbitration and that costs of the stay application be borne by the Plaintiff to be taxed if not agreed.

7. The Plaintiff commenced arbitration proceedings on 17 January 2018. The Defendant denies liability and counterclaims against the Plaintiff for alleged breaches of contract by the Plaintiff.

8. On 14 January 2019, the costs of the Defendant in HCA 476/2017 were taxed before Master Kot and on 20 February 2019 the Defendant obtained an interim certificate for a total amount of HK$381,826.

9. On 1 March 2019, the Defendant’s solicitors issued 2 statutory demands and served on the Plaintiff.

10. On 13 March 2019, the Plaintiff’s solicitors sent a letter to the Defendant’s solicitors purportedly giving notice that the sums under the statutory demands had been set off by the Plaintiff from the Plaintiff’s claim against the Defendant.

11. On 14 March 2019, the Defendant’s solicitors wrote that they have standing instructions from the Defendant to file and serve a winding-up petition against the Plaintiff if the Plaintiff failed to comply with the statutory demands on or before 22 March 2019.

Applicable Legal Principles

12. In Re Sinom (Hong Kong) Ltd[2], Kwan J (as Kwan VP then was) set out the relevant principles in relation to an application for an injunction restraining a creditor from presenting a winding-up petition based on a cross-claim raised by the company, which are as follows[3]:

“9. The principles governing applications for interim injunctions in American Cyanamid Co v Ethicon Ltd [1975] 396 do not apply to this situation, as the granting of an injunction to restrain the presentation of a winding-up petition would finally dispose of the issue in dispute in the present proceedings (Bryanston Finance Ltd v De Vries [1976] 1 Ch. 63 at pp. 80E-81E).

10. The court will grant a quia timet injunction to prevent the presentation of a winding-up petition which it considers would be an abuse of process. Great circumspection must be exercised in doing so, as the right to petition for winding-up in appropriate circumstances is a right conferred by statute, and a would-be petitioner should not be restrained from exercising it except on clear and persuasive grounds (Bryanston Finance Ltd v De Vries [1976] 1 Ch. 63 at pp. 78D-E, 79A-D).

11. As with a petition where there is a bona fide dispute of the debt on substantial grounds (“a disputed debt petition”), where the company has a genuine and serious cross-claim against the petitioner greater than or equal to the petitioner’s debt (“a cross-claim petition”), such a petition may be restrained from proceeding (Re Pan Interiors Ltd. [2005] EWHC 3241 (Ch), paras. [34] to [39]). It is an abuse of the process of the court to make a statutory demand or present a winding-up petition based on a claim to which there is a triable defence (In re A Company (No. 0012209 of 1991) [1992] 1 WLR 351). A cross-claim petition is regarded in the same way (Southern Cross Group plc v. Deka Immobilien Investment GmbH [2005] All ER (D) 374, paras. [29] & [30]; Re Pan Interiors, supra., para. [35]).

12. To successfully resist a cross-claim petition, the company has the onus of establishing that its cross-claim is genuine, serious and of substance. There must be supporting relevant details to demonstrate that the cross-claim is based on substantial ground. The test is very much the same as the test for a disputed debt petition for deciding whether a debt is disputed in good faith and on substantial grounds (Applications to Wind Up Companies, by Derek French, 2nd edition, paras 6.10.7.2 and...

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