Dayang (Hk) Marine Shipping Co., Ltd v Asia Master Logistics Ltd

HCCW 14/2019

[2020] HKCFI 311

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO 14 OF 2019

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JUDGMENT

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1. This is the substantive hearing of the Petitioner’s winding up petition dated 11 January 2019 which was amended on 11 April 2019 (the “Petition”) based on an unpaid debt of US$360,919.76 (the “Debt”).

2. Paragraph 6 of the Petition states:

“Pursuant to the Charterparty between the Petitioner and the Company as evidenced by a fixture note dated 25 October 2018 (the “Fixture Note”), your Petitioner had chartered its vessel M.V. “Aoli 5” to the Company for about 40 days at a hire of USD6,000 day. According to Clause 12 of the Fixture Note, the hire was payable every 10 days in advance. Pursuant to the statement of account dated 28 November 2018, 10 December 2018 and 19 December 2018 respectively, the 5^th to 7^th hire totalling in the sum of US$180,000 was being unpaid by the Company to the Petitioner.”

3. After 20 December 2018, Asia Master Logistics Limited, the Respondent, has incurred more debt totalling US$360,919.76 as set out in paragraphs 7 and 8 of the Amended Petition dated 11 April 2019.

4. A statutory demand was served on the Respondent on 20 December 2018. The Respondent has not paid the Debt after 21 days from 20 December 2018. Hence, on 11 January 2019, the Petitioner presented the Petition.

Material Facts

5. The Petitioner and the Respondent entered into a charterparty on 25 October 2018, whereby the Petitioner chartered its vessel, MV ‘Aoli 5’, to the Respondent.

6. The Fixture Note, inter alia, sets out the following:

(1) The relevant Vessel is MV ‘Aoli 5’ (the “Vessel”).

(2) The Shipper is Tanlong Group Joint Stock Company (the “Shipper”).

(3) Clause 1: Charterer is Asia Master Logistics Limited (i.e. the Respondent).

(4) Clause 5: Duration of about 40 days +/- 10 days at the Charterer’s option without guarantee.

(5) Clause 8: Hire at USD6,000/day.

(6) Clause 12: Hire is payable by the Charterer (the Respondent) every 10 days in advance.

(7) Clause 14: Owners guarantee that the Vessels covers are to be watertight throughout the charter period.

(8) Clause 19: Owners guarantee all fitted ship’s gear is workable and in good order during the whole voyage with effective gear certificate during the charter. If ships’ gear is out of order, the charge of shore crane is to be debited from the owner’s account and any time loss/bunker consumption will be off hire.

(9) Clause 23: Arbitration in Hong Kong with English law to apply.

(10) Clause 24: New York Produce Exchange 93 is applicable (“NYPE93”).

7. The Vessel was hired by the Respondent from 26 October 2018 to 11 January 2019 (approximately 77 days).

8. The Vessel arrived in Ho Chi Minh for loading on 29 October 2018. Loading was complete on 17 November 2018, and the Vessel departed from Vietnam to Korea.

9. The Vessel arrived at the unloading port at Masan, Korea on 26 November 2018. The Vessel was redelivered to the Petitioner on 11 January 2019.

10. The amount of hire to be paid by the Respondent to the Petitioner is US$321,377.30.

11. The Respondent does not deny that the Debt is due and owing, but it raises a counterclaim against the Petitioner in relation to an alleged breach of the Fixture Note and submits that the dispute should be dealt with by way of arbitration.

12. The Respondent alleges that:

(1) On 29 October 2018, the Vessel arrived at the loading port in Ho Chi Minh, Vietnam and the dock agent appointed by the Shipper (the Respondent’s client) made various complaints.

(2) The complaints comprised the following:

(a) The cover on the deck of the Vessel was defective, causing water leakage to the bags of rice (the “Cargo”);

(b) There was no electric or mechanical ventilation in the storage compartment;

(c) The cover on the deck of the Vessel was corroded with rust, some of which fell and damaged the Cargo; and

(d) The captain of the Vessel was uncooperative and refused to follow the Respondent’s instructions in handling the Cargo.

(3) Regarding the unloading of the Cargo:

(a) On 1 December 2018, the Respondent sent Mr Kelvin Peng (“Mr Peng”) to discuss the unloading of the Cargo. While the Cargo was being lifted by crane, some bags fell off or leaked.

(b) On 5 December 2018, Mr Peng “instructed the captain to temporarily suspend the unloading in order for the Respondent to work out a solution with the Shipper for remedial measures and to discuss about the responsibility for leakage problem and the contributions to pay for extra costs”.

(c) Mr Peng tried to contact the captain of the Vessel in order to give proper instructions to him on how to unload the Cargo, but he was “totally” out of reach.

(d) Mr Peng informed the Petitioner that he had lost confidence with the captain and requested that the captain be changed pursuant to the Fixture Note and NYPE93.

(e) The Petitioner failed to investigate the matter and refused to change the captain.

(f) The consignee adopted an inefficient method to unload the cargo.

13. The Respondent seeks to rely on Clause 8 of the NYPE93 which states:

“(a) The Master shall perform the voyages with due dispatch, and shall render all customary assistance with the Vessel’s crew. The Master shall be conversant with the English language and (although appointed by the Owners) shall be under the orders and directions of the Charterers as regards employment and agency; and the Charterers shall perform all cargo handling, including but not limited to loading, stowing, trimming, lashing, securing, dunnaging, unlashing, discharging, and tallying, at their risk and expense, under the supervision of the Master.

(b) If the Charterers shall have reasonable cause to be dissatisfied with the conduct of the Master or officers, the Owner shall, on receiving particulars of the complaint, investigate the same, and, if necessary, make a change in appointments.”

(Emphasis added.)

Whether the Debt is disputed in good faith and on substantial grounds

14. First, although the Respondent alleges that the Petitioner was in breach of its duties under the Fixture Note and should bear some responsibility for the losses it suffered by reason of the delay, Mr Lai for the Respondent fairly accepted that the Respondent remains in the process of investigation and is thus unable to quantify its counterclaim. In other words, the Respondent is not in a position to say that its counterclaim will exceed and thereafter extinguish the Debt.

15. Where a debtor opposes a petition on the basis that it has a genuine and serious cross-claim against the petitioner greater than or equal to the petitioning debt, it has the burden to prove 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 grounds. The test is very much the same as the test for deciding whether a debt is disputed in good faith and on substantial grounds. (See Re Sinom (Hong Kong) Ltd[2009] 5 HKLRD 487 (“Re Sinom”)at p.491; §§11-12, per Kwan J (as she then was) and Re Alpha Building Construction Ltd, unreported, HCCW 283/2014, 20 May 2015 at §8 per Harris J.)

16. The existence of an arbitration clause, or of the commencement of arbitration, does not ipso facto prevent the Court from considering whether or not the company has established the existence of a bona fide dispute of substance in relation to the debt on which the petition is based: see Re Sinom at p.492; §16 per Kwan J (as she then was), But Ka Chon v Interactive Brokers LLC[2019] 4 HKLRD 85 (“But Ka Chon”)at p.107; §71 per Kwan VP, and Re Southwest Pacific Bauxite (HK) Ltd[2018] 2 HKLRD 449 (“Lasmos”)at p.468; §31 per Harris J.

17. In my view, there is no doubt that, on any analysis, the Debt is not being disputed in good faith on substantial grounds. Accordingly, it is only right that this Court should make the usual winding up order against the Respondent.

18. First, there is prima facie no dispute to the Debt. The Respondent’s case is simply that the Petitioner was responsible for the delay. However, it had given no particulars as to the duration of the alleged delay and, importantly, the extent of loss it suffered by reason of the Petitioner’s alleged breach of the Fixture Note. As Mr Lai candidly accepted, the Respondent was still in the process of investigation. With respect, it is insufficient for the Respondent to simply say that the Petitioner should bear some responsibility when resisting a petition for winding up based on undisputed debts.

19. The dispute between the Petitioner and the Respondent is whether the Respondent has a bona fide cross-claim on substantial grounds. Mr Kirpalani for the Petitioner is correct that where the entire debt is not disputed (exceeding HK$10,000), regardless of whether arbitration proceedings have been commenced, the Court should exercise its discretion to wind up the Respondent.

20. In ReHong Kong Sports Industrial Development Limited[2018] HKCFI 1309...