The Japan Ship Owners' Mutual Protection & Indemnity Association v. Paramounta Liberty Shipping (HK) Ltd

HCCW 301/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO 301 OF 2017

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D E C I S I O N

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1.Mr Brown, counsel for the respondent company has applied to be excused because of potential conflict of interest in acting for the respondent. Mr Brown has acted in a previous application for a preservation order in aid of arbitration, wherein he represented Orange Walk, a party to the arbitration with the respondent.

2.As observed by Mr Justin Lam, counsel for the petitioner, I am a little surprised that the conflict of interest issue was not raised earlier, and Mr Brown had gone on to prepare a set of written submissions for the respondent before today.  But in any case, I do release him formally.

3.As confirmed by solicitors who instructed Mr Brown, I will adopt what Mr Brown has purportedly submitted to the court in writing and orally this morning.

4.Before the court, there is no affirmation filed by the respondent.  In Re Sun Sang Kong Yuen Shoes Factory Co Ltd, Harris J explained that:

“It is incumbent upon any company on which is served a petition seeking its winding-up on the grounds of insolvency, to deal with the petition seriously and with expedition. … If no evidence at all has been filed by a company when a petition comes on for the first time before the Companies Court judge, then in order for a company to have leave to file evidence in opposition, it must pay into court the amount of debts relied on in the petition, or at least a substantial proportion of it. If it does not do so, the court will proceed to determine the petition on the basis that no evidence has been filed opposing it, and therefore the petition should be granted.”

5.In the present case, the respondent company purports to raise two broad grounds for adjourning the petition: (1) disputing that the debt in question was contingent in nature; and (2) that there is an ongoing arbitration in London between Orange Walk and the company. 

Ground (1)

6.The statutory demand was issued in the present case on 17 August 2017, in respect of effectively insurance premium incurred since 20 February 2014 to 20 February 2017.  There had been no application to set aside the statutory demand on the ground that the debt in question was contingent or otherwise.  It is too late now to do so.  On a petition based on non-compliance with statutory demand, all that the petitioner needs to show at the hearing is that the statutory demand had been served, and had not been complied with.  The petitioner has apparently shown these. 

7.Further, to say that a debt is contingent in nature requires evidence as to, for example, how the debt was purportedly incurred, and why the company says it was contingent in nature.  I do not agree that it is entirely a legal argument that can be advanced without affidavit evidence. 

8.The first purported ground to seek an adjournment is not substantiated.

Ground (2)

9.The petitioner is not a party to the arbitration.  The date for completion of the arbitration is not known.  I do not see why the petitioner should be made to wait for the outcome of the arbitration when the petitioner is not a party to the arbitration; and there is no privity of contract between the petitioner and Orange Walk to oblige Orange Walk to pay any part of the debt due to the petitioner. 

10.The second ground, therefore, is not substantiated. 

11.Additionally, the respondent solicitors have no instructions to promise to make payments into court of the debt now relied on by the petitioner in the petition. 

12.Taking all circumstances together, and in reliance of the case of Re Sun Sang Kong Yuen, I see no reason for adjourning the petition.  The petitioner has sufficiently established its case, and I therefore issue a winding-up order. 

(Discussion re costs)

13.Costs of the petition is to be paid out of the assets of the company. The costs of the Official Receiver is fixed at $5,300, also to be borne out of the assets of the company.

Mr Justin Lam, instructed by Clyde & Co, for the petitioner

Mr Toby Brown, instructed by Reynolds Porter Chamberlain, for the respondent

Mr Raymond Kong, for the Official Receiver