Anglo Chinese Corporate Finance, Ltd v. Apastron Capital Ltd (in Liquidation)

HCCW 290/2020

[2021] HKCFI 2042

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO 290 OF 2020

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Before:  Mr Recorder Manzoni SC in Chambers

Date of Written Submissions of the Applicant: 30 June 2021

Date of Decision:  14 July 2021

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D E C I S I O N

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1.Anglo Chinese Corporate Finance Ltd (“ACCF”) has applied by way of summons dated 16 June 2021, under section 186 of Cap 32 for leave to continue HCA 2954 of 2017 against Apastron Capital Limited (in liquidation) (“the Company”).

2.On 17 December 2017 ACCF commenced action number HCA 2954/2017 against six defendants, including ACCF, claiming that ACCF’s business was wrongfully diverted to the Company.  The claim involves complex questions including, as summarised by ACCF in its skeleton argument:

2.1.   The ambit of the contractual duties owed by D1 and D2 to ACCF;

2.2.   The ownership and control of the Company;

2.3.   The conspiracy between the defendants and others to divert ACCF’s business;

2.4.   The diversion of ACCF’s business to the Company;

2.5.   The loss and damage suffered by ACCF.

3.The legal principles governing the exercise of the discretion under section 186 of Cap 32 have been set out by Kwan J (as she then was) in Re B+B Construction Co. Ltd (unreported, HCCW 114/2001, 4 April 2003, but with citations omitted):

“5. The test as to the exercise of the court’s discretion whether or not to grant leave is what is right and fair according to the circumstances of each case and this involves a balancing exercise.

6. If the issue can be conveniently decided in the course of the winding up, leave will be refused in the absence of special circumstances, as there is a positive benefit in having the issue decided by the liquidator since this should be less expensive and quicker than an independent action and the liquidator is obliged to act even-handedly as between each class of claim so prejudice would not normally be caused to any particular class of claimant.”

4.In this case there are the following relevant factors to bear in mind when exercising the discretion:

4.1.   Both ACCF and the Company, through its liquidator’s, consider that it is appropriate for the court to give leave to continue the action. 

4.2.   The action is inevitably going to proceed against all other defendants and it is clear that the Company would in ordinary circumstances be a necessary and proper party to that action.

4.3.   There are complex and substantial issues of fact that are in dispute including the ownership and control of the Company, the diversion of ACCF’s business to the Company, and the loss and damage suffered by the company.  Those issues will have to be determined by the court in any event because of the involvement of the other defendants in the action.  Consequently, if those issues are left to be determined by the liquidator within the liquidation of the Company there is a risk of inconsistent decisions being made.

5.Accordingly, I satisfied that it is right and fair that ACCF is given leave to continue the action in accordance with its application.  I therefore make an order in terms of the draft order

Mr. Jonathan Green of MinterEllison LLP, for the Applicant