Read the full judgment text of CACV 301/2021 on BabelCite. This Court of Appeal judgment was delivered on 10 August 2021 before Yuen, G Lam and Chow JJA.
Civil procedure – winding-up – foreign company – injunction to restrain presentation of winding-up petition – core requirements for winding up a foreign company – sufficient connection with Hong Kong – reasonable possibility of benefit – bona fide dispute of the debt on substantial grounds – new evidence on appeal – Ladd v Marshall – delay – interim stay – The plaintiff, a BVI company wholly owned by Mr Pan Sutong, held 35.59% of the shares in Goldin Properties Holdings Ltd, a Hong Kong company whose underlying property development project was located in the Mainland – The defendants, three CITIC group banks, had lent HK$12 billion in May 2017 to finance the privatisation of Goldin Holdings – The plaintiff defaulted on interest payments from November 2019 and the defendants issued a statutory demand – The plaintiff sought an injunction to restrain presentation of a winding-up petition, contending that the core requirements for winding up a foreign company were not met and that the debt was bona fide disputed on substantial grounds by reason of an alleged Overall Agreement and Representation that the defendants would first enforce security over mortgaged land before pursuing the plaintiff – The deputy judge dismissed the application and the plaintiff appealed – Whether an injunction to restrain presentation of a winding-up petition should be refused on jurisdictional grounds unless the plaintiff demonstrates it is not reasonably arguable that the core requirements would be satisfied at the hearing of the petition – Held: yes, following Shandong Chenming – Whether the first core requirement of sufficient connection with Hong Kong is satisfied by the presence of a 35.59% minority shareholding in a Hong Kong company with net assets exceeding HK$22.5 billion, the residence of the sole owner in Hong Kong, and the presence of Hong Kong companies and registered non-Hong Kong companies in the corporate chain – Held: yes, the first requirement was satisfied as the shares were not ephemeral assets, representing the principal significant commercial activity undertaken in Hong Kong – Whether the second core requirement of a reasonable possibility that the winding-up would benefit the applicants is satisfied where the assets in the jurisdiction are shares in a Hong Kong company with underlying assets in the Mainland – Held: yes, the shares are freely transferable, the block is large enough to preclude special resolutions, and the shares can be realised or distributed in specie – Whether the plaintiff has shown a bona fide dispute of the debt on substantial grounds by alleging an Overall Agreement – Held: no, the allegation was not credible as no contemporaneous document supported it, it was inconsistent with the Facility Agreements, the Personal Guarantee and public announcements, and it was not raised until Pan's affirmation of February 2021 – Whether new evidence (Peng's affirmation) should be admitted on appeal – Held: no, the application was dismissed for unexplained and unacceptable delay in the context of an urgent appeal, with indemnity costs, and the Ladd v Marshall conditions were not met – Whether an interim stay should be granted pending an application for leave to appeal to the CFA – Held: no, as the plaintiff had not shown concrete prejudice beyond bank accounts with minimal cash balances, and the jurisdictional question could be raised in the petition itself – Appeal dismissed with costs on the party and party basis, with certificate for two counsel – Application to adduce new evidence dismissed with costs on the indemnity basis, with certificate for two counsel – Interim stay refused.
Legal issues: Burden of proof for injunction to restrain winding-up petition on jurisdictional ground · First core requirement - sufficient connection with Hong Kong · Second core requirement - reasonable possibility of benefit · Bona fide dispute of the debt on substantial grounds · Application to adduce new evidence on appeal · Interim stay pending application for leave to appeal to CFA
Outcome: Appeal dismissed; application to adduce new evidence dismissed with indemnity costs; interim stay application refused.
Cited by 23 cases · Cites 4 cases