Re Hj Innoxcell Ltd

HCCW 374/2020

[2021] HKCFI 3538

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO 374 OF 2020

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Before: Madam Recorder Sit, SC in Chambers

Date of Hearing: 9 November 2021

Date of Decision: 9 November 2021

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DECISION

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1.This is an application for the lifting of a case management stay imposed by Linda Chan J on 8 February 2021. The order expressly provides that the stay is imposed pending determination of HCA 1707/2018.

2.The Petition is a creditor’s petition based on a statutory demand which was duly served and was not satisfied. The petitioning debt is constituted by 2 costs orders. The Company does not dispute the debt. Nevertheless the Company contends that it has cross claims or counterclaims against the Petitioner which value exceeds the total amount of the petitioning debt. Those cross claims are for breach of fiduciary duties qua director of the Company with respect to (a) alleged misappropriation of HK$900,000 for purported director’s fees; and (b) alleged expenses totalling HK$729,688 reimbursed by the Company which the Company says lacked business rationale or supporting documents.  These 2 claims (among others) have already been advanced by the Company in HCA 1707/2018, in which Company was the Plaintiff and Petitioner was the Defendant.

3.On 3 August 2021, in HCA 1707/2018 the court ordered the Company to pay security for costs in the sum of HK$1,650,000, failing which the Petitioner would have liberty to apply to dismiss the claims.

4.The Company failed to pay the security ordered within the stipulated time. It did not seek any extension of time or relief from sanction; it only sought leave to appeal from the order directing security for costs and stay pending appeal. The leave to appeal and stay applications were rejected, and the court dismissed the Company’s action on 23 September 2021. It does not appear that the Company has taken any further step with respect to those decisions.

5.In the circumstances, the condition stipulated in Linda Chan J’s order has clearly been satisfied, and I see no reason why the stay should not be lifted. Indeed, the Company does not oppose the lifting of the stay.

6.However the Petitioner goes further and asks for a winding-up order. That is not what is sought in the summons, which only seeks the lifting of the stay and the estimated time stated is 3 minutes. The application is therefore listed to be heard in chambers. In the premises I do not consider I should make a winding-up order and I will only lift the stay, and adjourn the Petition to the following Monday morning at 9:30 am before the Companies Judge.

7.The Company says notwithstanding the dismissal of HCA 1707/2018, it will oppose the Petition as it would like to pursue restructuring, and it seeks leave to file evidence and to adjourn the Petition to a date to be fixed with 3 hours reserved.

8.I decline to do so. The petitioning debt is no longer disputed by the Company. In such circumstances the Companies Court’s approach to contention of restructuring is well known and is set out in numerous decisions of Harris J. The Companies Court routinely deals with such contention at Monday morning hearings. The Company indicates it wishes to file evidence to update the court on matters which have transpired since the stay was imposed in February 2021. Whether or not the Company files any evidence is a matter for it. Accordingly I will only direct that if the Company wishes to file further evidence, it shall file and serve the same by 10 am on 10 November 2021 (Wednesday). Parties are reminded to observe the Companies Judge’s standard directions, which require the Petitioner to file skeleton by 10 am on Thursday and Company to file by 10 am on Friday before the Monday morning hearing, in each case subject to page limits.

Mr Kevin Lau, instructed by Wellington Legal, for the petitioner

Mr Ricky Li, instructed by Francis Ip & Co, for the company

Attendance of the Official Receiver is excused