Re Scisys-w Ltd

HCCW000322/1983

IN THE MATTER OF SCISYS-W LIMITED

-and-

IN THE MATTER OF THE COMPANIES ORDINANCE (CAP. 32)

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Coram: The Honourable Mr. Justice Jones in Chambers.

Date of hearing: 13th March 1984

Date of delivery of judgment: 15th March 1984

Mr. M. Bunting (Munro & Co.) for Respondent.

Mr. Waldron (Slaughter & May) for Petitioner.

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JUDGMENT

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1. A petition was Presented by The Philidor Press Limited (the Petitioner) on the 13th December 1983 to wind up Scisys-W Limited (the Respondent) on the grounds that the company is insolvent and unable to pay its debts, and that it is just and equitable to do so. The petitioner is a foreign company carrying on business in London whilst the respondent is a Hong Kong company. The petition is based upon a failure to comply with a statutory demand under Section 178(a) of the Companies Ordinance Cap. 32 for the sum of US$25,833.52 in respect of royalty payments. This amount is admitted to be due by the respondent. However, the respondent claims a set-off against the petitioner which is well in excess of this amount. The hearing of the petition after earlier dates had been vacated has been fixed for the 19th March 1984.

2. By the present summons the respondent applies for security for costs  under Section 357 of the Companies Ordinance on the grounds that the petitioner is a foreign company, not ordinarily resident and with no assets in Hong Kong, and that it is just and equitable in all the circumstances. Two other grounds relied upon in the summons have been abandoned.

3. Mr. Bunting who appeared for the respondent cited In re Home Assurance Association (No. 2) (1871) 12 L.R. Eq. 112 as authority that when a petitioner is a foreign company security should be ordered as a matter of course. He also referred me to In re Pretoria Pietersburg Railway Company (No. 2) (1904) 2 Ch. 359 where Buckley J. at 361 said

"It is well settled as a general rule that if a person resident abroad is an actor or plaintiff in proceedings in an English Court (not being a defendant in an action who is plaintiff in a cross-action, nor being a plaintiff suing a defendant who already has money of the plaintiff in his hands which in fact gives him security), and has not assets within the jurisdiction which can be reached, he may, except in special circumstances, be ordered to give security for costs."

and later on page 362

"In my judgment the ordirary practice of the Court applies in this case, and wherever a person resident abroad comes forward as an actor in a winding-up, whether voluntary, or under supervision, or by the Court, the ordinary rule as to security for costs applies.

In Re Alabama Portland Cement Company (Limited) Vol. XXV T.L.R. 691 it was held that when a foreign company presented petition for. the compulsory winding-up of an English company which was in voluntary liquidation and the whole of whose assets had been taken possession of by debenture holders that although the debt to the petitioners was admitted they must give security for costs. In re Contract and Agency Corporation (Limited) Vol. 57 Law Journal Series 5 it was held that no security should be given where a company against whom a winding-up petition had been presented by a petitioner who was resident abroad when the petitioner had obtained judgment against the company which had not been satisfied as the company was holding the very security which they were asking for.

4. Mr. Waldron on behalf of the petitioner concedes that the court has jurisdiction to grant security but submits that this is not an appropriate case. He referred to a letter dated the 27th January 1984 from the respondent's solicitors to the petitioner's solicitors in which it is admitted that the respondent owes a further sum of US$25,767.56 to the petitioner for royalties up to the end of December 1983. However, this sum together with the amount claimed in the petition is still less than the set off claimed by the respondent. Mr. Waldron referred to Winterfield v. Bradnum (1878) Vol. III Q.B.D. 324 where the defendant admitted his liability for the debt, but set up a counterclaim for damages for breach of contract which exceeded the plaintiff's claim. The defendant's application for security for costs against the plaintiff who was a foreign resident abroad was refused as the counterclaim was in the nature of a new action. However, in the instant case the respondent contends that the defence to the claim is by way of set off and not by a new action. I consider upon a perusal of the papers in the action that this argument is right with the result that in the absence of any special circumstances the respondent is entitled to an order for security. No special circumstances have been raised by the respondent.

5. The respondent has assessed costs up to date at the sum of approximately $47,400 which is calculated as followers:

Future costs have been estimated at $70,000 which includes $20,000 for solicitor's costs and disbursements, $10,000 auditors' fees and $30,000 counsel's fees. Mr. Bunting submits that three quarters of the total figure of $117,400 should be awarded as security. Mr. Waldron submits that the fees claimed are excessive, and details should have been set out in a skeleton bill of costs. The details that have been produced are too sketchy to enable me to make an accurate assessment. Accordingly I shall adjourn the application for a skeleton bill of costs to be lodged by the respondent. Summons to be restored on two days notice.

Representation:

Mr. M. Bunting (Munro & Co.) for Respondent.

Mr. Waldron (Slaughter & May) for Petitioner.