RE BTH CO LTD

HCCW 736 /2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 736 OF 2002

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J U D G M E N T

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1. This petition to wind up BTH Company Limited, formerly known as Bel Trade (Holdings) Company Limited ("the Company"), is presented by Burr Oak Tool and Gauge Company, Inc. of Michigan, U.S.A. ("the petitioner"), on the ground that the Company is unable to pay its debts. The debt in the petition arose out of a deed of guarantee dated 12 January 2001 ("the Guarantee") executed by the Company in favour of the petitioner in respect of the liability of Bel Trade (China) Company Limited ("Bel Trade China") to make payment to the petitioner. The petitioning debt is in the sum of US$2,423,173.78.

2. The Company opposes the petition on two grounds. Firstly, there is a bona fide dispute based on the construction of the Guarantee. Secondly, it is alleged by the Company that it may rely on serious and genuine cross-claims of Bel Trade China and the Company against the petitioner based on economic torts and misrepresentation.

The background

3. The background matters, which are not in dispute, may be stated as follows.

4. The petitioner is and was at all times engaged in the business of manufacturing production machinery for the heat transfer industry. From 1994 to 2000, the petitioner had supplied various goods to Bel Trade China and the goods manufactured by the petitioner were sold by Bel Trade China to customers in Mainland China. Bel Trade China failed to settle the outstanding contract sum in the invoices issued by the petitioner totalling US$3,313,173.78, despite demands for payment by the petitioner. In September 2000, the petitioner presented a petition to wind up Bel Trade China on the aforesaid debt. Subsequently, in January 2001, the petitioner and Bel Trade China reached an agreement by which Bel Trade China was allowed time to repay the petitioning debt of US$3.3 million odd by 24 monthly instalments, that the Company was to provide the Guarantee to the petitioner, and the petitioner agreed to the dismissal of the winding-up petition against Bel Trade China. A letter dated 12 January 2001 was issued by the petitioner's solicitors to the solicitors for Bel Trade China setting out the terms upon which the parties had agreed to settle the winding-up proceedings and this was countersigned by Bel Trade China to signify its acceptance of the terms therein. This agreement is referred to as "the Settlement Agreement" in the Guarantee and I shall use the same term here.

5. Bel Trade China rendered payment to the petitioner for the months of January 2001 to November 2001 in the total sum of US$840,000.00. The instalment for December 2001 was not paid. A demand for payment of the then outstanding contract sum of US$2,473,173.78 was served by the petitioner on the Company under the Guarantee and on Bel Trade China under the Settlement Agreement on 16 January 2002. On or about 25 January 2002, Bel Trade China paid an additional sum of US$50,000.00 to the petitioner. No further payment has since been made. As at 8 July 2002, being the date of the presentation of the petition, the outstanding contract sum owed to the petitioner amounted to US$2,423,173.78.

The Settlement Agreement

6. The material terms of the Settlement Agreement may be set out as follows.

7. The amount of US$3,313,173.78, being the sum in which Bel Trade China was indebted to the petitioner as at the date of the Settlement Agreement, was described as "the Indebtedness" in the agreement.

8. By clause 1, Bel Trade China agreed to repay the sum of US$3,313,173.78 due to the petitioner by way of 24 monthly instalments as per the repayment schedule annexed. The second and subsequent instalments were to be made on the 20th day of each month. According to the repayment schedule, the instalment for December 2001 was in the sum of US$360,000.00 and payment was due on 20 December 2001. As only US$50,000.00 was paid on 25 January 2002, in respect of the instalment for December 2001, there was an amount which had accrued due in the sum of US$310,000.00.

9. By clause 3, the Company undertook to execute a guarantee in the sum of US$3,313,173.78 in favour of the petitioner on or before 12 January 2001.

10. There was a further provision which I need to set out verbatim:

"Upon [Bel Trade China's] failure to comply with any of the terms of this letter or should a winding up petition be presented against [Bel Trade China] and/or [the Company] or should they make any composition with its creditors, all of our client's rights to immediate repayment of the Indebtedness shall immediately become due and payable and this agreement shall forthwith determine. Furthermore, our client shall reserve their rights to take whatever actions they deem necessary to recover the Indebtedness." (emphasis supplied)

11. Much of the argument advanced by Mr Swaine on behalf of the Company was founded on the above provision, which he called a "self-destructive" mechanism in the Settlement Agreement.

The Guarantee

12. The relevant provisions in the Guarantee may be set out as follows.

13. Clause (c) of the recitals was in these terms:

"By a Settlement Agreement dated 12 January 2001, the Principal Debtor [i.e. Bel Trade China] agreed, inter alia, to repay the outstanding contract sum of US$3,313,173.78 to the Supplier [i.e. the petitioner] by way of monthly instalments as per the repayment schedule annexed to the Settlement Agreement and the Guarantor [i.e. the Company] has agreed to execute a guarantee in the sum of US$3,313,173.78 in favour of the Supplier. The Guarantor has read and is fully cognizant of the terms pertaining the Settlement Agreement. In consideration of the Guarantor undertaking to comply with the terms in the Settlement Agreement, the Supplier has agreed to dismiss the winding up petition in High Court Companies (Winding Up) Action No. 871 of 2000." (emphasis supplied)

14. Other material provisions read as follows:

"1. In pursuance of the aforesaid Settlement Agreement a copy of which is annexed to this Guarantee and in consideration of the terms given by the respective parties, the Guarantor hereby guarantees unconditionally and irrevocably payment by the Principal Debtor of the outstanding contract sum in the total amount of US$3,313,173.78 under the terms of the Settlement Agreement.

2. This guarantee is not a continuing guarantee but shall cover US$3,313,173.78 ("the Guaranteed Indebtedness") notwithstanding the liquidation, administration or other insolvency or other incapacity or any change in the constitution of the Principal Debtor or of the Guarantor ...

3. This Guarantee shall apply to the whole and every part of the Guaranteed Indebtedness and, until all moneys, obligations and liabilities due, owing or outstanding under the said contract of sale have been paid, discharged and satisfied in full ... , the Guarantor waives all rights of subrogation and agrees not to demand or accept repayment in whole or in part of any loans or advances then or thereafter due to the Guarantor from the Principal Debtor ...

4. The Guarantor agrees that the Supplier may from time to time without diminishing or discharging or in any way affecting the liability of the Guarantor and without the assents or knowledge of the Guarantor grant to the Principal Debtor: -

(a) time or indulgence or give up, deal with, vary, realise or abstain from perfecting or enforcing the Guarantee or any form of securities or any rights which the Supplier may now or hereafter have from or against the Principal Debtor to renew, determine, vary the terms of the Settlement Agreement;

(b) compound with, discharge, release or vary the liability of the Principal Debtor in such manner as the Supplier may think fit

and no such act or admission on the part of the Supplier shall in any way discharge or diminish the validity of this Guarantee or affect the liability of the Guarantor. The Supplier may enforce this guarantee notwithstanding that it may hold any other guarantee, lien or security or have any outstanding remedy against the Principal Debtor or any other person.

...

9. Upon payment in full of the Guaranteed Indebtedness this Guarantee shall be returned to the Guarantor." (emphasis supplied)

The Company's arguments on the liability under the Guarantee

15. Mr Swaine submitted that on a proper construction of the Settlement Agreement, upon breach of the agreement by Bel Trade China, the obligation to pay by instalments was automatically and "forthwith" determined, and was replaced by the immediate coming into operation of the petitioner's "rights to immediate repayment of the Indebtedness". The "Indebtedness" was defined in the agreement as the sum of US$3,313,173.78, being the amount in which Bel Trade China was indebted to the petitioner as at the date of the Settlement Agreement.

16. Mr Swaine further submitted that this pre-existing indebtedness was not what the Company had undertaken to guarantee by the terms of the Guarantee. Clause 1 provided that the Company was to guarantee payment by Bel Trade China "of the outstanding contract sum in the total amount of US$3,313,173.78 under the terms of the Settlement Agreement". This could only refer to the payment by instalments under the repayment schedule in the Settlement Agreement, making the Guarantee the first of the two possible forms of agreement as envisaged by Lord Reid in Lep Air Services Ltd v Rolloswin Investments Ltd [1973] AC 331 at 344H. As the Company had only undertaken to guarantee payment by instalments, once there was breach of the Settlement Agreement by Bel Trade China and the obligation to pay by instalments was determined forthwith automatically and replaced by the petitioner's right to immediate payment of the pre-existing indebtedness, this would have the following effect: firstly, the Company could not be liable for any future instalments due after the breach of Bel Trade China, as no instalment not then due would ever fall due; secondly, the Company could not be liable in respect of the pre-existing indebtedness as that was not the subject of the Guarantee. The only possible liability of the Company in this situation is in respect of any instalment that had accrued due by the time of the breach of Bel Trade China, similar to the guarantee in Hyundai Heavy Industries Co. Ltd v Papadopoulos [1980] 1 WLR 1129.

17. I should mention that even on this argument, the Company is liable to the petitioner in the sum of US$310,000.00, being the outstanding sum on the instalment for December 2001.

The petitioner's arguments on the liability under the Guarantee

18. Mr William Wong, who appeared on behalf of the petitioner, submitted that by the Settlement Agreement, Bel Trade China had undertaken two obligations: firstly, to pay the outstanding contract sum by 24 monthly instalments; secondly, upon breach of the first obligation, to pay immediately the whole outstanding contract sum.

19. He further submitted that on the proper construction of the Guarantee, the obligation of the Company is in respect of the outstanding contract sum in the total amount of US$3,313,173.78 (clause 1) and the Guarantee applies to the whole and every part of outstanding contract sum, not just the payments by instalment in accordance with the repayment schedule in the Settlement Agreement (clause 3). The Guarantee is the second of the two possible forms of agreement discussed by Lord Reid in Lep Air Services, supra. at 345B. This construction is reinforced by clause 4, which makes clear that the determination of the terms of the Settlement Agreement would not discharge or affect the Company's liability under the Guarantee. Where the whole outstanding contract sum has become immediately payable upon breach by Bel Trade China of the obligation to pay by instalments, the Company has also undertaken to guarantee the performance of this obligation of Bel Trade China which arose under the Settlement Agreement.

The Company's liability under the Guarantee

20. The crux of the matter is what the Company had in fact undertaken to do by the terms of the Guarantee. As stated by Lord Reid in Lep Air Services, supra. at 344H to 345B, there are at least two possible forms of agreement,

"A person might undertake no more than that if the principal debtor fails to pay any instalment he will pay it. That would be a conditional agreement. There would be no prestable obligation unless and until the debtor failed to pay. There would then on the debtor's failure arise an obligation to pay. If for any reason the debtor ceased to have any obligation to pay the instalment on the due date then he could not fail to pay it on that date. The condition attached to the undertaking would never be purified and the subsidiary obligation [to pay damages for breach of the primary obligation to pay by instalments] would never arise.

On the other hand, the guarantor's obligation might be of a different kind. He might undertake that the principal debtor will carry out his contract. Then if at any time and for any reason the principal debtor acts or fails to act as required by his contract, he not only breaks his own contract but he also puts the guarantor in breach of his contract of guarantee. Then the creditor can sue the guarantor, not for the unpaid instalment but for damages. His contract being that the principal debtor would carry out the principal contract, the damages payable by the guarantor must then be the loss suffered by the creditor due to the principal debtor having failed to do what the guarantor undertook that he would do."

21. Parties are of course free to make any agreement they like, including modifying or excluding the common law rules by the terms of the contract. In construing the Guarantee it is pertinent to remind oneself of what the common law rules are to see whether the parties could have intended a result that would have made nonsense of the commercial purpose of requiring the Company to provide a guarantee. On the construction put forward by the Company, the petitioner would lose the benefit of the Guarantee at the moment when it is most needed, namely, on a repudiation by Bel Trade China of its obligation to make instalment payment (Lep Air Services, supra. at 355C and 356H, per Lord Simon of Glaisdale).

22. In Lep Air Services, Lord Diplock made a historical analysis of the obligation and liability assumed by a surety at common law and came to the following conclusion at 348H to 349B:

"It follows from the legal nature of the obligation of the guarantor to which a contract of guarantee gives rise that it is not an obligation himself to pay a sum of money to the creditor, but an obligation to see to it that another person, the debtor, does something; and that the creditor's remedy for the guarantor's failure to perform it lies in damages for breach of contract only. That this was so, even where the debtor's own obligation that was the subject of the guarantee was to pay a sum of money, is clear from the fact that formerly the form of action against the guarantor which was available to the creditor was in special assumpsit and not in indebitatus assumpsit: Mines v Sculthorpe (1809) 2 Camp. 215.

The legal consequence of this is that whenever the debtor has failed voluntarily to perform an obligation which is the subject of the guarantee the creditor can recover from the guarantor as damages for breach of his contract of guarantee whatever sum the creditor could have recovered from the debtor himself as a consequence of that failure. The debtor's liability to the creditor is also the measure of the guarantor's." (See also 356H to 357F, per Lord Simon of Glaisdale)

23. Thus, under the common law rules, prima facie the surety is treated as guaranteeing that the principal debtor will perform his contract so that if the debtor is in breach and the creditor exercises his rights to terminate the contract, the debtor's liability is thereby transmuted into a liability for damages but the surety remains liable for the performance of that duty, as he is liable for the performance of the original duty (Chitty on Contracts, 28th ed., Vol. 2, para. 44-076). As stated in the same passage in Chitty, it is theoretically possible that the surety has guaranteed only the debtor's primary obligation under the contract, and not the secondary obligation to pay damages in the event of breach, but is this a viable construction in this instance?

24. In my judgment, all indications here are to the contrary. Far from merely applying the common law rules by implication, express provision was made in the Settlement Agreement so as to leave the matter in no doubt that upon breach of the primary obligation to make payment by instalments, Bel Trade China would come under a liability to make immediate payment to the petitioner of the entire contract sum then outstanding, which is of the same measure that the petitioner would have been entitled to recover in damages at common law on the repudiation by Bel Trade China of its obligation to pay by instalments. The legal consequence of the obligation assumed by the Company under the Guarantee in this situation is as stated by Lord Diplock at 351C:

"It was the debtor's failure to perform his primary obligation to pay the instalments in circumstances which put an end to it that constituted a failure by the guarantor to perform his own primary obligation to the creditor to see that the instalments were paid by the debtor, and substituted for it a secondary obligation of the guarantor to pay to the creditor a sum of money for the loss he thereby sustained. It is the guarantor's own secondary obligation, not that of the debtor, that the creditor is enforcing in his claim for damages for breach of his contract of guarantee."

25. There is hardly any justification for reading into the words "under the terms of the Settlement Agreement" in clause 1 of the Guarantee an intention to refer only to the primary obligation of Bel Trade China to pay by instalments, but not the secondary liability of Bel Trade China to pay damages on repudiation of the primary obligation. The common law rules had not been modified in this instance.

26. I hold that there can be no serious and bona fide dispute of the Company's liability under the Guarantee and that the Company is indebted to the petitioner in the sum as demanded being US$2,423,173.78.

The alleged cross-claims

27. Mr Swaine submitted that there are the following claims in tort that might be raised against the petitioner:

(1) a conspiracy between the petitioner and its president, Mr Larry Franks, to injure Bel Trade China and the Company (it is alleged that Bel Trade China was at the material time a wholly owned subsidiary of the Company), resulting in damage to Bel Trade China and to the Company as the holding company of Bel Trade China;

(2) a fraudulent misrepresentation by the petitioner to Bel Trade China and to the Company, resulting in damage to Bel Trade China and the Company as the holding company;

(3) unlawful interference by the petitioner with the business of the Company as a holding company of Bel Trade China by injuring Bel Trade China, pursuant to (1) and (2) above, resulting in damage to the Company as the holding company; and

(4) unlawful interference by the petitioner with the business of Bel Trade China, pursuant to (1) and (2) above, resulting in damage to Bel Trade China.

28. It was further submitted that even if Bel Trade China alone could have raised some of the claims against the petitioner, the Company as the guarantor would be entitled to rely on any cross-claim that the principal debtor is entitled to raise as set-off against the creditor (Trafalgar House Construction (Regions) Ltd v General Surety & Guarantee Co. Ltd [1996] 1 AC 199).

29. The above claims in tort were founded on two allegations set out in the 1st affirmation of Mr Syed Mumtazuddin Ahmed, the vice president of the Company:

(1) the petitioner had diverted customers for machinery for which Bel Trade China had cultivated in the Mainland market as the exclusive sales agent of the petitioner to a business owned or controlled by Mr Franks known as Oak Japan Co. Ltd ("Oak Japan"); and

(2) the petitioner had dealt directly with Bel Trade China's customers in the Mainland market by offering prices lower than those which it offered to Bel Trade China, without disclosing or offering such lower prices to Bel Trade China, thus misrepresenting to Bel Trade China the price at which the petitioner was willing to deal and taking dishonest advantage of the promotional and marketing effort made by Bel Trade China in relation to these customers.

30. In a subsequent affirmation made by Mr Sy Chin Mong Stephen, the chairman and chief executive officer of the Bel Trade group of companies, he has put a further gloss on the alleged misrepresentation, after his attention was drawn to the letters of the petitioner to Bel Trade China dated 5 July 2000 and 25 July 2000 when he was reviewing the correspondence for the purpose of preparing his affirmation. It is alleged by Mr Sy that in stating in these letters that the Company "intends to continue working with [Bel Trade China] on future projects" and that "[Bel Trade China's] direct competitors are now other trading organizations in and around China", the petitioner had made misrepresentations in that its true intention was not to continue working with Bel Trade China and that the direct competitors of Bel Trade China were not other trading organizations in China but were the petitioner itself and Oak Japan.

31. Leaving aside for the time being whether there is any serious and genuine cross-claim available to Bel Trade China as a set-off to the petitioner's claim so that the Company is entitled to rely on it as the surety, I first consider if there is any viable cross-claim that can be advanced by the Company on its own. The Company's claim in fraudulent misrepresentation may be disposed of quickly. There is simply nothing in the evidence to support any such claim by the Company, the alleged misrepresentations were made by the petitioner to Bel Trade China as all business transactions were conducted between the petitioner and Bel Trade China.

32. As for the alleged claims that might be brought by the Company in the tort of conspiracy to injure and the tort of unlawful interference with the business of the Company, I am not persuaded on the basis of the tenuous connection of the Company with the wrongs complained of (merely because the Company would have suffered loss as the holding company of Bel Trade China if the latter should suffer loss) to accept that the Company would have a serious claim in these causes of action. On the present allegations, any unlawful acts of the petitioner would only have been directed against the Company in a very loose sense as the holding company of the intended victim.

33. That leaves the cross-claims that might be brought by Bel Trade China against the petitioner. There are a number of difficulties about that as well.

34. Firstly, there is no or no sufficient evidence that the amount of the cross-claims would be not less than the petitioning debt of US$2.4 million. The only attempt at quantification of Bel Trade China's claim in damages, in the 1st affirmation of Mr Ahmed, is that out of the value of business estimated to be lost due to the alleged wrongs being US$4.5 million, Bel Trade China would have suffered a loss of profit of US$900,000.00. No particulars were given as to how the estimated loss of business or the estimated loss of profit was arrived at, let alone any documents in support of the alleged loss. It is further alleged that Bel Trade China had suffered wasted expenditure of HK$1 million. If it is the case of Bel Trade China that it could claim damages for both heads of loss, it is not clear to me how Bel Trade China would have been entitled to damages for loss of profits on the basis of incurring expenditure to earn the profits claimed and claim damages at the same time for wasted expenditure. Even if both items were recoverable, they still fall short of the petitioning debt by a considerable margin.

35. I should also mention that in the subsequent affirmation of Mr Sy, he mentioned that prior to the injuries brought about by the petitioner, he estimated that the Company could have sold Bel Trade China for HK$50 million and that the shareholding of Bel Trade China would now fetch "nothing or almost nothing at all" if sold as it now has no business activity. A bare allegation of this nature would not do. There are no details given to support the estimate or that the fall in the value of the shareholding was caused by or materially attributable to the alleged wrongdoings of the petitioner. There is also evidence to the contrary in a previous affirmation of Mr Sy made in December 2000 for the purpose of opposing the petition to wind up Bel Trade China which would appear to suggest that Bel Trade China's financial difficulties were due to the fact that it had made an investment of HK$29 million in a property development in Wuhan, China. Further, on the available evidence, Bel Trade China had already been in liquidity problems since about April 2000 (this would be before the alleged wrongdoings of the petitioner on the evidence adduced by the Company), when it was unable to settle outstanding contract sums to the petitioner, causing Mr Franks to write to Mr Sy on 19 April 2000 expressing his concern about the financial circumstances of Bel Trade China and asking for a detailed plan of paying the debt within the next 12 months.

36. Secondly, the Company could only rely on the cross-claims of Bel Trade China against the petitioner's demand if the cross-claims of Bel Trade China should arise out of the same transaction as the debt guaranteed. An unconnected and independent cross-claim arising out of a separate and distinct transaction would not avail the surety (Rowlatt on Principal and Surety, 5th ed., para.4-91). The debt owed by Bel Trade China to the petitioner was in respect of the outstanding contract sum for goods supplied by the petitioner to Bel Trade China and formed the basis of the winding up petition in September 2000. There is no suggestion that the fraudulent misrepresentation (the alleged misrepresentations in writing were found in the letters dated 5 July 2000 and 25 July 2000) or the conspiracy to injure or the unlawful interference with business had taken place at more or less the time of the sale and purchase transactions that gave rise to the debt. Indeed, the indications are to the contrary on the available evidence, as it was only upon the failure of Bel Trade China to settle the debt that the petitioner terminated the exclusive sales agency of Bel Trade China by its letter dated 9 June 2000 and opened up all sales in China.

37. Thirdly, I have grave reservations as to the factual basis on which the cross-claims are put forward.

38. The evidence put forward by the Company contained merely bare allegations without sufficiently precise factual evidence, as one would expect to find if there is indeed a serious and genuine cross-claim. The cross-claim was mentioned for the first time in the 1st affirmation of Mr Ahmed, there is no evidence that Bel Trade China has made any cross-claim against the petitioner, such as by letter. The evidence disclosed by Mr Sy being his letter to the petitioner dated 8 May 2002 does not mention or even suggest that Bel Trade China might have any cross-claim at all. On the contrary, in that letter, having pointed out that "for the past several months" Bel Trade China found itself thwarted from the market as the petitioner had decided to enter the market and Bel Trade China could not compete with the petitioner in selling the petitioner's own products, Mr Sy urged and implored the petitioner to allow Bel Trade China to continue to sell as an exclusive agent as in the past for another two to three years, otherwise Bel Trade China would not be able to generate sufficient revenue to settle its outstanding debt to the petitioner.

39. If it is sought to explain that no cross-claim has been advanced because it was only in May 2002 that Bel Trade China discovered that the petitioner had entered the market itself and was directly offering its products to the customers of Bel Trade China at lower prices, I find this wholly incredible. For one thing, this is not consistent with Mr Sy's letter of 8 May 2002 in which he stated the state of affairs had been happening "for the past several months". Further, in Mr Ahmed's 2nd affirmation, he said that Bel Trade China's business of selling the petitioner's machinery had grown to a "very substantial level from 1991 to 2001" and gave the figures for the turnover in the financial year 2000/2001, which amounted to US$5.3 million odd. He went on to say that as a result of the alleged wrongdoings of the petitioner, in the financial year of 2001/2002, turnover had fallen by over 85% to about US$693,000.00. If the substantial fall in turnover was indeed attributable to any alleged wrongdoings of the petitioner, it is wholly improbable that Bel Trade China would not have found out the reason for the substantial drop in business much earlier and raised the matter with the petitioner well before May 2002 if it had been misled into thinking that the petitioner would not enter the market itself when the exclusive agency was terminated in June 2000.

40. The cross-claims sought to be advanced by Bel Trade China is simply incompatible with the evidence of the contemporaneous documents. According to these documents, in April 2000, the petitioner had expressed great concern as to the outstanding indebtedness of Bel Trade China. In June 2000, the petitioner informed Bel Trade China that the latter would cease to be its exclusive sales agent and if the debt situation of Bel Trade China was not to improve significantly, the petitioner "will be forced into a position where it will be impossible for [the petitioner] to do any business with [Bel Trade China] at all". There was no suggestion from Bel Trade China that the petitioner was not entitled to terminate the exclusive sales agency. In July 2000 the petitioner again impressed on Bel Trade China that more would have to be done about the repayment plan and although the exclusive sales agency was terminated, the petitioner was still prepared to supply goods to Bel Trade China. As the debt was not paid, winding up proceedings were commenced in September 2000 and the proceedings were settled in January 2001 with the repayment schedule of 24 months. From June 2000 to the end of the financial year in 2001, the business turnover of Bel Trade China was apparently not affected at all, notwithstanding the termination of the exclusive agency, according to the turnover figure given by Mr Ahmed.

41. For the above reasons, I hold that there is no serious and genuine cross-claim whether of the Company or of Bel Trade China that the Company may rely on to resist the petitioner's claim under the Guarantee.

Orders

42. As the Company has failed on both grounds of opposition, I make a winding-up order against the Company and order that the petitioner's costs are to be paid out of the Company's assets.