RE UNITED STRENGTH LTD

IN THE SUPREME COURT OF HONG KONG

COMPANY (WINDING-UP) NO. 28 OF 1992

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J U D G M E N T

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1. This is a petition for a winding up order on the grounds that the respondent company is insolvent and unable to pay its debts.

2. The petitioner claims the sum of $105,501 being the taxed costs in respect of an order made by the Court of Appeal on the 15th August 1991. A statutory demand for payment was made on the 16th December 1991 under s.178 (1) (a) of the companies Ordinance, but the company failed to comply. The petition to wind up the company was presented on the 27th January 1992.

3. The costs relate to the petitioner's application as plaintiff in CL 13 of 1991 against the company for summary judgment under 0.14. Before Mayo J., the petitioner's application for summary judgment was dismissed, but it was allowed upon appeal to the Court of Appeal together with an order for costs. However, the judgment was stayed pending resolution of the company's counterclaim which it is alleged, exceeds the amount of the judgment. However, the stay does not extend to the order for costs made in favour of the petitioner.

4. There is no dispute that the debt is owed by the company to the petitioner, but it is contended by Mr Li, counsel for the company, that as the company's counterclaim is a genuine one and well exceeds the petitioner's claim, it will not be just and equitable to make a winding up order so that a stay should be granted until the determination of the company's counterclaim.

5. The petitioner's solicitors, since the case came before me earlier this month, wrote to the company's solicitors on the 18th March stating that the application for a stay would not be opposed if the company paid the debt into court pending the outcome of the counterclaim and also paid the costs of the winding up proceedings. This proposal was not accepted. Indeed, in my judgment, it was a perfectly reasonable proposal.

6. The law, where there is no dispute or no substantial dispute with regard to a debt, is clear from such cases as Mann v. Goldstein [1968] 1 WLR 1091 and Cornhill Insurance Plc. v. Improvement Services Limited [1986] 1 WLR 114. In the last case, it was held that where a company was under an undisputed obligation to pay a specific sum and failed to do so, it could be inferred that it was unable to pay its debts. My attention has also been drawn by Mr Chan, counsel for the petitioner to In re Douglas Griggs Engineering Ltd. [1963] 1 Ch 19 which held that where a petitioner had obtained a judgment, he is prima facie entitled to a winding up order and that right was not to be displaced because the company had a disputed claim against the petitioner that is the subject of litigation. That case applied the decision of In re Amalgamated Properties of Rhodesia (1913) Ltd. [1917) 2 Ch 115 that was also cited to me by Mr Chan.

7. The debt in this case, as I have said, is undisputed so that the petitioner is prima facie entitled ex debito justitiae to a winding up order. The grounds put forward on behalf of the company that a stay be granted pending the outcome of the counterclaim must, upon the authorities, fail. As a result, I shall make the usual compulsory winding up order with costs.