SHADOW TRADING AND INVESTMENT LTD v. PERFECT RECOVERY LTD (in Members' Voluntary Liquidation)

HCMP 1535/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1535 OF 2014

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D E C I S I O N

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1. I have before me a summons dated 12 September 2014 taken out by the defendant for an order, pursuant to Order 12, rules 8(A)(2) and 9(3), of the Rules of High Court that these proceedings be dismissed with costs to the defendant.

2. The defendant is a company incorporated in Hong Kong.  It was put into members voluntary winding up on 4 July 2013.

3. The plaintiff claims to be the “ultimate assignee” of a claim previously the subject matter of legal proceedings in Hong Kong brought by OTC International AG (“OTC”) against, inter alia, the defendant in HCCL 11/2007 (“the 2007 Action”).

4. Those proceedings were stayed, on the ground of forum non conveniens, in favour of proceedings to be issued either in the Regional Court of Coburg or the Regional Court of Munich pursuant to the Judgment of Stone J given on 19 June 2008.

5. Apparently, in the latter part of 2008, OTC attempted to pursue the said claim through the Regional Court of Coburg, but that court refused to hear it.

6. In any event, on 16 May 2014, after the commencement of the voluntary winding up of the defendant, the plaintiff (through one Mr Issa) submitted a proof of debt in the total amount of £6,891,011.53 together with interest thereon to the liquidators of the defendant.

7. On 3 June 2014, the liquidators of the defendant gave notice of rejection of the proof of debt on the ground (inter alia) that “[t]he Claimant has not established how it had become the beneficiary, assignee or transferee of the Claim, nor has the Claimant made and established any independent claims against the Company”.

8. On 24 June 2014, the plaintiff commenced the proceedings herein by way of originating summons against the defendant seeking to reverse the decision of the liquidators in rejecting its proof of debt, pursuant to Rule 95 of the Companies (Winding‑up) Rules.

9. The plaintiff did not, however, serve the originating summons on the defendant, notwithstanding a letter dated 9 July 2014 from the defendant’s solicitors to the plaintiff’s solicitors.

10. Accordingly, on 12 August 2014, the defendant issued a notice pursuant to Order 12, rules 8(A)(1) and (2) and 9(3), of the Rules of High Court requiring the plaintiff to serve the originating summons within 14 days or discontinue the action against the defendant.

11. The plaintiff did not comply with the defendant’s aforesaid notice.  On 12 September 2014, the defendant took out the present summons.

12. It transpires that, on 27 November 2014 (according to the plaintiff) or yesterday (according to the defendant), the plaintiff served the originating summons on the defendant. That service was effected within the 12‑month validity period for the purpose of service of the originating summons.  Notwithstanding the plaintiff’s delay in serving the originating summons, and the fact that the only outstanding issue which the liquidators of the defendant have to deal with in the winding up of the defendant is the plaintiff’s claim (and thus it was, in my view, entirely reasonable for the defendant to press the plaintiff to proceed with the present action as soon as possible so as to complete the winding up of the defendant), in view of the substantial size of the plaintiff’s claim and the fact that the materials before me do not permit me to form any view regarding the merits of the plaintiff’s claim, I am not minded to dismiss these proceedings outright.  Indeed, the parties are agreed that the defendant’s summons should be withdrawn.  I should mention that Mr Whitehead (for the defendant) has made it clear that the defendant agrees to withdraw its summons for practical considerations and not because it considers that the plaintiff’s claim is meritorious.  Obviously, the merits of the plaintiff’s claim will have to be examined on some other occasion.  That leaves the question of costs to be determined.

13. The plaintiff submits that it commenced these proceedings on 24 June 2014, being the last day on which an appeal against the decision of the liquidators of the defendant to reject the plaintiff’s proof of debt could be lodged under Rule 95 of the Companies (Winding‑up) Rules, in order to preserve its claim.  It further submits that it was not in a position to serve the originating summons earlier because it needed to “gather the relevant documents” in Germany, it was “exploring viable means to finance the Claim”, and it wished to “inspect and take copy of the pleadings and affidavits evidence filed in the 2007 Action”.

14. I am not persuaded that these are good excuses for the plaintiff’s delay in serving the originating summons.  The plaintiff has failed to state what evidence it had in support of its claim prior to commencing the present proceedings, and indeed prior to submitting the proof of debt, and has failed to pin point precisely what further evidence it was hoping or seeking to obtain from the so called “relevant documents” in Germany or the “pleadings and affidavits evidence filed in the 2007 Action” the absence of which would prevent the plaintiff from proceeding with the action in the meantime.  In any event, there seems to me to be no good reason why the plaintiff could not have served the originating summons, filed such evidence as it had in support of the originating summons in accordance with the timetable laid down by Order 28 of the Rules of High Court and, if necessary, sought the court’s leave to file such further evidence as it might obtain from the sources mentioned above at a later stage.  Mr Kan (for the plaintiff) has fairly accepted that the recent service of the originating summons was, at least in part, prompted by the hearing today.

15. In my view, the plaintiff must bear the costs of the defendant’s application.  I am not prepared, however, to order that the defendant’s costs be taxed on an indemnity basis.  I make an order in terms of the original draft order handed up by Mr Whitehead to the court.