RE CASSIS LTD

HCCW 560/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 560 OF 2008

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D E C I S I O N

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1.  This is an inter partes summons issued on 27 February 2009 for the appointment of provisional liquidators to Cassis Limited (“the Company”).  The application was taken out by the Vanessa Destaing (“Vanessa”).  On the same day, she filed a notice of intention to appear on the winding-up petition as a supporting creditor.

2.  The petition was presented on 21 November 2008 by Paul Robine on the ground that the Company is unable to pay its debts as they fall due.  The petitioner has served a statutory demand on the Company claiming the balance of an outstanding debt of US$79,600.

3.  The Company was a vehicle for the co-operation of Vanessa and Valerie MacCarthy (“Valerie”) in a jewellery business.  Vanessa was to provide financial support and Valerie was to be the designer.  Each was to hold equal shares in the Company.  In the beginning, all the shares were held by Gordon Oldham, a solicitor of Messrs Oldham, Li and Nie, on trust for them.

4.  After the parties had fallen out in September or October 2008, Mr Oldham transferred half of his shares to Cameron Investments Limited (“Cameron”), to be held on trust for Valerie, and the other half to Mississauga Limited (“Mississauga”), to be held on trust for Vanessa.  Both Cameron and Mississauga are controlled by Mr Oldham.  Mr Oldham also appointed Cameron to be the sole director of the Company.

5.  The winding-up petition was opposed by Valerie and by the Company.  Valerie and Mr Oldham have filed affidavits in opposition.  In summary, they denied that the petitioner had made a loan to the Company.  They asserted that the petitioner had made a loan to Vanessa personally, and Vanessa injected the funds into the Company as part of her contribution to the working capital of the Company.

6.  The petition has been adjourned to 6 April 2009 and directions were given for evidence to be filed by the petitioner and the opposing parties.

7.  It could be seen readily that the dispute between Vanessa and Valerie has been around for some time.  The petition was presented three months ago.  The urgency for this application is said to be due to proceedings in a French court.  There would be a hearing on 13 March 2009.

8.  The application for provisional liquidators is supported by the petitioner.  The Company and the Official Receiver adopt a neutral position.  It is opposed by Valerie.

9.  The reason or main reason for provisional liquidators to be appointed is to assert the Company’s entitlement over intellectual property rights being the subject of the French action brought by Valerie.  Valerie claimed she is the creator and designer of the entire “Simone Gabor” line of jewellery and she is the owner of intellectual property rights in the design of such jewellery.  As the owner of these rights, she had granted a licence to the Company to use these rights as a contribution to the capital of the Company.  Since the breakdown of her relationship with Vanessa in October 2008 and her wrongful exclusion from the Company by Vanessa, Valerie has revoked that licence.  So the Company would have no right to continue to manufacture and sell the “Simone Gabor” line of jewellery.  She made an ex parte application to the French court on 23 December 2008 and obtained an order for seizure by the court bailiff at Vanessa’s premises of jewellery, stated by her to be part of the “Simone Gabor” 08 and 09 collections as they were counterfeit goods infringing her design rights.

10.  Vanessa claimed the intellectual property rights belonged to the Company because they are registered in the Company’s name.  She relied on e-mails in 2007 showing that both parties had understood the rights were to belong to the Company.

11.  As early as 29 December 2008, Vanessa’s solicitors in Hong Kong were put on notice of the assertion of those rights by Valerie in the French court and the basis for her assertion.  No action was taken by Vanessa in the Hong Kong court until the summons for provisional liquidators was issued on 27 February 2009.

12.  Vanessa seeks to appoint two Hong Kong solicitors as provisional liquidators to assert and protect the Company’s entitlement to the intellectual property rights and ask for an appointment to be made today, so that the provisional liquidators would intervene in the hearing before the French court on 13 March 2009.

13.  Provisional liquidators are appointed only if it is appropriate in all the circumstances, the court has a wide and unfettered discretion to do what is just in the particular circumstances of each case.  The fact that the creditors of the Company, who would appear to be the petitioner and Vanessa at the moment, support the application is not a compelling factor in favour of appointment.

14.  There is a dispute at the moment as to the ownership of the intellectual property rights, whether it is Valerie’s or the Company’s, as asserted by Vanessa.  The matter is to be resolved by the French court on the evidence adduced by each side.  Each side would present her evidence and her case to the French court to the best of her ability, and it is for to the French court to rule.

15.  It is not suggested that provisional liquidators would be able to come up with any new or additional evidence that either side is unable to adduce.

16.  Vanessa has produced a letter from her French lawyer stating that there is a prima facie case for the Company to claim it is the owner of the intellectual property rights claimed by Valerie, and, “for the tribunal to make an informed decision”, the Company should be represented.  No explanation was given by the French lawyer why the Company should be represented for the court to make an informed decision.  It is not apparent to me how the tribunal could be assisted by the provisional liquidators’ representation and intervention in the proceedings.  There are only two shareholders.  The court would have before it the conflicting versions put forward on each side.  I cannot see how the provisional liquidators can take a responsible position on this.

17.  It does not appear to me that a useful purpose would be served by making the appointment.  This main ground for appointment of provisional liquidators is rejected.

18.  Four other grounds were advanced by Vanessa for appointing provisional liquidators.  They are the questionable appointment of Cameron as the sole director of the Company in September 2008, the bias and conflict of interest of Cameron in the affairs of the Company, the unlawful disposition of the Company’s intellectual property rights, and the need for investigation by an independent party.

19.  These grounds do not appear to be sufficient to justify an appointment of provisional liquidators at this stage.  The matters complained of had taken place for some months.  If they are wrongs to be rectified, they can be unravelled by liquidators when the Company is ordered to be wound up.

20.  Valerie is not conducting business for the Company at the moment.  She cannot do so when the financial backing of Vanessa has been withdrawn.

21.  It is not necessary to consider if the petitioner or Vanessa, if she wishes to apply to be substituted as the petitioner, has a good arguable case for the purpose of appointment of provisional liquidators.

22.  I would dismiss the application for the above reasons.

23.  The petitioner seeks no order as to costs against Vanessa in this application, so no order would be made.  For other parties who appeared on this application, I make an order Vanessa is to pay their costs of this application in any event, and that the costs of the Official Receiver be assessed on a gross sum basis at $6,000.