WONG MAN KAM PATRICK v. ECOSUCCESS LTD

HCSD 50/2020 & HCSD 51/2020

[2021] HKCFI 1725

HCSD 50/2020

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

APPLICATION TO SET ASIDE A STATUTORY DEMAND

NO 50 OF 2020

_________________

_________________

AND

HCSD 51/2020

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

APPLICATION TO SET ASIDE A STATUTORY DEMAND

NO 51 OF 2020

_________________

____________________

(Heard Together)

____________________

JUDGMENT

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1.  The matters before me are two applications (“the Setting Aside Applications”) for setting aside statutory demands (“the SDs”), one made by Mr Wong Man Kam Patrick and the other made by Mr Leung Chi Kin Terence (“Wong” and “Leung”, collectively “the Applicants”). In accordance with §4 of PD25.1, the two applications were heard by me on 9/6/2021 in chambers not open to public. After hearing submissions, I reserved judgment. For the reasons set out in this judgment, I came to the conclusion that there is no merit in these applications, and the applications should be dismissed.

2.  Various legal principles are discussed in this judgment.  For the benefit of the development of the law, I am of the view that this judgment should be published.  Further, the Applicants have tried to bring in the disputes between Mr Lau Wing Yan (“Lau”) and Mr Chu Kong (“Chu”) in support of the Setting Aside Applications.  Those disputes are now being litigated in the Hong Kong Court and have been mentioned in various published judgments.  Since the Applicants are heavily relying upon those disputes (which are now in the public domain) in support of the Setting Aside Applications, I do not think that it would be necessary to anonymize any individual or any entity in this judgment.

BACKGROUND

3.  In HCSD 50/2020, the applicant is Wong.  In HCSD 51/2020, the applicant in Leung.  Save and except these, all the other matters in the two applications are the same.  The respondent in each application is Ecosuccess Limited (“Ecosuccess”).

4.  On 17/4/2014, Bintan Mining Corporation (“BMC”, a company incorporated in BVI) and Pacific Bulk Enterprises (“PB Enterprises”) entered into an agreement, to which both Wong and Leung were also parties as guarantors (“the Agreement”).  Pursuant to the Agreement, PB Enterprises inter alia agreed to be the exclusive transportation services provider to BMC for the export of bauxite, in connection with a project on the Solomon Islands (“the Project”).

5.  The Agreement contains the following clauses which have a significant bearing in these proceedings.

(1) Clause 5(b):

“All payments made by [BMC] to [PB Enterprises] under this Agreement shall be:

(b) made in full, without set-off, counterclaim or condition ……” (Emphasis added)

(2) Clause 9:

“GUARANTEE

[Wong] and [Leung] … each hereby irrevocably and unconditionally jointly and severally:

(a) guarantee to [PB Enterprises] punctual performance by [BMC] of all of [BMC]’s obligations under this Agreement; and

(b) undertakes with [BMC] that whenever [BMC] does not pay any amount when due under or in connection with this Agreement, that Guarantor shall immediately on demand pay that amount as if it was the principal obligor;

(c) agrees with [PB Enterprises] that if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal, it will, as an independent and primary obligation, indemnify [PB Enterprises] immediately on demand against any cost, loss or liability it incurs as a result of [BMC] not paying any amount which would, but for such unenforceability, invalidity or illegality, have been payable by it under this Agreement on that date when it would have been due;

……” (Emphasis added)

6.  Subsequent to the Agreement, each of PB Enterprises, Ecosuccess, BMC, and its wholly-owned subsidiary (BMSI) entered into a nomination agreement dated 21/1/2015 (“the Nomination Agreement”), with both Wong and Leung assenting to the same by signing on it.  By the Nomination Agreement, (a) PB Enterprises nominated and transferred to Ecosuccess all of its rights, title, liabilities, and obligations under, arising out of or in connection with the Agreement, and (b) the Agreement was to be construed and treated in all respects as if Ecosuccess had been named therein instead of PB Enterprises.  In this judgment, the Agreement and the Nomination Agreement would be collectively called as the “Subject Agreement”.

7.  Originally, the fee to be charged by PB Enterprises is US$1.00 per dry metric ton of bauxite exported.  Subsequently in 2018, Ecosuccess agreed at BMC’s request to reduce the fee to US$0.50 per dry metric ton of bauxite.

8.  Between 2015 and 2019, BMC made a number of payments to Ecosuccess as required under the Subject Agreement.[1]  From July to October 2019, BMC made partial repayments on the outstanding invoices to Ecosuccess, namely by way of 6 payments of HK$300,000 (ie totalling HK$1,800,000).

9.  However, from 2017 to 2020, BMC failed to make full payment of substantial sums under the outstanding invoices issued by Ecosuccess.

10.  On 2/9/2020, Ecosuccess via its solicitors issued a letter to Wong and a letter to Leung, by which Ecosuccess made a formal demand against each of them as guarantors for the outstanding sums under the issued invoices, pursuant to Clause 9 of the Agreement.

11.  Neither Wong nor Leung paid the outstanding sums to Ecosuccess.  On 8/9/2020, Ecosuccess issued the SDs.  The outstanding debt (“the Debt”) as stated on each SD is (a) USD 1,194,450.34; plus (b) HKD 5,757,913.14.

12.  On the same date, Ecosuccess also issued a statutory demand (“the BMCSD”) for the Debt against BMC.

13.  The SDs were served on Wong and Leung 9/9/2020.[2]

14.  On 28/9/2020, the Applicants commenced these proceedings.[3]

15.  On 30/9/2020, BMC commenced HCMP 1630/2020 (“the MP Proceedings”) for an injunction restraining Ecosuccess from presenting a winding-up petition against BMC based upon the BMCSD. 

16.  On 25/3/2021, the shareholders of BMC passed a resolution in accordance with the BVI law to wind up BMC and to appoint liquidators of the BMC.  Accordingly, as from 25/3/2021, BMC is in liquidation and is controlled and managed by the liquidators (“the Liquidators”).

GROUNDS IN SUPPORT OF THE APPLICATIONS

17.  BR, rule 47(4) provides:

“The debtor’s application shall be supported by an affidavit—

(a) specifying the date on which the statutory demand came into his hands; and

(b) stating the grounds on which he claims that it should be set aside,

and the affidavit shall have exhibited to it a copy of the statutory demand.” (Emphasis added)

18.  In each application, the applicant stated that the grounds in support of the application are set out in Tung Aff.  However, by a consent order dated 16/12/2020, each applicant is allowed to file and serve further affidavit(s) in support of the application.  Pursuant to the consent order, Wong 1^st Aff was filed on 31/12/2020.  After hearing the parties, I ruled that the Applicants may rely upon the grounds as set out in Tung Aff and Wong 1^st Aff in support of the Setting Aside Applications.  However, they cannot rely upon any ground which is not contained in these two affirmations.

19.  At the beginning, Mr Yeung Ming Tai (together with Mr Chan Hei Ching) for the Applicants said that the Applicants were relying upon BR, rule 48(5)(a), (b) and (d) in support of the Setting Aside Applications.  However, at a later time, Mr Yeung has clarified his position and said that in fact he was relying upon rule 48(5)(a) and (b) only.  Rule 48(5)(a) and (b) are as follows:

“The court may grant the application if—

(a) the debtor appears to have a counterclaim, set-off or cross demand which equals or exceeds the amount of the debt or debts specified in the statutory demand;

(b) the debt is disputed on grounds which appear to the court to be substantial”

THE PRINCIPLES

20.  It is trite that “in applying to set aside a statutory demand, the applicant bears the burden of showing that the debt is genuinely disputed on substantial grounds.  The burden that the applicant bears is higher than that of a defendant opposing an Order 14 application in that not only must he show that his defence is credible, he must also adduce precise factual evidence in support of his defence”.[4]

21.  To succeed in such an application, “the debtor must show a bona fide dispute on substantial grounds, by sufficient precise evidence which is believable, and must established that he actually has a defence of substance, not just a fair probability of one”.[5]

22.  It is necessary for the court to consider the case being put forward “with a reasonably critical eye, testing the case against the other background facts and circumstances”[6].

23.  “It is also well established that where only part of the petitioning debt is disputed on substantial grounds, the statutory demand still stands and a bankruptcy petition can properly be presented on the basis of the statutory demand, unless the undisputed or indisputable portion of the debt has been paid”.[7]

ANY BONA FIDE DISPUTE ON SUBSTANTIAL GROUNDS?

24.  The Applicants try to say that there are bona fide disputes on substantial grounds by bringing in the disputes between Lau and Chu in other litigations.  Having considered the matter, I have to say that the disputes between Lau and Chu are irrelevant for the purpose of these proceedings.

25.  Counsel for the Applicants have put forward lengthy written submissions.  With respect, those written submissions are convoluted and cannot give the court much assistance.  During the hearing, I asked Mr Yeung what exactly are the points made by the Applicants in saying that there are bona fide disputes on substantial grounds, and Mr Yeung submitted that there are in fact 4 points under this head, namely:

(1)  BMC entered into the Agreement under a misapprehension of the identity of the contracting party due to various misrepresentations made by Lau before BMC entering into the Agreement.

(2)  No service has been provided by Ecosuccess in relation to the invoices set out in the SDs (“the Invoices”).

(3)  Pursuant to Clause 1(b) of the Agreement, PB Enterprises has provided a loan of USD 3 million to BMC, among which USD 0.5 million are from an illegal source.  The Agreement is therefore tainted by illegality.

(4)  Lau has illegally diverted business from Chu’s companies to his own companies.

26.  I would examine these points in turn.

Misrepresentations

27.  Notwithstanding the various formulation of the misrepresentations put forward by the Applicants, the essence of those alleged misrepresentations is that Lau made the representations to the effect that PB companies were under the control of Guangxi Beibu Gulf International Port Co Ltd (“Beibu”).  However, PB companies in fact are not controlled by Beibu.

28.  I agree with Mr Victor Joffe (together with Mr Martin Kok) for Ecosuccess that there is nothing in this complaint.

29.  First, subject to the matter discussed in [30] below, the Applicants are unable to point to any written documents in support of the existence of the alleged representations.  There is nothing in the Agreement or in the Nomination Agreement showing the existence of these alleged representations.  In particular, there is a clause in the Agreement dealing with “Representations and Warranties” in the Agreement, ie Clause 7. There is no reason why the alleged representations are not recorded in the Agreement, if there is any truth in the Applicants’ case.

30.  The Applicants can only point to a self-introduction brochure for “Pacific Bulk” (“the Brochure”) attached to an email from a Ms Sun Min to the Applicants dated 4/11/2013 as documentary evidence in support of the representations alleged by the Applicants.  The Applicants are relying upon one sentence in the 19-page Brochure, namely that “In 2010 Pacific Bulk in joint venture with Guangxi Beibu Gulf Port International invested in ship asset owning business “Beibu Gulf Ocean Shipping Group Ltd” (BBG Group)”.  In my view, that Pacific Bulk Group is having a joint venture with Beibu does not mean that the PB companies are being controlled by Beibu.  In my judgment, there is nothing in the Brochure in support of the existence of the representations alleged by the Applicants.  

31.  Second, even if the existence of the alleged representations is arguable, it is plain and obvious that BMC has not rescinded the Subject Agreement as a result of the alleged misrepresentations.  That being the case, there is simply no reason why BMC can refuse to pay the outstanding transportation fees as set out in the invoices identified in the BMCSD[8]. In turn, there is no reason why the Applicants can refuse to pay the debts as set out in the SDs.

32.  The following principles are well established and cannot be disputed:

(1)  Unlike a “void” contract, a “voidable” contract is “validly formed unless and until one of the parties rescinds it ab initio.  In that case the contract is binding until rescinded, and the right to rescind provides the only qualification to its enforceability”.[9] (Emphasis added)

(2)  An election to rescind must be “clear and unequivocal”.[10] (Emphasis added)

(3)  “Once the representee has elected to affirm the contract, his affirmation is irrevocable.  An election, once made, is final and binding”.[11] (Emphasis added)

(4)  “Affirmation may occur by reason of the way in which litigation is conducted, as where correspondence between solicitors treats the contract as valid and the pleading admits certain contractual obligations, or seeks damages for their breach, or where orders are obtained from the court consistent only with the transaction remaining on foot.”[12] (Emphasis added)

33.  The Applicants did not try to spell out when and how the Subject Agreement had been rescinded until the hearing before me.  In the hearing, in response to the questions from the court, Mr Yeung submitted that the Subject Agreement has been rescinded by the service of Tung Aff on Ecosuccess.  With respect, this submission cannot be correct.

(1)  There is no clear and unequivocal election in Tung Aff showing that BMC has chosen to rescind the Subject Agreement as a result of the alleged representations.

(2)  From Wong 1^st Aff, it is clear that BMC is relying on breach of “implied terms/conditions” of the Subject Agreement to claim against Ecosuccess for damages.  As a result of this claim, BMC has affirmed the Subject Agreement, and this affirmation is irrevocable.

(3)    Even if BMC were to attempt to rescind the Subject Agreement, BMC would be required to make counter-restitution to Ecosuccess (including for the benefit of the transportation services received by BMC).[13]  However, there is never any indication or suggestion that BMC would be willing and/or able to provide such counter-restitution.

34.  In my judgment, even if the misrepresentations alleged by the Applicants exist, BMC has not rescinded but has affirmed the Subject Agreement.  That being the case, the Applicants cannot derive any assistance from the alleged misrepresentations in any event.

35.  Third, by reason of Clause 9(c) of the Agreement, even if BMC’s obligations towards Ecosuccess under the Subject Agreement are or became unenforceable or invalid, the Applicants would still be liable to Ecosuccess.  Wong and Leung have signed the Agreement and the Nomination Agreement in their personal capacities, and they must be bound by Clause 9 of the Agreement.[14] No vitiating factor has been shown by Wong and Leung, and there is no reason why they should not be so bound.

36.  The clear objective of Clause 9(c) is to preclude any debate or discussion about the validity or enforceability of BMC’s liability to Ecosuccess.  The effect of the Clause 9(c) is that (a) the Applicants cannot rely on the “co-extensiveness principle” (ie the guarantor’s liability is secondary and co-extensive with the liability of the principal), even in the event that BMC’s liability to Ecosuccess were invalid, illegal, or unenforceable, and (b) the Applicants would be under a concurrent liability in debt to Ecosuccess as guarantor.  All these are clearly supported by the authorities.

(1)  Recently, in Southwest Securities (HK) Brokerage Limited v. Nieumarkt Investments Ltd and Anor[15], the Court of Appeal recognised that a clause in materially similar terms to Clause 9(c) “imposes a primary obligation on the 2nd defendant to indemnify the plaintiff if the obligation guaranteed by it is or becomes unenforceable, invalid or illegal”.[16]  The Court of Appeal in turn held that such a clause gave rise to a concurrent liability on the guarantor in debt, and allowed the plaintiff’s cross-appeal for entering summary judgment against the guarantor.[17]

(2)  In X v Y [18], DHCJ Maurellet SC held that a clause materially similar to Clause 9(c) would be effective to preclude the operation of the “co-extensiveness principle”, and that the guarantor/debtor would be liable in the position of a primary obligor.  The court in turn dismissed the guarantor’s application to set aside the statutory demand.

(3)  In Gulf Bank KSC v Mitsubishi Heavy Industries Ltd (No 2)[19], in respect of a clause in a counter indemnity which provided that the defendant’s obligation “shall not be in any way discharged or diminished… by any total or partial, illegality or unenforceability” of the guarantee, the English Court of Appeal observed that (a) “the obligations assumed by the parties had to take effect according to their terms”, and that (b) “a clear objective of the agreement [was] to preclude any debate or discussion about legal electiveness or validity of the guarantee when the question arose either of payment under the guarantee or reimbursement under the counter indemnity”.[20] Accordingly, the court held that the defendant would be liable under the counter indemnity, even though the guarantee was “invalid, illegal or unenforceable whether in whole or in part”.  The relevant clause could also cover any illegality, invalidity or unenforceability of the underlying guarantee whether “from the beginning” or “occurring at some later stage”.[21]

37.  There is no merit in the Applicants’ arguments based upon the alleged misrepresentations.

No service by Ecosuccess in relation to the Invoices?

38.  Each of the SDs refers to 60 invoices issued by Ecosuccess to BMC, ie the Invoices.  In Tung Aff and Wong 1^st Aff, there is no allegation that in respect of these 60 invoices, transportation services have not been provided by Ecosuccess to BMC.  Since the Applicants can only rely upon the grounds as set out in Tung Aff and Wong 1^st Aff, Mr Yeung has told me that he would not pursue this point.  This is a fair and reasonable concession.

39.  For the sake of completeness, I would also say that the details of the Debt have been clearly set out in the Invoices.  In the Invoices, the outstanding sums are clearly referable to the USD 1.00 or USD 0.50 per dry metric ton of bauxite (ie “DTS x USD 1.00DT” and “DTS x USD 0.5 /DT” ), as provided under Clause 3(a) of the Agreement (including the variation in 2018).  The Invoices also made direct reference to the agreement date of 17/11/2014 (ie the date of the Agreement).  The particulars of the Debt are clear and unambiguous. 

Any illegality relating to the USD 0.5 million?

40.  The Applicants say that there was a bank transfer of USD 0.5 million from a company known as Go Prosper International Limited (“Go Prosper”) to BMC on 5/11/2014 (“the Go Prosper Transfer”).  The USD 0.5 million is part of the loan of USD 3 million provided by PB Enterprises agreed to BMC under Clause 1(b) of the Agreement.

41.  Based upon some information provided by Chu to the Applicants after the taking out of the Applications, the Applicants say that there is illegality in the Go Prosper Transfer, and this would impact upon the Agreement.  According to Chu, a sum of US$2,762,242 was transferred from a company known as Pacific Bulk Lines Company Limited (“PB Lines”) to Go Prosper, without his prior knowledge or consent.  This is the basis of the alleged illegality. 

42.  I must say that there is no merit at all in these arguments.  First, all these are based upon the hearsay comments from Chu, and the truth is far from clear.  Second, even if all the allegations are true, there is no allegation that when BMC received the USD 0.5 million, BMC knew or ought to have known the improprieties concerning the USD 0.5 million. I asked Mr Yeung while BMC had no actual or constructive notice of the alleged improprieties concerning the USD 0.5 million at the time of the receipt of the same, on what legal basis someone can now require BMC to return the USD 0.5 million.  Mr Yeung has difficulties in giving me an answer.

43.  There is nothing in this point.

Disputes between Lau and Chu

44.  I am aware of the disputes between Lau and Chu. Chu is alleging, inter alia, that Lau has diverted business from Chu’s companies to his own companies.  However, I do not see in what way these disputes can exonerate BMC from the liability to pay Ecosuccess the Debt as set out in the Invoices.  Further, in view of Clause 9(b) of the Agreement, Wong and Leung have the liability to pay the Debt as principal obligors.  That being the case, Wong and Leung’s liabilities under the guarantee would not be affected by the mutual liabilities of the creditor and the principal debtor.[22]

45.  In my judgment, Wong and Leung cannot rely upon the allegation that Lau has diverted business from Chu’s companies to his own companies to refuse to honour the guarantors’ obligations as set out in Clause 9 of the Agreement.

ANY COUNTERCLAIM EQUALS OR EXCEEDS THE AMOUNT OF THE DEBT?

46.  In order to successfully set aside a statutory demand by relying upon BR, rule 48(5)(a), it would not be sufficient for the applicant to merely demonstrate that he has an arguable counterclaim against the creditor, he must also demonstrate that his counterclaim equals or exceeds the amount of the debt in the statutory demand.

47.  In my view, it is plain and obvious that both the Applicants cannot succeed in setting aside the SDs by relying upon BR, rule 48(5)(a).

(1)  The Applicants are merely saying that BMC has some counterclaims against Ecosuccess.  They are not saying that they personally have any counterclaim against Ecosuccess.

(2)  The Applicants cannot say anything on behalf of BMC after 25/3/2021, for BMC has been put into liquidation on that date.  The Liquidators are now controlling BMC.  There is no evidence showing that the Liquidators would consider to lodge any claim against Ecosuccess.

(3)  In these circumstances, there is simply no basis upon which the Applicants can say that they should not be required to pay the Debt as set out in the Invoices because of any counterclaim.  There is simply no one has made or will make any claim against Ecosuccess.

48.  Without prejudice to the above, I would briefly deal with Mr Yeung’s submissions concerning BR, rule 48(5)(a).  Mr Yeung is also relying upon the alleged misrepresentations and the alleged illegality under this head.  I have dealt with these arguments, and I would not repeat what I have already said.  The new points being made by Mr Yeung under this head are (a) Seabed screening cost, and (b) some events concerning an alleged misappropriation.

Seabed screening cost

49.  Preamble (5) of the Agreement is as follows:

“Upon [BMC] undertaking to use [PB Enterprises], subject to the Shipping Agreement under clause 6, as their exclusive transportation services provider for all Bauxite exported from …, [PB Enterprises] arranged at its own cost detailed seabed screening of various potential loading areas …as well as conducting various other investigation into navigation safety for marine vessels in the vicinity of …” (Emphasis added)

50.  The Applicants alleged that the seabed screening cost should be borne by PB Enterprises. However, BMC has mistakenly paid USD 320,698.52 to PB Supramax (as Ecosuccess’s agent) as seabed screening cost upon request.  Accordingly, BMC has a valid counterclaim against Ecosuccess in relation to this sum.

51.  There problems in this argument are as follows:

(1)  According to Preamble (5), PB Enterprises had “arranged at its own cost” the relevant screening.  BMC, Wong and Leung have signed the Agreement.  Where parties express an agreement as to a certain state of affairs in a contractual document, “neither can subsequently deny the existence of the facts and matters upon which they have agreed” (ie by operation of contractual estoppel).[23]

(2)  In view of the clear wording of Preamble (5) in the Agreement, it is incapable of being believed that there would be such mistaken payments as alleged by the Applicants.  The parties to the Agreement (including Wong and Leung) in fact have declared that the relevant seabed screening cost has been borne by PB Enterprises.  Wong and Leung cannot now deny this.

(3)  Further, from the payment records relied upon by the Applicants, most of the relevant payments to PB Supramax were made in 2015, with one final payment in 2017.  It is inexplicable that why there would be no complaint as to any alleged mistake for many years.

52.  In my judgment, the seabed screening cost as alleged by the Applicants cannot be a genuine counterclaim.

Alleged Misappropriation

53.  The Applicants allege that Ecosuccess, through its agent PB Supramax, has misappropriated some cargoes belonging to BMC (“the Cargoes”). As a result of this, BMC has a counterclaim against Ecosuccess.

54.  There would be no need for me to mention the details of the disputes here.  Suffice for me to say that there are disputes concerning the Cargoes between PB Supramax and BMC.  PB Supramax is saying that BMC has failed to make some payments to them and they are entitled to exercise their liens over the Cargoes.  BMC is saying that PB Supramax has unlawfully detained the Cargoes.  The disputes are the subject matters of some arbitration proceedings between PB Supramax and BMC.

55.  The Applicants are saying that all these disputes in fact are disputes between Ecosuccess and BMC, for PB Supramax is Ecosuccess’ agent in these matters.  The disputes are relating to the transportation services provided by PB Supramax to BMC.  The Applicants say that in accordance with the Agreement, PB Enterprises (and later Ecosuccess) is the exclusive transportation services provider in relation to the Project.  The transportation services provided by PB Supramax to BMC are services in relation to the Project.  Hence, PB Supramax is the agent of Ecosuccess in providing these services. 

56.  With respect, I am unable to accept these submissions.

(1)  Although Ecosuccess is the exclusive transportation services provider in relation to the Project in the Subject Agreement, BMC may still retain other service provider with the consent and agreement from Ecosuccess.  That BMC has retained another service provider does not necessarily mean that the other service provider is the agent of Ecosuccess.

(2)  In the contract between PB Supramax and BMC concerning the Cargoes, there is nothing suggesting that PB Supramax entered into the contract on behalf of Ecosuccess.

(3)  I have asked Mr Yeung that in respect of the Cargoes, why BMC has not commenced any proceedings against Ecosuccess.  Mr Yeung’s answer is that there is an arbitration clause in the contract between PB Supramax and BMC, but there is no arbitration clause in the Subject Agreement.  Hence, it would not be possible for BMC to commence arbitration proceedings against Ecosuccess.  With respect, this cannot be a satisfactory answer.  BMC can start proceedings against Ecosuccess in court at any time, if BMC is really having a genuine claim against Ecosuccess concerning the Cargoes.

(4)  In my judgment, the disputes concerning the Cargoes are disputes between PB Supramax and BMC, and Ecosuccess is not a party involved in these disputes.  That being the case, the Applicants cannot say that BMC would have a claim against Ecosuccess as a result of these disputes.

(5)  Further, BMC has not indicated that they are going to make a claim against Ecosuccess in relation to the Cargoes.  There is no such indication from the Liquidators.

(6)  In any event, the Applicants cannot say that each of them can personally have a claim against Ecosuccess because of the matters relating to the Cargoes.

57.  For the reasons set out above, the Applicants cannot invoke BR, rule 48(5)(a) by relying upon matters relating to the Cargoes.

NO SETTING ASIDE OF THE SDs

58.  Having considered the evidence before me and the submissions made by the parties, I am not satisfied that the Applicants have made out a case under BR rule 48(5)(a) or (b).  Accordingly, the Setting Aside Applications must be dismissed.

59.  In accordance with BR rule 48(7), I shall make an order authorizing Ecosuccess to present a bankruptcy petition against each Applicant forthwith, or on or after a specified date specified by me.  As to when Ecosuccess should be authorized to present bankruptcy petitions against Wong and Leung, I have invited submissions from the parties on this point.

(1)  After taking instructions, Mr Yeung told me that he had “firm instructions” to say that if the Setting Aside Applications are dismissed, Wong and Leung will pay the Debt to Ecosuccess, but they would need 2 months to pay.

(2)  Mr Joffe submitted that a period of 2 months would be unduly long.  The SDs were served on the Applicants long time ago, ie on 9/9/2020.  The Applicants should have prepared to face the consequences if the Setting Aside Applications are unsuccessful.  Mr Joffe submitted that Ecosuccess should be allowed to present bankruptcy petitions either forthwith or at most a few days after the handing down of the judgment.

60.  Since Mr Yeung has, on firm instructions given to him, submitted that Wong and Leung are going to pay the Debt, I would give them some leeway.  However, as submitted by Mr Joffe, Wong and Leung in fact should have prepared to pay the Debt long time ago.  I would only allow Wong and Leung to have 14 days to pay the Debt to Ecosuccess.  If Wong and Leung fail to do this, Ecosuccess can present bankruptcy petitions against them at any time after the 14-day period.

DISPOSITION

61.  I dismiss the Setting Aside Applications.  In each application, in accordance with BR rule 48(7), I also make an order authorizing Ecosuccess to present a bankruptcy petition against the applicant on or after 30/6/2021.

62.  The parties have agreed that costs should follow the event, with a certificate for 2 counsel.  I am of the view that there is sufficient complexity in these proceedings justifying a certificate for 2 counsel.  In each case, I order that costs of the proceedings (including costs reserved, if any) be to Ecosuccess forthwith, with a certificate for 2 counsel, to be taxed if not agreed.

63.  Lastly, it remains for me to thank counsel for the helpful assistance rendered to the court.