HONG KONG AVIATION SUPPORT AND DEVELOPMENT ASSOCIATION LTD v. BEACON INTERNATIONAL GROUND SOLUTIONS LTD (formerly known as BIGMAN HK LTD)

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BETWEEN
	Hong Kong Aviation Support and Development Association Limited （香港航空業促進會有限公司）	Plaintiff
	and
	Beacon International Ground Solutions Limited (真里航空顧問有限公司) (formerly known as BIGMAN HK LIMITED (真男人有限公司))	Defendant

________________________

Before:

Deputy High Court Judge Kent Yee in Court

Date of Hearing:	12 March 2025
Date of Decision:	19 June 2025

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DECISION

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Introduction

1.  By Originating Summons dated 21 February 2024 (“the OS”), Hong Kong Aviation Support and Development Association Ltd (“P”) seeks, among other things, an injunction restraining Beacon International Ground Solutions Limited (formerly BIGMAN HK LIMITED) (“D”) from presenting a winding up petition against it based on a statutory demand dated 22 January 2024 (“the SD”).

2.  By the SD, D demands P to pay a sum of HK$1,294,700.00 (“the Alleged Debt”) representing the aggregate amount of 5 invoices issued by D to P on divers dates in early June 2023 (collectively “the Invoices”).

3.  It is not in dispute that P has settled neither the Invoices nor the SD. P says there is plainly a bone fide dispute on substantial grounds over the Alleged Debt. It avers that it has a cross-claim against D for damages well exceeding the amount of the Alleged Debt.

4.  After the issue of the OS and an exchange of some correspondence, on 27 March 2024, D agreed to give an interim undertaking that it will not present a winding up petition against P on the account of non-compliance of the SD pending determination of the OS (“the Undertaking”).

5.  This is the substantive hearing of the OS. Mr Chan appears for P and Ms Chu appears for D.

Background facts

6.  The parties have filed a considerable amount of affirmation evidence and there are factual disputes. For comprehension of the parties’ contentions, the undisputed background facts can be briefly outlined as follows.

7.  The disputes between the parties arose from the labour charges for ground operations at the Hong Kong International Airport (“the Airport”). Such ground operations are primarily handled by three private ground handling agents (“GHAs”) and one of them is SATS HK Ltd (“SATS”). At the material time, Mr Ben Wong (“Wong”) was the Chief Executive Officer of SATS.

8.  When air travel gradually resumed normality in Hong Kong in 2022, there was a huge demand of manpower for ground operations. Against this background, P was incorporated in Hong Kong on 14 June 2022 and started its business as an intermediary for the supply of part-time manpower to SATS. Mr Wong is its founder and was its sole shareholder and director at the inception.

9.  Since December 2022, P has entered into contracts with SATS for its provision of labour and labour management services to SATS to support its ground operations business (collectively “the SATS Contracts”).

10.  Among such contracts, of relevance to these proceedings are those relating to ground operation services to be provided for the three airlines, namely, InterGlobe Aviation (“6E”), Scoot Pte Ltd (“TR”) and VietJet (“VJ”) (collectively “the Three Airlines”).

11.  To fulfil its obligations under these SATS Contracts, P entered into contracts with D which carries on the business of providing casual labour for flight handling at the Airport.

12.  First, on 28 December 2022, P and D made a written contract relating to the provision of labour services for TR (“the TR Contract”).

13.  On the same date, P and D entered into a similar written contract concerning 6E (“the 6E Contract”).

14.  On 3 February 2023, another similar contract was concluded by P and D concerning VJ (“the VJ Contract”).

15.  All of the TR Contract, the 6E Contract and the VJ Contract (collectively “the Contracts”) contained the following provision regarding settlement of invoices (“the 30-day Payment Clause”),

The Company (P) shall settle the payment by means of a cheque for the total amount payable to the Contactor (D) or by bank transfer to the designated bank account as per the Contractor (D)’s invoice, within 30 days from the date of receipt of monthly invoice.

16.  Further, in each of the Contracts, it is expressly provided that the contract is automatically terminated once the relevant airline terminates contract with SATS or SATS terminates or changes any term of contract with P (“Automatic Termination Clause”).

17.  On 7 June 2023, by an email to D, P gave D its notice of termination of the Contracts on the ground that the Three Airlines terminated their respective contracts with SATS with effect from 8 June 2023, thereby triggering the Automatic Termination Clause.

18.  D issued the Invoices to P:

	Date of Issuance	Amount (HK$)	Invoice no.
(a)	5 Jun 2023	5,500.00	Inv#2023-6E MAY23
(b)	6 Jun 2023	477,400.00	Inv#2023-VJ MAY23
(c)	6 Jun 2023	575,300.00	Inv#2023-TR MAY23
(d)	8 Jun 2023	106,700.00	Inv#2023-VJ JUN23
(e)	8 Jun 2023	129,800.00	Inv#2023-TR JUN23
(f)	Total	1,294,700.00

19.  The Invoices were due on or about 12 February 2024 and none of them has been settled. The aggregate amount of the Invoices has become the Alleged Debt, which forms the subject matter of the SD.

20.  In reply to D’s request for settlement of its invoices by its email dated 12 June 2023, P sent to D an email dated 14 June 2024 (the “14/6 Email”) in the following term:

This is to clarify that as agreed the Invoice will be due after 30 days from the date of receipt of monthly invoice. According to record the May & June Invoices are not due yet according to the date of receipt of the invoice. For Apr invoice we are actively chasing the client SATS HK to settle it ASAP and we appreciate your understanding.

21.  D sent an email dated 23 June 2023 (the “23/6 Email”) to demand settlement of the outstanding invoices issued in June. There is no reply thereto.

22.  D instructed Messrs Eddie Lee & Company (“ELC”) to issue a demand letter for the Alleged Debt dated 21 December 2023.

23.  On 22 January 2024, D issued the SD and served it on P.

24.  On 21 February 2024, P issued the OS. The first supporting affirmation was filed only on 20 March 2024 in the form of the Affirmation of Lau Kar Yan Jill (“Lau”). Lau is the wife of Wong and the current sole director of P.

Relevant legal principles

25.  Mr Chan gives a good summary of the relevant legal principles in his written submission. He starts with Re Sinom (Hong Kong) Limited [2009] 5 HKLRD 487 in which , Kwan J (as she then was) said this (at §§9-13),

“9. The principles governing applications for interim injunctions in American Cyanamid Co. v. Ethicon Ltd. [1975] AC 396 do not apply to this situation, as the granting of an injunction to restrain the presentation of a winding-up petition would finally dispose of the issue in dispute in the present proceedings (Bryanston Finance Ltd. v De Vries (No. 2) [1976] 1 Ch 63 at 80E to 81E).

10. The court will grant a quia timet injunction to prevent the presentation of a winding-up petition which it considers would be an abuse of process. Great circumspection must be exercised in doing so, as the right to petition for winding up in appropriate circumstances is a right conferred by statute, and a would-be petitioner should not be restrained from exercising it except on clear and persuasive grounds (Bryanston Finance, supra., at 78D to E, 79A to D).

11. As with a petition where there is a bona fide dispute of the debt on substantial grounds (“a disputed debt petition”), where the company has a genuine and serious cross-claim against the petitioner greater than or equal to the petitioner’s debt (“a cross-claim petition”), such a petition may be restrained from proceeding (Re Pan Interiors Ltd. [2005] EWHC 3241 (Ch), paras. [34] to [39]). It is an abuse of the process of the court to make a statutory demand or present a winding-up petition based on a claim to which there is a triable defence (In re A Company (No. 0012209 of 1991) [1992] 1 WLR 351). A cross-claim petition is regarded in the same way (Southern Cross Group plc v. Deka Immobilien Investment GmbH [2005] All ER (D) 374, paras. [29] & [30]; Re Pan Interiors, supra., para. [35]).

12. To successfully resist a cross-claim petition, the company has the onus of establishing that is cross-claim is genuine, serious and of substance. There must be supporting relevant details to demonstrate that the cross-claim is based on substantial ground. The test is very much the same as the test for a disputed debt petition for deciding whether a debt is disputed in good faith and on substantial grounds…”

26.  Ms Chu submits that P is not here to demonstrate that it has a bona fide defence on substantial grounds only and it has to convince this court that the presentation of a petition is an abuse of process. I am unable to accept this submission.

27.  As rightly pointed out by Mr Chan, it is exactly an abuse of process to present a winding-up petition based on a claim of which there is a bona fide dispute on substantial grounds: Re Grande Holdings Ltd (unreported, HCMP 2369/2017, 22.12.2017) per Chow J (as he then was) at §14. The learned judge went on to say that petitions are not meant for the purpose of debt collection and the winding-up jurisdiction of the court would be exercised only in clear cases.

P’s contentions

Industry Practice and Oral Agreement

28.  The core contention of P is that there was an oral agreement reached between the parties in addition to the Contracts that the payments apparently due to D under the invoices as a downstream sub-contractor would only be made upon the settlement of the corresponding fees by the upstream customer, namely, SATS (“the Oral Agreement”).

29.  P says that it is indeed a common practice known as “pay when paid” adopted in the aviation industry in the provision of causal labour services (“the Industry Practice”). In simple terms, upstream contractors of causal labour would only settle downstream payments once the upstream contractor had itself been paid for the corresponding labour.

30.  The Oral Agreement, Mr Chan submits, embodying the Industry Practice, constituted a collateral contract supplementing and modifying the terms of the Contracts thereby preventing D from relying on the 30-day Payment Clause.

31.  P says that the existence of the Oral Agreement is supported by the following credible evidence.

32.  First, P has an independent witness. Ms Candy Chan is the General Manager of Aerial Engineering Limited (“AEL”). AEL and its associated company, Aerial Enterprise (HK) Limited have been in the same business of D. She made an affirmation and confirmed the Industry Practice. She explained how AEL made its monthly retrospective payment applications to P in its performance of the contracts with P to provide labour resources to SATS through P. In such applications, AEL submitted spreadsheets showing the amount of labour resources supplied during the month for the verification of SATS.

33.  Ms Candy Chan went on to state her belief that the same payment process applied to all other companies under their subcontracts with P and indeed across the aviation industry in Hong Kong in respect of causal labour supply services though the basis of her belief is unknown.

34.  Based on the evidence of Ms Candy Chan, Mr Chan submits that the express incorporation of the Industry Practice into the sub-contracts between P and AEL makes it inherently likely that it was likewise adopted in the Contracts especially when the same upstream customer was involved.

35.  Mr Chan submits that such back to back payment arrangements are common in the context of construction sub-contracts too.

36.  Second, P alleges that the Industry Practice was evidenced by contemporaneous documents including an internal email of SATS dated 8 March 2022 sent by Wong as SATS’ CEO to one Geline Tsang (“Geline”) who was the Head of Finance of SATS (“8/3 Email”). Despite the express term to the effect that payment was to be made within 15 days from the date of receipt of the monthly invoice in contracts between SATS and D, Wong told Geline Tsang that she must ensure the actual payment to D could only be made after receipt of the revenue of the month from the respective airlines.

37.  Mr Chan submits that this instruction inconsistent with the express term of payment in subcontracts between SATS and D confirms the existence of the Industry Practice. There is no other reason why such an instruction was given in the absence of the Industry Practice.

38.  Third, P relies on the own conduct of D. Mr Chan has created a table showing the payments made by P to D for its 10 invoices issued from 3 March 2023 to 8 May 2023. All these payments were made only after SATS had paid P and 6 of them were made more than 30 days after the dates of D’s invoices. The table is reproduced below:

D’s invoice to P	P’s receipt of payment from SATS	Payment by P to D	No. of days between D’s invoice and payment
3.3.2023	10.3.2023	10.3.2023	0
3.3.2023	10.3.2023	10.3.2023	0
7.3.2023	31.3.2023	3.4.2023	3
7.3.2023	31.3.2023	3.4.2023	3
11.4.2023	11.5.2023	19.5.2023	38
4.5.2023	7.6.2023	8.6.2023	35
11.4.2023	11.5.2023	19.5.2023	38
8.6.2023	20.7.2023	21.7.2023	43
8.5.2023	20.7.2023	21.7.2023	74
8.5.2023	20.7.2023	21.7.2023	74

39.  Mr Chan highlights that there is no evidence that D made any protest of these late payments and he submits that a plausible explanation is that D actually agreed to incorporate the Industry Practice into its contracts with P and knew that payments were not yet due despite the 30-day Payment Clause.

40.  Mr Chan further points out that the first protest of late payment of D only came after P had terminated the Contracts and D had directly contracted with SATS to usurp P’s role. He submits that D had only decided to renege on the Oral Agreement to claim early payment when it found out that it could do away with P and contracted with SATS directly.

41.  Fourth, the Oral Agreement is allegedly evidenced by a chain of WhatsApp messages exchanged between Wong and Mr Dante Chow (“Chow”) who was the director of D (“the Text Messages”) before D’s first demand for payment in June 2023.

42.  In gist, the Text Messages showed that Wong and Chow talked about the non-payment of SATS and Chow said that the problem did not lie with Wong and Chow and SATS had the responsibility to pay wages. Ben also indicated that P had made advance payments to its suppliers before SATS had settled the upstream invoices.

43.  Mr Chan submits that the Text Messages are solid proof of the existence of the Oral Agreement.

44.  Mr Chan submits that the factual dispute as to whether the Oral Agreement should not be summarily determined and the following issues should call for resolution at trial:

(a)  Does the Industry Practice exist?

(b)  If so, was the Industry Practice generally followed in the industry and adopted in the subcontracts between P and AEL?

(c)  If so, was the Industry Practice incorporated into the Contracts in the pre-contractual discussion on the phone between Wong and Mr Francis Chan who was the General Manager of D as alleged by Wong?

(d)  If the Oral Agreement had not been concluded, why D did not protest P’s consistently late payment until June 2023?

(e)  If the Oral Agreement had not been concluded and P was liable to settle the Invoices even before any upstream payments made by SATS, why Chow said what he had said in the Text Messages?

45.  Despite the attractive presentation of Mr Chan, I am not impressed by P’s evidence relating to the Industry Practice and the Oral Agreement at all.

46.  It was Lau who first mentioned the Industry Practice on the evidence. She said on 20 March 2024 she had recently been informed by Wong, her husband, of the Industry Practice though she replaced Wong to be the sole director of P on 7 November 2023.

47.  I have examined the Affirmation of Candy Chan closely. Ms Candy Chan first referred to the Affirmation of Lau and said she agreed that “pay when paid” was an arrangement commonly adopted in the industry. She said very little about her experience in the industry and she did not explain how she acquired the knowledge about the common adoption of such a practice.

48.  Her account of how AEL was paid by P is not really indicative of the alleged Industry Practice. In the case of AEL, on her evidence, AEL had to make payment applications together with documentary evidence of the amount of labour resources expended by AEL by way of its proforma invoices to P. Onward submissions of such applications to SATS were required for its verification of the information provided. SATS would assess the actual amount of labour resources with its own records and it would require AEL through P to issue invoices for the assessed amounts. Upon receipt of the invoices, SATS would then pay P the adjusted amount and P would pass on the monies to AEL. She believed that the same payment process applied to all other companies having sub-contracts with P.

49.  Overall speaking, I do not find the evidence of Ms Candy Chan to be convincing. She has failed to exhibit the subcontracts between P and AEL and she did not quote any specific provisions therein. She said nothing about the actual payment terms in the subcontracts of AEL. Her belief that the same payment process applied to all other subcontracts of P is unfounded.

50.  In the present case, no such payment procedures is stipulated in the Contracts. There is no express provision that D had to submit any payment application to be approved by SATS before submitting its invoices to P. Nor is there any allegation that Wong and Mr Francis Chan ever had a discussion, let alone reached an agreement, about such a payment procedure.

51.  In any event, I do not think that the evidence relating to the payments made to AEL by P under their contracts can assist P. It was merely agreed between AEL and P that the information in the monthly payment applications had to be verified by SATS first and it was SATS which decided what amounts AEL could charge in a particular month. SATS would pay the adjusted amounts in the invoices issued by AEL. It did not really evidence the adoption of the Industry Practice that P would only pay AEL after SATS paid P.

52.  Whilst I can accept that a “pay when paid” payment term is not uncommon in sub-contracts, I am not convinced that it amounts to an industry practice and in any event I cannot accept that generally it is to be followed and adopted in all sub-contracts notwithstanding any different payment provisions agreed by the parties.

53.  On the other hand, I find P’s evidence relating to the Oral Agreement to be tenuous. Wong only said that there was a telephone conversation between Mr Francis Chan and him in the course of pre-contractual negotiations some time around December 2022 and he informed Mr Francis Chan of the Practice. He then asserted that Mr Francis Chan agreed to it on the phone. This is all he said about the formation of the Oral Agreement.

54.  In his short affirmation, Mr Francis Chan made a general denial of having concluded the Oral Agreement or agreed to the Industry Practice.

55.  The burden is on P to adduce credible evidence to show that its allegation of the Industry Practice and the Oral Agreement is bona fide. Wong is the key person to adduce such evidence since he alleges to conclude the Oral Agreement with Mr Francis Chan orally on the phone. His evidence, however, is wholly inadequate.

56.  The Industry Practice and the Oral Agreement are plainly inconsistent with the 30-day Payment Clauses in the Contracts. It cries out for an explanation as to why the parties came to agree to the insertion of the said provisions in the Contracts in the first place if the Industry Practice were to be adopted generally. P should also explain why the Oral Agreement was not properly embodied in the Contracts. It is inexplicable why the parties had not done so if it had been the real bargain. The paucity of evidence in this regard is alarming.

57.  I do not find it credible that D would have agreed to any hidden “pay when paid” term despite the 30-day Payment Term expressly stipulated in the Contracts. D would be in a very precarious position without knowing when it would be paid or whether it would be paid by P at all because that is totally dependent on the payments by SATS to P. In the event that SATS did not pay P, as in the present case, D could not enforce the 30-day Payment Clause and could not do anything to compel SATS to make payment to P for want of any contractual relationship with SATS.

58.  I do not think that the 8/3 Email could assist P to prove the Industry Practice. Wong’s instruction to Geline to pay D not in compliance with the subcontracts could only show that he only had the interests of SATS in mind with scant regard to its contractual obligations in the subcontracts.

59.  If there had been such an Industry Practice generally followed and adopted, it begs the question why Wong still found it necessary to give the serious instructions to Geline, who assumed the highest positon in the Finance Department of SATS. Geline should have simply followed the Industry Practice. In my view, if anything, the 8/3 Email negates the existence of the Industry Practice.

60.  I cannot accept P’s contention that D’s non-complaint about the lateness of its 6 previous invoices is indicative of the existence of the Industry Practice and the Oral Agreement.

61.  Out of the 6 invoices, 3 of them were issued in April and May 2023. They were settled after a delay of 5 to 8 days. It is perfectly understandable that D was willing to wait for such a short period for payments in respect of these invoices without any chasers. I cannot see such tolerance could be taken as any indication of the Industry Practice and the Oral Agreement.

62.  For the remaining 3 invoices, they were issued on 8 May 2023 and 8 June 2023. On 12 June 2023, D sent to Wong an email chasing for settlement of the invoices due on 8 June 2023. By the 23/6 Email, D requested payment of its invoices issued in June 2023. Apparently D sought to enforce the 30-day Payment Clauses.

63.  Thus, I am unable to draw any inference from D’s tolerance of the lateness of P’s payment of these invoices that P and D had the Oral Agreement incorporating the Industry Practice.

64.  It is noteworthy that neither parties referred to the Industry Practice and the Oral Agreement. Quite on the contrary, P even relied on the 30-day Payment Clause in the 14/6 Email itself. This is effectively the final nail in the coffin of P’s case on the Industry Practice and the Oral Agreement.

65.  Mr Chan tried manfully to explain away P’s own acknowledgment of the 30-day Payment Clause in the 14/6 Email. He draws my attention to the fact that the email was signed off by “Finance HASDA”, showing that the email was sent by an account used by P’s administrative staff working under Lau’s supervision. He submits the administrative staff might not be privy to the Oral Agreement and hence had no knowledge about it.

66.  I am not convinced by this submission. To start with, Wong should give an explanation in his affirmation about the 14/6 Email. Wong’s silence is deafening and does not lend any support to the submission of Mr Chan.

67.  As rightly pointed out by Ms Chu, the 14/6 Email was carbon copied to Wong and the damaging acknowledgment therein could not escape his attention. If the staff had made such a fundamental mistake about the actual payment term, Wong should have immediately made correction and clarification.

68.  I also note that by the 8/3 Email, Wong allegedly impressed Geline that she should follow the Industry Practice. Geline was in charge of the Finance Department, which apparently issued the 14/6 Email. The staff in the Finance Department was responsible for making payments for P. It is inconceivable that when sending the 14/6 Email, the Finance Department still had no knowledge of the Industry Practice and the Oral Agreement, if they had ever been in existence.

69.  The Text Messages can hardly salvage P’s case on the Industry Practice and the Oral Agreement.

70.  To begin with, as observed by Ms Chu, Wong did not say anything about the Industry Practice and the Oral Agreement. Wong did not deny P’s liability to D’s outstanding charges and remind Chow that they were not yet due.

71.  Further, nothing in the Text Messages shows that D accepted that P was obliged to pay its invoices only after P had been paid by SATS.

72.  As one of the subcontractors, D should certainly appreciate that, to a certain extent, P relied on the payments of SATS to make payments to D under the Contracts. D would understand that if SATS did not pay P under the main contract, P might have difficulties in paying D. However, it is a quantum leap of logic to say that contractually P need pay D only after P was paid by SATS.

73.  In my view, the conversation between Wong and Chow appears to me that Chow merely tried to be diplomatic and emphatic. Those were business talks only. Chow’s assertion that the problem did not lie with P and D and SATS had the responsibility to pay wages cannot possibly amount to his acceptance of the existence of the Oral Agreement. He just tried to show that P and D were in the same boat. The fact that Chow himself had asked SATS to pay P does not suggest that P’s liability to pay D is contingent on whether SATS has paid P. I do not think I could attach any weighs on the assertions of Wong as well. He was merely buying time to pay D and making up excuses.

74.  In another subsequent exchange of text messages between Wong and Chow, Chow in fact told Wong that he was not unwilling to press SATS for payments and the fact was SATS literally ignored him. Chow said that he had no locus and no reason to meddle in the affairs between SATS and P.

75.  In response to this, Wong said that once SATS paid P, P would pay D and he hoped Chow could understand P’s situation and assist pressing SATS for payment. Alarmingly, Wong added that because of the non-payment of SATS, P did not have enough money to pay its sub-contractors and P had been working hard on communication and had sought advice but if any action was taken against P, it might lead to the winding up of P and P hoped that it could persevere. Wong lastly asked for more time.

76.  Wong’s response is totally inconsistent with the Industry Practice and the Oral Agreement. If they had been in existence, Wong should have reminded or warned Chow that P’s liability to pay D had not arisen yet. Wong should have asked Chow to understand P’s legal position regarding payments and not P’s plight. Moreover, P could not be at any risk of being wound up since any of its sub-contractors’ claims would be premature before SATS had paid P.

77.  To conclude, I am not convinced that there is any credible evidence to support the existence of the Industry Practice and the Oral Agreement.

78.  For completeness, in light of my rejection of the allegation of the Industry Practice and the Oral Agreement, P’s pleas of promissory estoppel and estoppel by convention must be rejected logically.

No particulars given for the Alleged Debt

79.  The second broad ground advanced by P is that there is no evidence to substantiate the quantum of the Alleged Debt in that D has consistently failed to provide any particulars or breakdown to substantiate the amount of manpower allegedly provided by D under the Invoices. Mr Chan submits that D has completely failed to substantiate the amounts demanded in the Invoices and, by extension, the quantum of the Alleged Debt.

80.  Mr Chan further submits that the likely reason why D has refused to provide any details of the labour allegedly supplied to SATS under the Contracts covered by the Invoices is that D usurped P’s role and contracted with SATS directly in around late May 2023. In doing so, all the labour records of D should make references to SATS and hence D is reluctant to disclose such records to P.

81.  I see no merit in this ground for the following reasons.

82.  First, the clear evidence is that P did not ask D for any particulars or breakdown in respect of the invoices of D issued between February 2023 to April 2023. Such invoices were settled by P without any objections raised.

83.  Even for the Invoices, P did not cast any doubt on the amounts appearing therein even after its receipt of the SD on 22 January 2024. P began to challenge the amounts only in P’s affirmations filed to support the OS.

84.  As summarised by Mr Chan, the evidence of Lau is that part-time workers supplied by D were to staff the workstations of SATS and SATS as the end user of such part-time workers would keep its own records of the identity of the workers, the shifts and the numbers of hours they worked, etc. P on the other hand played an administrative role in the coordination between SATS and D only and P had no on-site staff on the ground at the Airport to verify the figures billed by D.

85.  In other words, P completely relies on SATS to verify the accuracy of the amounts claimed by D in its invoices by the use of its own records. P was not in a position to challenge the claims of D.

86.  It is the evidence of P that P has acted on the Invoices and issued its own invoices based on the Invoices. There is no evidence that SATS has ever raised any requisition about the amounts in the Invoices. P had no grounds to raise any bona fide dispute about the same. That explains why the requisition was only first made after the OS was issued.

P’s intended cross-claims against D

87.  Next, P says that it has a strong cross claims against D in tort. P contends that it can make out a claim in both inducement/procurement of breach of contract and unlawful conspiracy.

88.  There is no argument about the elememts of these economic torts.

89.  In 厦門新景地集團有限公司 v Eton Properties Limited & Ors. (2020) 23 HKCFAR 348 at §162, Lord Sumption NPJ set out the following elements of the tort of inducing a breach of contract: (i) a contract, (ii) known to a third party who (iii) does something which induces or persuades a contracting party to break it, (iv) intending to bring about the breach and (v) thereby causing loss.

90.  To succeed in a claim in unlawful conspiracy, the plaintiff has to prove:

(1)  a combination, arrangement or understanding between 2 or more people. It is not necessary for the conspirators to all to join the conspiracy at the same time, but the parties to it must be sufficiently aware of the surrounding circumstances and share the same object for it properly to be said that they were acting in concert at the time of the acts complained of;

(2)  an intention to injure another, albeit with no need for that to be the sole or predominant intention. The necessary intent can only be inferred if it can be shown that the act is done deliberately and with knowledge of the consequences;

(3)  concerted action (in the sense of active participation) consequent upon the combination or understanding;

(4)  use of unlawful means as part of the concerted action; and

(5)  loss being caused to the target of the conspiracy.

See China Metal Recycling (Holdings) Ltd v Chun Chi Wai [2021] HKCFI 378 per DHCJ MK Liu at §93.

91.  The key allegation is that SATS repudiated the SATS Contracts due to the inducement and/or peruasion of D and that the repudiation was the result of the concerted effort and shared understanding of SATS and D.

92.  On 23 May 2023, SATS issued a notice of termination to P (“the Termination Notice”) whereby SATS gave P the required 60 days’ notice to terminate the SATS Contracts. With effect from 23 July 2023, SATS no longer required the service of P under the SATS Contracts.

93.  Lau in her affirmation alleges that the SATS Contracts provided that any termination notice should only be issued after a specific date. She avers that the earliest date on which any of the SATS Contracts could be terminated by SATS by giving the requisite 60 days’ notice was 31 November 2023. In other words, the Termination Notice was premature.

94.  Lau said the issue of the Termination Notice was a repudiatory breach and P accepted the repudiation of SATS by its commencement of proceedings against SATS under HCA 145/2024 on 23 January 2024.

95.  There are several sets of proceedings subsequently commenced by SATS against P and/or Wong essentially based on its allegations of conflict of interest and breach of fiduaicary duties arising from the procurement of the contracts between SATS and P.

96.  I have read the provisions relating to notices of termination in the SATS Contracts. My construction of these provisions is different from that of P.

97.  That said, I can accept, only for present purpose, that the Termination Notice was premature and arguably a breach.

98.  However, there is not a shred of evidence that D was cognisant of anything wrong with the Termination Notice. D denies having any knowledge of the actual terms in the SATS Contracts and P can adduce no contrary evidence. P has failed to show that D knew that the Termination Notice was given in contravention of the relevant terms in the SATS Contracts.

99.  Nor is there any evidence that D has done anything to induce or persuade SATS to issue the Termination Notice. P simply fails to come up with any evidence to show what D has done to cause P to issue the Termination Notice.

100.  This is actually acknowledged by P. P issued another originating summons dated 14 February 2024 against D for its application for pre-action discovery. The originating summons was supported by an affirmation made by Lau. There Lau avers that P’s suspicions at that stage are based on logical inference only. She says that discovery is needed because if upon discovery of relevant documents it transpires that P’s inference is incorrect, then there would obviously be no reason for P to bring substantive proceedings against D. She goes on to say that P would not be in a position to plead all the material facts that are required under the relevant rules, i.e. the particulars of the means and manner by which D induced or procured the breach of the SATS Contracts or the manner in which D conspired with SATS to injure P which would be the key elements of its claims.

101.  I know nothing about the outcome of the originating summons. P is unable to show how its case against D has improved up to now. In the circumstances, I cannot accept that P’s cross-claims are genuine, serious and based on substantial ground.

Conclusion and orders

102.  For the reasons given above, I am not satisfied that there is a bona fide dispute of the Alleged Debt on substantial grounds and that P’s cross-claims are serious and genuine with a sound and solid evidential basis.

103.  Accordingly, I refuse to grant the injunction and the OS must be dismissed. The Undertaking should be discharged forthwith.

104.  I see no reason why costs should not follow the event. I make an order nisi that costs of and occasioned by the OS including all costs reserved be paid by P to D, to be taxed if not agreed.

105.  Lastly, I agree with Mr Chan’s observation about the affirmations filed by D. They were written in an argumentative manner and even contained legal submissions. Indeed I can see similar contents appearing in the written submissions. Affirmations of factual witnesses should contain factual evidence only and there is no room for arguments and legal submissions. Emotive, aggressive and lawyerly languages add nothing to the weight of the deponents’evidence and they must be avoided. To mark my disapproval of such unpleasant features in those affirmations, I make an order nisi that 30% of the costs of the drafting and preparation of these affirmation be disallowed.

106.  It remains for me to thank Mr Chan and Ms Chu for their helpful assistance.

 

 

 

Mr Zenith Chan, instructed by William W.L. Fan & Co., for the plaintiff

Ms Fontanne Chu, instructed by Eddie Lee & Company, for the defendant