XCHRX Charter Land Ltd. v. Lucky Plan International Trading Ltd.

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 14267 OF 2000

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R U L I N G

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1. Mr Chain is right that this action should be struck out under Order 18, Rule 19, on the ground that it is frivolous or vexatious or otherwise an abuse of the process of the court.

2. The claim by the plaintiff is for $100,000 for an alleged breach by the defendants of a settlement agreement in respect of a High Court Action 19122 of 1998. But as against that, the plaintiff is indebted to the defendant in the sum of over $4 million, pursuant to a judgment dated 19 July 2000. That amount is increasing daily, having regard to the incidence of interest, presumably at the judgment rate.

3. The real point here is that the plaintiff has been wound up by virtue of an order dated 27 December 2000. Under section 186 of the Companies Ordinance, "no action or proceeding shall be proceeded with or commenced against a company except by leave of the court;" that court, of course, being the Companies Court. That, therefore, creates a statutory stay, but Mr Chain submits that this cannot apply here, because this action is brought by the company and not against it. In such circumstances, the defendant, Mr Chain submits, is entitled to defend by whatever means it chooses to, including by this application to strike the action out. That must be right.

4. That then brings me to the merits of the summons which draws attention to and relies upon the comprehensive regime in the Companies Court whereby the rights and liabilities of creditors of the company inter se and the rights and liabilities of the company itself will be adjudicated upon. To continue this action against that background and in circumstances where the company owes the defendant over $4 million, clearly amounts to an abuse of process. This action, therefore, must be struck out.

5. As a result, the dispute must now be dealt with in its proper setting, the winding up proceedings, and in its proper forum, the Companies Court.

(Discussion re costs)

6. Costs of the action to the defendants.

7. The orders that I am making today, the first I have already made:

8. The action shall be struck out for the reasons appearing in my ruling.

9. Secondly, that the plaintiff's solicitors are to appear on a date to be fixed, initially for directions only to show cause why the costs of this action should not be paid to the defendants by the plaintiff's solicitors personally.

10. I reserve the costs of today.