The impact of an arbitration clause on the Court’s discretion to grant a winding up order was recently considered by the Court of First Instance in Hong Kong.

In Lasmos Limited v Southwest Pacific Bauxite (HK) Limited (HCCW 227/2017; [2018] HKCFI 426), the Court dismissed a winding up petition in view of an arbitration clause contained in the agreement between the parties and held that the dispute concerning the alleged debt should be dealt with in accordance with the arbitration clause.

Facts

The rules on contingent assets are broadly as for last year but there are developments to note. Recertification can take longer than expected if there have been changes in relation to an asset.

Trustees and sponsors should be preparing for the recertification of contingent assets that are to remain in place with a view to levy advantage for the 2018/19 year. If there have been changes in relation to a contingent asset, recertification may take materially longer than otherwise.

With residential leasehold law in the spotlight, landlords should be aware of a recent court case which focused upon the method of calculating the premium payable for a residential lease extension.

In a recent winding-up case, Discreet Ltd v. Wing Bo Building Construction Co., Ltd [2017] HCCW 49/2017, the Court confirmed that when there is clearly a cross-claim which exceeds the sum claimed by the petitioner, and it is clear that the cross-claim is genuine and based on substantial grounds, the petition can amount to an abuse of process.

Background

Generally speaking, the most appropriate jurisdiction in which to wind up a company is the jurisdiction where the company is incorporated, and the jurisdiction to wind up a foreign company has often been described as exorbitant or as usurping the functions of the courts of the country of incorporation.

The case of Wing Hong Construction Limited v Hui Chi Yung and Ors [2017] HKEC 1173 provides an overview of the legal principles which apply to an application for security for costs, where the Plaintiff against whom security is sought is a company and the application is made under section 905 of the Companies Ordinance (Cap 622). This was an appeal against the decision of a Master who had dismissed the Defendant’s application for security for costs against the Plaintiff which was a private company in liquidation. The appeal was allowed and security for costs of HK$2 million ordered.

In Re Lucky Resources (HK) Ltd [2016] 4 HKLRD 301, Hong Kong’s Court of First Instance had to consider the question of whether an arbitration award could be enforced by winding up the company against which the award had been made, without first applying for leave to enforce the award under section 84 of the Arbitration Ordinance (Cap 609). The Court answered that question in the affirmative.

What is a freezing order?

The purpose of a freezing order is to preserve the defendant's assets until judgment can be enforced. It operates by granting an injunction prohibiting the defendant (or anyone on his behalf) from disposing of identified assets. Legally, it does not operate as security over the assets.

Taylor v Van Dutch Marine Holding Ltd

A Court of Appeal judgment held that a company must have a settled intention to appoint an administrator when filing a notice of intent (NOI) under paragraph 26 of Schedule B1 to the Insolvency Act 1986 (“Schedule B1”) . The court also confirmed that an NOI cannot be filed in the absence of a qualifying floating charge holder (QFCH) on which to serve the notice.

In the recent case of South Coast Construction v Iverson Road Limited [2017] EWHC 61 (TCC), South Coast Construction ("South Coast") had obtained an adjudicator’s decision against the employer, Iverson Road Limited (“Iverson Road”), in a sum approaching £900,000. Iverson Road refused to pay the award so South Coast commenced enforcement proceedings in the Technology and Construction Court (TCC).