In re ORCHARD LTD.

In re ORCHARD LTD.

The Guarantee was supported by consideration because Orchard Limited promised a guarantee in exchange for the Owners' forbearance from stopping discharge; the Petitioner's 38-hour suspension was a partial, temporary breach that did not go to the root of the bargain and therefore did not discharge the Company; there was no bona fide dispute demonstrated by the Company; accordingly the petition to wind up was valid and the Company was ordered to be wound up.

Citation
In re ORCHARD LTD.
Parties
Petitioner (creditor): Petitioner (Owners/Disponent Owners); Respondent (company): Orchard Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
8 April 1999
Case Number
HCCW685/1998
Procedural Posture
Companies Winding Up Petition / Judgment Order for Compulsory Winding Up Made
Outcome
Petition granted; Orchard Limited ordered to be compulsorily wound up pursuant to Cap.32
Legal Topics
Guarantee, Consideration, Failure of Consideration, Winding Up, Ultra Vires
Source Language
EN
Company Law Contract Law Insolvency Law Guarantee Consideration Failure of Consideration Winding Up Ultra Vires

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Parties

Petitioner (Owners/Disponent Owners)

Petitioner (creditor)

Orchard Limited

Respondent (company)

Procedural Posture

Companies Winding Up Petition / Judgment Order for Compulsory Winding Up Made

Legal Issues

  1. 1 Whether there was consideration supporting the guarantee
  2. 2 Whether the Petitioner's 38-hour suspension constituted a total failure of consideration discharging the guarantor
  3. 3 Whether the Company acted ultra vires in giving the guarantee

Ratio Decidendi

The Guarantee was supported by consideration because Orchard Limited promised a guarantee in exchange for the Owners' forbearance from stopping discharge; the Petitioner's 38-hour suspension was a partial, temporary breach that did not go to the root of the bargain and therefore did not discharge the Company; there was no bona fide dispute demonstrated by the Company; accordingly the petition to wind up was valid and the Company was ordered to be wound up.

Court Disposition

Petition granted; Orchard Limited ordered to be compulsorily wound up pursuant to Cap.32

Orders

  • Orchard Limited to be compulsorily wound up pursuant to Companies Ordinance (Cap.32)
  • Order nisi for costs in favour of the Petitioner to be taxed if not agreed and to be paid out of the assets of the Company