SULANSER CO. LTD. and Another v. CHINA ALLIED HOLDINGS LTD. and Others

SULANSER CO. LTD. and Another v. CHINA ALLIED HOLDINGS LTD. and Others

The application for security for costs was dismissed because the court formed the view that the plaintiffs' claim was bona fide with strong prima facie prospects of success, there was credible inference that the defendants' conduct (including contemporaneous transfer of the only asset) contributed to the company's inability to pay, the third defendant had misled the court (negative on clean hands), and an order for security would likely be oppressive and obstruct legitimate investigation and litigation; accordingly the exercise of discretion was against ordering security.

Citation
SULANSER CO. LTD. and Another v. CHINA ALLIED HOLDINGS LTD. and Others
Parties
1st Plaintiff (in Liquidation): SULANSER COMPANY LIMITED; 2nd Plaintiff: THE OFFICIAL RECEIVER AND LIQUIDATOR OF SULANSER COMPANY LIMITED; 1st Defendant: CHINA ALLIED HOLDINGS LIMITED; 2nd Defendant: PHILLIP FEI; 3rd Defendant: YU KWONG SEN
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
2 October 1996
Case Number
HCA8001/1995
Procedural Posture
Civil Company Litigation — Winding Up, Mareva Injunction and Security for Costs / Chamber Hearing on Summonses; Decision on Application for Security for Costs
Outcome
Application for security for costs dismissed
Legal Topics
Mareva Injunction, Security for Costs, Bank Guarantee/undertaking as to Damages, Fraudulent Transfer, Winding Up, Disclosure/non Disclosure, Clean Hands
Source Language
EN
Company Law Civil Procedure Insolvency/liquidation Injunctions Equity Fraudulent Conveyance Mareva Injunction Security for Costs +5 more

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Parties

SULANSER COMPANY LIMITED

1st Plaintiff (in Liquidation)

THE OFFICIAL RECEIVER AND LIQUIDATOR OF SULANSER COMPANY LIMITED

2nd Plaintiff

CHINA ALLIED HOLDINGS LIMITED

1st Defendant

PHILLIP FEI

2nd Defendant

YU KWONG SEN

3rd Defendant

Procedural Posture

Civil Company Litigation — Winding Up, Mareva Injunction and Security for Costs / Chamber Hearing on Summonses; Decision on Application for Security for Costs

Legal Issues

  1. 1 Whether security for costs should be ordered against a plaintiff company in liquidation under Companies Ordinance s.357 and Order 23 r.1(1)
  2. 2 Whether the plaintiff company has a bona fide claim with reasonable prospects of success
  3. 3 Whether the plaintiff's inability to pay costs was caused by conduct of the defendants (fraudulent transfer)

Ratio Decidendi

The application for security for costs was dismissed because the court formed the view that the plaintiffs' claim was bona fide with strong prima facie prospects of success, there was credible inference that the defendants' conduct (including contemporaneous transfer of the only asset) contributed to the company's inability to pay, the third defendant had misled the court (negative on clean hands), and an order for security would likely be oppressive and obstruct legitimate investigation and litigation; accordingly the exercise of discretion was against ordering security.

Court Disposition

Application for security for costs dismissed

Orders

  • Application for security for costs dismissed with costs to the Plaintiffs
  • Costs awarded to the Plaintiffs