Before the Court are: i. An Application for the appointment of an administrator for East Wind Development Company Limited (brought by Duncanson and Company) under section 64(1) of the Insolvency Ordinance (W1/23). ii. An application to strike out a Winding Up Petition (W1/24) which said petition was issued by Duncanson & Co. (“D&C”). The alleged debt is the subject of proceedings which were commenced by Originating Summons filed on 11th October 2022 (CL150-22) wherein the Plaintiff, D&C, in summary, is claiming, inter alia, that there was a written contract with the First Defendant, East Wind Development Company Ltd. (EWD), for legal services to be provided to the First Defendant.
Held: The application for the appointment of an administrator W1/23 is dismissed with costs awarded to EWD to be taxed in default of agreement.
In the case of Re Simoco Digital UK Ltd; Thunderbird Industries LLC v Simoco Digital UK Ltd it was held that the position in relation to winding-up petitions was that if liability remained the subject of a genuine dispute the court would decline, as a matter of practice and discretion, to entertain the application and would leave the parties to resolve their differences in an alternative forum, and that the same rule applied to administration petitions. It was further held that since real issues of fact and law arose in respect of the debt allegedly due to the applicant which could not be resolved on the instant application, it followed that the applicant had failed to establish the locus standi to seek an administration order.
The Court has already concluded that for the purpose of the Insolvency Ordinance, D&C is not a creditor and that the debt is disputed. In the circumstances, since liability in respect of whether a debt was due to D&C remains the subject of a genuine dispute, this court is of the view that D&C does not have the locus standi to seek an administration order and that the application for the appointment of an administrator can therefore proceed no further.
The Winding Up Petition W1/24 (inclusive of the relief seeking the appointment of an administrator) is dismissed as an abuse of the process of the court with costs awarded to EWD to be taxed in default of agreement.
In both W1/23 and W1/24, the Petitioner has named EWD as the Respondent in the proceedings. It is clear therefore that these are proceedings ‘against the company’. In the circumstances, leave of the court would have been required to commence W1/24, there being a pending application for the appointment of an administrator (in W1/23) which was yet to be determined. No leave having been sought, it is clear that W1/24 and all of the reliefs sought therein (inclusive of the fresh relief again seeking the appointment of an administrator) cannot stand.
In addition, W1/24 contains matters which have already been determined by the Court and the application for the appointment of an administrator in W1/24 is identical to the application for an administrator in W1/23 (which is still pending). The Court notes the concerns of D&C about the dispositions of property but also notes that D&C has initiated action for a freezing order which it has not actively pursued but is instead seeking to use the winding up proceedings to obtain similar relief.
The Court therefore considers action W1/24, inclusive of the relief seeking the appointment of an administrator, to be an abuse of the process of the Court.