Horizon Capital Fund (Registration Number B218924) v BCC Trade Credit Pty Ltd

[2023] NSWSC 1253

Supreme Court

New South Wales

Medium Neutral Citation:

Horizon Capital Fund (Registration Number B218924) v BCC Trade Credit Pty Ltd [2023] NSWSC 1253

Hearing dates:

20 October 2023

Date of orders:

25 October 2023

Decision date:

25 October 2023

Jurisdiction:

Equity - Commercial List

Before:

Stevenson J

Decision:

Plaintiff granted leave to continue proceedings against Hong Kong and Labuan companies; dissolved United Kingdom company removed as defendant

Catchwords:

CIVIL PROCEDURE – whether plaintiff should have leave to continue proceedings against Hong Kong company – whether Labuan company and United Kingdom company should be removed as defendants

Legislation Cited:

Companies Act 2006 (UK) c 46

Companies Ordinance (Hong Kong) cap 622

Companies (Winding Up and Miscellaneous Provisions) Ordinance (Hong Kong) cap 32

Corporations Act 2001 (Cth)

Cross-Border Insolvency Act 2008 (Cth)

Labuan Companies Act 1990 (Malaysia)

Rules of Court 2012 (Malaysia)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Agar v Hyde (2000) 201 CLR 552; [2000] HCA 41

Deputy Commissioner of Taxation v Australian Securities and Investments Commission [2011] FCA 219

Horizon Capital Fund (Luxembourg Business Registration No. B218924) v Insurance Australia Ltd; Horizon Capital Fund (Luxembourg Business Registration No. B218924) v Tokio Marine & Nichido Fire Insurance Co. Ltd [2023] NSWSC 389

Rossiter v Core Mining Limited [2015] NSWSC 360

Category:

Procedural rulings

Parties:

Horizon Capital Fund (Registration Number B218924) (Plaintiff)
BCC Trade Credit Pty Ltd (First Defendant)
Tokio Marine & Nichido Fire Insurance Co. Ltd. (Second Defendant)
Longview Resources (AU) Pty Ltd (Third Defendant)
Longview Resources (HK) Limited (CR 1107401) (in liq) (Fourth Defendant)
Longview Resources (LABUAN) Ltd (NBIN LL10421) (Fifth Defendant)
Longview Resources (UK) Ltd (CRN 11 507 683) (dissolved) (Sixth Defendant)

Representation:

Counsel:
D H Mitchell with M Caristo (Plaintiff)

Solicitors:
Squire Patton Boggs (Plaintiff)
Kennedys (First and Second Defendants)
Emerson Lewis Lawyers (Third Defendant)

File Number(s):

2023/135821

JUDGMENT

1. The plaintiff, Horizon Capital Fund (Registration Number B218924), is a Luxembourg corporation. It provides finance to commodity traders.

2. By Notice of Motion filed on 29 September 2023, Horizon seeks a variety of orders concerning the fourth, fifth and sixth defendants, to the detail of which I will return after outlining the general background.

3. Horizon claims to be entitled, as assignee, to the proceeds of a “Trade Credit Insurance” policy (“the Policy”) issued by the first and second defendants, BCC Trade Credit Pty Ltd and Tokio Marine & Nichido Fire Insurance Co. Ltd (“the Insurers”) on 9 August 2019.

4. In the Policy, the third defendant Longview Resources (AU) Pty Ltd (“Longview AU”) is named as “Insured” and the fourth to sixth defendants, Longview Resources (HK) Ltd (“Longview HK”), Longview Resources (LABUAN) Ltd (“Longview Labuan”) ^[1] and Longview Resources (UK) Ltd (“Longview UK”) are named as “Joint Insureds”.

   1. Labuan is a state in Malaysia.

5. The Longview entities were, at the time of the events with which these proceedings are concerned, members of the “Longview Resources Group”, and were ultimately owned by a Mr Richard Maurer. The relationship between the Longview entities is depicted in the attached diagram.

6. The Longview entities took out the Policy to protect themselves against the risk of non-payment by their customers.

7. The insuring clause under the Policy provides that the Insurers:

“Will indemnify the Insured up to the Insured Percentage of an Insured Loss if an Insured Buyer fails to pay the Insured and Insured Debt because of an ‘Insured Event’.”

8. Horizon provided finance to Longview HK. On 1 April 2020, Horizon advanced US$3,908,514 to Longview HK pursuant to a Facility Agreement made between Horizon, Longview HK and Longview Labuan. ^[2] On 6 June 2020 Horizon advanced a further US$591,486 to Longview HK pursuant to a Second Facility Agreement.

   2. And other entities not presently relevant.

9. The purpose of both these transactions was to enable Longview HK to purchase commodities (copper cathodes and soybeans, respectively) for the purpose of on-sale to Welta General Trading LLC.

10. Welta was an “Insured Buyer” for the purpose of the Policy. In these proceedings, Horizon alleges that the debts owed by Welta to Longview HK in respect of the commodity trades referred to above are “Insured Debts” for the purposes of the Policy.

11. On or about 30 March 2020, and as a condition of the two Facility Agreements, Longview AU and Horizon executed a document called “Trade Credit Insurance Selective Proceeds Assignment” (“the Assignment”). In the Assignment, Longview AU was defined as “the Insured”. The document provided that “the Insured” assign to Horizon its interest under the Policy “but only in respect of” Welta.

12. The Insurers consented to the Assignment.

13. Although Longview entities other than Longview AU are not named in the Assignment, it is Horizon’s position that, for the reasons I discuss below, at least Longview HK in addition to Longview AU, assigned to Horizon its interests under the Policy so far as concerns monies owing to Longview HK by Welta.

14. In these proceedings, Horizon alleges that:

1. Welta has failed to repay the Insured Debts to Longview HK;

2. Longview HK has made claims under the Policy in respect of those debts;

3. the Insurers are obliged to make payment in respect of those claims; and

4. by reason of the Assignment, it is the entity entitled to the payment.

15. The Insurers do not admit that the Policy responds or that Horizon is so entitled.

16. Horizon seeks declaratory relief as against the Insurers that the Policy responds to the claims lodged by Longview HK and that the Insurers are liable to provide indemnity in accordance with the terms and conditions of the Policy. It seeks consequential orders for payment.

17. Horizon has served the Insurers and directions have been made to progress Horizon’s claim against the Insurers. The Insurers neither consented to nor opposed the relief sought by Horizon on the present application, and did not appear before me.

18. Horizon has served Longview AU. It has entered a submitting appearance.

19. Horizon has served Longview HK. That company has not appeared. Horizon now seeks leave to proceed against Longview HK pursuant to r 11.8AA of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”).

20. In the circumstances I discuss below, it appears that Longview Labuan has been struck off the register maintained under the Labuan Companies Act 1990 (Malaysia). It may have been dissolved by operation of the Labuan Companies Act although that is not clear.

21. Longview UK was dissolved on 4 January 2022.

22. Horizon seeks orders that Longview Labuan and Longview UK be removed as parties to the proceedings pursuant to UCPR r 6.29 or, alternatively, orders that I discuss further below.

Longview HK

23. In order to obtain leave to proceed under UCPR r 11.8AA, Horizon must demonstrate four matters. ^[3]

    3. Rossiter v Core Mining Limited [2015] NSWSC 360 at [11] (Adamson J, as her Honour then was), summarising Agar v Hyde (2000) 201 CLR 552; [2000] HCA 41 at [50]-[51] (Gaudron, McHugh, Gummow and Hayne JJ).

24. The first is whether Longview HK has been properly served.

25. Rule 11.8AC of the UCPR permits service of process overseas if service is effected in accordance with the law of the local jurisdiction. The Summons and Commercial List Statement and the notice required by UCPR r 11.7 were delivered to Longview HK’s registered office in Hong Kong on 2 May 2023. Section 827 of the Companies Ordinance (Hong Kong) cap 622 permits such service.

26. Second, it is necessary for Horizon to show that the claim made in the proceedings falls within one of the categories set forth in Sch 6 of the UCPR. This claim falls within a number of such categories, one of which is a claim for the enforcement or other relief of contract made in Australia, namely the Policy, and thus falls within subpar (b) of Sch 6. That is sufficient to satisfy this requirement.

27. Third, it is necessary that Horizon show that it has an arguable case in the sense of a case that would survive a summary judgment application against Longview HK.

28. Horizon seeks declaratory relief that Longview HK has assigned its interest under the Policy. As I have set out above, the Assignment refers only to Longview AU and makes no reference to Longview HK. Nonetheless, I am satisfied that it is at least arguable that Longview HK was intended to be one of the assignees. First the Facility Agreements, to which Longview HK was a party, make express references to the Policy. Second, Longview HK informed Horizon’s facility administrator that the Assignment “covers any transaction with the insured and/or co-insured” under the Policy. Third, the evidence suggests that it was the practice of the Longview entities and the Insurers to refer only to Longview AU in documents relating to the Policy, even when the document related to all of the Longview entities. An example is the Insurers’ 12 March 2021 response to the claim for indemnity made by Longview HK. Notwithstanding the fact that the claim was made by Longview HK, the Insurers’ responding “Claim Declaration” identified the “Insured Details” as being Longview AU.

29. Finally, it must be shown that NSW is not a clearly inappropriate forum. NSW is the location of the Insurers; it is also the law of the Policy. NSW is not a clearly inappropriate forum.

30. Longview HK was wound up on 24 November 2021 by the High Court of the Hong Kong Special Administrative Region. Section 186 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Hong Kong) cap 32 provides that if a winding up order has been made, “no action or proceedings shall be proceeded with or commenced against the company except by leave of the court”. This section is thus equivalent to s 471B of the Corporations Act 2001 (Cth). However, it is well established that, so far as this Court is concerned, such provision operates only within the territory of the enacting legislation. ^[4]

    4. For example, see the recent decision of Darke J in Horizon Capital Fund (Luxembourg Business Registration No. B218924) v Insurance Australia Ltd; Horizon Capital Fund (Luxembourg Business Registration No. B218924) v Tokio Marine & Nichido Fire Insurance Co. Ltd [2023] NSWSC 389 at [22] and the cases cited therein.

31. Searches have been conducted to ascertain whether any steps have been taken under the Cross-Border Insolvency Act2008 (Cth) to have the foreign insolvency proceedings recognised in an Australian court. The result of those searches is that no such steps have been taken.

32. In those circumstances, I am satisfied that Horizon has established an entitlement to leave to proceed against Longview HK.

Longview Labuan

33. Longview Labuan was incorporated in the Federal Territory of Labuan in Malaysia.

34. Horizon has adduced indirect evidence that Longview Labuan was “struck off” the register maintained under the Labuan Companies Act on 3 April 2021. The most recent evidence is an email sent to Horizon’s solicitor from a Malaysian solicitor on 18 October 2023 stating that:

“We have received verbal confirmation from the [Labuan Financial Services Authority] that the status of [Longview Labuan] remains as ‘struck off’ as at today’s date.”

35. Several days earlier, on 9 October 2023, the Malaysian solicitor sent Horizon’s solicitor an email stating:

“We understand from the [Labuan Financial Services Authority’s] responses up till now that they are reluctant to provide further verbal or written confirmation on the date of striking off or dissolution of [Longview Labuan], particularly in light that such disclosure will be without [Longview Labuan’s] consent.”

36. Other indirect evidence suggests that Longview Labuan may have been struck off later, possibly in late June or early July 2022.

37. Horizon has been unable to obtain more direct information from the Labuan Financial Services Authority because its online systems have, evidently, been inaccessible since April 2023.

38. Depending on when Longview Labuan was struck off it may be that, by operation of other provisions of the Labuan Companies Act, Labuan has already been deemed to be dissolved or may, early next year, be deemed to be dissolved. ^[5]

    5. See Labuan Companies Act, s 151D(1).

Is Longview Labuan a proper or necessary party to the proceedings?

39. Horizon’s preferred position is that Longview Labuan be removed as a party to the proceedings pursuant to UCPR r 6.29 on the basis that it “has ceased to be a proper or necessary party” to the proceedings.

40. The primary relief sought by Horizon against the Insurers relates to a claim for indemnity under the Policy made by Longview HK alone. However, part of the alternative relief sought by Horizon in the proceedings is an order that all the insured entities, including Longview Labuan, direct the Insurers to pay to Horizon the amounts said to be due under the Policy. Horizon adopted what was described before me as the “cautious approach” of joining Longview Labuan as a party because of the definition of “Insured” in the Policy which, according to its black letter, appears to provide the Insurers with an entitlement to pay the sum due in relation to any claim by Longview HK to any one of the Longview entities, including Longview Labuan.

41. In those circumstances, and in the further circumstance where it is entirely unclear as to whether Longview Labuan has been dissolved, I do not see how I could conclude that, notwithstanding the fact that Horizon has joined Longview Labuan to the proceedings, it has ceased to be a proper or necessary party.

Leave to discontinue

42. Alternatively, Horizon seeks leave to discontinue the proceedings against Longview Labuan pursuant to UCPR r 12.1(1)(b) but only on the basis that I also make an order under UCPR r 6.20(1) that Horizon have leave “not to thereafter join” Longview Labuan as a party. The stated objective of that proposed order is achieving “certainty on the non-involvement” of Longview Labuan, and to avoid being exposed to a contention raised by the Insurers, or by the Court, that the proceedings are not properly constituted, by reason of the absence of Longview Labuan.

43. In that regard, it was submitted on behalf of Horizon that:

“In circumstances where Longview Labuan and Longview UK are inactive entities, the risk of multiple proceedings against Insurers in respect of the same losses in respect of which Horizon seeks payment under the Policy is negligible. That is all the more so when Insurers retain a right under the Policy to make a payment to any one or more of the Insureds, and where in any event there would not be a proper basis for the Insurers to make payment to Longview Labuan or Longview UK … Accordingly, if the Court makes orders in these proceedings for payment to Horizon (as assignee of Longview HK), Insurers will have also discharged any liability to Longview Labuan and Longview UK.”

44. I do not see how I could, at this stage, make any assessment about these matters. Nor can I see upon what basis I could grant leave to Horizon to discontinue against Longview Labuan coupled with, in effect, an assurance from the Court that it not be necessary thereafter for it to join that company as a party.

Leave to proceed

45. Horizon’s least preferred alternative is to seek leave to proceed against Longview Labuan pursuant to UCPR r 11.8AA.

46. The four matters that I have discussed concerning leave to proceed against Longview HK again arise for consideration.

47. As to whether Horizon has served Longview Labuan in accordance with the law of the local jurisdiction, the Rules of Court 2012 (Malaysia) relevantly provide that service may be effected on a company by sending documents by registered post addressed to the corporation at its principal office. ^[6] The evidence shows that service of the Summons, Commercial List Statement and notice required by UCPR r 11.7 were sent by registered post to Longview Labuan’s principal office. The documents were returned with a note “returned by customer”. Nonetheless I am satisfied that service has been properly effected under Malaysian law.

    6. Rules of Court 2012 (Malaysia) o 62, r 4(1)(b).

48. The other requirements for leave under UCPR r 11.8AA are satisfied for the reasons I have set out in relation to the position concerning Longview HK.

Liberty to apply

49. As discussed with counsel at the hearing of the motion, I propose also to grant Horizon liberty to apply for an order that Longview Labuan be removed as a party if evidence can be adduced that Longview Labuan is not only struck off the relevant register but is also dissolved.

50. I was informed during argument that it is likely that Horizon will, some time early next year, be able to prove that Longview Labuan is deemed to be dissolved under the Labuan Companies Act. For that reason, I propose to stand over Horizon’s Notice of Motion for directions before me on Friday 26 April 2024 and to grant Horizon liberty to apply to me in the meantime if it can be demonstrated that Longview Labuan has been dissolved.

Longview UK

51. The position is less complicated in relation to Longview UK.

52. Longview UK was incorporated in England and Wales.

53. The Registrar of Companies struck Longview from the Register maintained under the Companies Act 2006 (UK) c 46 on 21 December 2021. Longview UK was dissolved on 4 January 2022.

54. There is also evidence that, before it was dissolved, Longview UK had a share capital of £1, that it always filed dormant accounts, that it never traded and that there was no creditor insolvency process that led to its dissolution. The assets of Longview UK, whatever they may be, are now held by the Crown.

55. There is provision under the relevant United Kingdom legislation for the possible restoration of the company to the Register. But there is no reason to think that that is likely to occur.

56. As Longview UK has been dissolved, it no longer has legal existence. ^[7] It should be removed as a party to the proceedings pursuant to UCPR r 6.29.

    7. By analogy to the situation that obtains in relation to the registered companies as discussed in Deputy Commissioner of Taxation v Australian Securities and Investments Commission [2011] FCA 219 at [11] (Jagot J).

Conclusion

57. For those reasons, I propose to make orders to the effect that Horizon have leave to proceed against Longview HK and Longview Labuan and that Longview UK be removed as a party to the proceedings.

58. I also propose to grant Horizon liberty to apply for an order that Longview Labuan be removed as a party to the proceedings should Horizon be in a position to show that Longview Labuan has been dissolved.

59. Horizon should bring in short minutes to give effect to these reasons.

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Diagram - Longview Resources Group

Endnotes

Decision last updated: 25 October 2023