Hex Technologies Ltd v DCBX Ltd Company
| Jurisdiction | England & Wales |
| Judge | Addy |
| Judgment Date | 21 March 2023 |
| Neutral Citation | [2023] EWHC 537 (Ch) |
| Docket Number | Case No: CR-2021-002383 |
| Court | Chancery Division |
[2023] EWHC 537 (Ch)
Deputy Insolvency and Companies Court Judge Addy KC
Case No: CR-2021-002383
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BANKRUPTCY COURT
Royal Courts of Justice
Rolls Building, Fetter Lane, EC4A 1NL
Madeleine Jones (instructed by Reynolds Porter Chamberlain LLP) for the Petitioners
Rabya Anwar of Keystone Law for the Respondent Company
Hearing dates: 26 September 2022 with various further rounds of submissions made in writing
Deputy Insolvency and Companies Court Judge Addy KC:
This Judgment concerns a disputed winding up petition, presented on 17 December 2021 pursuant to section 122(1)(f) of the Insolvency Act 1986 against DCBX Limited, being a company incorporated on 17 August 2012 under the Companies Act 2006 with registration number 08184268 (the “ Company”) by Hex Technologies Limited (“ Technologies”), Hex Trust Limited (“ Trust”) and Hex Technologies Pte Limited (“ Technologies Pte”). For convenience and where appropriate to do so, I shall refer to the 3 petitioning companies, Technologies, Trust and Technologies Pte, together as “ HEX” or “ the Petitioners”. By the Petition, HEX claim that the Company owes to them a total debt of £108,765.15 (comprising principal of £96,184.33 – converted from USD 131,759.36 – and interest of £12,580.81, as at 9 November 2021), such sums having been invoiced pursuant to 4 different contractual agreements entered into by the Company. A statutory demand claiming such sums and accompanied by the requisite Condition B Notice dated 10 November 2021 was served upon the Company on that date.
The Petition was served upon the Company on 17 December 2021, by leaving it with the receptionist at the Company's registered office address in London. Although the Company takes issue with the method of service in circumstances where the receptionist was not an employee of the Company, it was served in accordance with the requirements of the Insolvency Rules by being deposited at the registered office in such a way that it was likely to come to the notice of a person attending the office (in compliance with paragraph 2(2) of Schedule 4) and it obviously came to the attention of the Company's director, Mr Angelo, as he has filed various witness statements in opposition to the Petition. The Petition was duly advertised on 12 January 2022, identifying the Company's present and its recent former names (LDX EFOLIO Limited and London Derivatives Exchange Limited). The Petition was first heard on 2 February 2022, when directions for the filing of evidence were made by ICC Judge Barber.
The following background facts are not disputed:
i) The Company operates or operated an online trading platform enabling clients to buy and sell digital assets and was regulated in such activity by the FCA.
ii) HEX are a principally Hong Kong based corporate group which provides IT infrastructure for digital assets trading platforms, including digital assets custody (i.e. digital ‘wallets’ in which digital assets are stored), platforms on which trading service employees can interact, software which enables trading using blockchain technology and other related software.
iii) The Company engaged HEX to provide it with IT services pursuant to written agreements consisting of the following:
a) An Engagement Letter dated 30 January 2019 pursuant to which Technologies and/or its affiliates provided to the Company a bespoke settlement and clearing interface (the “ LDX Interface”) and a supporting private blockchain (the “ LDX Blockchain”) to the Company (the “ Engagement Letter). Pursuant to the Engagement Letter HEX set up and maintained the LDX Interface and LDX Blockchain, enabled trade clearing, settlement confirmation and regulatory reporting of transactions on the LDX Blockchain and revenue share distribution and corporate actions for these transactions.
b) A “ Software License[ 1] Agreement” pursuant to which Technologies Pte (a company incorporated under the laws of Singapore) provided to the Company a one-year licence for the Hex issuance platform with effect from 6 September 2019 (the “ Software License Agreement”).
c) A custodian agreement dated 26 September 2019 pursuant to which Trust provided digital assets custodial services to the Company for the Company's own account (the “ Company Custodian Agreement”).
d) Nineteen separate custodian agreements entered into by Trust on various dates during September 2019 with various of the Company's own clients and to which the Company was itself a contracting party, pursuant to which digital wallets were provided and maintained by HEX for those clients of the Company (the Client Custodian Agreements).
The matter first came before me on 12 July 2022 when counsel for the Petitioners, Ms Jones, and the solicitor advocate for the Company, Ms Anwar, both urged me to hear and determine the Petition substantively despite my expressed reservations about what proved to be a grossly over optimistic half-day time estimate. Given the limited time, it was not possible to determine the Petition on that occasion. However, in light of various submissions made on behalf of the parties at that hearing, I gave permission for the parties to rely on
further evidence which they had each filed and served the previous day and gave further permission for the Company to file and serve further evidence to be strictly limited to evidence in response to the further witness statement of Mr Paul Bagon dated 11 July which had been served on behalf of the PetitionersAccordingly, the following evidence has been filed in relation to the Petition and is relied upon by the respective parties:
i) For the Petitioners:
a) A short witness statement of Charlotte Bennett of the Petitioners' solicitors, Reynolds Porter Chamberlain ( RPC), dated 17 December 2021 verifying the content of the Petition.
b) A witness statement of Alessio Quaglini, who is a director of the Hex group of petitioning companies, dated 2 March 2022, together with Exhibit AQ1.
c) A short witness statement of Paul Bagon of RPC dated 7 June 2022, in support of HEX's application to amend the Petition so as to correctly state that the Company is not an undertaking within the meaning of Article 1.2 of the EU Regulation.
d) A further witness statement of Mr Bagon dated 11 July 2022 together with Exhibit PB2 which was filed following receipt of the skeleton argument on behalf of the Company for the hearing on 12 July 2022. Its particular purpose was, as it stated, to rebut an assertion made on behalf of the Company that there was only one active custodian account with a particular third party which I shall refer to for convenience (as did the parties) as SGH. Exhibit PB2 contained various documents which HEX wished to rely upon that had been redacted to remove reference to details of account holders. Such redactions had been made (so it was said) to protect confidential information in relation to such persons from being on the Court file and, at the hearing on 12 July 2022, I gave permission for HEX to rely upon such material upon their solicitors' undertaking to provide to the Company's solicitors an unredacted copy of such exhibit in advance of the hearing, leaving open the question of whether it might be necessary for the Court to be referred to any unredacted versions of such documents and, if so, whether it might be appropriate to make any order restricting public access to such materials. In the event, the parties considered it unnecessary for the Court to be referred to any unredacted versions of any documents contained in Exhibit PB2 and accordingly they were never placed on the Court file and it was not necessary to consider whether any confidentiality order could or should be made in relation to any unredacted copies of such documents.
ii) The Company relies upon the following in opposition to the Petition:
a) A witness statement of Vj Andrew Angelo, director and CEO of the Company, dated 25 January 2022.
b) A witness statement of Ellie Puddle, who states that she is the Chief Operations Officer of the Company, having worked for the Company only since 1 July 2021 and having been appointed as the Company Secretary on 1 November 2021.
c) A witness statement of Ms Anwar dated 16 February 2022, the purpose of which was to exhibit (as RA1 through to RA15) various documents which the Company wished to rely upon in opposing the Petition.
d) A second witness statement of Mr Angelo dated 5 July 2022 together with Exhibit VA1.
e) A third witness statement of Mr Angelo dated 11 July 2022 together with Exhibit VA2 (which, as noted above, I granted the Company permission to rely upon in opposition to the Petition at the hearing on 12 July 2022). Its intended purpose was to address the Company's financial position, particularly in response to doubts expressed in the skeleton argument filed on behalf of HEX for the hearing on 12 July 2022 as to the Company's asserted solvency.
f) A fourth witness statement of Mr Angelo dated 29 July 2022 together with Exhibit VA3 which was filed pursuant to the permission which I gave on 12 July 2022. I note that this witness statement is some 73 paragraphs long.
In advance of the substantive hearing on 26 September 2022 (which was listed for a full day with an additional half a day for judicial pre-reading) Ms Jones for HEX and Ms Anwar for the Company each filed skeleton arguments of some length (both closely typed, single line spaced and 26 pages each). At the end of the full day's hearing and it being necessary to reserve judgment in any event, I gave the parties permission to provide (and their respective advocates duly provided) further written submissions limited to a point that the Company wished to make (and that HEX wished to refute) which...
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Manolete Partners Plc v Ian Russell White
...that, Mr. Asquith has referred me to the observations of Deputy Insolvency and Companies Court Judge Addy KC in the case of Hex Technologies Limited v DCBX Limited [2023] EWHC 537 (Ch) at paragraph 69, approving what is said at paragraph 32 of volume 11 of Halsbury's Laws of England concer......