RE GOLDCONE PROPERTIES LTD.

HCCW 391/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING UP NO. 391 OF 1999

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J U D G M E N T

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1. I delivered judgment in this matter yesterday and invited the parties to appear before me today to make submissions as to costs and any consequential matters, after having had the opportunity to read the judgment. Having heard submissions, my decision as to costs is as follows.

2. It is common ground that the Court has a discretion in relation to the making of orders as to costs: see Re Criterion Gold Mining Company [1889] 41 Ch. D. 146.

3. According to the textbooks, the normal rule is that the successful petitioner's costs are paid out of the estate as an expense of the liquidation: see Re Humber Ironworks Company [1866] LR 2 Eq 15. I bear in mind that, as Mr. Poon points out, in that case there was no opposition to the making of the order. Nevertheless, it appears to me to set out what has become the normal practice in winding-up cases. Where an opposing creditor fails in his opposition, the court often considers that such creditor had the right to air his views and, quite commonly, simply makes no order as to the costs of the opposing creditor or contributory: see In Re Bathampton Properties Ltd. [1976] 1 WLR 168.

4. The question which arises today is whether the circumstances of this case take the considerations in relation to costs outside those normal rules. Mr. Yu, who appears for the opposing creditor, submits that this is simply a case of the opposing creditor putting forward his views and points out that no concluded adverse findings have been made against him. He submits that the ordinary rule should therefore be followed but, failing that, Mr. Yu submits that only part of the costs incurred should be paid by his client on the footing that he was entitled to pursue these proceedings until such time as the facts which form the basis of my judgment became known to him.

5. Mr. Poon, on behalf of the petitioning creditor, submits that this is a case where the opposing creditor should be made to pay the petitioner's costs and, of course, also their own costs. He says that this is a case outside the ordinary rule because the opposition here was mounted solely by "insider creditors", not in the interest of the general body of creditors, but in their own narrow self-interest, with a view to preventing appointment of a new liquidator whom they may not find to their liking. In other words, this was essentially a lis between the petitioning creditor and the opposing creditor, and not opposition by independent outside creditors when the usual costs order is made.

6. Secondly, Mr. Poon points out that if it had not been for the opposition of the opposing creditors, it was very likely that the liquidators would have stepped down and that the petition might have been withdrawn or led to a compulsory order made ex debito justitiae. This would have meant substantially lower costs. Accordingly, he submitted, the second factor taking this case outside the ordinary rule is the attitude of the opposing creditors, causing a substantial increase in the costs of the liquidation. Mr. Poon also points out that from an early stage, the position taken by the petitioner regarding the liquidators and on the grounds for a compulsory order ought to have been known to the opposing creditors.

7. In my judgment, there is force in these points and I have come to the conclusion that this is not an ordinary case and that I should order the opposing creditors to pay the major part of the petitioning creditor's costs rather than to have those costs paid out of the estate.

8. I order that the costs of the petitioning creditor after the date of the presentation of the petition should be borne by the opposing creditor. There is to be no order as to costs in respect of the opposing creditor's appearance at the hearing. The liquidators appeared in person and do not seek any order as to costs. The costs of the Official Receiver, who is now represented in court but who did not take part in the hearing, will be subject to the usual orders in due course and no order requires to be made at the moment.