MACAU FIRST UNIVERSAL INTERNATIONAL LTD v. DING XIAO HONG AND OTHERS

HCA 992/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 992 OF 2010

____________

_____________

D E C I S I O N

_____________

1. This is an application by Ding Gang/Macau First for inquiry as to damages pursuant to an undertaking as to damages given by the defendant DY. DG/Macau First also applies for interim payment in the suggested sum of $14.75 million.

2. The undertaking as to damages arose as a result of DY’s application for receivership pending the trial of this action.  The receivership order provided for remuneration of the receivers to be paid out of the assets of Macau First in the first instance.

3. DG/Macau First now seeks interim payment, being about 50 percent of the receivers’ bill of costs, reduced to about $24.69 million.  DG/Macau First accepts that they cannot seek interim payment in relation to legal costs of instructing Herbert Smith to appeal against that receivership order.

4. The facts before me is that the receivers’ bill has not yet been taxed or paid by DG/Macau First.  That, of course, does not prevent them from taking out the present application.  This is because pursuant to the undertaking as to damages, DY may be held liable to pay to DG/Macau First what they have repaid the receivers (see Order 29, rule 9).  Mr Henry Chan’s affirmation that the bills should be paid by DY merely stated the net result without referring to the proper channel is wrong, but that does not affect the right of the applicants to take out this application.

5. I have to decide whether or not to give directions for inquiry into damages and also the interim payment. 

6. Insofar as the inquiry is concerned, I agree with Mr Law that it is premature.  The bill of the receivers has not yet been taxed; neither DG nor DY has had the opportunity to question the quantum or substance of those bills; it is not clear how much of those bills will be taxed down.  Therefore, giving directions on inquiry as to damages is, in my view, not appropriate at this stage.

7. The next question is the amount of the interim payment.  DY objects to the figure $24.69 million as excessive, representing an average of 1.5 million per month.  I reiterate my observation in the decision of 7 March 2012 that using monthly estimates are not appropriate.  Some items of cost and expenses cannot be assessed on a monthly basis.  Estimates in my decision dated 7 March 2012 are not appropriate either because they are overtaken by the receivers’ bill which are not before the court today, I only have a lump-sum breakdown by letter from the receivers.

8. There is, of course, no doubt that DG/Macau First will recover substantial sums from DY.  However, Mr Law has rightly referred me to my judgment of 7 March 2012.  At that time, faced with estimated costs of $12.5 million on the part of the receivers, I had only asked DY to provide fortification in the sum of $6.4 million which was to cover the period from making of the receivership order up to and including 31 May 2012.  Two months beyond that date the Court of Appeal has already set aside the receivership order. 

9. I share Mr Law’s concern as to why between the dates of hearing, January 2012 to July 2012, the bills of the receivers would have doubled and, secondly, whether or not the $6.4 million would have been enough “security” for the potential liabilities under the receivership order.  Without the receivers’ bill before me, I am unable to pluck a figure from thin air and increase the amount of $6.4 million as security for DG/Macau First.

10. I do not consider it appropriate to order interim payment at this stage.  Accordingly the appropriate thing for me to do is to adjourn the whole summons which should be restored once the taxation on the receivers’ bills comes into existence.

11. As I have indicated in the course of the arguments, knowing the amount claimed by the receivers, knowing the points in issue raised by DG or DY are important to enable me to decide on what interim payment DY should pay.  It is also an important consideration for this court because DG/Macau First are out the jurisdiction of Hong Kong and at this stage I do not feel safe that monies now placed in court for future security to be provided by DY should leave the jurisdiction of Hong Kong pending any taxation of the receivers’ bills.

12. So I adjourn the summons with liberty to restore.  The court should be updated on progress as to taxation of the receivers’ bills in three months’ time by a joint letter from the parties’ solicitors.

(Discussion between court and counsel)

13. A substantial part of today’s argument really turns on the interim payment.  DG/Macau First has asked for a substantial sum, but despite the opportunity to reply they still insist on something in the region of $10 million.  I am of the view that the costs of this hearing ought to be to DY to be assessed on the papers summarily.