DAVID KONG v. PINE GROWTH MANUFACTURING CO LTD AND OTHERS

HCCW321/2006
& HCCW322/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 321 OF 2006

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R U L I N G

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1.  I think, in principle, that it is undesirable for the court to have to reopen, time and again, orders that have been made because the parties cannot agree on particular aspects of them. I also have doubts as to whether or not I actually have jurisdiction to amend the orders that I have made, because the matters that are now raised are matters that either were raised or could have been raised at the previous hearing.

2.  In any event, in the circumstances of the case, I am disinclined to amend the order that I made on the last occasion.  As far as the form of the engagement letter is concerned, there is no reason to suppose that it was not originally put forward in a form that was drafted by the proposed valuers, FTI Consulting, without input from any party as far as the terms of the engagement letter were concerned. 

3.  The only additional costs that might be incurred (and which might arguably be avoided if the proposed amendment to the engagement letter is included) is in respect of one set of valuations which have already been procured previously, so that there might be a certain amount of wasted expenditure in having to get further valuations if the engagement letter were to be understood as requiring this.  This relates to machinery in Zhanjiang, in respect of which there are already existing valuations submitted by each party.  However, even if one were to leave the engagement letter in its original form, I do not see that the valuers would be bound to get a third set of valuations at this late stage, some four years down the road, in respect of that particular machinery.  On the other hand, if there are other assets that require to be valued in respect of which there are no existing independent valuations, then it seems to me that if the valuers have determined to approach the matter on the basis of a net asset valuation basis, they would need to have valuations, as they have proposed in the original form of appointment letter. 

4.  In this respect, if they themselves have within their organisation the in-house capability to provide valuations, there is no reason why their in-house valuer should not tender for the valuation process along with any other tenderers.  If their tender happens to be the most economical, then that is the one that will be accepted.  On the other hand, if other external valuers are able to deal with the matter more economically, there is no reason why that should not happen.

5.  Thus, having regard to the view that I take of the obligations of the valuer under the relevant paragraph of the letter of engagement, it seems to me that there is no need to amend the letter of engagement further so as to give rise to the potential for a situation in which the valuer might choose, for reasons best known to itself, not to obtain a valuation at all, which I do not think can have been their intention.

6.  So for that reason, I am not inclined, as a matter of substance, quite apart from my disinclination to revisit my order, to make the amendment sought in relation to the first point raised by Mr Coleman.

7.  As far as the second point raised by Mr Coleman is concerned, the parties now appear to be ad idem, that the extent of the inspection that the Petitioner may have of documents provided to the valuers by the Respondents is to be limited in the way that is indicated in the consent order made in 2007. 

8.  In those circumstances, I do not think it is strictly necessary to make any amendment to paragraph 4 either.

9.  In the circumstances, I do not think that it is necessary to make any change to the order that was made on 10 November and I decline to do so.  The consequence is that Mr Coleman’s summonses will simply be dismissed. 

(Submissions on Petitioner’s summons)

10.  As far as Mr Carolan’s summons is concerned, I will simply direct that the Respondents sign the engagement letter within three days.

(Submissions on costs)

11.  I think having regard to the fact that the order was made and was not complied with and it has been necessary to have this hearing to clarify matters, I think the appropriate order to make would be that the Petitioner’s costs of these applications should be paid by the Respondents.  However, I am not going to order that they be paid on any enhanced basis.  Thus, they will be paid on the party and party basis, to be taxed if not agreed.