RE MAINTAIN PROFITS LTD

HCCW 345/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 345 OF 2002

____________

____________

(Heard together)

__________________________________

REASONS FOR DECISION

__________________________________

1. This is an application to vary an order nisi as to costs made on 20 August 2003 in respect of a summons issued by the provisional liquidators in each of HCCW Nos. 345 and 346 of 2002. I had ordered the provisional liquidators' reserved costs of the initial hearing on 11 November 2002 and their costs of each of the applications be paid out of the funds of each of the companies concerned, being Maintain Profits Limited ("Maintain Profits") and Myriad Gold Corporation ("Myriad Gold"), received by the provisional liquidators pursuant to the undertakings given by Madam Law Wai Duen and Mr Chan Shiu Chick on 11 November 2002. The provisional liquidators have been excused from attendance of the application today.

2. Madam Law has applied to vary the order nisi so that (1) the provisional liquidators' reserved costs of the initial hearing on 11 November 2002 and their costs of each of the applications are to be paid by Mr Chan; and (2) Madam Law's costs of the initial hearing and of the applications are to be paid by Mr Chan, with a certificate for two counsel.

3. It is contented by Miss Linda Chan on behalf of Madam Law that the order nisi is not appropriate as it is tantamount to making Madam Law and Mr Chan jointly liable to pay the provisional liquidators' costs. It is submitted that the costs of the provisional liquidators and of Madam Law should be paid by Mr Chan because firstly, Mr Chan has failed in his opposition to the various orders sought by the provisional liquidators in the applications; secondly, but for Mr Chan's opposition, an order could have been made by consent in respect of those parts of the provisional liquidators' applications which were not opposed by Madam Law; thirdly, Madam Law has effectively supported a successful application of the provisional liquidators, she should have her costs because she has not adopted an "adversarial" stance in the applications in that she supported in part the provisional liquidators' applications, being the application for leave to present a winding-up petition against BF Construction Co. Ltd ("BF") and the application regarding the validity of the shareholders' resolutions of BF.

4. Alternatively, it is submitted that Mr Chan should be liable to pay part of the costs of the provisional liquidators and of Madam Law, being that part of the costs attributable to part of the application not opposed by Madam Law and could have been dealt with by consent but for the opposition of Mr Chan. In the further alternative, if Mr Chan should not be liable for costs, it is submitted that the costs of the provisional liquidators and of Madam Law should be paid out of the assets of BF.

5. Much of the arguments addressed to me at the hearing concerned the question whether the remuneration of the provisional liquidators of Maintain Profits and Myriad Gold, which are the parent companies of BF, could be paid out of the assets of BF and whether this could be resolved by the provisional liquidators passing a resolution as shareholders of BF, to provide for their remuneration to be paid out of the assets of BF.

6. It is necessary for the provisional liquidators to seek directions from the court on this, because of the problems encountered in dealing with the bank accounts of BF and the absence of direct authorities on this point. Madam Law had only changed her stance on this issue at the substantive hearing and supported the submissions made by the provisional liquidators.

7. It seems to me that the directions and reliefs sought by the provisional liquidators should be looked at as a whole in considering an appropriate order as to costs. It does not seem to me practicable to separate the reliefs or directions sought in the manner as suggested by Ms Chan, and order Mr Chan to bear part of the costs in respect of part of the reliefs which were not opposed by Madam Law.

8. For these reasons, I do not think it appropriate in the circumstances to order Mr Chan to bear the costs of the provisional liquidators and of Madam Law in the applications, or to order that he should bear part of the costs. I do not propose to alter the order nisi as to the incidence of the provisional liquidators' costs, i.e. that they should come out of the funds of Maintain Profits and Myriad Gold received by the provisional liquidators pursuant to the undertakings of Madam Law and Mr Chan.

9. As this application to vary the order nisi has been dismissed, costs of this application should follow the event. I order that Madam Law should pay the costs of Mr Chan in this application in any event. I decline to order that the costs should be paid forthwith as submitted.