新興縣粵華不銹鋼制品有限公司 v. UNITED PACIFIC TRADING LTD

HCCW424/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 424 OF 2006

------------------------------

------------------------------

____________________

D E C I S I O N

____________________

1. This is an application to set aside paragraph 3 of the Order of Master Hui dated 24^th day of January 2007, by which he ordered that no order should be made against the former liquidators of the Company that would have the effect of making them personally liable for any costs incurred in relation to proceedings by the applicant against the Company.  The former provisional liquidators did not appear before me at the hearing, but I have considered the submissions which they have made in correspondence.  As far as the substance of the application is concerned, it seems to me that, with respect to Master Hui, when he added paragraph 3 of the order, it may be that he had misapprehended the effect of his decision not to order costs against the provisional liquidators personally for the particular hearing which he had heard.  Whatever the reason for such a misunderstanding might have been, it is certainly clear from the transcript of the hearing before Master Hui that nobody had suggested that an order along the lines of that contained in paragraph 3 of his order as approved should be made, so that the applicant had no opportunity to make any submissions about it. 

2. On that ground alone, I am satisfied that the applicant is entitled to have that part of the order set aside.  However, I would also say that it seems to me that such an order, providing a blanket immunity from personal liability for costs, is not the sort of order that should usually be made, because that would be to tie the hands the court in relation to future conduct of the proceedings, when it may happen that a liquidator or provisional liquidator unfortunately takes steps that are so unreasonable as to merit an order for costs being made against them personally.  As it is impossible to foresee what might happen in the future, it seems to me that, as a matter of principle, an order in the form contained in paragraph 3 of Master Hui’s order was not an appropriate order to make on the application of the sort before Master Hui. 

3. The applicant is, however, well out of time for appealing against Master Hui’s order.  It seems that there was certainly an error on the applicant's side in failing to appreciate the actual effect of the part of the order now complained of, but I do not see that any prejudice will be caused to the former provisional liquidators by rectifying the error that has been made. 

4. In the circumstances, I would grant the applicant leave to appeal against Master Hui's order out of time and, for the reasons that I have already given, I would be prepared to grant the order sought and set aside paragraph 3 of his order. 

5. As I have said, nobody has appeared to argue against the appeal today.  The provisional liquidators left office a few days ago as a result of a determination hearing which was held to determine who should be the liquidators of the company, at which it was decided that the provisional liquidators should not continue as liquidators and that different liquidators should be appointed.  I do not know what the reasons for that Whatever the reasons for that may have been, the fact is that the provisional liquidators are now out of office and new liquidators are in office.  The new liquidators indicated that, as they do not yet have any information in relation to today's hearing, they are not in a position to make submissions, and therefore would not attend.  But even if they had attended, I very much doubt that they have had any basis to resist this appeal. 

6. As far as the provisional liquidators are concerned, they appear to take the view that because they are no longer in office, they no longer have locus to act for the purpose of these proceedings.  This appears from a submission which they made by letter to the court, which, I regret to note, was not copied to the applicant. 

7. It seems to me, however, that they clearly have locus to appear because their personal interests are engaged by the fact that the applicant is seeking to put itself in a position where it will be in a position to apply for costs against them personally.  However, as I have said, I have taken account of the submissions that they have made in their letters to the court. 

9. The only remaining issue is as to the costs of the appeal.  Although it had become apparent by the time of the hearing that the applicant would be successful, it seems to me that until the transcript had been made available to all the parties, this would not have been obvious.  The onus was on the applicant to appeal against the order, and it seems to me that the former provisional liquidators did not act unreasonably in wanting at least to know what the underlying grounds for the appeal were and what the evidence in support of it was.  This was not made known to them until earlier this week, only shortly before the hearing, when the evidence in support of it, which included the transcript of the hearing before Master Hui, was served.

10. In those circumstances, I think it would be harsh to make any order against the provisional liquidators personally in respect of this appeal, and that a fair order in all the circumstances would be that there should be no order as to costs.