RE HAWKINS DEVELOPMENT LTD

HCCW 215/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 215 OF 2007

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D E C I S I O N

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1.  This is an application of Hawkins Development Limited (“the Company”) for security for costs to be provided by the petitioner in a winding-up petition.

2.  There is no issue that the petitioner Walford International Holdings Inc., being a company incorporated in the British Virgin Islands and not registered under Part XI of the Companies Ordinance, Cap. 32 with no known business activities, should provide security for costs.

3.  The present summons issued on 10 October 2008 is the second time that the Company seeks security in this petition.  In a previous application taken out in August 2007, an order was made by consent on 17 October 2007 that the petitioner was to provide security of $200,000.  This amount was paid into court on 29 October 2007.

4.  The Company in its supporting affirmation seeks further security of about $1.7 million, on the basis that the estimated costs of the entire proceedings would amount to $1.9 million and giving credit to $200,000 already paid.  Since then, on 4 December 2008, the Company has revised its estimate, taking into account the criticisms made to the skeleton bill of costs in the petitioner’s affirmation in opposition, and adjusted its estimated costs of the entire proceedings to $1 million.  The Company now seeks further security of $800,000.

5.  The petitioner has filed evidence opposing the application on the basis that the previous assessment of a reasonable amount of security for costs agreed by the parties at $200,000 should still hold good, and that all of the work done or estimated to be done in the new skeleton bill of costs prepared for this application had already been covered in the first skeleton bill prepared for the application last year.  Mr Stanley Siu who appeared for the petitioner made much of the fact that in the first skeleton bill, the total amount of costs was estimated at $440,000 only.

6.  I do not think the petitioner’s stance is a realistic position.  The matters raised in dispute in the petition are now much wider as compared to the state of affairs in October 2007.  The hearing time of the petition fixed at 3 hours in November 2007 was revised to one day in February 2008 and then to two days in September 2008.  I do not regard this as a run-of-the-mill creditor’s petition with relatively straightforward issues.

7.  I am inclined to think additional security should be provided.  The question is how much.  The petitioner has offered to pay additional security of $100,000 and contended that this should be sufficient security.

8.  The further security I am going to order should be sufficient security.  It is not meant to be complete security.  My estimate is made on the basis of costs that could reasonably be expected to be allowed on taxation on a party and party basis of work done by suitable counsel and solicitors reasonably competent to handle the litigation for the Company.

9.  I would take a broad-brush approach, and not scrutinise the skeleton bill item by item.

10.  On the Company’s present estimate, a rough breakdown of the total costs of $1 million is as follows:

(1)  past costs and disbursements up to September 2008 – $400,000;

(2)  estimated solicitors’ costs from September 2008 to conclusion of proceedings – $100,000 to $150,000; and

(3)  estimated counsel’s fees from September 2008 to conclusion of proceedings – $450,000 to $500,000.

11.  I would estimate the total costs at $700,000.  So the additional security I would order the petitioner to provide is $500,000.

12.  I order all proceedings in this petition to be stayed except for the purpose of the petitioner providing further security for costs of the Company in this petition by making a payment into court of $500,000 within 28 days hereof, or within such further time as the court may for special reasons allow, and in the event such further security is not provided within the time stipulated, the petition do stand dismissed without further order, with costs to be taxed and paid by the petitioner to the Company.

13.  I order the costs of this application up to 4 December 2008 (when the Company informed the petitioner’s solicitors by letter that the Company would accept additional security of $800,000) be in the cause of the petition.

14.  For the costs of the hearing today, I order costs to be paid by the petitioner to the Company in any event.