SCANTY INVESTMENT CO AND ANOTHER v. BRILLIANT FUNCTIONS LTD AND OTHERS

HCCW 190/2018

[2020] HKCFI 1292

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO 190 OF 2018

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DECISION ON COSTS

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1.  On the 26 March 2020, I gave my decision in respect of a strike-out application in this matter, it is not necessary for me to repeat what is said in the decision. In paragraph 11, I made a costs order nisi that the Petitioners pay the costs of the Respondents’ summons forthwith with the certificate for two counsel, such costs to be taxed if not agreed. The Petitioners have applied to have that order varied.

2.  The Petitioners have argued for a number of alternatives.  First, the costs be reserved, alternatively that the costs be in the cause and there is a final alternative that the Respondents’ costs be in the cause.  So far as the 7^th Respondent, the Company is concerned that there be no order as to costs.

3.  In short, the Petitioners’ point is that the sole relief that is sought, namely, a winding-up order, has not been struck-out and the matter will proceed to trial.  In the circumstances, it cannot be said the 1^st to 3^rd Respondents were wholly successful, which is the implication of the costs order.  I disagree.  It seems to me apparent from my reasons and the fact that the strike-out application was dismissed against the undertaking referred to in the reasons, which was proffered during the hearing, that the Respondents’ application has in a material respect achieved success.  That success is that it has established that the Petitioners cannot seek unfair prejudice relief in Hong Kong (it should be said that this of itself was not contentious), and that it cannot as a result of the undertaking that it has given seek it in the British Virgin Islands.  The result is that, the Petitioners can only obtain any relief if it demonstrates that this is one of the exceptional cases, in which the findings of the court in a dispute between shareholders concerning the conduct of the affairs of the company justify making a winding-up order rather than, for example, a buy-out order.

4.  This will narrow, in my view, the area of dispute at the trial and constitutes a material, albeit perhaps somewhat tactical, success for the 1^st to 3^rd Respondents.  I will, therefore, not vary that costs order.

5.  So far as the 7^th Respondent is concerned.  It is of course well established that the Company which is the subject of a petition should not take an active role in the substantive dispute. To the extent that the 7^th Respondent was represented for the purposes of a general case management hearing on the 22 November 2019, it seems to me that the appropriate costs order would normally be costs in the cause or that the costs be paid out of the assets of the Company.  It does not seem to me that it was necessary for the 7^th Respondent to take an active role in respect of the strike-out application itself.

6.  I, therefore, agree that in the case of the 7^th Respondent, there should in respect of the strike-out application be no order as to costs. So far as today’s hearing is concerned, I will order that the Petitioners pay the 1^st to 3^rd Respondents’ costs albeit with the certificate for one counsel, and that there be no order as to costs so far as the 7^th Respondent is concerned.