RE LEGEND INTERNATIONAL RESORTS LTD

HCCW 1139/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO 1139 OF 2004

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REASONS FOR DECISION

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Introduction

1.  There were 3 summonses before me, all taken out by Metroplex Berhad (provisional liquidators appointed) (“Metroplex”) against the liquidators of Legend International Resorts Ltd (“the Liquidators” and “Legend”).

2.  The primary application was the summons seeking:-

“[the] signing of the taxing Master’s final certificate dealing with the Liquidators’ remuneration … be temporarily stayed until [the] determination of … [Metroplex’s] application [for leave to appeal to the Court of Final Appeal] … ”

(“the stay of final certificate application”).

3.  The other two summonses were respectively Metroplex’s application for the taxation of the Liquidators’ remuneration to be stayed and a differently worded application (see paras 22 to 26 below for more details).

4.  At the end of the hearing, all summonses were dismissed.  Below are the reasons for the decision.

Background

5.  Legend, a Hong Kong company, operated a hotel, resort and casino business in the Philippines.  By early or mid-2000’s, it became hopelessly insolvent.

6.  Metroplex was Legend’s largest shareholder and its creditor for about 10% to 16% of Legend’s debts.

7.  One of the other creditors of Legend petitioned in Hong Kong for Legend’s winding up.  It was supported by two other creditors.  The debts owed to all 3 constituted almost 80% of Legends’ debts (approximately US$90 million).  Around the same time, Legend petitioned in the Philippines for its own corporate rehabilitation.

8.  A winding up order was made on the ground of insolvency in June 2006.  A regulation order was made at the same time, giving directions regarding some aspects of the winding up, and appointing the Liquidators.

9.  Metroplex subsequently sought the discharge of the regulation order and the removal of the Liquidators on various grounds. Both were unsuccessful: the first instance court dismissed the application in March 2011 and the Court of Appeal dismissed the appeal in January 2012.

10.  There is a pending application for leave to appeal to the Court of Final Appeal (“pending leave application”).

11.  Meanwhile, the Liquidators applied to have their remuneration taxed pursuant to r 176, Companies (Winding-Up) Rules (Cap 32H).  The matter was heard by the master on 13 January 2012 who, at the end of the hearing, ordered (among other things):-

“Liquidator Bill 1 be hereby taxed and allowed at [about $10 million].”

The order was sealed and perfected on 3 February 2012 (“the 13 Jan order”).

12.  Having done so, at the request of Metroplex, and for reasons not immediately apparent, the master directed the summons seeking the stay of taxation to be:-

“stood over to a Judge”.

The said summons later developed into the 3 summonses referred to in paras 1 to 3 above.

The stay of final certificate application

13.  In short, the purpose underlying this application is as follows.

14.  Metroplex accepted that, by virtue of r 176, Cap 32H and RHC O 62 r 2(2), the following provisions of O 62 (among others) are applicable to the Liquidators’ earlier application and the 13 Jan order:-

(a) r 17(1) (interim certificates);

(b) rr 17A (final certificate) and 17B (taxing master may set aside his own decision);

(c) r 21 (except paragraph (4)) (mode of commencing proceedings for taxation); and

(d) rr 33 to 35 (application for review to, and review by, taxing master and judge).

15.  Metroplex contended that the 13 Jan order was not the “final certificate” referred to in O 62 rr 1(1), 17A and 33.  In this connection, reliance was placed in particular on O 62 rr 17A(2) and 33(2) proviso, where a distinction was expressly made between a taxing master’s decision on taxation and the signing of a final certificate by him.

16.  Not having sought a review of the decision made on 13 January 2012 within the period prescribed by O 62 r 33(2), the stay of final certificate application sought in effect a stay of execution of the payment of the Liquidators’ remuneration (despite the 13 Jan order) pending the outcome of Metroplex’s pending leave application.

17.  During the hearing, Metroplex initially could not make up its mind whether it truly intended to seeking a review of the 13 Jan order, or merely to “suspend” the payment of the Liquidators’ remuneration until its successful appeal to the Court of Final Appeal for the removal of the Liquidators (if and when that happens).  At the end, Metroplex indicated that it intended to both seek a review and a “suspension” of the payment.

18.  I find the stay of final certificate application to be misconceived and unmeritorious.

19.  Insofar as Metroplex intended to seek a review of the 13 Jan order, the stay of final certificate application was in effect an attempt to by-pass the provisions of O 62 r 33(2).  In the absence of any valid reason for Metroplex’s failure to apply for a review within the prescribed period, I infer that the non-compliance was self-induced.

20.  In this connection, to avoid doubt, I have not determined whether Metroplex could have applied for an extension of the period prescribed by O 62 r 33(2), or could have sought to set aside the final certificate pursuant to O 62 r 17A(3) (instead of taking out the stay of final certificate application).

21.  Insofar as Metroplex intended to seek a “suspension” of payment of the Liquidators’ remuneration, the stay of final certificate was clearly not the appropriate way of seeking such relief.

The other summonses

22.  The original summons seeking a stay of the taxation:-

“scheduled to be heard … on 13th January 2012 … ”

was taken out on 10 January 2012 (“the 10 Jan application”).

23.  As stated above, the Liquidators’ remuneration has in fact been taxed already at the end of the hearing of 13 January 2012 (see the 13 Jan order quoted in para 11 above).

24.  The 10 Jan application has therefore been overtaken by the events on 13 January 2012 (especially the 13 Jan order).  It has no pending proceeding to “bite on” since then.

25.  The differently worded summons sought a stay of the taxation:-

“scheduled to be heard … on 13th January 2012 and finalised thereafter … ” (emphasis supplied)

26.  The phrase “and finalised thereafter” is ambiguous.  Insofar as it should mean the signing of the final certificate, the discussion and conclusion set out in paras 14 to 21 above equally applies.