KOR HIN LUNG v. FUJISEIKO SAFE INDUSTRIAL CO. LTD. AND OTHERS

HCCW 381/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP NO. 381 OF 1999

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D E C I S I O N

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1. This is an application under Section 220 of the Companies Ordinance and Rule 179 of the Companies (Winding-Up) Rules for an order made on the application of the former joint Special Managers and joint Liquidators of the 1st Respondent Company that the remuneration of and any fees, disbursements and expenses properly incurred by them as former joint Special Managers and the necessary disbursements of the joint Liquidators, other than expenses properly incurred in preserving, realizing or getting in the assets, and the costs of any person properly employed by the joint Liquidators and the remuneration of the joint Liquidators be paid out of the assets of the Company in order of priority under Rule 179 of the Companies (Winding-Up) Rules ahead of the taxed costs of all the parties to the Winding-up Petition.

2. The matter arose from a petition which was presented to this court for the winding-up of the 1st Respondent Company. A consent order was made on 13 March 2001 and one of the orders made in that consent order was that the taxed legal costs of all of the parties to the petition were given the same priority as taxed costs of the petition under r. 179.

3. However, it would appear that the assets of the Company are not that substantial, whereas the taxed legal costs of all the parties to the petition have come up to something like $11 or $12 million.

4. The Special Managers and Liquidators have since their appointment incurred substantial expenses in order to preserve and maintain the Company's factory on the mainland, and in particular to pay employees whose continued co-operation is necessary to maintain the factory and eventually to bring about its sale.

5. Accordingly to the affidavit of Mr Kenny Tam of the Liquidators, the estimated realization value of the factory, cash at the bank and book debts are unlikely to cover the taxed legal costs of the winding-up proceedings, thereby putting in doubt the recoverability of the costs of the Liquidators and the Special Mangers.

6. It seems to me that these Special Managers and Liquidators ought to be given their reasonable remuneration and expenses in priority to the taxed legal costs of these shareholders of the Company because what they have done is clearly necessary to enable a proper sale of the assets in the interest of all the shareholders.

7. As far as the parties are concerned, the Petitioners have consented to the summons. In relation to the other shareholders, all but two have indicated that they have no objection. In respect of the 5th and 7th Respondents who are Japanese individuals who have instructed Deacons, who remain on the record, they have not given any instructions to Deacons in this respect, and Deacons has not turned up to make any objection to the summons and has asked for their attendance to be excused.

8. In the circumstances I would give an order in terms.