RE FIRST BANGKOK CITY FINANCE LIMITED

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

COMPANIES WINDING-UP

NO. 202 OF 1986

NO. 215 OF 1986

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D E C I S I O N

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1. I have before me a summons issued under 0. 62, r. 35(1) of the Rules of the Supreme Court to review a certificate of taxation granted by Master Chan on the 18th May 1989 that he confirmed upon review on the 22nd June 1989.

2. The Official Receiver is the liquidator of First Bangkok City Finance Limited that was wound up by an order made on the 28th June 1986 and of Thai Mercantile Development Finance Limited, which was wound up by an order made on the 15th September 1986.

3. During the course of the liquidations, the Official Receiver, after obtaining orders from the court on the 20th. January 1987 under section 199(1)(c) of the Companies Ordinance for the appointment of a firm of solicitors, to assist him in the performance of his duties sought the advice of Messrs. Clifford Chance (the solicitors). For the work carried out, the solicitors submitted a bill of costs to the Official Receiver which was filed for taxation under Rule 169 of the Companies (Winding-UP) Rules. Rule 169 reads:-

"169. Every solicitor, ................. employed by an Official Receiver or liquidator in a winding up by the court shall on request by the Official Receiver or liquidator ................. deliver his bill of costs or charges to the Official Receiver or liquidator for the purpose of taxation;........................"

4. Upon the taxation Master Chan disallowed from the total sum claimed $12,150 relating to the fees of Mr Bates, one of the partners of the solicitors. The fees for Mr Bates were calculated at the rate of $2,100 per hour for 40 hours and 30 minutes, but were allowed at the sum of $1,800 per hour.

5. In his decision, Master Chan said that the basis for the taxation was on a solicitor and own client basis for payment to be made out of a common fund. However, the only bases for taxation in Hong Kong are solicitor and own client, common fund and party and party. In effect, Master chan adopted the common fund basis for the taxation.

6. Following tar Booker's argument on behalf of the Official Receiver on the 11th July, he addressed me again on the 14th July, after had drawn his attention to a decision at first instance in England of Templeman J., as he then was, in In re Nation Life Insurance Co. Ltd. (In Liquidation) [1978]1 W.L.R. 45 where he held that the normal basis of taxation of costs of litigious and non-litigious costs of liquidation was the common fund basis except the costs of actual proceedings when the court had a discretion to order a different basis of taxation. Templeman J., in his judgment, placed reliance upon Rule 188 of the Companies (Winding-Up)Rules, 1949, which provides:-

"...every bill of costs, charges or expenses shall be taxed as if it were a bill of costs arising out of proceedings in or before the court under its ordinary jurisdiction."

At page 50, Templeman J. had this to say:-

"If there are no proceedings, rule 188 of the Companies (Winding-Up) Rules 1949 requires proceedings to be presumed and the taxing master naturally, and in my judgment properly, applies the basis of common fund taxation as if the taxing master were the court."

This decision, although of great persuasive authority, is not binding upon me particularly as the equivalent of Rule 188 which no longer applies in England does not appear in our own Companies (Winding-Up) Rules. The costs, as I have said, were taxed in accordance with Rule 169 of the Companies (WindingUp) Rules.

7. During the course of his judgment, Templeman J., after referring to the power of the court to appoint a solicitor to assist the liqudiator in the performance of his duties, went on to say at page 47:-

"In law however 'there is no such thing as solicitors to the liquidator', see In re London Metallurgical Co. [1897]2 Ch. 262, 269. The solicitor has no claim against the liquidator personally for any costs; In re Anglo-Moravian Hungarian Junction Railway Co., Ex parte Watkin (1875)1 Ch.D. 130. The solicitor can only look to the assets of the company for payment."

8. However, as was submitted by Mr Booker, it appears that with respect to that decision the correct position as stated in the Anglo-Moravian case to which Templeman J. referred is that the client of the solicitor is the company in liquidation so that he can only look to the assets of the company for payment of his fees and not to the Official Receiver in his personal capacity for the Official Receiver only acts as agent of the company. Accordingly, the relationship between the solicitor and the company in liquidation is that of solicitor and client with the result that the proper basis for taxation of the solicitor's bill of costs will be that of solicitor and own client under O. 62, r. 29 of the Rules of the Supreme Court. Under sub-rule (1) all costs shall be allowed exceptin so far as they are of an unreasonable amount or have been unreasonably incurred while sub-rule (2) provides that all costs incurred with the express or implied approval of the client, shall subject to sub-rule (3) which does not apply in this case, be conclusively presumed to have been expressly or impliedly approved by the client. In fact, the Official Receiver expressly approved the rate of $2,100 per hour that had been charged which I am told had been previously allowed by other masters on taxation as the appropriate rate Since the 1st February 1985 it has been the practice of the masters to allow solicitors upon a party and party taxation to charge at the hourly rate of between $800 to $1,500 for contentious work in the High Court. However, having regard to inflation, it is likely that these figures will soon have to be revised upwards.

9. In my opinion, the non-contentious costs of a solicitor employed in the course of a liquidation should be taxed on a solicitor and own client basis. The rate of $2,100 per hour agreed by the Official Receiver cannot, in the circumstances of this case, be described as unreasonable. As a result, I shall review the certificate of the master by reinstating the rate of $2,100 per hour for $1,800 per hour.