RE WAN HIN AND CO LTD (In Liquidation) (“the Company”)

HCCW 614/1997

[2021] HKCFI 1228

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO 614 OF 1997

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D E C I S I O N

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1.  I have before me an application by the Liquidators of the Company for an amendment of the costs provisions in [3] of an order that I made on 29 May 2013 appointing them as Liquidators. The amendment they seek is that their costs be assessed on the higher of a percentage basis pursuant to Rule 146 of the Companies Winding-up Rules, Cap 32H (“Rules”)[1] or time costs using the prevailing panel A rates. The Official Receiver appeared on the application. The Official Receiver has no objection to panel A rates being used, but does object to the fees being assessed using a percentage of the value of the realised assets.

2.  The Company was wound up by order of Master Kwan on 21 January 1998 and the Provisional Liquidators appointed under s193 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, Cap 32 (“Ordinance”) constitute the Provisional Liquidators under s194.  As a result I assume of the slow progress of the liquidation there were a number of changes in the identity of the Liquidators culminating in the appointment of Alan Chung Wah Tang and Kan Lap Kee as Liquidators in place of Thomas Andrew Corkhill and Wong Kwok Man by my order of 29 May 2013, which included an order that the Liquidators be entitled to be remunerated on a time-cost basis or such other basis as may be determined by the Committee of Inspection or the Court under s196(2) of the Ordinance and that the fees be paid out of the assets of the Company.

3.  It is not in dispute that Rule 196(2) of the Rules gives the Court a discretion to order that a liquidator be remunerated on a percentage basis.  However, I agree with the conclusion and reasoning of Kwan J (as she then was) in Re Goldlory Restaurant Ltd [2] that in the case of a summary liquidation normally fees should be assessed on a time costs basis.  In my opinion for the same reasons this is the case for liquidations such as the present that are not conducted on a summary basis.

4.  The reason advanced by the Liquidators for departing from a time costs assessment in the present Liquidation is that they anticipate being able to make a substantial recovery for the benefit of creditors from the realisation of a parcel of land claimed in proceedings commenced by the Liquidators on behalf of the Company against Chung Chun Keung and others, which it appears may not be defended. The details do not matter for present purposes.  The Liquidators say that given what they seem to see as a great prospective success in pursing recovery of the land to which I have referred it is legitimate for them to receive enhanced remuneration.  The second reason is that they have not yet been paid and consider that a percentage, which they assume would result in them recovering more than they would on a time basis, is justified in part to compensate them for not being paid for some time.

5.  In my view neither argument justifies departing from the normal practice.  In respect of recovery of the land the Liquidators are simply doing the job they were appointed to do.  The fact that previous liquidators seem not to have made any progress in recovering this particularly valuable asset does not change the character of what the current Liquidators have done.  Secondly, the Liquidators must have known the position of the Company when they accepted appointment.  I can see no reason why they should be compensated for a delay in payment that they must have anticipated.

6.  There are also some peripheral reasons for not granting an order that the Liquidators are paid on an enhanced basis.  There are judgments of both Linda Chan J [3] and Coleman J [4], which contain criticisms of the Liquidators conduct of the Liquidation and costs orders that reflect this criticism.  In the case of the order of Linda Chan J what is now sought conflicts with her Ladyship’s order.  In addition the Liquidators entered into a funding agreement in respect of the claim to recover the land pursuant to which they were paid HK$400,000.  It is far from clear that the Liquidators’ management of the Liquidation has exhibited a level of excellence or costs effectiveness that justifies special treatment.

7.  I will order that the Liquidators’ fees are assessed at the Panel A rate.  I will order that the Liquidators and the Official Receiver’s costs are paid out of the assets of the Company.  I assess the Official Receiver’s costs at HK$64,000.