UPPLAN CO LTD v. LI HO MING AND ANOTHER

HCA 1915 / 2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1915 OF 2009

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REASONS FOR DECISION

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A. Introduction

1.  On 30 July 2010, I made an Order that Mr Roderick Sutton and Mr Fok Hei Yu of the Hong Kong Office of FS Asia Advisory Ltd (formerly know as Ferrier Hodgson Ltd) be appointed as Receivers over the Plaintiff company pursuant to the Order of Deputy High Court Judge Mayo dated 5 May 2010 and a Consent Order dated 12 July 2010.

2.  I indicated that I would give my reasons later. This is what I do now.

B.      Brief background

3.  This action concerns a dispute between two camps of family members over a money exchange business, which was established by the mother some 20 odd years ago.  The business has been vested in and held by the Plaintiff company. 

4.  Essentially, now the mother through the Plaintiff claims against her daughter Virginia (the 1^stDefendant by Original Action) and the 2^ndDefendant company (said to be set up by Virginia) for various wrongdoings against the Plaintiff’s money exchange business, including passing off, conversion of the company’s assets and breach of fiduciary duties. 

5.  Virginia denies any wrongdoings and in return counterclaims against the Plaintiff, the mother, and her other siblings (Alan and Anita) for various reliefs, including a declaration that she is a 50% beneficial shareholder in the Plaintiff, damages for conspiracy and an injunction to restrain them from excluding her from the Plaintiff’s management.

6.  By an Amended Summons dated 4 December 2009, the Plaintiff sought various injunctive reliefs against Virginia and the 2^nd Defendant for, inter alia, deliver up of the books and records and documents of the Plaintiff and restraining her from representing to the outside world as the director of the Plaintiff and interfering the business of the Plaintiff.

7.  The parties appeared before Deputy High Court Judge Mayo for the Amended Summons, and after hearing counsel, by consent, His Lordship made an Order which includes at paragraph 2 the following:

“2. Anita and Virginia shall, on or before 2:30 p.m. on 12^thMay 2010, each propose at most 3 candidates for the aforesaid appointment. In the event that no one candidate can be agreed between Anita and Virginia, the receiver shall be selected and appointed by the Court out of all the proposed candidates and for this purpose, the parties have leave to apply.”

8.  The parties eventually could not agree on the candidate of the Receivers.  They then took out a consent summons which I made into a consent order on 12 July as follows:

“1. The selection and appointment of the Receivers [is to be made] by the Court out of the following candidates proposed by Anita and Virginia:-

(i) Mr. Roderick John Sutton and Mr. Fok Hei Yu of Ferrier Hodgson Limited;

(ii) Mr. Jim Wardell and Mr. Jackson Ip of Horwath Corporate Advisory Services Limited;

(iii) Mr. John Lees and Mr. Mat Ng of John Lees & Associates Limited;

(iv) Mr. Alan C W Tang and Mr. Wong Kwok Man of Grant Thorton Specialist Services Limited.

2. The remuneration of the Receivers shall be fixed by reference to the scales and rates of professional charges as quoted by the receivers in their quotations already provided.

3. To facilitate the Court to make the selection, the parties shall submit their grounds in support of their own recommendations and in oppose to the other side's recommendations on or before 16th July 2010.

4. The Court may make the selection without or with a hearing, subject to the direction of the Court.

5. The Court may make any further directions together with the appointment as the Court thinks fit.

6. The Receivers are at liberty to seek further directions of the Court after appointment.

7. Costs of the Plaintiff's Solicitors in this application be paid out of the assets of the Plaintiff without prejudice to each party's subsequent costs application upon the final determination of this action.”

9.  The Parties put in their respective written submissions^[1] as to the choice of the Receivers.

C.      The Decision

10.  After reading the parties’ respective submissions together with the respective CVs and fees proposals set out by the candidates, as I mentioned above, I made an order without any hearing that Mr Sutton and Mr Fok be appointed as the Receivers.  My reasons for the decision are as follows.

11.  All the proposed candidates are experienced insolvency and receivership practitioners.  However, from what have been provided to the Court, I agree with the submissions of the Plaintiff’s Solicitors that Mr Sutton and Mr Fok appear to be having relatively more relevant experience in acting as Receivers over companies which are intended to continue to do business pending the resolution of shareholders’ disputes (as in the present case) other than in insolvency scenarios.

12.  Although Mr Sutton and Mr Fok’s fee proposal appears to be slightly higher than the candidates proposed by Virginia, I also agree with the Plaintiff’s submissions that the difference is not substantial or significant, in particular in light of the uncertainty as to how much work would eventually and factually be involved in the Receivership. 

13.  In the circumstances, in relation to the present case, I do not think the difference in the proposed fees amongst these candidates outweighs the advantage of the relatively more relevant experience that Mr Sutton and Mr Fok possess.   It may further be noted that this more relevant experience may save some time and thus costs in the Receivership itself. 

14.  I therefore conclude that Mr Sutton and Mr Fok are relatively (albeit marginally) more suitable to be appointed as Receivers over the Plaintiff.  I thus made the Order as I did.