RE GW ELECTRONICS CO LTD

HCCW 81/2016

[2021] HKCFI 1869

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP)  PROCEEDINGS NO 81 OF 2016

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D E C I S I O N[1]

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1.  By 2 summonses filed on 7 December 2020 (“1^st Summons”)  and on 27 April 2021 (“2^nd Summons”)  the Official Receiver (“OR”)  applies, qua provisional liquidator of the Company (“ORPL”)  and in her own name, for an order to allow her to pay the ad valorem fee (“AV Fee”)  said to be chargeable under Item I of Table B of Schedule 3 to the Companies (Fees and Percentages)  Order (Cap 32C)  (“CFPO”)  out of the cash fund held by her in the liquidation account of the Company (“Liquidation Account”).

2.  The 1^st Summons was issued under s 200(3)  of the Ordinance and rule 7(3)  of the Companies (Winding up)  Rules (“Rules”)  whereby the ORPL sought “directions and an order” in the following terms:

“1. The Liquidation Expenses as stated in paragraph 2(1)  of the [Conditional Order[2]] do include the [AV Fee] chargeable in these winding up proceedings as provided in Item I of Table B of Schedule 3 to the [CFPO];

  2.  The payment of the surplus, calculated on the basis of the Liquidation Expenses being inclusive of the [AV Fee], by the Official Receiver to the Petitioner shall be regarded as compliance with the requirement on the Official Receiver under paragraph 2(3)  of the [Conditional Order[3]]”

3.  The 2^nd Summons was issued under “inherent jurisdiction of the High Court” whereby the OR applies for “a declaration or order” in the following terms:

“1. Notwithstanding the terms of the [Conditional Order[4]] and the [Permanent Stay Order[5]], [AV Fee] imposed under Section 296 [of the Ordinance]; Sections 6 to 7 and Item I of Table B of Schedule 3 of [sic] the [CFPO] in the amount of HK$2,076,030 became due and payable on realisations of HK$124,102,769.90 made in 2017 in this liquidation, as set out in the attached schedule;

  2.  The abovementioned Orders are unaffected by the [AV Fee], which equate to and are to be met by the funds in the amount of HK$2,076,030 retained and presently held by the Official Receiver”

Factual background

4.  The factual background relevant to the Applicant’s summons dated 17 June 2020 for a permanent stay of all proceedings in the winding up of the Company (“Stay Summons”)  have been set out in §§2-9 and 13-18 of the Reasons and will not be repeated here. 

5.  The Summonses were issued in circumstances where:

(1)  the Stay Summons had already been argued by all parties, including the ORPL[6], at the hearing on 12 November 2020; 

(2)  at the conclusion of the hearing on 12 November 2020, this Court decided that it was appropriate to order a permanent stay upon accepting the undertaking given by the Applicant to pay to the Petitioner the sum of $2,881,887.73[7] within 5 working days of the order (“Undertaking”), and subject to the ORPL complying with the following conditions (collectively “Conditions”):

(a)  “The liquidation costs and the fees, costs and expenses of the Official Receiver of and arising out of the winding up of the Company (“Liquidation Expenses”)  be paid out of the cash fund in the [Liquidation Account] held by the [ORPL]” (“1^st Condition”);

(b)  “The ORPL shall as soon as reasonably practicable apply the balance of the cash in the Liquidation Account, after payment of the Liquidation Expenses, to discharge the Untaxed Costs in the sum of HK$7,586,956.80 and the Debt in the amount of US$15,263,129.39 owed by the Company to the Petitioner” (“2^nd Condition”); and

(c)  “The ORPL shall as soon as reasonably practicable pay the entire surplus (ie the cash after payment of the Liquidation Expenses, Untaxed Costs and the Debt)  in the Liquidation Account to the Petitioner” (“3^rd Condition”).

Upon compliance with the Conditions, the Applicant shall apply on paper for an order to stay the winding up proceedings permanently and to release the ORPL as provisional liquidator of the Company (“Conditional Order”);

(3)  the Conditional Order was sealed on 4 December 2020; and

(4)  by order dated 4 February 2021, the winding up proceedings of the Company were stayed permanently, and the ORPL released as provisional liquidator (“Permanent Stay Order”). 

6.  In determining the Stay Summons, one of the main issues which required determination was solvency of the Company, specifically whether the fund kept in the Liquidation Account was sufficient to discharge the Company’s liability to pay the Liquidation Expenses payable to the ORPL, as well as the Debt and the Untaxed Costs payable to the Petitioner.  For this purpose, the Applicant and the Petitioner relied on the information and evidence then adduced by the ORPL and put forward their respective arguments on the issues of solvency and the extent of the Company’s liability to pay statutory interest to the Petitioner. 

7.  The ORPL’s evidence and information on the Stay Summons consisted of:

(1)  the OPRL’s Report dated 29 December 2017 filed in CACV 24/2017 and 84/2017[8] (“ORPL’s Report”), where it was stated that she had “recovered” a total of HK$124,139,861.55 (§1), the total amount of the proofs of debts lodged was HK$122,652,221.65 (§3)  and, as such, “it appears that the Company was solvent” (§4).  On the question of fees and costs[9], the ORPL stated at §7:

“The estimated fees and costs of ORPL up to 18 January 2018 in the winding up of the Company are HK$33,443.50 with particulars set out below:

1.	Costs incurred before the winding up order was made (time-costs basis)	HK$5,180.00
2.	Fees for inserting of notices of winding up order and first meeting in the gazette (Item 7, Table A, Sch.3, [CFPO]	HK$660.00
3.	ORPL’s fees after the winding up order (time-costs basis)	HK$27,603.50
	Total	HK$33,443.50

(2)  the OR’s letter to the Court dated 23 June 2020 (“OR’s June 2020 Letter”)  which stated, inter alia, as follows:

“Since the [ORPL’s Report], there is no money received by the [ORPL] on the Company’s behalf (apart from the interests [sic] on the monies held by her). As at the date hereof, the total cash balance held by the OPRL is approximately HK$126,165,373.29 (based on the conversation [sic] rate of USD1 to HK$7.78).

According to the updated record of ORPL, apart from the Proof of Debt lodged by the Petitioner for the sum of USD15,263,129.39 (approximately HK$118,747,146.65 based on the conversation [sic] rate of USD1 to HK$7.78), the remaining 5 Proof of Debt (the particulars were set out in the [ORPL’s Report])  have been withdrawn.

…

The Official Receiver takes a neutral stance in the 1^st and 2^nd Applications and will leave it to the Applicant to substantiate their cases. With a view to saving costs, the Official Receiver does not propose to appear at the above hearing, unless the Court otherwise directs.

ORPL has provided an estimate on her fees and costs in the [ORPL’s Report]. In the event that the applications are allowed and assuming that she is not required to appear at the above hearing, ORPL would seek her fees and costs in a total of HK$64,443.50 (HK$33,443.50 + HK$23,000 being her claimed costs as per the summary of costs dated 28^th December 2017 + HK$8,000 being her claimed costs for the present applications)  or such amount as the Court may determine shall be borne by the party as the Court deems appropriate. A summary of costs is attached for assessment” (underlined added)

8.  After the Conditional Order had been made, the OR in her letter dated 17 November 2020 to the solicitors for the Petitioner (“FKC”)  and the solicitors for the Applicant (“ONC”), provided comments on the draft order and stated, inter alia, that “the Official Receiver’s costs and fees are HK$64,443.50 as at 23^rd June 2020”.

9.  Neither the ORPL’s Report nor the OR’s June 2020 Letter mentioned any AV Fee. 

10.  Having considered the parties’ evidence and arguments, this Court held that as at the date of the hearing (12 November 2020):

(1)  the liabilities of the Company comprised (a)  the ORPL’s fees and expenses (ie Liquidation Expenses)  in the amount of HK$64,443.50; (b)  the Enforcement Costs; (c)  the Debt; and (d) the Untaxed Costs (see §17 of Reasons).  As the Enforcement Costs would be set off against the recovery held by ARC, the undischarged liabilities of the Company consisted only of the Liquidation Expenses, the Debt and the Untaxed Costs (collectively “Liabilities”);

(2)  the Company’s assets exceeded the Liabilities and there was a surplus of HK$2,718,214.07 (§17 of Reasons); and

(3)  after discharging all the Liabilities, the surplus in the Liquidation Account should be paid to the Petitioner by way of statutory interest (§§20, 27, 29 of Reasons).

11.  On 25 November 2020, the terms of the Conditional Order was approved. 

12.  The first time the OR asserted her entitlement to charge AV Fee was in her letter dated 25 November 2020 to the Court where she said, inter alia:

(1)  it had been discovered that the amount of AV Fee chargeable pursuant to Item I of Table B of Schedule to the CFPO “had all along been inadvertently omitted in the submissions by the Official Receiver mentioned above”;

(2)  as the total realization is HK$124,139,861.56, the AV Fee to be charged on the realization amounts to HK$2,076,400; and

(3)  the AV Fee is “part of the liquidation expenses given priority under rule 179 of [the Rules]”, and the Liquidation Expenses as defined in §32(1)  of the Reasons should include the AV Fee.

13.  By letter dated 26 November 2020, FKC stated that the matter of AV Fee was only raised by the OR after the Conditional Order had been made and requested an opportunity to be heard on the matter.

14.  In response, this Court observed that it was too late for the OR to raise the question of AV Fee, after the Court had determined the Stay Summons and made the Conditional Order.  No further changes to the Conditional Order would be entertained.

15.  By letter dated 1 December 2020 to the Court, the OR accepted that there was no excuse for her omission in raising the issue of AV Fee, but submitted that her omission “should not or could not be a ground for dispensing with the duty to charge and pay the [AV Fee] in this winding up”.  After setting out her submissions on the issue, the OR stated that she would appeal against the decision on Conditional Order if this Court did not re-consider her submissions:

“It is further submitted that in view of the statutory duties regarding the [AV Fee], the Official Receiver would have no alternative but would be duty bound to appeal against a decision of the Court that waives or dispenses with the charging of the [AV Fee] in the present circumstances. The Official Receiver sincerely invites the Court to re-consider our submissions on the [AV Fee] issue.”

16.  By another letter dated 1 December 2020 to the Court, the OR sought to provide further comments on the Conditional Order.

17.  Despite her knowledge that the claim for AV Fee (if allowed)  would be at the expense of the Petitioner (being the only party entitled to receive the surplus)  and the concerns raised by this Court, the OR seems to think that she could simply ask the Court to change the Conditional Order without issuing any summons or filing any evidence in support of her application.  Even after this Court had made clear that no further change to the Conditional Order would be entertained, the OR continued to seek to change the Conditional Order under the guise of providing comments on the draft Order.  This is wholly unacceptable.  The OR is no different from other litigants and is required to follow the rules and procedure if and when she wants to make an application. 

18.  By letter dated 3 December 2020, the parties were informed that:

“1. If the Official Receiver has any application to make, a proper application should be made. The Court would not deal with any ‘submissions’ on paper.

  2.   In the meantime, the order made on 12 November 2020 has already taken effect and should be complied with by all parties, notwithstanding the belated ‘submissions’ made by the Official Receiver in correspondence.  The order will be sealed so as not to delay the permanent stay ordered by the Court.”

19.  This was followed by the OR filing the 1^st Summons on 7 December 2020. 

Discussion

20.  In my judgment, the 1^st and 2^nd Summonses should be dismissed for the following reasons:

(1)  The ORPL is barred by the doctrine of res judicata and cannot seek to re-litigate the issue of fees which has already been determined by the Court as part of the decision on the Stay Summons (Res judicata point).

(2)  Even if (contrary to my view)  the issue of AV Fee has not been decided by the Court such that res judicata does not apply, it is an abuse of process for the ORPL to seek to raise in subsequent proceedings the issue of AV Fee, when such issue could and should have been raised in the Stay Summons (Abuse of process point).

(3)  Once the Conditional Order was sealed, this Court is functus and does not have jurisdiction to deal with the 1^st Summons or the 2^nd Summons (Functus point).

(4)  In any event, at the time the 2^nd Summons was issued, the winding up proceedings in respect of the Company had already come to an end and the ORPL released as provisional liquidator. The Court has no jurisdiction to make any order which concerns the winding up of the Company (No jurisdiction point).

21.  I deal with these points in turn.

Res judicata point

22.  A res judicata may be a cause of action estoppel or an issue estoppel (Spencer Bower and Handley: Res Judicata, 5^th ed, §1.05).  The relevant principle has been explained in Spencer Bower and Handley, §1.01, as follows:

“A res judicata is a decision pronounced by a judicial or other tribunal with jurisdiction over the cause of action and the parties, which disposes once and for all of the fundamental matters decided, so that, except on appeal, they cannot be re-litigated between persons bound by the judgment. A judgment in personam binds the parties and their privies, and because this is so basic it will generally be assumed in what follows. A judgment in rem is binding on the so-called world, party, privy or otherwise.”

23.  To set up res judicata as an estoppel, the following essential elements must be established:

(1)  the decision, whether domestic or foreign, was judicial in the relevant sense;

(2)  it was in fact pronounced;

(3)  the tribunal had jurisdiction over the parties and the subject matter;

(4)  the decision was: (a)  final; (b)  on the merits;

(5)  it determined a question raised in the later litigation; and

(6)  the parties are the same or their privies, or the earlier decision was in rem (Spencer Bower and Handley, §1.02).

24.  As regards issue estoppel, the principle was explained by Dixon J in Blair v Curran (1939)  62 CLR 464, 531-533:

“A judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies. The estoppel covers only those matters which the prior judgment, decree or order necessarily established as the legal foundation or justification of its conclusion … the distinction between res judicata and issue-estoppel is that in the first the very right or cause of action claimed or put in suit has in the former proceedings passed into judgment, so that it is merged and has no longer an independent existence, while in the second, for the purpose of some other claim or cause of action, a state of fact or law is alleged or denied the existence of which is … necessarily decided by the prior judgment, decree or order.”

25.  Similarly, in Spencer Bower and Handley, §8.01, the learned author explains issue estoppel in this way:

“A decision will create an issue estoppel if it determined an issue in a cause of action as an essential step in the reasoning. Issue estoppel applies to fundamental issues determined in an earlier proceedings which formed the basis of the judgment …”

26.  Mr Jeremy Bartlett SC, counsel for the OR, submits that res judicata or issue estoppel has no application to the 1^st and 2^nd Summonses for the following reasons:

(1)  The Petitioner has not issued any “proper summons for strike out with supporting evidence, as required” (1^st Reason). 

(2)  The Stay Summons was an interlocutory application made in the winding up proceedings in respect of the Company, and the Court has not “finally adjudicated on the matter” (2^nd Reason). 

(3)  There was no determination on the AV Fee because no one had raised the issue (3^rd Reason). 

(4)  The Stay Summons was not “former proceedings” and the 1^st and 2^nd Summonses are not subsequent proceedings.  As such, res judicata and issue estoppel have no application (4^th Reason). 

27.  The 1^st Reason is a non-point. 

(1)  There is no rule which permits or allows a party to issue a summons to strike out another party’s summons. 

(2)  It should have been clear from the letters to the OR that this Court was concerned about the propriety of the OR’s attempt to re-open issue which had already been determined by the Court as part of the Stay Summons. 

(3)  The fact that the OR decided not to address the concern in her evidence or the written submissions of counsel would not render the point to become inapplicable or irrelevant.  The Court has jurisdiction to regulate its own process and would not allow a party to re-open an issue in circumstances where such party is barred by issue estoppel or res judicata.   

28.  The 2^nd and 4^th Reasons are untenable.  Unlike other civil proceeding which needs to be commenced by way of a writ or an originating summons, an applicant who wishes to seek any relief which concerns the company in compulsory liquidation must apply by summons issued in the winding up proceedings.  Insofar as a summons is issued against a party which has not previously taken part in the winding up proceedings, such summons constitutes the “originating process” as against that party, and the determination of the Court on the issues raised by the parties will be “final” in the sense that unless reversed by the Court of Appeal, they are binding upon the parties concerned.  The procedure for making application in winding up proceedings is governed by the following rules in the Rules:

(1)  Rule 1 provides that “Subject to the limitation hereinafter mentioned these rules shall apply to the proceedings in every winding up under the Ordinance of a company …”.

(2)  Rule 7(1)  provides that every application in court other than a petition shall be made by motion. 

(3)  Rule 7(2)  provides that “Every application in chambers shall be made by summons, which, unless otherwise directed, shall be served on every person against whom an order is sought, and shall require the person or persons to whom the summons is addressed to attend at the time and place named in the summons”.

29.  It is wrong to assume or characterise a summons issued in the winding up proceedings as an interlocutory application without considering its nature and the relief sought by the parties.  In the case of the Stay Summons, the relief sought is final in that it determined once and for all whether the winding up proceedings in respect of the Company should come to an end.  Such determination binds all the parties[10] unless the order is overturned on appeal. 

30.  The 3^rd Reason is factually incorrect. 

31.  In determining the Stay Summons, one of the issues which this Court had to consider was solvency of the Company.  This, in turn, required the Court to consider whether the fund kept in the Liquidation Account was sufficient to discharge the Liabilities.  In this regard:

(1)  the Applicant and the Petitioner relied on the information and evidence adduced by the ORPL (described in §7 above)  and put forward their respective arguments on the issues of solvency, whether there would be any surplus after discharging the Liabilities and, if so, the extent of the Company’s liability to pay statutory interest to the Petitioner;

(2)  specifically, the meaning of “Liquidation Expenses” was expressly stated to cover what the OR then said and confirmed to be the “fees” payable to the ORPL; and

(3)  this Court took into account the precise amounts required to be paid by the Company in respect of the Liabilities, and concluded that the Company was solvent and had surplus after discharging all such Liabilities.

32.  It is clear that the precise amount of the Liquidation Expenses payable to the ORPL formed part of the factual foundation upon which this Court concluded that the Company was solvent.  If follows that the OR is barred by issue estoppel and cannot raise the same issue in the 1^st and 2^nd Summonses.

33.  Insofar as it is necessary, I consider that all the essential elements to set up res judicata estoppel against the OR are satisfied in that:

(1)  the Stay Decision and the Conditional Order were judicial determination and were pronounced;

(2)  this Court had jurisdiction over the parties and the subject matter;

(3)  the Stay Decision and the Conditional Order were final and on the merit;

(4)  the Stay Decision and the Conditional Order determined the issues of the amount of Liquidation Expenses payable to the ORPL, which included the amount of fees payable to the ORPL.  This is the same issue raised by the OR in the 1^st and 2^nd Summonses; and

(5)  the parties to the Stay Decision and the Conditional Order are the same as the parties to the 1^st and 2^nd Summonses.

Abuse of process point

34.  If, contrary to my view, the issue of AV Fee has not been decided by the Court such that res judicata or issue estoppel does not apply, I would still dismiss the 1^st and 2^nd Summonses on the ground that it is an abuse of process for the OR to seek to raise in the 1^st and 2^nd Summonses the issue of AV Fee when such issue could and should have been raised in the Stay Summons. 

35.  The principle governing the Henderson v Henderson abuse has been explained by Ma CJ in Ko Hon Yue v Chiu Pik Yuk (2012)  15 HKCFAR 72, §§82-83:

“82. The abuse that is known as the Henderson v Henderson abuse (or res judicata in the wider sense – the nomenclature is not important)  is derived from the case of that name. It has been developed and explained by the House of Lords in Johnson v Gore Wood & Co. (a firm)  [2002] 2 AC 1, by the Judicial Committee of the Privy Council in Yat Tung Investment Co. Ltd. v Dao Heng Bank Ltd and Brisbane City Council v Attorney General for Queensland [1979] AC 411, by the English Court of Appeal in Bradford and Bingley Building Society v Seddon [1999] 1 WLR 1482 and by our Court of Appeal in Ngai Few Fung v Cheung Kwai Heung [2008] 2 HKC 111 and Chiang Lily v Secretary for Justice [2009] 6 HKC 234. The essence of the doctrine is that a party ought generally not be permitted to raise in subsequent proceedings matters which that party could and should have raised in earlier proceedings.

83. … For present purposes, it is sufficient just to refer to the following facets of the doctrine:-

(1)  The starting point is to recognize that the doctrine is founded on an abuse of process. As Lord Wilberforce said in Brisbane City Council v Attorney General for Queensland, ‘it ought only to be applied when the facts are such as to amount to an abuse: otherwise, there is a danger of a party being shut out from bringing forward a genuine subject of litigation’: at 425.

(2)  This concern (that a party ought not lightly be deprived of the right to have serious matters litigated)  was echoed by Lord Millett in Johnson v Gore Wood : at 59D-G.

(3)  It must therefore be essential when striking out a claim on this basis (and thus preventing a litigation of that claim)  that an abuse is found to exist in seeking to raise in subsequent proceedings claims or issues which could and should have been raised in earlier proceedings. This abuse will usually take the form of the other party being ‘vexed’ (or in some cases, the terms ‘oppressed’, ‘unjustly harassed’ or ‘unjustly hounded’ are used)  by the subsequent set of proceedings: Johnson v Gore Wood at 31A-B.

(4)  The abuse can also take the form of the administration of justice being brought into disrepute: see Chiang Lily at 256D-G (para 58)  referring to Hunter v Chief Constable of the West Midlands Police [1982] AC 529. With the procedural reforms introduced by the Civil Justice Reform in 2009, the courts in Hong Kong must now, when exercising their procedural powers, increasingly bear in mind not just the parties before them in any particular litigation but also the position of other litigants in the court process. RSC O.1A r.1(f)  states as one of the underlying objectives of the court’s procedural powers under the Rules to be ‘to ensure that the resources of the court are distributed fairly’.

(5)  In examining aspects such as abuse, the court is concerned with balancing interests: not just those of the litigants before it, but also taking into account the other interests involved in the administration of justice. It is important therefore here to emphasise that when the court is dealing with the Henderson v Henderson type of abuse, it is not looking at an absolute bar to litigation such as issue estoppel or cause of action estoppel. On the contrary, in considering this type of abuse, the court is required to assess a number of factors and balance competing interests. See here, Bradford and Bingley Building Society at 1490F-H. It is also worth making the following observations at this juncture:-

(a)  There is conceptually an important distinction between absolute bars such as issue estoppel and the type of abuse with which we are concerned. In the former situation, the party who seeks to re-litigate an issue or cause of action has already had his day in court, whereas in the latter situation, that party has not: cf Johnson v Gore Wood at 59D (‘It is one thing to refuse to allow a party to re-litigate a question which already been decided; it is quite another to deny him the opportunity of litigating for the first time a question which is not previously being adjudicated upon’ per Lord Millett).

(b)  The assessment of different factors and balancing competing interests can be said to be an exercise of a discretion …” (underlined added)

36.  Mr Bartlett submits that Henderson v Henderson abuse does not arise because:

(1)  there is neither earlier concluded proceedings nor subsequent proceedings as the parties were still involved in the same proceedings (1^st Argument);

(2)  there was no determination on the AV Fee (2^nd Argument);

(3)  where a litigant failed to put all the amendments in the earlier application for amendments of his pleadings or failed to seek discovery of all documents from the other party, the Court still permits amendments to be made or hears the applications without any concern about abuse of process (3^rd Argument);

(4)  the OR is not asking the Court to permit or allow any AV Fee to be paid to the OR, but merely asking for recognition of what was imposed by the CFPO at the time when the ORPL realised assets in 2017 (4^th Argument);

(5)  the AV Fee sought by the ORPL would not affect the solvency of the Company and, hence, the outcome of the Stay Summons (5^th Argument); and

(6)  the OR stands in a different position from other litigants in that she is performing a statutory role, being the person designated by the CFPO to collect the AV Fee (6^th Argument). 

37.  The 1^st to 3^rd Arguments are the same arguments advanced under the 2^nd, 3^rd and 4^th Reasons, which I do not agree for the reasons stated in §§28 to 31 above. 

38.  I am unable to accept the 4^th Argument.  It is plain from the 1^st and 2^nd Summonses that the OR is seeking an order from the Court to allow her to pay the AV Fee she claims out of the fund in the Liquidation Account.  In any event, the argument ignores the fact that the OR, like any litigant, is required to comply with the order made by the Court. 

39.  More importantly, had the ORPL raised the issue of AV Fee before determination of the Stay Summons, it was possible that the Company, the Applicant or the Petitioner would challenge her entitlement to receive the amount claimed as grossly excessive, having regard to the fact that the Court had granted an interim stay of the winding up proceedings at the early stage, such that very little time was spent by the ORPL in dealing with the liquidation of the Company. 

40.  Mr Bartlett contends that neither the parties nor the Court can challenge or reduce the AV Fee as such Fee is prescribed by the CFPO, and only the OR can apply for a reduction of the AV Fee by making an application under paragraph 9 of the CFPO.  I do not agree.  The parties who have interest in the Company could challenge the decision of the OR[11] in not applying for a reduction of the AV Fee on the basis that the amount claimed is grossly excessive, having regard to the fact that the Court has already granted an interim stay of the winding up proceedings and very little time has been spent by the ORPL in dealing with the liquidation of the Company.  There is no proper basis to assume that the OR must be entitled to receive the AV Fee in the amount claimed.  For the same reason, it is wrong to assume that had the OR raised the issue of AV Fee much earlier, she would have been entitled to receive the same amount. 

41.  The 5^th Argument is irrelevant to the question of abuse.  Nothing further needs to be said. 

42.  The 6^th Argument is a surprising contention.  If and insofar as it is suggested that the OR stands in a special position and has the right to ask the Court to allow her to apply the fund under her control to pay the AV Fee (or any fees under the CFPO)  however late the application is made, it cannot be right.  No authority has been cited in support of such contention.   

43.  In my view, it is an abuse of process for the OR to pursue the 1^st and 2^nd Summonses after determination of the Stay Summons for the reasons set out below.

44.  First, the OR qua ORPL has been involved in, and taken substantive steps since the commencement of the winding up proceedings in March 2016.  There was ample opportunity for the ORPL to consider and decide what fees were payable to her.  As a matter of fact, the OR did in the ORPL’s Report and the OR’s June 2020 Letter state the amount of costs and fees payable to her (which included the fee under Item 7, Table A, Schedule 3 to the CFPO, see §7(1)  above). 

45.  Second, it would be unfair and oppressive to the other parties to the Stay Summons in particular the Petitioner, to be vexed again on the question of what amount the ORPL was entitled to receive from the fund in the Liquidation Account, having already filed evidence and advanced arguments on the Liabilities and obtained the Conditional Order which made clear that the Petitioner was entitled to receive the surplus after payment of the Liabilities.   

46.  Third, it is unfair to other court users to allow the OR to re-open the issue of AV Fee after determination of the Stay Summons, as it would mean that the OR can take up additional Court’s time which could have been deployed to applications made by other court users.  This is inconsistent with the underlying objectives of the Rules of the High Court as stated in Order 1A rule 1(a), (b)  and (f). 

47.  Lastly, allowing the OR to pursue the 1^st and 2^nd Summonses merely because she (and the solicitors acting on her behalf)  had overlooked the issue of AV Fee during a period of 4½ years would set an undesirable precedent for other cases.  Other litigants may seek to vex their opponents again on the ground that they had omitted to raise certain issue in the earlier proceedings.  This is precisely the type of abuse which the doctrine of Henderson v Henderson abuse is directed to avoid. 

Functus point

48.  Mr Samuel Chan, counsel for the Petitioner, submits that this Court is functus officio and it is not open to the OR to re-open the proceedings with a view to arguing a point which ought to have been raised at the time when, or even before, the Stay Summons was heard. 

49.  The relevant principle has been stated in Spencer Bower and Handley, §5.03:

“A judgment that has been formally entered can only be altered by the court which pronounced it within the narrow limits of the slip rule and the inherent jurisdiction. These powers are exercisable to ensure that the judgment gives effect to the court’s manifest intention and, in incidental matters such as costs and interest, to relieve against omissions (‘slips’)  by a party or his legal advisers. They do not enable the court to review its decisions on the merits, that is, its decision on issues presented to it for decision which it intended to decide …”

50.  Apart from repeating the 4^th and 6^th Arguments, the only new argument raised by Mr Bartlett is that by the time the 1^st Summons was issued, the Conditional Order might not have taken effect.  I disagree.  The Conditional Order took effect on the day it was pronounced.  In any event, once the Conditional Order was sealed on 4 December 2020, this Court is functus and does not have jurisdiction to deal with or review the issue of the amount of the Liquidation Expenses payable to the ORPL. 

No jurisdiction point

51.  This is only relevant to the 2^nd Summons, which was issued after the winding up proceedings in respect of the Company had already come to an end and the ORPL released as provisional liquidator.  There was no winding up proceedings within which the OR could seek any relief or determination concerning the winding up of the Company.  Nor does the Court have jurisdiction to entertain such application.

52.  In this regard, Mr Chan cites Re Conso Electronics (Far East)  Ltd [1996] 1 HKLR 1, where Godfrey JA said (6F-G)  this:

“The compulsory winding up having terminated with the making of the s.209A order, the effect of the previous order [appointing the former liquidators], which had provided for their remuneration, was clearly spent, although obviously the applicants did not realise this at the time … It follows that the order under appeal was made without jurisdiction and must be discharged …” (underlined added)

53.  Unsurprisingly, Mr Bartlett is unable to cite any case to contradict the ratio in Re Conso.  Nevertheless, he contends that the winding up proceedings are still “alive” and the “umbrella of proceedings still there”, given that the OR issued the 1^st Summons before the permanent stay took effect.  Further, the 2^nd Summons was issued under inherent jurisdiction, and the OR has the “right” to make the application pursuant to her “statutory role” in supervising liquidation and collecting the AV Fee. 

54.  No matter how Mr Bartlett puts it, the fact remains that by the time the 2^nd Summons was issued, the winding up proceedings had already come to an end, and the Court no longer has jurisdiction to supervise or make any order which concerns the liquidation of the Company. 

55.  For the above reasons, the 1^st and 2^nd Summonses fall to be dismissed. 

Amount of AV Fee

56.  If, contrary to my view, the OR is entitled to pursue the 1^st Summons, it seems to me that subject to the right of the parties to challenge the amount of AV Fee (as described in §40 above), the $2,076,400 claimed is the amount which the ORPL is entitled to receive out of the fund in the Liquidation Account. 

57.  The principles governing the payment of AV Fee have been fully set out in Re MF Global Hong Kong Ltd [2015] 2 HKLRD 325, §§5-9, per Barma JA and Re STX Pan Ocean (Hong Kong)  Co Ltd [2018] 4 HKLRD 826, §§6-11, per Godfrey Lam J.  In short, the AV Fee is chargeable on the “aggregate amounts of assets realized and brought to credit by a liquidator” at the rate prescribed in Item I of Table B of Schedule 3 to the CFPO. Although the ORPL was not and had never been appointed as liquidator, for the purpose of the CFPO, the meaning of “liquidator” includes provisional liquidator (Re MF Global, §11). 

Order

58.  For the above reasons, the 1^st and 2^nd Summonses are dismissed. 

59.  As for costs, I make a costs order nisi that the OR is to pay the costs of and occasioned by the 1^st and 2^nd Summonses to the Applicant[12] and the Petitioner, to be taxed if not agreed on an indemnity basis.  The OR has been warned that irrespective of the outcome of the 1^st and 2^nd Summonses, she should bear the costs occasioned by her applications on an indemnity basis. This reflects the fact that all the time and costs were incurred as a result of her (and her solicitors)  omission.  There is no reason why the other parties would have to bear any shortfall in costs.