JOINT AND SEVERAL PROVISIONAL LIQUIDATORS OF HSIN CHONG CONSTRUCTION CO LTD (PROVISIONAL LIQUIDATORS APPOINTED) v. THE CHINESE UNIVERSITY OF HONG KONG AND OTHERS

HCCW 239/2018

[2020] HKCFI 3179

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO 239 OF 2018

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DECISION ON COSTS

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1.  In this Decision, I adopt the abbreviations used in my Reasons for Decision dated 18 September 2020 (“Reasons”).

2.  At the hearing on 9 September 2020, I dismissed the Summons issued by the PLs under s 200(3) of the Ordinance.  I considered that on the basis of the evidence before the Court, it was unnecessary and unreasonable for the PLs to have issued the Summons.  I gave an opportunity to the PLs to show cause as to why they should not be deprived of their right to receive remuneration and to recover their costs from the estate of the Company. 

3.  In its written submissions dated 11 September 2020 made on behalf of the PLs, W&G makes 3 main points.

4.  First, it is said that the issuance of the Summons was required by CUHK.  This is put variously as follows:

(1)  It was “only on the basis that the PLs agreed to take out the application for directions in respect of the distribution of the Sums, [CUHK] finally agreed to pay the Sums to the PLs” (§3(e));

(2)  CUHK would not have paid the Sums to the Company “but for PLs’ undertaking to make this application” (§6); and

(3)  CUHK paid the Sums to the PLs “on the condition that the PLs are to take out the [Summons]” (§10).

5.  Similar assertions have been made by Mr John Hui in his skeleton dated 15 October 2020 in respect of the PLs’ application for leave to appeal against my Order made on 9 September 2020.  At the hearing on 21 October 2020, this Court asked Mr Hui to identify the evidence or correspondence where the alleged requirement, “undertaking” or “condition” said to have been emanated from CUHK could be found.  Mr Hui confirmed that there was no such evidence or correspondence.  It is surprising to see that W&G and the PLs consider it appropriate to repeat the same assertions in the submissions.

6.  Second, it is suggested that there was a “genuine” dispute between the PLs and CUHK as to how the Sums should be distributed (§4) in that:

(1)  It has all along been “the common objective of both the PLs and [CUHK] to ensure that the Sums will go to the rightful parties” (§4);

(2)  CUHK’s stance “has always been that they are entitled to make direct payments of both [the Retention Monies] and [the Non-Retention Monies] to the NSCs”.  There is no evidence that CUHK has changed its stance (§5); and

(3)  The PLs were “alive to the reality that commencing an action against [CUHK] would definitely be more costly and time consuming than taking out the [Summons]” (§6).

7.  Again, W&G has not been able to point to any evidence in support of the assertions.  It seems to me that the assertions are mere afterthoughts put forward by the PLs in response to this Court’s holding that the Summons was issued and pursued by the PLs when there was no genuine difficulty or real dispute between the PLs, CUHK and the NSCs (at §§21 – 23 of the Reasons). 

8.  Third, it is contended (§8) that from the PLs’ perspective, “there is the overriding consideration to act in the best interests, and protect the position, of the unsecured creditors of the Company in discharging their duties by preserving any assets which the Company may be entitled to … It has never been the intention of the PLs to assert rights over any assets which do not belong to the Company”, and the Summons was taken out “for the sake of fairness to the creditors of the Company, as well as [CUHK] and the NSCs”.

9.  From the evidence considered by this Court, it is clear that the PLs had not taken into account the so-called “overriding consideration” or “fairness” to the creditors.  As stated in §§18 – 20 of the Reasons, prior to issuing the Summons, the PLs never applied for any sanction. Had the PLs taken the necessary step of seeking prior sanction of the Court before issuing the Summons, they would have been able to reflect on and realised that there was no justification for issuing the Summons, in view of (1) the non-contentious stance taken by CUHK and the NSCs; (2) the legal advice of counsel (recited in §13 of Reasons); and (3) the relevant authorities considered in §23 of the Reasons.

10.  For the above reasons, I do not accept the assertions and explanations put forward by the PLs.  I consider that it is an appropriate case to make an order pursuant to §8 of the Appointment Order and Order 62 rule 6(2) of the Rules of the High Court as follows:

(1)  the PLs are not entitled to seek or receive any remuneration in respect of all the work done in connection with the Summons including the submissions to show cause, whether such work was done by the PLs themselves or by the other persons engaged by the PLs;

(2)  the PLs are to bear the costs incurred in respect of the Summons, including the adverse costs payable by them to Huns personally, and cannot seek to recover such costs from the assets of the Company; and

(3)  the PLs are directed to produce this Order to the taxing master seised of the application for taxation of their remuneration and costs insofar as such application cover the period for which work was done in connection with the Summons.