RE CHINA NONFERROUS METALS GROUP (HONG KONG) LTD

HCCW 130/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 130 OF 2002

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REASONS FOR DECISION

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The application

1. I have before me a summons taken out on 18 July 2003 by Jinhui Holdings Company Limited ("Jinhui"), which is a member of the committee of inspection ("the COI") of China Nonferrous Metals Group (Hong Kong) Limited ("the Company"), under sections 199(3), 200(5) and 287(1) of the Companies Ordinance, Cap. 32. The following orders are sought in the summons:

(1) the resolutions passed by the COI on 11 July 2003 sanctioning the liquidators in entering into agreements to sell its claims against Oriental Metals (Holdings) Company Limited ("OMCL"), Oriental Shipping and Transportation Company Limited ("OS") and Orientmet Properties Company Limited ("OP") be set aside;

(2) Ms Lu Yu Xiang ("Ms Lu") and Mr Song Hong En ("Mr Song") be removed from the COI;

(3) information concerning the adjudication by the liquidators of the Company of the claim of Premiere Asia Holdings Limited ("Premiere Asia") be provided by them as soon as is reasonably practicable; and

(4) following the provision of the information in (3), a general creditors' meeting of the Company be held to vote on the approval of the proposed sale of the Company's claims against OMCL, OS and OP.

2. At the hearing of the summons, Mr Thomas Au, who appeared for Jinhui, informed the court that Jinhui would not seek the orders in (1) and (2). Jinhui no longer wishes to object to the resolutions passed by the COI on 11 July 2003, in view of the information contained in the liquidators' affirmation filed on 22 July 2003 that another proposed transaction for the sale of the Company's shares in Onfem Holdings Limited ("Onfem"), which Jinhui has approved, would only proceed if the transactions relating to the claims against OMCL, OS and OP are also accepted by the Company as a global settlement. Notwithstanding its withdrawal of opposition to these transactions, Jinhui still seeks the orders in (3) and (4), as it considers it has genuine concerns about the proposed transactions and should discharge its duty as a member of the COI by bringing its concerns to the attention of the court. Hence, it seeks an order that the proposed transactions be referred to the general body of creditors for approval, after the liquidators have provided the information sought in (3). Jinhui's position is supported by another member of the COI, Lakeside Company Limited ("Lakeside"), which did not appear at the hearing.

3. At the conclusion of the hearing, I declined to make the orders sought by Jinhui and these are the reasons for my decision.

The Company

4. Provisional liquidators were appointed for the Company on its own application on 10 April 2002 in the circumstances mentioned hereafter. The Company was wound up on Jinhui's petition on 8 May 2002. The provisional liquidators were appointed as the liquidators by an order made on 19 June 2002. The members of the COI, elected by the first meeting of creditors and whose appointments were confirmed by the order of 19 June 2002, were Jinhui, Lakeside, the Hong Kong and Shanghai Banking Corporation, ING Bank N.V. and Onfem Finance Limited. The last three have resigned from the COI on 29 May 2003 and 20 June 2003.

5. The Company was established in 1993. It had carried on business as a holding and investment company and is part of a group of companies ("the CNMG Group") formerly under the control of the State Nonferrous Metals Industry Administration ("SNMIA"), which directed the non-ferrous metals industry in the Mainland. In 1994, the Company became a subsidiary of its present majority shareholder, China Nonferrous Metals Holdings (Cook Islands) Limited ("CNMH(CI)"). CNMH(CI) was owned by SNMIA, which was in turn owned by the State Economic & Trade Commission ("SETC") of the People's Republic of China. As part of a restructuring of the non-ferrous metals industry in China, the SETC promulgated on 19 February 2001 that SNMIA would be dissolved.

6. The Company's major assets comprise shares held directly and indirectly in Onfem (53.87% of the shareholdings) and OMCL (45.16% of the shareholdings). The shares of Onfem and OMCL are listed and trading on the Stock Exchange of Hong Kong. Other assets of the Company include its claim against OMCL ("the OMCL Claim") of HK$5.4 million and claims against OS and OP ("the OS/OP Claim") in the aggregate sum of HK$115,520,871.67. OS and OP were part of the CNMG Group at all material times, OMCL held 3,879,999 out of 3,880,000 non-voting deferred shares in OP and OS was a subsidiary of SNMIA.

7. The liquidators have received 43 proofs of debt with total claims of HK$1.3 billion. They have admitted total claims of HK$1,153,315,001.01, and claims amounting to about HK$24 million are yet to be adjudicated. The creditors fall into four broad categories:

(1) inter-company creditors (57.35%);

(2) bank creditors (28.26%);

(3) employees (0.07%) and

(4) other general creditors (14.32%).

8. Jinhui and Lakeside fall under the category of other general creditors. Jinhui's claim is 3.05% of the admitted claims. Lakeside's claim is 0.12% of the admitted claims.

9. Of the inter-company creditors, the two most substantial creditors are Challenge Progress Group Limited ("Challenge Progress"), with an admitted claim of HK$467,773,856.11 (which is 40.56% of the admitted claims), and Premiere Asia, with an admitted claim of HK$198,968,949.00 (which is 17.25% of the admitted claims). According to a schedule supplied by the liquidators to Jinhui and Lakeside enclosed to a letter dated 3 June 2003, the nature of the claim of Challenge Progress is an assignment of debt by CNMH(CI) to Challenge Progress and that loans were advanced by CNMH(CI) to the Company, and the nature of the claim of Premiere Asia is an assignment of debt by China Nonferrous Metals Industry Trading Group Corporation ("CNMTG") to Premiere Asia and that loans were advanced by CNMTG to the Company.

The offers of Minmetals HK

10. The liquidators have come to the opinion that the best return to the Company's creditors is for the Company to dispose of its shares in Onfem for the best possible price. They are of the view that the offers received from China Minmetals HK (Holdings) Limited ("Minmetals HK") represent the best available option to the Company, its creditors and contributories. Minmetals HK is owned by the China National Metals and Minerals Import and Export Corporation ("Minmetals"), which is a state-owned enterprise, just like the Company and other companies in the CNMG Group.

11. Minmetals HK has offered to purchase the Company's shares in Onfem for the consideration of about HK$158 million. This proposal was approved by the resolution of the COI dated 2 July 2003.

12. Minmetals HK has also made the following offers to acquire the OMCL Claim and the OS/OP Claim:

(1) the OMCL Claim is to be acquired for the cash consideration of HK$1.35 million, which represents 25% of the OMCL Claim. The offer is inter-conditional on, inter alia, (a) Minmetals HK successfully acquiring the claims of the bank creditors against OMCL on similar terms, including consideration of 25% of the banks' claims and the banks continuing to be able to claim in the Company's liquidation pursuant to the guarantees given by the Company to secure the indebtedness of OMCL; and (b) the subscription of new shares in OMCL by Minmetals HK to implement a restructuring of OMCL by way of a debt to equity conversion, as a result of which the Company's shareholding in OMCL would be diluted from 45.16% to not less than 9.8%; and

(2) the OS/OP Claim is to be acquired in consideration of Minmetals HK procuring Premiere Asia to reduce its claim in the Company's liquidation by the full amount of the OS/OP Claim, as a result Premiere Asia will agree to only receive dividends as if it had proved in the liquidation in the sum of HK$83,448,077.33 instead of its admitted claim and the total dividend to general creditors of the Company will be increased by approximately HK$15 million.

13. The liquidators have formed the view that OMCL, OS and OP are all insolvent. They have made an analysis that in the event of a liquidation of these companies, the likely return to creditors would be in the range of 18.33% to 10.49% in the case of OMCL, 2% in the case of OS and 0.07% in the case of OP.

14. The bank creditors have accepted an identical offer from Minmetals HK to acquire their claims for the same consideration of 25% of their claims. The offer of Minmetals HK to acquire the OMCL Claim and the OS/OP Claim is the only offer received by the liquidators. The only other option available to the Company is to attempt to pursue the OMCL Claim. If this should happen, Minmetals HK would not proceed with its acquisition of the shares of the Company in Onfem and it may not proceed with its acquisition of the claims of the bank creditors against OMCL. If OMCL should go into liquidation, the recoverability of the Company's claim is estimated by the liquidators to be well below the offered consideration of 25%, as mentioned earlier.

15. OS and OP are dormant companies and have no management in place. The liquidators have sent letters of demand for the OS/OP Claim dated 13 May 2002 and no reply has ever been received. The most substantial asset of OS is a debt due from OP in the amount of HK$190 million odd. OP's major assets are two joint ventures in the Mainland. The liquidators have reviewed the accounts of these joint ventures and have come to the view that both are insolvent and the prospect of recovery from realisation of OP's investment in the joint ventures would be extremely low.

16. As for the claim of Premiere Asia from which the OS/OP Claim is proposed to be satisfied, the liquidators have adjudicated the proof of debt of Premiere Asia and investigated the transactions concerning the Company, including the assignment of a debt from CNMTG to Premiere Asia, which formed the basis of Premiere Asia's claim against the Company. The liquidators are satisfied as to the legitimacy of the CNMTG assignment and in adjudicating the proof of debt of Premiere Asia the liquidators have determined that the Company has a right of set off of HK$22,192,251.00 and have accounted for that set off in admitting the claim of Premiere Asia. The amount of HK$22 million odd is a debt due to the Company from SNMIA and as Premiere Asia has agreed to assume the liabilities of SNMIA, the amount has been determined to be set off against the proof submitted by Premiere Asia in the liquidation of the Company.

The COI meetings and requests for information

17. As the offer to acquire the OMCL Claim and the OS/OP Claim involve the compromise of debts, the liquidators have sought the sanction of the COI.

18. On 29 May 2003, a meeting of the COI was held to consider if the liquidators should accept the offers of Minmetals HK to acquire the shares in Onfem, the OMCL Claim and the OS/OP Claim. As a result of the resignation of two members of the COI which are among the bank creditors of OMCL on the same day, that meeting was only attended by Jinhui and Lakeside. The remaining member of the COI, Onfem Finance Limited, did not attend to avoid any conflict of interest in the matters to be discussed and resolved upon. The meeting was adjourned as Jinhui and Lakeside requested the liquidators to provide further information which they said was necessary to assist them to consider the offers.

19. Following that meeting, the liquidators' solicitors provided a number of documents to Jinhui and Lakeside on 30 May 2003 and requested them to advise the liquidators of the outcome of their deliberations as soon as possible as time is of the essence with respect to the offers of Minmetals HK. On 3 June 2003, the liquidators wrote to Jinhui

20. and Lakeside providing background information on the OS/OP Claim with additional documents.

21. Jinhui responded by a letter of its solicitors dated 9 June 2003 stating that it did not believe it had sufficient information to make a decision on any of the three offers and requesting for further documents and information to be supplied as set out in the letter. A similar request for documents and information was made by Lakeside's solicitors to the liquidators' solicitors on 10 June 2003.

22. The liquidators responded by a letter of their solicitors dated 13 June 2003 and stated inter alia that they do not have more recent financial information of Onfem, OMCL, OS and OP apart from what had already been supplied. Further documents and information were supplied to Jinhui and Lakeside and they were requested to inform the liquidators of the outcome of their deliberations by 18 June 2003.

23. Jinhui's solicitors replied on 18 June 2003 stating that Jinhui remains of the view that the information supplied is insufficient for it to "properly evaluate" the offers made by Minmetals HK. Further, the liquidators were asked if the offer to purchase the Onfem shares is linked with the other offers, as Jinhui had understood otherwise from the liquidators at the COI meeting on 29 May 2003. The liquidators' solicitors responded on the same day stating that apart from the answers to the specific questions as set out in their letter, the liquidators are not in a position to provide any further information and requested Jinhui to proceed to make a determination on the basis of the information it has to date. The liquidators' solicitors also confirmed that the offer to purchase the Onfem shares was separate from and not inter-conditional upon the offer to purchase the OMCL Claim.

24. On 20 June 2003, Jinhui's solicitors wrote to the liquidators' solicitors stating that notwithstanding Jinhui continues to believe that the information provided is insufficient, it would accept the offer to purchase the Onfem shares on the basis of the strong recommendation of the liquidators. As for the offer to purchase the OMCL Claim and the OS/OP Claim, Jinhui maintained its position that the information supplied is insufficient to make "an informed and responsible decision".

25. On 23 June 2003, a general meeting of the creditors was held after notice of the meeting was gazetted to elect members to the COI to fill the vacancies due to the resignations. 14 creditors attended in person or by proxy, including Jinhui. Mr Song, Ms Lu and Citic Ka Wah Bank were elected to the COI. Mr Song was a director of the Company and Ms Lu was its financial controller. No objection was raised by Jinhui at the meeting to Mr Song or Ms Lu. Jinhui claims it was not aware of their former positions at the time.

26. By letter dated 24 June 2003, each of the new COI members were forwarded copies of all the prior correspondence between the liquidators, Jinhui and Lakeside, including copies of all documents previously provided to Jinhui and Lakeside in respect of the offers of Minmetals HK to purchase the OMCL Claim and the OS/OP Claim. The new COI members were specifically asked to notify the liquidators immediately if there was any reason why they should not vote on these offers. No such notification was received by the liquidators.

27. On 26 June 2003, Jinhui's solicitors wrote to the liquidators' solicitors enclosing a newspaper article dated 24 June 2003 which cast aspersions on the impartiality of Mr Song and Ms Lu. As a result, the liquidators made enquiries with Mr Song and Ms Lu. Both have denied the contents of the newspaper article and have signed acknowledgments to the liquidators confirming that they have no relationship with any of these entities, namely, Minmetals HK, OMCL, OS, OP, or Premiere Asia. The acknowledgments were provided by the liquidators' solicitors to Jinhui's solicitors on 3 July 2003.

28. On 11 July 2000, Jinhui's solicitors wrote to the liquidators' solicitors raising questions on the claim of Premiere Asia against the Company and asserting that Mr Song and Ms Lu should not act as members of the COI or vote on the offers made by Minmetals HK in view of "connections" between the Company, Onfem, OMCL and the Minmetals Group. Later that day, a meeting of the COI was held to consider passing the resolutions sanctioning the liquidators entering into agreements to sell the OMCL Claim and the OS/OP Claim. The resolutions were passed by a majority in number of 3 to 2. Jinhui voted against the resolutions because it does not consider that Mr Song and Ms Lu should be allowed to vote. In response to a query from Jinhui's solicitors at the meeting about the progress of the sale of the Onfem shares, the liquidators stated that the share deal is "part and parcel of the whole series of transactions with Minmetals", which would seem to be contrary to the earlier position that the offers of Minmetals HK were not linked.

The concerns of Jinhui

29. Jinhui's concerns about the offers of Minmetals HK to purchase the OMCL Claim and the OS/OP Claim may be summarised as follows.

30. Firstly, Jinhui says it has not been supplied with satisfactory materials in support of the liquidators' view that OMCL is insolvent, notwithstanding the liquidators have informed Jinhui's solicitors they do not have more recent financial statements of OMCL other than what have been supplied. The report by the liquidators' financial adviser, Asian Capital (Corporate Finance) Limited ("Asian Capital"), made in October 2002 was based on the interim results of OMCL as at 30 June 2002 and was therefore "dated". The annual report of OMCL of 2002, which covered the position up to 31 December 2002 and was released on 17 April 2003, is not "up to date financial information". Instead, Jinhui seized on a passage in the Chairman's statement in the annual report in which mention was made of factors pointing to an overall improvement in the business environment of OMCL and its subsidiaries to challenge the views of the liquidators and Asian Capital that OMCL is insolvent.

31. Secondly, Jinhui has queried if the terms of the OMCL offer are really in the best interests of the creditors as the cash consideration is only HK$1.35 million and the acceptance of the offer would bring about a dilution of the Company's shareholding in OMCL from 45.16% to not less than 9.8%.

32. Thirdly, Jinhui has similar reservations if OP and OS are really insolvent in view of the fact that the liquidators have not been able to supply more up to date financial statements of these dormant companies. The latest financial statements were as at 31 December 2001 which have not been signed by the directors. Jinhui claims it does not have sufficient information to satisfy itself that it is not feasible for the liquidators to pursue the claims against OS and OP.

33. Fourthly, Jinhui needs to be satisfied that Premiere Asia is indeed a creditor of the Company as it is a term of the offer that the consideration for the purchase of the OS/OP Claim would be discharged out of Premiere Asia's claim against the Company. Notwithstanding the liquidators have adjudicated the claim of Premiere Asia and is satisfied as to the legitimacy of the assignment of the debt to Premiere Asia, Jinhui says it must be given the documents in support of the claim so it can form its own views.

34. Fifthly, Jinhui has pointed to clause 3.1(a) in the draft sale and purchase agreement of the OMCL Claim and it was submitted that this provision may suggest that the liquidators are obliged to admit the proofs of debt lodged by Premiere Asia and Challenge Progress. If this construction is correct, Jinhui queries whether this is appropriate or desirable.

35. Sixthly, Jinhui has questioned if Mr Song and Ms Lu should serve on the COI, having regard to their former positions in the Company and in view of the fact that the debts owed to them as employees are relatively insignificant.

The appointment of the new COI members

36. I will first deal with the concern raised regarding the new COI members

37. Jinhui has referred to an affirmation made by Mr Song in April 2002 when he was a director of the Company in which he deposed that the board of directors did not think it appropriate they should conduct negotiations with the Minmetals Group for the sale of the shares in Onfem and OMCL, owing to the fact that the Minmetals Group and the CNMG Group are owned ultimately by the state, that there are common directors (not Mr Song) in the Company and Minmetals HK, and the Company operated from premises adjacent to premises of the Minmetals Group. The board of directors thought it desirable there should be no perception of conflict of interest at board level in the negotiation process for the sale of the Company's shares in Onfem and OMCL and sought the appointment of provisional liquidators who would conduct such negotiations for the Company. Provisional liquidators were appointed accordingly on 10 April 2002.

38. On the basis of the aforesaid affirmation of Mr Song and the newspaper article which did not provide the source of information for its contents, Jinhui has alleged that Mr Song and Ms Lu would appear to connected with Minmetals HK, the Company, OS, OP and Premiere Asia, notwithstanding the signed acknowledgments of Mr Song and Ms Lu to the contrary. Notwithstanding Jinhui has abandoned the relief in paragraph (2) of its summons to remove Mr Song and Ms Lu from the COI (it is therefore unnecessary to consider if the court does have power to make the order sought as this does not appear to come within sections 199(3), 200(5) or 287(1) stated in the summons), Mr Au submitted that the inappropriateness of Mr Song and Ms Lu to vote on the resolution of 11 July 2003 should be taken into account so that the court should disregard the resolution and direct that the offers of Minmetals HK be considered afresh by the general body of creditors.

39. I reject the above submissions. Mr Song and Ms Lu were elected to the COI in their personal capacity as creditors of the Company. They only represent their own interest and do not purport to represent the interest of any other creditor. In the case of Mr Song, he has no involvement in the liquidation of the Company apart from filing the statement of affairs. Both Mr Song and Ms Lu have stated that they came to know of the offers of Minmetals HK from the information given by the liquidators after they were elected to the COI. On the available evidence, there is no or no sufficient justification to regard the acknowledgments signed by these individuals confirming no connections with any of the companies stated therein as dubious. The position is very different from the situation when the directors of the Company sought the appointment of provisional liquidators to conduct negotiations with Minmetals HK. In my view, it was not improper for Mr Song and Ms Lu to vote on the resolution.

The assignments of debts to Premiere Asia and Challenge Progress

40. Jinhui considers that further investigations into the assignments of debts to Premiere Asia and Challenge Progress are required, in that there is inter-relationship of these companies with the assignors CNMTG and CNMH(CI) and other entities including SNMIA which has been dissolved and no proper explanation has been given to Jinhui for these and similar assignments. Jinhui queries whether the liquidators have properly investigated the assignments and whether the liquidators have considered that the assignments have been made in such a way to avoid set offs.

41. The liquidators have adjudicated the claims of Premiere Asia and Challenge Progress. They have stated on affidavit that they have "thoroughly investigated" all transactions concerning the Company. There is no legal restriction on a creditor assigning his debt against a company after the debtor company is in liquidation. The assignments have not prevented the liquidators from determining that the Company has a right of set off in an appropriate situation, as in the case when the debt due from SNMIA is set off against part of the claim of Premiere Asia.

42. This is not an application to reverse or vary the decision of the liquidators in admitting the proofs of debt of Premiere Asia and Challenge Progress. I see no sufficient reason to order the liquidators to provide the information sought in paragraph (3) of the summons for Jinhui to form its own views on the adjudications.

The views of the majority of creditors

43. Mr Harris, who appeared on behalf of the liquidators, submitted that in accordance with section 199(1), a validly constituted meeting of the COI was held at which resolutions were passed by a majority sanctioning the liquidators in entering into the agreements to compromise the Company's claims against OMCL, OP and OS by selling these claims to Minmetals HK. The resolutions were validly passed in accordance with section 207(3). The liquidators have explained on affidavit why the proposed transactions are manifestly in the interests of the creditors. Mr Harris submitted that it has not been demonstrated in any of the matters raised by Jinhui that they are likely to make any difference to the decision of a reasonable creditor whether to approve the sale of the claims against OMCL, OP and OS.

44. I was referred by Mr Au to Re Poole, ex parte Cocks (1882) 21 Ch D 397, in which it was held, under certain provisions in the Bankruptcy Act 1869, which have some similarity with section 200 of Cap. 32, that the court has power for just cause shown to direct the trustee in bankruptcy to disregard the directions given by the resolutions of a general meeting of creditors and to act contrary to them. Mr Au has also drawn my attention to instances in which the court has, under section 200(5), interfered with the decision taken by the liquidator in exercising his discretionary powers to manage and distribute the assets in the liquidation where the liquidator has not exercised his powers in good faith or has acted in a way in which no reasonable liquidator could have acted (Butterworths Hong Kong Company Law Handbook, 4th ed., para. [200.09]; Practice and Procedure of the Companies Court by Boyle and Marshall, 1997 ed., para. 11.7.3).

45. In the present case, I do not think the liquidators' decisions or acts could be said to have been mala fide or perverse. I am also unable to see any just cause for directing the liquidators to disregard the resolutions of the COI on 11 July 2003, particularly in view of the fact that there is support for the resolution from a minimum of 87.36% of the creditors.

46. The liquidators have received indication from the following creditors that they would vote in favour of the transactions if a general meeting should be held to vote on this:

(1) 11 bank creditors whose claims comprise 26.34% of the admitted claims;

(2) Challenge Progress and Premiere Asia, whose claims comprise 57.81% of the admitted claims; and

(3) Shandong Jiao Tong Development Company, a general creditor, whose claim comprises 3.21% of the admitted claims.

Hence, even if the court were to direct that a general meeting of creditors is to re-consider the matter, the outcome would not be any different. The bank creditors (they are also creditors of OMCL) and the inter-company creditors are entitled to vote if the resolutions are put to the general meeting of creditors. As there is sufficient evidence before the court of the wishes of the majority of creditors, no useful purpose would be served to direct a general meeting of the creditors to be held to ascertain their wishes under section 287(1), as sought in paragraph (4) of the summons (Greater Beijing First Expressways Limited, HCCW No. 338 of 2000, Chu J, 30 October 2000).

Orders

47. For the above reasons, I have declined to make the orders sought in paragraphs (3) and (4) of Jinhui's summons. At the hearing, I have also awarded costs against Jinhui in favour of Mr Song and Ms Lu, as Jinhui's intention of not pursuing paragraph (2) of the summons against these individuals was made known to them belatedly.

48. I did not decide on the question of the liquidators' costs as Jinhui's counsel indicated that he would like to have the opportunity of considering the reasons for my decision before making submissions on costs, so the order I make here in relation to the liquidators' costs is an order nisi.

49. I rule that Jinhui should bear the costs of the liquidators in this application, to be paid forthwith and taxed on a trustee basis if not agreed. I see no sufficient reason why the liquidators' costs should be paid out of the Company's assets in this instance. I appreciate that Jinhui might not have a clear indication from the liquidators (notwithstanding the liquidators' response to Jinhui's query at the meeting of 11 July 2003) that the offers of Minmetals HK are inter-conditional until the liquidators filed their affidavit on 22 July 2003. This in my view did not make any material difference to the application, as Jinhui did decide to proceed with paragraphs (3) and (4) of its summons and Jinhui had asked the court to take into account paragraphs (1) and (2) of the summons, even though no orders would be sought for these paragraphs. In the end, none of the points taken by Jinhui in challenging the resolution of the COI were abandoned. The objections taken against Mr Song and Ms Lu are found to be without merit. It has not been shown that the decisions or actions of the liquidators are mala fide or perverse. That Jinhui may not have stood to gain any financial or other benefit from this exercise is beside the point. There is no good reason why the liquidators should be put to additional expense, which would have been borne by all the creditors unless the court should order otherwise, in resisting an application which has been ruled to be without merit.