RE SILVER BASE INTERNATIONAL DEVELOPMENT CO LTD

CACV 258/2022, [2023] HKCA 937

On appeal from [2022] HKCFI 1793

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

(ON APPEAL FROM HCCW NO 328 OF 2021)

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DECISION

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1.  This is the assessment on quantum for security for costs in the appeal by the respondent against the order of Linda Chan J (“Judge”) dated 15 June 2022, for the winding-up of the respondent in the event of its failing to pay a debt owed to the petitioner, Techian International Development Limited, within 14 days of the order (“Order”).

2.  The petitioner is engaged in the business of exporting, among other things, Chinese liquor. The respondent was the exclusive distributor of the products known as “Wuliangye (五糧液) 52% Vol. 500ml (1x6)”, and was the supplier of such products to the petitioner.

3.  By a Petition dated 6 September 2021, the petitioner sought a winding-up order against the respondent on the ground that it was unable to pay its debt, in particular a debt of $43,922,031.30 owed to the petitioner. The respondent’s opposition on the ground of having a genuine and serious cross claim against the petitioner was rejected by the Judge, and the Order was made.

4.  By a Notice of Appeal filed on 29 June 2022, the respondent appealed against the Order. As the respondent did not pay the petitioner’s debt within 14 days of the Order, a winding-up order was subsequently made and provisional liquidators were appointed on 11 July 2022. The respondent’s appeal was driven by its director, Mr Liang. By a Summons filed on 9 November 2022, the petitioner applied for security of costs to be given by Mr Liang. In support of its application, the petitioner filed on the same day the affirmation of its director, Mr Ng Ma Mui, exhibiting a statement of costs for the appeal.

5.  By a consent order dated 8 February 2023, the respondent is to procure Mr Liang to give security in an amount to be assessed by the Court; and the costs of the present application are to be in the cause of the appeal. The petitioner further filed a second statement of costs for the application on 15 February 2023, to be added to its earlier statement of costs for the court’s assessment by way of paper disposal.

6.  The petitioner claims the costs for the appeal in the sum of $736,900, consisting of fees for two counsel of $485,000, and solicitors’ costs of $251,900. He further claims the costs for the present application a total of $222,803, consisting of fees for two counsel of $102,750, and solicitors’ costs of $120,053. The total costs claimed come to a total of $959,703.

7.  The respondent objects on the grounds that the costs claimed are excessive, and there are duplication and unjustified items. In particular, he contends that (1) the handling solicitor as shown on the correspondence is a partner admitted in 2012, whose hourly rate is $5,200, but items charged included another partner who was admitted in 1996, whose hourly rate is $5,800; and (2) one senior counsel is sufficient instead of two counsel. The respondent proposes that the costs of the appeal should be $291,030, and the costs of the application, $48,237.

8.  It is settled that the amount of security should be a rough estimate of the costs to be incurred by the petitioner in the appeal (AKAI Holdings Ltd, CACV 177/2008, unrep., 2 April 2009 at [4]). On the whole, it cannot be said that the appeal is a complicated one. The Notice of Appeal rehearses the respondent’s arguments below, seeking to overturn on factual basis the Judge’s ruling that it did not have a genuine and serious cross claim. There is also an argument on the proper approach to the issue of whether a genuine and serious cross claim is a valid ground to oppose a winding-up petition, all the authorities referred to in the Notice of Appeal having already been cited by the Judge. The petitioner is to be represented by the same team of counsel below. There is accordingly room for reduction in the costs claimed by the petitioner. Looking at the matter broadly, the appropriate amount to be provided should be $450,000 for the costs of appeal. As for the costs of the application, again looking at the matter broadly, $80,000 is the appropriate amount. The total amount of the security is thus assessed at $530,000.