HCCW000015/1985
IN THE SUPREME COURT OF HONG YONG
HIGH COURT
____________
COMPANIES MINDING-UP
NOS.
12 OF 1985
13 OF 1985
14 OF 1985
15 OF 1985
19 OF 1985
28 OF 1985
_____________
IN THE MATTER of the Companies Ordinance (Cap. 32)
and
IN THE MATTER OF
Millie's Shoes Factory Limited
Millie's Trading Company Limited
Millie's Wholesale Centre Limited
Miliie's Property Management Company Limited
Millie's Handbag & Shoes Factory Limited
Sum Chun High Quality Shoes Factory Limited
______________
Coram : Hon. Jones J. In Chambers
Date of hearing : 18th December 1985
Date of Ruling : 18th December 1985
________
RULING
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1. On the 21st November 1985 I made a ruling on a matter that arose at the previous hearing of the present summonses issued by the applicants the Provisional Liquidators of Millie's Shoes Factory Limited and five other companies in the Millie's group. The facts are set out in that ruling and I do not propose to repeat them. At the outset today, Mr. Allen on behalf of the official Receiver unreservedly withdrew the allegations that had been made at that hearing against the applicants and tendered his apologies which were accepted by Mr. Dicks who appeared on their behalf. Mr. Woollard then proceeded to conduct the case today on behalf of the Official Receiver.
2. Since the last hearing, a letter has been written to the applicant's solicitors by the Official Receiver which is dated the 9th December 1985 in which he sets out the broad basis on which he seeks to argue the issues relating to the applications which are as follows :-
"
(1)
The proper approach to the Provisional Liquidators' fees in these matters is that set out in Re Carton Limited (1923) 39 TLR 194.
(2)
The circumstances of these liquidations were not sufficiently exceptional to justify the award of fees on a time-cost basis and a percentage of can provide an adequate remuneration.
(3)
In the event that the Court is with the Official Receiver on (1) above but against the official Receive on (2) above in assessing your clients' remuneration on a time-cost basis the Court should have regard to the proper scope of their duties in the circumstances and the manner in which the duties were carried out and for this purpose the Court should as in the taxation of the time element in a solicitor's bill have regard to the nature of the case and the amount of time that should be expended on such a case by a reasonably competent practitioner.
(4)
In the event that the Court is against the official Receiver on (1) above and is of the view that the fixing of fee on a time-cost basis is appropriate the Official Receiver nonetheless argues that the nature of the case and the amount of time that should be spent by a reasonably competent practitioner are the proper oriteria a for assessing what time-cost should be allowed.
(5)
The decision in Re Joseph Phillips Ltd. [1964] I All E.R. 441 is applicable only in circumstances where by reason of limitations upon the provisional liquidators' powers or premature cessation of his appointment there have been no substantial realisations upon which a percentage fee can be calculated. The position is otherwise in these liquidations.
....................................it is the Official Receivers submission that if the Court decides your clients are entitled to payment on a time-cost basis it follows that the time spent and its productivity will have to be examined against an objective standard of a reasonably competent practitioner.
Should the Court accede to this approach it would then be the submission of the Official Receiver that the proper person to apply the relevant standard and to pass the bill in detail would be a Master."
3. Additional evidence has also been placed before the Court by way of affidavits from the applicants Mr. Timso and Mr. Stevenson and by Mr. Woollard for the Official Receiver. These affidavits in the main are concerned with the work and conduct of the liquidations. Certain paragraphs of Mr. woollard's affidavit are in fact inadmissible, but it is unnecessary for me to comment further for the purposes of the present ruling.
4. Great reliance has been placed by Mr. Wollard on Re Carton Limited (1923) 128 L.T. 629 as support for the Official Receiver's contention that the applicants' fees should be charged on a percentage basis or by reference to a scale. In that case Lawrence J. at p. 631 had this to say :-
"
Now there is no enactment or rule fixing the scale of remuneration of voluntary liquidators, and it is well settled that the court, when called upon to fix such remuneration, is not bound by the scale applicable to the official receiver when acting as liquidator in a compulsory winding-up. Every case must be considered on its merits.
The present practice of the court, in the absence of special circumstances, is to be guided by the scale fixe for the remuneration of trustees in bankruptcy.
The reason for adopting this practice is, first, because the court has found that the most satisfactory method to adopt is to fix the remuneration on a percentage basis, whenever the basis yields a fair remuneration, and to avoid whenever possible a time basis."
The second reason that was given is not relevant.
5. It is quite apparent from a reading of this case that it is not an authority to support the contention that the liquidator's remuneration is to be fixed by reference to a scale or by way of a percentage. Indeed I understand from Mr. Woollard that he does not now assert that there is any such rule or scale. In my opinion it would be wrong for me to accede to any invitation to set out guidelines to the Taxing Master as to the basis upon which he should determine the proper remuneration of the applicants. This case must depend on its own facts.
6. Having regard to the criticisms that have been levelled at the applicants by the official Receiver, the Taxing Master will have to decide whether adequate remuneration can be provided by reference to a scale or a percentage or whether the time basis is appropriate. Whichever basis is to be applied can only be determined after a full investigation into the facts by the Taxing Master.
7. Adequate remuneration means sufficient remuneration to compensate the applicants for the work that they have done, provided that it was properly incurred. If the Taxing Master is unable to decide what is adequate by reference to a scale or percentage, he may take all relevant circumstances including the time factor into consideration. The Taxing Master should exercise his discretion on the taxation on the usual wellknown principles.
8. Accordingly the fees of the applicants are referred to the Taxing Master for taxation. In fact I made such a reference on the 12th January 1985. However, the Official Receiver and the applicants' solicitors requested: that I hear the summonses with regard to the basis upon which the remuneration should be taxed. I have today expressed my views that this was not the correct procedure to adopt for it would amount to giving an answer to a hypothetical question. The fees and any argument thereon should have been directed as I have said to the Taxing Master at the outset. Both parties were at fault in this respect with the result that I shall make no order as to costs.
9. The summonses should not have been issued by way of separate miscellaneous proceedings, but should have been instituted in the companies winding-up proceedings. I shall therefore make a formal order that all the papers in the miscellaneous proceedings be transferred to the companies winding-up actions.
(B.L. Jones)
Judge of the High Court
Representation:
Mr. A.R. Dicks (Coward Chance) for former provisional liquidators.
Mr. Woollard for Official Receiver