RE STX PAN OCEAN (HONG KONG) CO., LTD (In Liquidation)

HCCW 324/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO 324 OF 2013

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DECISION ON COSTS

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1.  On 26 September 2014 I handed down my decision making a winding-up order against the company which was put into creditors’ voluntary liquidation in August 2013. I have since received written submissions on costs from Rostrum and PO Korea.

2.  There is a large measure of common ground between the parties on the incidence of costs, leaving for determination only two issues.

3.  The first is whether Rostrum’s costs should be paid out of the company’s assets or paid by PO Korea.  Rostrum submits that while the ordinary rule in a winding-up is that a successful petitioner’s costs are paid out of the assets of the company, there are special circumstances here that warrant an order that they be paid by PO Korea.  First, it submits that it was clear from the start that little weight could be placed on the views of PO Korea as an opposing creditor since it was also the parent company.  Further, PO Korea is likely to be among the subject of investigation.  Rostrum submits therefore that PO Korea’s opposition to the petition is likely to have been motivated by the desire to prevent adverse claims against itself and to maximize its own recovery in the company’s liquidation.  Rostrum also says that PO Korea had mounted “vehement and dogged” opposition, leading to the substantial litigation which placed Rostrum at risk as to costs.

4.  While there is some force in some of these points, I have ultimately concluded that there is insufficient basis in this case to depart from the usual rule.  The majority of the costs in question was incurred after the substitution of Rostrum as petitioner.  As PO Korea submits, after Rostrum was substituted in June 2014, the petition was opposed by virtually all other creditors.  There is no question of the other creditors, except PO Korea, being the subject of investigation or adverse claims.  On a simple numerical basis, the creditors favouring the continuation of the voluntary liquidation constituted a large majority in value.  Although in the end I disregarded or discounted some of their votes, it cannot be gainsaid that there was a relatively independent body of creditors that preferred voluntary liquidation.

5.  Moreover, while I disregarded PO Korea’s wishes because objectively there was a conflict between its interests and the interests of the creditors as a whole, I did not go so far as to find that its sole motive in opposing the petition was to further its self-interests other than as a creditor of the company.

6.  PO Korea was also correct to point out that this is not a case where the voluntary liquidators would have stepped down but for its opposition, which distinguished this case from the situation in Re Goldcone.

7.  Further, PO Korea was  in my view justified in saying that a significant part of the original ground for the petition was based on the way in which the first creditors’ meeting was conducted, which I eventually held not to give rise to any legitimate grievance.  In contrast, the need for investigation as a ground for compulsory winding-up was only gradually augmented.  In particular, the criticism of the “loans” to STX UK and STX Singapore was only raised at the hearing.

8.  In all the circumstances I would therefore order that Rostrum’s costs be paid out of the assets of the company.  These costs are to include the costs of Rostrum as a supporting creditor before the substitution, which should be relatively modest.

9.  The second issue is the costs of the application for the appointment of provisional liquidators.  It was Lauritzen’s application and not really pursued by Rostrum at the hearing of the petition.  The summons eventually became superseded and no order was made on it.  I consider that the appropriate costs order on it is that there be no order as to costs.

10.  I shall therefore make the following orders:

(1) Rostrum’s costs as the petitioner after the substitution (including the costs of the written submissions on costs) and Rostrum’s costs as supporting creditor before the substitution, be paid out of the assets of the company as a liquidation expense, with a certificate for two counsel, to be taxed on a party and party basis if not agreed.

(2) There be no order as to the costs of any opposing creditor including PO Korea.

(3) The reasonable costs of the voluntary liquidators be met out of the assets of the company as a liquidation expense.

(4) The reasonable costs of the Official Receiver, if any, be paid out of the assets of the company as a liquidation expense.