RE Y LTD

HCMP 2418/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2418 OF 2013

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D E C I S I O N

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1. I have before me an application by the liquidators of ‘Y Limited’, which is in creditors’ voluntary liquidation, for an order that a protective writ that they wish to issue against the former auditors of the company be entered in the court registry in the names “A” and “B” in order to provide anonymity.  In other words, the provisional liquidators seek a form of gagging order.

2. I dealt with a similar application in Re v X Limited HCCW382/2006, unreported, 4 May 2010.  As I explain in paragraphs 3 and 4 of that judgment, although the Companies Court has on occasions accepted that such an order can be properly made to assist liquidators in pursuit of claims on behalf of an insolvent company, such orders are exceptional.

3. One of the reasons advanced by the liquidators in this case for not informing any party, including the prospective defendant, of the writ, is to avoid embarrassment that it might cause to the auditors, in respect of whom a definite decision has not yet been made as to whether or not to commence proceedings. 

4. That may be a perfectly legitimate concern, but in my view, the appropriate course is to require the writ to be issued and to make a gagging order, but to include a direction, as I did in X Limited, that a copy of the writ and the order and my decision are sent to the auditors in order that they can decide how, in their own best interests, to proceed.

5. I will therefore make an order in the terms sought in the summons before me, however, two additional paragraphs should be added:

(1) that a copy of this order, the court’s decision, and the writ, be sent to the defendant;

(2) there be general liberty to apply and that until further order all applications in this action are to be heard by the Companies judge.