THE JOINT AND SEVERAL LIQUIDATORS OF THE NEW CHINA HONG KONG GROUP LTD AND OTHERS v. ERNST & YOUNG (A FIRM) AND OTHERS

HCMP 3891/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 3891 OF 2002

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D E C I S I O N

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1. I have before me an urgent appeal brought by the 1st, 2nd and 3rd respondents. The matter arose in this way.

2. On 24 September 2002, an originating summons was issued in HCMP No. 3891 of 2002 by the liquidators for an order for production of certain documents against the 1st respondent and to examine the 2nd and 3rd respondents orally, pursuant to section 221 of the Companies Ordinance, Cap. 32.

3. On 28 April 2003, I made an order granting the liquidators' application and the reasons are set out in the decision I handed down and reported in [2003] 3 HKC 252. As an appeal was brought by the respondents, on 30 May 2003 I stayed the order I made on 28 April 2003 pending appeal. Subsequently, as the appeal was abandoned, the order for stay was lifted on 13 November 2003.

4. On 13 February 2004, the dates for the oral examination of the 2nd and 3rd respondents were fixed before a Master. For the 3rd respondent, her examination was to commence on 26 July 2004 with 27 July 2004 reserved. For the 2nd respondent, his examination was to commence on 28 July 2004 with 29 and 30 July reserved.

5. On 9 July 2004, an originating summons was issued by the liquidators in HCMP No. 1725 of 2004 against Ernst & Young, the 1st respondent in the earlier proceedings, seeking an order for production of various documents.

6. On 20 July 2004, the 1st to 3rd respondents issued a summons returnable before Registrar Chan for adjournment of the oral examination of the 2nd and 3rd respondents until the final determination of the originating summons in HCMP No. 1725 of 2004. Registrar Chan adjourned the summons on 22 July 2004 to Master de Souza, who has been assigned to hear the oral examination on 26 July 2004.

7. This morning, Master de Souza heard an application made by the respondents to adjourn the examination before him. He dismissed the application but stood down the examination until tomorrow 10:00 am, for the respondents to bring an urgent appeal to this court.

8. The reason why the adjournment was sought is as follows. It is contended by the respondents that the liquidators have sought substantially wider discovery in the originating summons in HCMP No. 1725 of 2004, issued two weeks before the oral examination was due to start. It would appear that that the liquidators may well seek to examine the 2nd and 3rd respondents again if they should succeed in obtaining an order for such wider discovery in the new originating summons. If that is the case, it is not right and proper that the 2nd and 3rd respondents should be examined again. As Mr Fung, SC, who appeared for the respondents, has put it, the examinees should not be vexed twice.

9. As I understand Mr Fung's submission, he is not contending that the liquidators may not, at the end of an examination, ask the court to adjourn the examination sine die to enable the liquidators to consider their position, so that if it is necessary for them to conduct any further inquiry with the examinee, they may apply to restore the examination.

10. Mr Fung contended however that this practice should only apply if the examination is to be conducted on the basis of the same originating summons. It cannot be right for the liquidators to take out another originating summons and keep coming back to court to seek to examine the respondents again.

11. For my part, I see no reason why that cannot or should not be done. No authority was cited for his proposition. I wish also to say that insofar as the new originating summons is concerned, although I noted Mr Fung's submission that the ambit would appear to be wider in that the disclosure is to extend to subsidiaries and that the time frame would appear to be longer, it would appear to be a matter in dispute whether the new originating summons is essentially an application for a much wider form of discovery, or whether it is an exercise pursued by the liquidators in an attempt to forestall any argument that has been raised and might continue to be raised by Ernst & Young as to the scope of the original order for production I made on 28 April 2003.

12. I see no valid reason at all for adjourning the oral examination, the dates of which have been fixed some time ago and which was due to start before the Master today with 4 days reserved.

13. For the above reasons, I dismiss the appeal brought by the respondents with costs to the liquidators.