LU CHENG LU v. THE REGISTRAR OF COMPANIES AND ANOTHER

HCMP 2694/2017

[2018] HKCFI 1645

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2694 OF 2017

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D E C I S I O N

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1.  This is the applicant’s (“A”) application under sections 765(4) and 767(3) of the Companies Ordinance, Cap 622 for the restoration of the Company. The Registrar of Companies is neutral to the application. The 2^nd respondent (“R2”) originally opposed the application. The opposition has since but only belatedly been withdrawn. The only issue remained for adjudication is that on costs. In that regard:

(a)  A seeks an order that R2 should (1) bear the costs of the Registrar in the sum of HK$5,000; and (2) pay A’s costs in relation to the present proceedings in an indemnity basis to be taxed if not agreed; and

(b)  R2’s stance is that (1) A should bear the costs of the Registrar; (2) R2 shall pay A’s costs on a party and party basis (save and except A’s costs of the Originating Summons and his 1^st Affirmation), to be taxed if not agreed; and (3) A shall pay R2’s costs incurred after the letter of Messrs Cham & Co dated 26 June 2018, including the costs of this hearing, to be taxed if not agreed.

2.  I have considered the authorities cited to me on the applicable legal principles, including Town Planning Board v Society for Protection of the Harbour Ltd (No 2) (2004) 7 HKCFAR 114, Libertarian Investments Ltd v Thomas Alexej Hall (unreported, FACV 14/2012, 11 March 2014), and Huge Dragon Corp Ltd v Lung Mun Oasis (IO) [2014] 3 HKLRD 286.  As has been explained by Ribeiro PJ in Libertarian Investments Ltd:

“As this Court made clear in Town Planning Board v Society for Protection of the Harbour Ltd (No 2), the usual order for costs infavour of a successful party is an award on a party and party basis. An order for costs on an indemnity basis is only considered where the case has some ‘special or unusual feature’. The Court’s discretion may be exercised in relation to (but is not limited to) cases ‘brought with an ulterior motive or for an improper purpose or where there is some deception or underhand conduct on the part of the losing party’. However, such improper conduct generally relates to the conduct of the litigation rather than conduct which constituted the cause or matter giving rise to the litigation.”

3.  I have considered the evidence.  The evidence establishes that the present application was necessitated by the conduct of R2.  It was she who applied to have the Company deregistered.  She signed on the form.  The evidence suggests that she did so without A’s consent.  Those pre-application conduct justified A’s taking out of the present application.  Indeed, the Company was the holding company of a subsidiary of its which was in active business operation at the time of the deregistration, and which has continued to be in active business operation since.  It is submitted on behalf of R2 that no pre-action letter had been issued by A.  But there is no evidence from R2 that had one been issued to her, she would have consented to the application.  I am satisfied that R2 should bear the costs of the Originating Summons and A’s first affirmation in support.  I am also satisfied that R2 should bear the costs of the Registrar in the requested amount.  I however see, in so far as those costs are concerned, no special feature which justifies the ordering of any basis other than the usual party to party basis.

4.  On 30 January 2018, a letter was issued by R2’s legal advisers to A’s legal advisors saying inter alia that:

“… [R2] is of the view that her inclusion as one of the [Rs] in the present proceedings lacks foundation. We are instructed to deny each and every allegation contained in the affirmation of the Application against [R2].

Without prejudice of the above, we are instructed that [R2] does not object to A’s application … on the condition that there will be no order as to costs.”

5.  No agreement was reached between the parties.  After three extensions of time, R2 on 25 May 2018 filed her affirmation in opposition claiming that the application to deregister the Company was made with the knowledge and consent of A.  I agree with Mr Chau, counsel for A, that it was a bare assertion not supported by any documents.  More importantly, I can see no utility in R2 opposing the application.  This is particularly so after what she had indicated through her then legal advisers on 30 January 2018.  There is no evidence why the proposed restoration will be unjust, whether to R2 or otherwise.  Up till now, there is still no explanation as to why R2 chose to oppose the application.

6.  On 26 June 2018, another letter was issued by R2’s legal advisers.  The position was maintained that the application was without merits.  But opposition was withdrawn to save time and costs.  Proposals along the line summarized in paragraph 1 above were made.  No agreement was reached between the parties—hence this application.

7.  Having considered the evidence and parties’ submissions, I am of the view that the litigation conduct on the part of R2, and the total lack of utility and basis of her objection after sight of the OS and A’s affirmation in support constitute “special and unusual feature” which justify the ordering of indemnity costs in respect of those incurred after A’s first affirmation in support.

8.  I will proceed to hear parties on the exact terms of the Order.