PASHMINA VIVEK BHAGNARI v. ASHOK KUMAR UTTAMCHANDANI AND ANOTHER

HCMP 781/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 781 OF 2009

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D E C I S I O N

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1.  This is an originating summons taken out on 27 April 2009 by a director of Canrich Industries Limited (“the Company”) under section 121 of the Companies Ordinance, Cap. 32 for inspection of books of accounts and records.  The 1^st respondent is the director who has possession and control of the accounts and records, the 2^nd respondent is the Company.  The Company is not represented.

2.  The 1^st respondent filed an acknowledgment of service on 11 May 2009 stating he intends to contest the proceedings.

3.  Further correspondence has been exchanged between the 1^st respondent’s solicitors and the applicant’s solicitors after the acknowledgment of service was filed.  The outcome of this is that the 1^st respondent is no longer opposed to giving inspection of the books of accounts and records.

4.  In a letter of 10 June 2009 to the court, the 1^st respondent’s solicitors proposed an order in this terms:

“Upon a 14 days written notice of the Applicant, the 1^st Respondent do provide for the inspection of the Applicant and/or her accountant or representative the books of accounts and computer records of the 2^nd Respondent as are available at unit 401-3, Houston Centre, 63 Mody Road, Tsimshatsui, Kowloon”

5.  I have ascertained with Mr Bernard Man who appeared for the applicant and I understand that the applicant is content with an order as proposed by the 1^st respondent’s solicitors.  So there will be an order in terms as mentioned above.  That leaves the question of the costs of inspection in the retrieval and transportation of the documents and legal costs.

6.  It is accepted by the 1^st respondent that the applicant was justified in issuing the originating summons and that the 1^st respondent should pay the costs of the applicant in respect of the costs incurred prior to the delivery of brief to counsel.  There was consensus that $45,000 would be reasonable costs incurred in that regard.

7.  The applicant’s solicitors delivered a brief to counsel in the afternoon of 9 June 2009.  They said that the costs and disbursements up to the writing of the letter on 10 June 2009 have since gone up to $96,375.

8.  The 1^st respondent’s position is that he will pay the costs of $45,000, which have been agreed as reasonable costs before delivery of brief to counsel, but that he should not be liable for subsequent costs including the costs of the hearing of today, which was necessitated due to the applicant’s unreasonable attitude over the issue of fees which the 1^st respondent required the applicant to pay for the costs of retrieving the documents and computer records at $10,000, the professional fee of a consultant/accountant at $2,000 per hour and the fee of an assistant to the consultant/accountant at $750 per hour.

9.  In the hearing today, the 1^st respondent simply seeks an order that the applicant is to pay “the reasonable expenses” of the 1^st respondent of the inspection.

10.  I do not propose to recite the correspondence exchanged between solicitors during 11 May and 10 June 2009.  Mr William Wong submitted on behalf of the 1^st respondent that his client had tried his best to reach a sensible settlement without taking up the court’s time and incurring additional costs.  I do not agree with this.

11.  The applicant’s solicitors had indicated that the applicant would agree to pay reasonable costs for retrieval of accounts and asked the 1^st respondent’s solicitors to give an estimate.  The 1^st respondent’s solicitors gave a figure of $10,000.  The applicant’s solicitors regarded that amount as exorbitant and asked for clarification if the proposed fee related to the transportation and labour costs for retrieval of documents, they requested information of the address at which the documents and computer records are stored, and indicated that the applicant could arrange her own transportation and labour for that purpose.  No information or response was provided by the 1^st respondent’s solicitors.

12.  The applicant’s solicitors also indicated the applicant does not require the 1^st respondent’s accountant or the assistant of the accountant to be present during inspection to answer her inquiries and any queries she might have after she had time to digest the documents inspected would be put to the 1^st respondent in writing.  There was no response from the 1^st respondent to this.  It was not until Mr Wong served his written submission that it became clear the 1^st respondent would not be insisting on the presence of his own accountant and the accountant’s assistant.

13.  In these circumstances, it is not the applicant’s fault that no agreement to dispose of the originating summons by consent could be reached.  In the absence of clarification of her above queries, the applicant could not have agreed to pay “reasonable fees of the 1^st respondent of the inspection” in the draft Tomlin order prepared by the 1^st respondent’s solicitors.  It does not appear to me that the hearing today could have been avoided.

14.  As of today the 1^st respondent is still unable to give a breakdown of the amount of $10,000 put forward in the letter of his solicitors as to the costs of retrieval and transportation of the documents and records save to say that oral quotations have been obtained.  If a party wishes to seek an order for costs and expenses, he must come to court prepared.

15.  I decline to make an order that the applicant is to pay “the reasonable expenses” of the 1^st respondent of the inspection.  I order him to pay the applicant’s costs of the application including the hearing of today.  There will be an assessment on a gross sum basis.

16.  I have decided to award the costs of today’s hearing to the applicant as I have taken the view that the hearing today cannot be avoided.  It does not follow that it is justified and reasonable to instruct counsel for the hearing of today.  I am of the view that the involvement of counsel for today’s hearing is unnecessary having regard to the large amount of agreement reached in correspondence and that it must have been envisaged that the only argument for today’s hearing is the question of costs.

17.  In my view, the hearing today could have been handled by a solicitor with no difficulty.

18.  On that basis, I am going to reduce the amount of fees sought by the applicant.  Having regard to the consensus between the parties that $45,000 would be reasonable costs for the work done up to 5 June 2009, I would assess the work done since then, being the preparation of one further affidavit, correspondence exchanged with the other side and preparation for the hearing of today in the sum of $25,000.  So the total amount of costs I award to the applicant for the entire application is $70,000.