XCHRX Re Shun Kwong Investment & Trust Co. Ltd.

HCCW958/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO.958 OF 2000

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REASONS FOR DECISION

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1. The Petition herein was presented on 16 October 2000 by four of the contributories of the Company. An affidavit verifying the Petition was made by the 4th petitioner and it was filed on 23 October 2000. The Petition is listed for hearing on 9 January 2001. As of today, it has not been advertised.

2. On 24 November 2000, the 4th petitioner filed with the court a Request to withdraw Petition through her present solicitors, Messrs Patrick Chan & Co. ("PCC"). Hitherto, she together with the other three petitioners were represented by another firm of solicitors, Messrs K.C. Tsang & Co. ("KCT"). In support of her application to withdraw, the 4th petitioner made an affidavit which was filed on 24 November 2000. There was also filed with the court an affidavit of Melissa Pang, a partner of PCC.

3. The 4th petitioner's reasons for seeking to withdraw as a petitioner, as appeared from her and Miss Pang's affidavits, are that she was not aware that she was petitioning for the winding-up of the Company, that she did not in fact understand what was meant by winding-up and that she was misled into lending her name and support to the Petition by Mr Samuel Tak Lee ("S T Lee") and his son. In short, it is the 4th petitioner's contention that the Petition was presented without her knowledge and authority.

4. The application came before me as an ex parte application on 24 November 2000 with notice being given to the Company. The Company appeared by its solicitor, who informed the court that the Company had no objection and did not seek costs against the 4th petitioner. Having considered the papers, the submissions and the authorities referred to by counsel appearing for the 4th petitioner, I took the view that the 1st to 3rd petitioners should be given notice of the application. The application was therefore adjourned to 25 November 2000 to enable notice of the application be given to the 1st to 3rd petitioners' solicitors.

5. At the adjourned hearing on 25 November 2000, the 1st to 3rd petitioners were represented by counsel, Mr Coleman, who also held a watching brief for S T Lee but on the instructions of another firm of solicitors, Messrs Denton Wilde Spate. Mr Coleman informed the court that he also appeared for the 4th petitioner on the basis that the 4th petitioner had executed a Power of Attorney in favour of S T Lee and the Power of Attorney could not be revoked. Mr Coleman requested for an adjournment of the hearing for the reason that the 4th petitioner through S T Lee had instructed KCT to remain on record as her solicitors and that an affidavit from the 4th petitioner to the effect that PCC was not properly instructed was forthcoming. Mr Coleman further indicated that there would be arguments against the 4th petitioner's right to withdraw the Petition based upon the legal effects of the Power of Attorney she gave in favour of S T Lee.

6. The request for adjournment was opposed by counsel who appeared for the 4th petitioner on the application to withdraw. In the end, I adjourned the application for argument upon an undertaking from the 1st to 3rd petitioners given through counsel not to advertise the Petition until after the determination of the application to withdraw. I also gave directions for the filing of evidence in view of the indications, given through Mr Coleman, that an affidavit from the 4th petitioner on the authority of PCC would be filed within a few days. Principally, my concern was whether the application to withdraw was properly before the court, namely, whether it was indeed the wish of the 4th petitioner to withdraw.

7. Then on 13 December 2000, KCT wrote to PCC stating that "our client is prepared to consent" to the 4th petitioner's application subject to payment of S T Lee's costs incurred on behalf of the 4th petitioner and the consent is without prejudice to "our client's rights" against the 4th petitioner under two Powers of Attorney. On 16 December 2000, PCC wrote to KCT refusing the demand for costs and seeking clarification as to on whose behalf KCT wrote on 13 December 2000. The response from KCT came on 18 December 2000. It stated that "our clients do not object" to the 4th petitioner's withdrawal from the Petition. It also asked that the 4th petitioner paid the 1st to 3rd petitioners' costs necessitated by the application since 24 November 2000. The letter further reserved the rights of S T Lee. The letter however did not address the query of PCC as to on whose behalf the letter of 13 December 2000 was issued. Indeed, it is not altogether clear on whose behalf the latter letter of 18 December 2000 was issued. In any event, PCC replied on the same day refusing the request for the 1st to 3rd petitioners' costs.

8. At the hearing today, the 1st to 3rd petitioners do not contest the application to withdraw. Contrary to the submissions made on 24 November 2000, there is no affidavit from the 4th petitioner regarding the authority of PCC to act. No submission on the effect of the Powers of Attorney was advanced. The only outstanding issue is the question of costs as between the 1st to 3rd petitioners and the 4th petitioner. On this issue, the 4th petitioner's contention is that the adjournment on 25 November 2000 was occasioned by the 1st to 3rd petitioners' indications through counsel that an affidavit from the 4th petitioner to explain the question of authority and instructions to solicitors was forthcoming. The adjournment was totally unnecessary having regard to the fact that no such affidavit had been filed. The 4th petitioner therefore seeks costs occasioned by the adjournment on 24 November 2000 be paid by the 1st to 3rd petitioners on indemnity basis. The 1st to 3rd petitioners, on the other hand, ask for costs against the 4th petitioner in respect of the hearing on 24 November 2000 and this hearing. The argument is on the basis that PCC ought to have served, but did not serve, the papers of the application until 25 November 2000 and that the 1st to 3rd petitioners needed time to consider the application. It is submitted that the application should not be made ex parte but should have been by way of an inter partes hearing.

9. In my view, had the 1st to 3rd petitioners, in response to the notice given, simply attended the hearing on 25 November 2000 to find out what was happening and/or to make representations on the question of costs, they might be on better grounds to seek costs of that hearing from the 4th petitioner. I pause here to observe that I do not agree that an application to withdraw has to be made inter partes. It can be made ex parte in the first instance, subject to the court's power to direct for it to be heard inter partes or on notice to the interested parties, depending on the circumstances of the case. The fact is, as Mr Au who appears for the 1st to 3rd petitioners at this restored hearing rightly accepts, that the other petitioners have no right to insist that the 4th petitioner remains as a petitioner. Nor are they entitled to oppose an application to withdraw, subject to question of costs.

10. The 1st to 3rd petitioners had instead adopted a very involved stance on 25 November 2000 and requested for an adjournment for the reasons outlined above. While accepting that when Mr Coleman asked for an adjournment, he had not specified on whose behalf the request was made, whether it was the 1st to 3rd petitioners, S T Lee or KCT, Mr Coleman had also not differentiated the position of the 1st to 3rd petitioners from S T Lee or KCT. The court can only take it that the submissions reflected the stance of the 1st to 3rd petitioners or, to say the least, that the 1st to 3rd petitioners supported the adjournment. The adjournment, as subsequent events show, was wholly unnecessary and served no purpose at all. But for the request for adjournment and the submission that an affidavit from the 4th petitioner refuting the authority of PCC was on the way, this court would have dealt with and disposed of the application to withdraw on 25 November 2000.

11. Mr Au is at pain to stress that the 1st to 3rd petitioners were entitled to time to consider the application in view of the late supply of the papers for the application. That may well be so. The reality, however, is that the adjournment was not sought on that basis. Likewise, the adjournment was not granted on that basis. The adjournment was sought and granted for a purpose which was not met, the reasons for which, however, remain unknown as no explanation has been offered. The adjournment is plainly wasted. That being the case, there is no reason why the 1st to 3rd petitioners should not bear the costs of and occasioned by the adjournment. There is also no basis for the 1st to 3rd petitioners to seek costs against the 4th petitioner.

12. As to the costs of the hearing on 19 December 2000, although KCT had written on both 13 and 18 December 2000 indicating that the application to withdraw would not be opposed, the concession was with conditions, which are without basis. The 4th petitioner is, in the circumstances, entitled not to agree to them.

13. For these reasons, the costs occasioned by the adjournment of the hearing on 25 November 2000 should be borne by the 1st to 3rd petitioners. As to the basis on which the costs are to be paid, I agree that the 1st to 3rd petitioners ought to be visited with a higher scale of costs. Contrary to the submissions made by Mr Coleman on 25 November, there is no affidavit from the 4th petitioner to dispute the authority of PCC. Not only that, there is no attempt at all to explain to this court the basis on which Mr Coleman made the submission and, more importantly, why the affidavit has not come about. This court cannot help but doubt the genuineness and the motive of the challenge made to PCC's authority to act for the 4th petitioner. It will also appear that the request for adjournment is nothing but an attempt to delay the proceedings. It is conduct which amounts to an abuse of the process of the court and also an affront to the court. The costs should therefore be awarded on an indemnity basis to mark the court's disapproval. I however decline the 4th petitioner's application to certify the matter fit for two counsel as I do not consider that the issues are of such complexity as to necessitate the appearance by two counsel.

14. For the above reasons, there will be leave to the 4th petitioner to withdraw as a petitioner and to withdraw the allegations made in her affidavit filed on 23 October 2000. There will be no order as to the costs of the application to withdraw save that the 4th petitioner's costs after 25 November 2000 be paid by the 1st to 3rd petitioners to be taxed on indemnity basis if not agreed.