XCHRX LAM SIU LEUNG AND ANOTHER v. KOOVER WOOLLEN KNITTING FACTORY LTD. AND OTHERS

HCMP 6321/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 6321 OF 1998

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D I R E C T I O N S

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1. The directions which I propose to make are as follows:

(1) That the Petitioners and the 4th and 5th Respondents through their respective solicitors do endeavour to agree on the choice of accountant for the valuation of the Petitioners' shares in the Company within 7 days from the date of this order.

(2) Should the parties fail to agree on the choice of accountant within the aforesaid 7 day period, an accountant be appointed by the Court, and each side be at liberty to file with the Court and serve on the other side a list of no more than 3 accountants (none of whom should have any previous or current connection with the Company) within 14 days upon the expiry of the 7 day period provided under paragraph 1 above.

(3) The accountant chosen through the procedure in paragraphs 1 or 2 above ("the Accountant") should be jointly retained by the Petitioners and the 4th and 5th Respondents and be instructed to write a written report on the full value of Petitioners' shares in the Company according to the Court's directions and accounting principles commonly applied in Hong Kong.

(4) The Petitioners and the 4th and 5th Respondents be jointly and severally liable for the costs of the Accountant in the first instance, subject to further directions from the Court on the incidence of these costs.

(5) For the purpose of valuing the fair value of Petitioners' shares in the Company, the Accountant do have full and unlimited access to all the Company's books and accounts as well as all supporting documents (including but not limited to any relevant vouchers, ledgers, journals, bank statements and other bank documents).

(6) Valuation of Petitioners' shares in the Company be conducted on (a) net assets basis and (b) pro-rata and without any discount for minority shareholding.

(7) In ascertaining the net assets of the Company, the sums found to have been misappropriated by the 4th Respondent be added back as the assets of the Company.

(8) The Petitioners' shares in the Company be valued as at the date of the Petition, that is to say 15 October 1998, but without prejudice to any claims that may be made by the Company against any parties or persons for any damage or loss caused to the Company's property.

(9) That upon the appointment of the Accountant, the said Accountant should within 7 days appoint such surveyors or other professionals to assess the value of the following properties (1) the directors' quarters of the Company at Sheung Ping, (2) office equipment, furniture, machines and stocks of yarn ("the goods") stored at Fidelity Godown Company Ltd.

(10) That the aforesaid surveyors or professionals shall be instructed to use all best endeavours to complete the aforesaid assessment within 3 weeks from their appointment.

(11) That upon receiving a report of the aforesaid surveyors or professionals, such auctioneer as the Accountant may nominate shall be appointed with instructions to use all best endeavours to hold within 14 days therefrom, an auction for the sale of the said office equipment, furniture, machines and stocks of yarn stored at the said Fidelity Godown Company Ltd.

(12) That in the event that there is no willing buyer for the goods or any part thereof, the Company be at liberty forthwith to dispose of the remaining items in whatever manner it deems fit.

(13) That the Petitioners and 4th and 5th Respondents be at liberty to make respective representations to the Accountant if they so wish not later than 2 weeks before the Accountant's finalisation of its written report on the fair value of the shares.

(14) Completion of the sale and purchase of the Petitioners' shares in the Company shall take place at the office of the Petitioners' solicitors within 14 days upon the Accountant rendering his report on the price of the Petitioners' shares in the Company.

(15) At completion

(a) the 4th and 5th Respondents do pay to the Petitioners the price of their shares in the Company by way of either a cashier order or cheque drawn by their solicitors,

(b) the Petitioners do deliver to the 4th and 5th Respondents signed instruments of transfer and relevant bought and sold notes.

(16) Liberty to apply.

2. As for the costs of the 3rd Defendant, the general principle is that costs should follow the event. I see no circumstance which allows me to depart from that general principle. Accordingly, I would order that the Petitioners pay the costs of the 3rd Respondent to be taxed if not agreed.