SECURITIES AND FUTURES COMMISSION v. CANWELL FOREX INTERNATIONAL LTD

1995, MP No. 3103

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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D E C I S I O N

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1. In this case I have been asked to make a number of orders and I have made orders in terms of paragraphs 1, 2, 3 and 6 of the first draft order.

2. There then follows now the apparently more complicated question of costs. In this respect, I propose to join in as intervener, for want of a better description, Silver Bound Capital Ltd. They have clearly been invited to attend these proceedings. Two draft orders have been prepared in which they are mentioned as having appeared by counsel and it was clearly intended that they should attend.

3. The order that I now make is primarily one for the appointment of an administrator and that has been made without dissent by the company, and in respect of that it seems to be right that the company should pay the SFC's costs for the administration.

4. I then turn to Silver Bound Capital Ltd.'s costs. It appeared during the course of argument that there might have been perhaps some confusion between the roles of the SFC and the roles of the administrator. One of the orders that I was asked to make was an order under the first draft order, which is No. 4, and that after I had indicated I had some difficulty with my appreciating that I had jurisdiction to make such an order, it has been left over either for the administrator to argue later or for the SFC to come back on some other occasion and convince me that I have power to make such an order. More important is, as far as Silver Bound Capital Ltd.'s appearance here today is concerned, the sum of HK$32,080,000. That is, in respect of that an order was sought to be made under paragraph 5 of the first draft order that that sum remain in the hands of the administrator-to-be and remain vested in him until after determination of the issues which are to be tried and to be dealt with as the court may think fit. However, in the second draft order the provision is made that that sum which is in the hands of the administrator may be released as may be necessary from time to time to enable the administrator to appear and to defend the said issues - a small order in terms of lines necessary to set it out, perhaps an important order as regards the parties, particularly if that is the major sum of money which might be available in this matter.

5. I considered it inappropriate to make any directions at all as to the conduct of a dispute that would arise between Silver Bound Capital Ltd. and the company. That is a matter which, it seems to me, the administrator, who will be the person who will be conducting those proceedings, should play a part in, and it seemed to be inappropriate to make any order for directions in his absence.

6. Now in those circumstances what should I do about the costs? It seems to me that really Silver Bound Capital Ltd. appeared here because they were invited to attend and they were invited to attend by the SFC, that that invitation indicated that a significant order might possibly be made which would affect the interests of Silver Bound Capital Ltd., so they, not unsurprisingly, attended. As it transpires, that order has not been made. I have been invited by counsel on behalf of the SFC to reserve those costs, and perhaps to be dealt with as part of any action between Silver Bound Capital Ltd. and the company. I do not consider that an appropriate step because that might entail the company having to pay costs which they weren't responsible for incurring. In those circumstances it seems to me that the order for costs should be that Silver Bound Capital Ltd., as intervener, should receive their costs from the SFC, the Plaintiff.