WILLIAM JOHN LAU v. WAN YUK LIN ALISON AND OTHERS

HCCW 576/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO. 576 OF 2007

____________________

____________________

BETWEEN

____________________

______________

D E C I S I O N

______________

1.  The valuers have made a valuation report of some shares of the 4th respondent to be purchased by the 1st to 3rd respondents from the petitioner pursuant to an order of the court. The petitioner has made further representations to the valuers saying that there appeared to be some discrepancies between the bank statements and the management accounts provided by the 1st to 3rd respondents.

2.  The valuers then sought clarification from the 1st to 3rd respondents on the possible discrepancies, but the 1st to 3rd respondents were not forthcoming.

3.  The petitioner then made an application by summons dated 12 September 2011 for an order pursuant to the inherent jurisdiction of the court that unless the 1st to 3rd respondents, or any one of them, do answer the questions put forth by the valuers within seven days from the date of this order to be made and do purchase all the petitioner’s shares in the 4th respondent within seven days after the issue of the revised valuation of the shares by the valuers, the petitioner shall be entitled to reinstate the petition.

4.  However, I understand that it is not the intention of the petitioner to reinstate the petition. 

5.  Counsel for the 1st to 3rd respondents, Mr Maurellet, submitted that I have no jurisdiction to make the order sought as the valuation was by consent and the terms of the agreement as recorded in the schedule of the Tomlin order did not give me any power to make the order.

6.  Mr D’Souza referred me to the terms of the valuation as agreed between the parties.  The terms provided that the valuers should discuss with the 1st to 3rd respondents on various matters pertaining to the valuation.

7.  I think if the 1st to 3rd respondents should fail to provide full cooperation and be less than full and frank in the discussion with the valuers, then the valuers can only make reasonable assumptions as answers to their queries for the purpose of the valuation.

8.  I do not think I should make any order requiring the 1st to 3rd respondents to be more cooperative or be full and frank in answering the valuer’s queries.  The same would apply to the present unanswered queries.

9.  I think the valuers, having been apprised of the possible discrepancies at about some HK$3 million, have taken the view that there may be manifest errors in the report already made. 

10.  In the circumstances, if the 1st to 3rd respondents should provide answers to the possible discrepancies, then the valuers may consider whether there is any manifest error in the report and decide whether to produce a revised report.

11.  If the 1st to 3rd respondents are not going to provide any answer, then it is for the valuers to go through the relevant papers and make the necessary and reasonable assumptions and then consider whether there is any manifest error and the need to revise the report.

12.  Having made the above observations, I have to say that it does not appear in the terms of the schedule to the Tomlin order that I can make an order requiring the 1st to 3rd respondents to clarify the possible discrepancies.  I therefore dismiss the summons.

(Discussion re costs)

13.  The petitioner has lost the application and should pay costs.  The 1st to 3rd respondents are recalcitrant and such attitude should not be encouraged.  The affidavit in opposition is bulky and the exhibit runs to 241 pages when only six pages are useful.  The point that led to the success of the 1st to 3rd respondents in the application was only made known in the skeleton submission filed yesterday. 

14.  Taking all these matters into account, I order the petitioner to pay 50 per cent of the costs of the application to the 1st to 3rd respondents.