IMAGE TECHNOLOGY (HONG KONG) LTD (IN LIQUIDATION) v. HO YING CHEONG AND OTHERS

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

COMPANIES WINDING-UP

NO.342 OF 1996

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DECISION

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1. The Official Receiver applied for leave to appeal against a cost order I made on 4th September 1996.

2. I will refer briefly to the background of the case. Image Technology (Hong Kong) Ltd. ("the Company") is a company in liquidation. The winding-up order was made on 7th August 1996 in Companies Winding-up Case No.342 of 1996.

3. The Company was one of the four Plaintiffs in High Court Action 6861 of 1993. On 22nd February 1995, Yam J., after the trial of the action, dismissed the claim of the 2nd and 4th Plaintiffs with costs to the Defendants on an indemnity basis. The claims of the Company and the 3rd Plaintiff were already previously dismissed.

4. On 15th August 1996, Master O'Donnell ordered the security for costs paid in by the 2nd and 4th Plaintiffs be paid to the 1st Defendant as part payment by the Plaintiffs of the Defendants' costs.

5. On 22nd August 1996, the Official Receiver, without taking any application to intervene as a party in High Court Action 6861 of 1993, applied on an ex parte basis to Master Woolley and obtained a stay of execution of Master O'Donnell's Order for two weeks.

6. On 30th August 1996, the Official Receiver in Companies Winding-up No.342 of 1996 issued a summons seeking the money paid into Court by the Plaintiffs in High Court Action 6861 of 1993 be vested in the Official Receiver and stay of execution of the Order of Master O'Donnell. The application was made in the Companies Winding-up proceedings and not in the high court action.

7. The 1st Defendant on 2nd September 1996 applied by summons in the high court action to set aside the Order of Master Woolley.

8. The two summonses were listed before me for hearing on 4th September 1996. I adjourned the two summonses in order to enable the Official Receiver to lodge application to intervene in High Court Action 6861 of 1993 and also in High Court Action 9302 of 1993 in which there was a similar order for payment out of the security for costs paid in by the Plaintiffs to the 1st Defendant and the Official Receiver again obtained an order staying that order.

9. The view I took was that the Official Receiver must apply to intervene as a party in those actions before it was able to seek the relief which affected the rights of the other parties in the two actions. The matter is so basic I just cannot see how it could be argued otherwise. Mr Lewis for the Official Receiver was not able to produce any authority that the Official Receiver was entitled to act in the manner as it did. The performance of statutory duties is not an excuse and can never be a justification for not observing the procedural requirements. The application was misconceived and the adjournment was caused entirely by the fault of the Official Receiver. The situation falls within the principles in De-Etco International Ltd. v. Desirable Enterprise Ltd. (1993)1 HKC251 which was not cited at the last hearing. It has not been shown that I had wrongly exercised my discretion and the application for leave to appeal is dismissed.

10. I must raise my concern that public funds are wasted in this manner. The situation is even made worse that the Official Receiver had since abandoned the application to vest the funds in Court in the Official Receiver. Mr Lewis said that the Official Receiver needed the advice of the Court of Appeal, as a matter of policy, on whether the Official Receiver could so act in the winding-up proceedings. With respect, it is not the function of the court to give advice to parties. There was no appeal on this issue and the Official Receiver had actually applied to intervene in the two actions. What is more surprising is that the Official Receiver had actually informed the Defendants' solicitors, as revealed in the solicitors' correspondence, that the costs order against the Official Receiver would be borne by the company in winding-up. There was no response to this letter.

11. As I have said, the application for leave is dismissed, with costs to the 1st Defendant to be borne by the Official Receiver.