Re Udl Steel Fabricators & Shipbuilders Co. Ltd.

CACV 157, 164, 258, 259, 260, 261, 262 & 280 of 2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NOS. 157, 164, 258, 259, 260, 261, 262 & 280 of 2000

(ON APPEAL FROM HCMP NO. 436 OF 1999)
(ON APPEAL FROM HCMP NO. 437 OF 1999)
(ON APPEAL FROM HCMP NO. 414 OF 2000)
(ON APPEAL FROM HCMP NO. 416 OF 2000)
(ON APPEAL FROM HCMP NO. 418 OF 2000)
(ON APPEAL FROM HCMP NO. 419 OF 2000)
(ON APPEAL FROM HCMP NO. 421 OF 2000)
(ON APPEAL FROM HCMP NO. 422 OF 2000)
(ON APPEAL FROM HCCW NO. 26 OF 2000)
(ON APPEAL FROM HCCW NO. 189 OF 1999)
(ON APPEAL FROM HCCW NO. 709 OF 1999)
(ON APPEAL FROM HCCW NO. 1152 OF 1999)
(ON APPEAL FROM HCCW NO. 1153 OF 1999)
(ON APPEAL FROM HCMP NO. 5519 OF 1999)

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Coram: Hon Rogers VP, Woo JA and Seagroatt J in Court

Dates of Hearing: 7 - 8 November 2000

Date of Judgment: 7 December 2000

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J U D G M E N T

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Hon Seagroatt J :

Background

1. UDL Holdings Ltd and its 24 subsidiary companies are in financial difficulties. They are, in short, insolvent. The outcome will be liquidation of the companies unless some form of composition of creditors or scheme of arrangement can be agreed and approved.

2. Such a scheme if it can be devised, accepted and approved by the Court is often the lifeline when there is a discernible general benefit in keeping a company afloat. It would enable the companies to continue to trade. Historically, a scheme, providing it meets the statutory requirements, is regarded as being infinitely preferable to liquidation. The company can continue to provide employment and, as a living body, it contains the potential for liabilities to be satisfied in the long term. The scheme is designed to meet creditors reasonable requirements. If it does not, it will not be approved. The scheme may provide for only a fraction of creditors' debts to be met. Creditors have to make value judgments taking into account all the circumstances. They will of course look at all the provisions of such a scheme meticulously to see if it establishes an equitable provision for their rights and/or interests. They will weigh in the balance the alternative to such a scheme.

3. A scheme was devised for each of the 25 companies. It is based, financially, on the sale of the unencumbered assets of each of the companies whose creditors vote in favour of the relevant scheme.

4. The fund formed by these realised assets of all companies will then be applied to payment of all the 'external claims' of those companies. The secured creditors are covered in respect of their debts by the security held. Preferential creditors will be paid the full amount of their preferences up to the statutory limit. They then rank in respect of the excess over the preference, if any, with the unsecured creditors pari passu. The same applies to any secured creditors in respect of any excess of debt over the value of the security.

5. There are special provisions relating to the valuation and/or realisation of the security held by a secured creditor. The time limit is two years. Claims by or debts owed to the company and any of its subsidiaries are excluded from the Scheme.

6. There is to be a moratorium on the enforcement of creditors' claims whilst realisation of the assets and distribution take place but pending arbitrations are allowed to continue in order to quantify claims by creditors and establish their entitlement to dividends.

7. If the schemes are sanctioned the recovery for unsecured creditors is likely to be modest - $0.1141 plus 0.17 share for each dollar of scheme debt.

8. The meeting of each company took place. Creditors to the value of 80.36% of the overall debt voted for the scheme. Numerically, 46 creditors voted for the scheme and only 7 voted against. Certain irregularities came to light which subsequently reduced the percentage of the creditor votes to 75.87 which was just sufficient to meet the statutory requirement.

The Judicial decision

9. Although the petitions to the Court to approve the scheme were opposed by some of the preferential creditors of seven of the subsidiary companies, and Nishimatsu, a disputed creditor whose claim against two subsidiary companies (only one of which is amongst the 24 petitioners) is currently subject to arbitration, the Companies Judge ( Le Pichon J, as she then was) approved the scheme. In her judgment she gave a detailed resumé of the arguments challenging the Court's jurisdiction, and of the pertinent law.

10. She was satisfied that the statutory provisions "have been complied with," and she could discern "no reason ... as would cause the court to withhold its sanction to the schemes". She was also "satisfied that the arrangements are such as an intelligent and honest person, a member of the class concerned and acting in respect of his interest, might reasonably approve."

11. Before I deal with the grounds of these appeals against her judgment I shall review shortly the relevant law.

The Statutory requirement and the approach of the Courts

12. Section 166(1) of the Companies Ordinance (Cap. 32) provides that "where a compromise or arrangement is proposed between a company and its creditors or any class of them, or between the company and its members or any class of them, the court may, on the application in a summary way of the company or of any creditor or member of the company ..... order a meeting of the creditors or class of creditors, or of the members of the company or class of members, as the case may be, to be summoned in such manner as the court directs." [My underlining]

13. Subsection (2) relates to the necessary majority (three-fourths) voting for any compromise or arrangement, and the court's power to sanction such a compromise which becomes binding on all creditors or class of creditors. It follows in all essentials section 206 of the English Companies Act, 1948, and section 425 of the English Companies Act, 1985.

14. The argument before the learned Judge centred around whether internal creditors, either in the form of those of the company and all its subsidiaries or of those of the company and the 24 scheme companies, should have had a separate meeting as a class of creditors instead of having to vote with all other creditors as a single class. If the votes of the internal creditors were excluded on either basis, the approval percentage would fall short of the statutory threshold by between approximately 2% to 5%.

15. A number of cases was reviewed, each differing on its facts, in order to underline the principles involved. The starting point was Sovereign Life Assurance Co. v. Dodd [1892] 2 QB 573 where Lord Bowen at page 583 said:

"The word 'class' is vague, and to find out what is meant by it we must look at the scope of the section, which is a section enabling the Court to order a meeting of a class of creditors to be called. It seems plain that we must give such a meaning to the term 'class' as will prevent the section being so worked as to result in confiscation and injustice, and that it must be confined to those persons whose rights are not so dissimilar as to make it impossible for them to consult together with a view to their common interest. If that be so, in considering the deed of arrangement made with the Company which took over the business of the Sovereign, we must so construe it as not to include in one class those whose policies had already ripened into debts, and those whose policies might not ripen into debts for years to come."

16. A contemporaneous decision was that of In Re Neath and Brecon Railway Co. [1892] 1 Ch 349 in which the Court of Appeal [Lindley, Lopes and Kay LJJ] affirmed the decision of North, J. It was a case under the Railway Companies Act, 1867. There were five classes of debenture stockholders, a class of preference shareholders, and the ordinary shareholders. All except the preference shareholders assented to the scheme to the required extent. No holder of preference shares had expressed dissent. North, J thought the scheme a beneficial one but he was bound by section 15 of the Act -

"..... the assent to the scheme of any class of ..... preference shareholders ..... shall not be requisite in case the scheme does not prejudicially affect any right or interest of such class."

Although the language is somewhat archaic the Judge had no difficulty in interpreting it to mean that if any of the existing rights or interests of a class is affected by the scheme, that class is to be consulted, and their assent must be obtained. The wording of section 15 of the Railway Companies Act, 1867 is significantly different from section 166 of the Ordinance (and the English Companies Legislation). Lopes, LJ said at page 358:

"It appears to me to be perfectly clear from the Act that, if there is any right which is prejudicially affected, although the balance of advantage may be in favour of the class, section 15 does not apply."

The section was drawn to protect "any right or interest of such class or company". This is a far different situation from that in section 166 (et al). Kay LJ went on to identify the effect of the scheme upon the rights of the preference shareholders which was substantial, particularly in relation to those of some other classes.

17. I doubt that that case is of any assistance and I am far from accepting that it illustrated any difference between the terms used - "rights" as opposed to "interests". I am more inclined to the view that the terms were used synonymously or at least inseparably in the statute. At page 23 of her judgment (P-Q) Le Pichon J referred to the obiter dicta of Owen J in Re Bond Corporation Holdings Limited [1991] 5 ACSR 304 at p. 316 -

"..... it is not appropriate to focus on considerations of motive and personal interests as they might affect individual creditors, or which might predispose individual creditors to vote one way or the other. Those considerations should not be used as the basis of classification."

18. In her evaluation of rights of creditors and consideration of whether confiscation or injustice would result from classification of creditors under the scheme, the learned judge came back to some observations of Owen J in the Australian case most recently cited (at page 317):

"In determining classes of creditors, the court must balance the danger of a compromise being forced on dissenting creditors by a majority, against the danger of a minority of creditors having the power to veto the scheme. The court must be satisfied that the result of a meeting is likely to reflect properly the views of the creditors concerned. In approaching its task, the court must identify the legal character of the rights and obligations of the creditors against the company and must assess the way in which those rights and obligations will be affected in the implementation of the scheme. Creditors whose legal rights and obligations (so understood) are so dissimilar to those of other creditors that it would be impossible for them to consult together with a view to their common interests, must be treated as a separate class."

19. Owen J mirrored the approach of Bowen LJ in Sovereign Life and, in his lucid exposition, is his heir. The learned Judge, in my view, placed great weight on this approach, and in my respectful opinion rightly so.

20. Almost contemporaneously with Owen J's decision and exposition came the decision of Nazareth J (as he then was) in Re Industrial Equity (Pacific) Limited [1991] 2 HKLR 614 cited with approval by Jonathan Parker J (as he then was) and equally approvingly adopted by the Court of Appeal in the same case - Re BTR plc in 1999. The two most pertinent passages from Nazareth J's judgment appear at page 18 (H-P) and page 19 (D-F) of the judgment of Le Pichon J and I do not need to repeat them. The Australian decision of Owen J did not feature in the Hong Kong decision (not surprisingly perhaps given the fact that it was in March 1991 and Nazareth J's judgment was delivered in July 1991) nor in the English decision at first instance or in the Court of Appeal. Notwithstanding that, Chadwick LJ adopted almost exactly the same practical and legal approach as the line of judges from Bowen LJ had done and the relevant passage, although appearing in full at page 20-21 (F-A) of the judgment of Le Pichon J, is worth repeating for its logic, reasonableness and force:

"... Parliament clearly intended that s. 425 should be available as a means of effecting a binding compromise between a company and its members and that it should be available as an alternate to the route under ss. 428 and 429.

....

The way which Parliament's intention is given effect - as it seems to me and as it has seemed to judges over the century or so since Bowen LJ considered the matter in 1892 - is that the court is not bound by the decision of the meeting. A favourable resolution at the meeting represents a threshold which must be surmounted before the sanction of the court can be sought. But if the court is satisfied that the meeting is unrepresentative, or that those voting in favour at the meeting have done so with a special interest to promote which differs from the interest of the ordinary independent and objective shareholder, then the vote in favour of the resolution is not to be given effect by the sanction of the court. That, as it seems to me, is the check or balance which Parliament has envisaged. Further, that as it seems to me, is the only practical check that can be imposed in circumstances where, as Jonathan Parker J pointed out, it is a fact of life that shareholders having shares which confer the same rights under the company's constitution and under the scheme may, nonetheless, be motivated to vote in different ways..... Parliament has recognised that it is for the court exercising the function described by Jonathan Parker J to hold the ring between different interests; and to decline to sanction a scheme if satisfied that members having one interest has sought to take advantage over those having another. In my view the judge was plainly correct to reject the objection that there should have been more than one meeting in this case."

In the course of the hearing before the learned Judge, and before us, a number of other decisions has been referred to and considered. For my part I do not think that the decision in Re Hellenic & General Trust Ltd 1976 1 WLR 123 is of assistance. Nazareth J in Re - Industrial Equity (Pacific) Ltd added "as an aside" that "the difficulties Templeman J (as he then was) considered manageable in Hellenic, appear to have been concerned with shares in subsidiary companies and to have presented difficulties of a wholly different and minor order". I would also respectfully adopt Nazareth J's view of Lord Esher's statement in the Sovereign case, - when dealing with the statutory provision that persons to be summoned to a meeting are persons who can be divided into different classes -

"They must be divided into separate classes ..... It is because the creditors composing the different classes have different interests; and, therefore, if we find a different state of facts existing among different creditors which may differently affect their minds and their judgment, they must be divided into different classes."

Nazareth J construed that reference as a reference to interests arising out of rights in the company. Jonathan Parker J at first instance in Re BTR plc found it difficult to understand the concept of an interest arising out of a right as being something separate from the right itself. He went on to state that:

"..... the relevant test is that of different rights rather than differing interests ..... Shareholders with the same rights in respect of the shares which they hold may be subject to an infinite number of different interests and may therefore, in assessing their own personal interests (as they are perfectly entitled to do), vote their shares in the light of those interests. But that in itself, in my judgment, is simply a fact of life: it does not lead to the conclusion that shareholders who propose to vote differently are in some way a separate class of shareholders entitled to a separate class meeting. Indeed a journey down that road would in my judgment lead to impracticability and unworkability."

I have formed the view that that is virtually the last word on the merits of the argument.

The Appellant Preferential Creditors

21. Mr Martin Lee SC, on behalf of the preferential creditors, being employees and/or former employees of some of the companies, has argued for separate meetings of this class of creditors. The argument is predicated on the basis that in a single meeting there is no opportunity for his clients to talk amongst themselves about their common interests. However I suspect from Mr Lee's fall back position, and indeed from the tenor of his arguments, that his real complaint is that a scheme of arrangement will simply delay the satisfaction of the employee's statutory preferences. A liquidation will satisfy their entitlement more quickly. I consider that a flawed argument, but will return to the question of delay in due course.

22. In the scheme the preferential creditors have the same right in respect of their preference as in a liquidation. In other words that preference is guaranteed. The excess over the statutory maximum is however to rank pari passu with the claims of the unsecured creditors. The same applies to the secured creditors in respect of the excess of their claim over and above the value of the security. There are specific varying provisions as to the valuation and realisation of such securities in the scheme. Nothing turns on that so I do not need to consider it.

23. Leaving aside for the moment the fact that the preferential creditors' rights are the same under the scheme as on liquidation, the preferential creditors have the same rights in respect of the excess as the unsecured creditors and as the secured creditors in respect of the excess debt claimed by them over and above the value (however and whenever ascertained) of their security. They also have the same interests, the questions to be posed being - "Is the dividend and share distribution a fair reflection of the assets available? Do we want the company to survive as a going concern? Do we recognise that a shareholding gives us a potential return in the future?" All those are matters that preferential, secured and unsecured creditors can properly consider and discuss in a single meeting. Their motivations can be varied. They can properly be ventilated. I regret that I cannot accept Mr Lee's postulation that only by a separate meeting can proper regard be had to the preferential creditors' rights and interests. Their prime right is properly secured by the Scheme. There is nothing to discuss about that. It is cut and dried. They have community of interest, as well as of right, with the other defined creditors.

24. At this stage it is appropriate to consider the position of the internal creditors since although this was not to the fore of Mr Martin Lee's submissions, it nonetheless featured prominently, albeit secondarily, in Mr Bunting's submissions.

25. The internal creditors are those of the subsidiaries and holding company inter se. They have no priority and no security. They are on a par with the ordinary creditors. Those subsidiaries not participating in the scheme will receive dividend and shares on the same basis as the ordinary creditors. Under the scheme the participating subsidiaries are to rank lower than all the other ordinary creditors because they are not to receive either dividend or shares (see clauses 22 - 24 of the Scheme). I have difficulty in accepting the argument which says that a proper consideration of the rights and interests of other creditors demands that internal creditors should be excluded from any meeting of any other class - even of the class of unsecured creditors - and have their own meeting. Although the rights of the participating subsidiaries have been diminished by the scheme - and no other class of creditors has had its rights diminished - they should not have a meeting with even those with whose debts they rank, or so the argument goes.

26. On a rational view, their interest must be in common, and can only be in common, with the interest of the other unsecured creditors. The participating subsidiaries having accepted, if they do, that they will forgo dividend and shares, they will look as carefully and realistically at the provision concerning share distribution, as the other creditors - at the very least. As a consequence of their foregoing any dividend and shares there is more benefit to the unsecured creditors. The proposed shareholding will be more valuable.

27. I now return to the point of delay. Once the Scheme Administrator has gathered in sufficient assets of the company and subsidiaries to meet the Post-Scheme Costs the Preferential Claims will be paid. On a liquidation the gathering in of assets is likely to be more uncertain and time-consuming whatever the present calculations may be of the net assets of any of the companies on a liquidation. Another factor, never to be underestimated in Hong Kong, is the liquidator's costs for which there is no express provision in the calculations to which our attention has been drawn.

28. It is more than likely that in view of the fact that share distribution, on a par with all the other creditors, is the only means whereby there is some small degree of satisfaction of their debts, they will be concerned to check that there is no possibility of a greater return. Therefore they clearly have an interest identical to that of ordinary creditors, and of the preferential and secured creditors who are reduced to that same rank for the purpose of dealing with their excess claims.

29. I remain wholly unconvinced that liquidation, involving the realisation of the assets of a moribund concern, can be more speedy than the realisation of assets of a company deemed to be viable which needs to reassert itself in the trading world and has the impetus to do so.

30. Mr Lee in the closing stages of his address invited us to rewrite the criteria or principles for a situation such as this, on the basis that it would lay down the guiding policy for Hong Kong. I find it difficult to reject the legal wisdom which is time honoured and still, a century later, finds itself approved and applied in cogent form in the courts of the United Kingdom, Australia and Hong Kong. Flattering though it may be to a court be so invited, it would, in my view, be to underrate distilled wisdom which over the years has encountered no difficulty in applying the principles so succinctly stated, and to risk trying to create a straitjacket which ignores the very considerations to which Bowen LJ and others attributed importance.

Nishimatsu

31. The case for Nishimatsu is advanced on this premise: Nishimatsu is a creditor of UDL Holdings under the latter's guarantees of Kenworth's and Argos' contracts with Nishimatsu. As such it should have attended the meeting of creditors and been allowed to vote. Because its claims or "debts" are valued at nil it was prevented from having any voice or vote. Accordingly it is argued the Court has no jurisdiction to approve the scheme because of that irregularity.

32. The dispute between Nishimatsu and Kenworth is the subject of arbitration proceedings. The outcome is unknown. In the proceedings Kenworth has counterclaimed for almost $196 million. The claim against Argos is in a similar state with Argos counterclaiming almost $69 million.

33. It is agreed on all sides that both claim and counterclaim are genuine or "bona fides". The only inference of any value to be drawn from that is that the counterclaim is not simply a cynical, spurious tactic. There are serious issues on both sides, to be resolved by arbitration.

34. Apparently the Company (UDL Holdings) under the scheme treated Nishimatsu as having a debt i.e. as a creditor. In the Explanatory Statement it is quite clear that the Company would be looking at a valuation of the debts of Creditors for voting purposes. (See pages 31-32 of the Scheme.) The scheme has a definition section. "Creditors" are defined as those Creditors "whose claims arose out of or had their origin in any matter occurring before the Effective Date (the date on which the scheme was to come into force) and whether present, future or contingent whether sounding in equity, contract, tort or under statute, and whether liquidated or yet to be ascertained".

35. There is no definition of "creditor" in the Ordinance. In Halsbury's Laws of England (Vol. 7(2) Companies) at §1452, a "creditor" is defined as "every person having a pecuniary claim against the company, whether actual or contingent". This would encompass Nishimatsu as a contingent creditor. Although Kenworth does not appear to be one of the 24 subsidiaries to be embraced within the scheme, its claim against UDL Holdings would nonetheless be contingent because if Kenworth were unable to satisfy any arbitration award, Holdings would then be liable under the parental guarantee. Argos is one of the 24 and Nishimatsu's claim fell to be valued as a direct pecuniary claim against it.

36. How was Nishimatsu's potential debt to be valued? There was no admission of any part of it. Until the arbitration award, or any settlement of the claim, it would be impossible to determine any fixed amount to represent it. It may fail utterly. The counterclaim may succeed fully. It may fail in part with the counterclaim extinguishing part of the claim. It may succeed fully with the counterclaim failing. It would require a careful evaluation of the merits of claim and counterclaim to determine a range for its value. That would be an unrealistic course. In my view it would be impossible to give it any value for sensible purposes. In fact a nil value was attributed to it meaning that it had no voting rights. I do not see how there could be any different decision. The alternative would have made a nonsense of any idea of parity amongst the unsecured creditors giving a right to an unproved creditor (who may ultimately fail to prove a debt) which was possibly greater than that of a proven creditor. The decision was not only a bona fide decision. It was in my view the only patently equitable one.

37. There is a safeguard in the Scheme for the benefit of Nishimatsu's potential debt. It can submit a notice of claim prior to the cut off date. The claim is already subject to arbitration proceedings so the Scheme Administrator has to await the award or the decision of any appellate body. Providing the clauses in the scheme have been complied with, such proving creditors with the benefit of an arbitration award, will rank for cash dividends. A fund will be set aside for this purpose (see clauses 43 and 44 of the Scheme).

38. Mr Bunting was concerned about the question of Nishimatsu's costs in the event of a successful arbitration award for his clients. The definition of "Claims" in the scheme is "the claims of Proving Creditors". This must include the costs of proving such claims. It would in my view require a specific exclusion of the necessary costs to defeat any claim to include such costs. "Scheme Debts" has a definition. It includes "all claims of Proving Creditors against the Company ... ... established in accordance with part 3 of the Scheme .. ..." It would indeed be inequitable if, having been required to prove its claim, a potential creditor was not able to include the costs of so doing in its claim. In my view, the word "claim" unarguably includes the reasonable costs of proving that claim. The word 'award' in clause 33 includes the costs involved.

39. The reasoning of the learned Judge in this case, carefully set out in pages 27-31 of her judgment, is unassailable.

Conclusion

40. In my judgment these Appeals fail. The learned Judge had jurisdiction to make the orders she did and she exercised her discretion properly in sanctioning a scheme which provides a fair recognition of the rights (and interests) of all creditors, which scheme is infinitely preferable to the uncertainties and wastefulness of a series of liquidations.

41. The Respondents shall have their costs of these Appeals and of the hearing below, the learned Judge having reserved those costs.

Hon Woo JA :

42. I agree with both of the judgments of Seagroatt J and Rogers VP. I have nothing to add.

Hon Rogers VP :

43. I agree with the judgment of Seagroatt J. I wish to add a few words in relation to a few matters.

44. As the first affidavits on behalf of the preferential creditors augured, one of the advantages that was perceived that would be gained by the failure of the Schemes and consequent winding up orders was that ex gratia payments would be forthcoming under the Protection of Wages on Insolvency Ordinance. Arguments in this respect clearly featured in the court below and in my view were correctly dealt with in the judgment of Mrs. Justice Le Pichon. The arguments again featured on the application before me in July for a stay of the order made in the Court below. Quite rightly, on this appeal Mr. Martin Lee S.C. disavowed any reliance on such arguments. The major point taken on behalf of the preferential creditors that there would be increased delay in the payment of the preferential debts under the scheme has been dealt with in the judgment of Seagroatt J. and I wish to add nothing further than to say that the basis for such an argument is conspicuous by its absence.

45. Furthermore, both the judge below and Seagroatt J. have given full consideration to the cases relating to the proper approach to the questions relating to classes of creditors as regards approval of schemes. They have demonstrated that the proper approach is to consider the question of rights. The question of interests falls to be considered by the court as a matter of discretion when approving the Schemes. With that I entirely agree. In the light of that, I see no reason for disturbing the judge's conclusion that as regards these Schemes there was no dissimilarity in rights between the preferential creditors and the other creditors and that the Schemes did not give rise to or result in any confiscation or injustice. I do not consider that the rights of the preferential creditors in respect of their claims over and above the preferential parts of their claims were such that the preferential creditors constituted different classes of creditors requiring separate meetings from the general body.

46. In relation to the complaint made on behalf of Nishimatsu Construction Company Limited that they were excluded from the meetings of creditors called to sanction the relevant Schemes on the grounds that their claims were valued at nil, I entirely agree with what is said in the judgment of Seagroatt J. I would add, however, that the course taken in so valuing their claim for the purposes of voting was clearly anticipated in Appendix 8 to the Explanatory Statement to the Scheme documents.

47. Once the correct approach to the question of what constitutes a class is appreciated, it can be seen that the argument that what have been termed the internal creditors, that is the Scheme Participating Subsidiaries and the Non-participating Subsidiaries as they are called in the Scheme document, should have been treated as a separate class (or classes) and have had separate meetings fails. In my view the Judge was correct in the approach to the question of the rights as it was dealt with at page 24 of the judgment.

48. I also consider that there are no grounds for interfering with the exercise of the discretion later in the judgment as it was advanced in relation to any of the creditors in respect of whom it was said that there should be separate meetings.

49. In the circumstances the appeals will therefore be dismissed. There will be an order nisi that the respondents to the appeals will have their costs of their appeals to be taxed if not agreed. Since the conditions precedent have apparently been satisfied there will also be an order nisi that the respondents to this appeals should have their costs in the Court below.

Representation:

Mr Aarif Barma and Mr Anthony Cheung, instructed by Messrs Joseph C T Lee & Co., for the Companies/Respondents

Mr Michael Bunting, SC and Mr Paul Carolan, instructed by Messrs Masons, for the Opposing Disputed Creditor/Appellant in CACV 164 & 280/2000

Mr Martin Lee, SC and Mr Chan Chi Hung, instructed by Director of Legal Aid, for the Opposing Preferential Creditors/Appellants in CACV 157, 258-262/2000