Re Moulin Global Eyecare Trading Ltd

HCCW 471/2005

[2019] HKCFI 2303

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO. 471 OF 2005

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Before: Deputy High Court Judge Le Pichon in Chambers

Date of Hearing: 12 September 2019

Date of Decision: 12 September 2019

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D E C I S I O N

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1.This is an application by the liquidators of Moulin Global Eyecare Trading Limited (In Liquidation) (“the Company”) pursuant to section 199 (4) (a) and section 200 (3) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap 32) (“the Ordinance”) for retrospective sanction from the Court of the appointment in March 2016 of Messrs DLA Piper Hong Kong (“the Firm”) as their solicitors in relation to an Order nisi dated 20 November 2015 made by Master Hui reducing the bill of costs of the liquidators on taxation.

Background facts

2.The background facts, in outline, are as follows:

(a)  The Company which was the primary operating entity within a wider corporate group (“the Group”) was wound up on 5 June 2006. Its ultimate parent company was listed on the Hong Kong Stock Exchange.

(b)  On any view, the liquidation of the Group was complex, involving creditors’ claims of over HK $4.3 billion, assets in multiple jurisdictions, extensive forensic investigations and legal proceedings arising out of a substantial fraud committed by former management. To date, creditors of the Company have received $.19 in the dollar and further distributions are anticipated.

(c)  The liquidators’ bill of costs dated 27 August 2013 in the sum of approximately $3.3 million was in respect of professional fees incurred by the liquidators between 27 November 2010 and 31 October 2012 (“Liquidator Bill 3”).

(d)  On taxation, the Master applied Panel A Rates on the basis that the liquidators’ fees had not been approved by the Committee of Inspection (“COI”) nor paid out of the Company prior to the disbanding of the COI in June 2013. As a result, Liquidator Bill 3 was taxed down to approximately $1.16 million.

(e)  On 2 December 2015, the Court was advised that the liquidators opposed the Order nisi. It was in those circumstances that the Firm was appointed to advise the liquidators as to the appropriateness of the basis of the liquidators’ fees being assessed at Panel A Rates.

(f)  Whilst there was a formal engagement letter with the Firm, the liquidators inadvertently overlooked the need to seek the prior sanction of the Court before appointing solicitors to assist them as required under the former section 199 (1) (c) of the Ordinance.

(g)  The Firm advised and represented the liquidators in the setting aside application which proved successful. On 8 June 2016, the Order nisi was set aside and 90% of the sum originally invoiced was allowed.

(h)  The Firm’s bill of costs rendered to the liquidators on 20 October 2017 was taxed in August 2018. 95% of the costs was allowed and ordered to be paid out of the assets of the Company.

(i)  However, when the liquidators sought to uplift funds from the liquidation account of the Company, the Official Receiver refused the application due to the Firm’s appointment not having been sanctioned by any COI or the Court.

Applicable principles

3.The applicable principles for retrospective sanction of a liquidator’s appointment of solicitors to assist him in the performance of his duties are clear and well established.

4.The court has power, pursuant to section 200 (3) of the Ordinance and the Court’s inherent jurisdiction, in a proper case, to give retrospective sanction to a liquidator’s appointment of solicitors to assist him in the performance of his duties: see Re Carruthers Limited (in liquidation), HCCW 710/2001, unreported, 23 February 2005, Kwan J at §11; Re Newsweb International Limited, HCCW 388/1997, unreported, 20 April 2007, Barma J at §§24 and 29, [2007] HKCU 735 and Re Associated Travel Leisure and Services Ltd [1978] 2 All ER 273 at 275f-h.

5.Clearly, the factors that warrant the exercise of the court’s discretion would depend on the facts of the particular case. In the authorities cited above, relevant factors have included whether the decision was for the benefit of and in the best interests of the creditors and/or liquidation; whether the resultant expenditure was necessary and reasonable; and whether the relevant agent’s fees would be subject to the scrutiny of the court through the normal process of taxation of fees in liquidations.

6.The Official Receiver does not oppose this application.

7.On the facts of the present case, I have no hesitation in granting retrospective sanction of the appointment of the Firm by the liquidators and I so order.

Mr James Wood, instructed by DLA Piper Hong Kong, for the Joint and Several Liquidators