Excellent Investment (Group) Limited (in Liquidation) v. Sin Yuk Ling

HCCW 294/2012

[2020] HKCFI 1675

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO. 294 OF 2012

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D E C I S I O N

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1.There is before the court a Summons of the Respondent (“Ms Sin”) against the Applicant which is represented by its Joint and Several Liquidators (“JSL”) for “further directions as to the implementation” of paras 1 and 2 of the Order of this court granted on 3 August 2016 (“Order”), pursuant to O 44, r 3 of the RHC.

2.The background of this case can be seen from the Decision of this court dated 3 August 2016.  It would be apparent from reading the Decision that there was a dispute between Ms Sin and the JSL arising from the manner in which the latter had been pursuing a Misfeasance Summons against the former despite the fact that Ms Sin had conceded from the outset that she had, and agreed, to make amends for the misfeasance. 

3.The continuous pursuit of the hostile litigation resulted in increase in costs as well as the fees of the JSL.  In para 17 of Decision, it was stated that “these circumstances call into question the propriety of JSL’s position”.  Paras 1 and 2 of the Order provided as follows:

“1. the costs of the [Misfeasance Summons] incurred up to and including the 1st September 2014 be paid by [Ms Sin], and the costs incurred thereafter (including the hearing on 21^st April 2015) be borne by the [JSL] personally;

2. the costs of the liquidation be borne by [Ms Sin] with the exception of those costs which were incurred after 1st September 2014 for the purposes of the [Misfeasance Summons].  The excluded liquidation costs be borne by the [JSL];”

4.Subsequent to the Decision, the parties had entered into a Settlement Agreement dated 3 May 2019 pursuant to which, inter alia, the costs of liquidation up to 1 September 2014 were settled at a compromised sum (the total fees and disbursements claimed by the JSL, including those of the Official Receiver, up to 31 August 2014 were HK$405,224.56). 

5.However, that Agreement was preceded by an action in the District Court of the JSL to recover their fees and disbursements, a Charging Order nisi obtained by the JSL in respect of the same and an application by Ms Sin to re-open the ex parte taxation of the JSL’s costs.  The Charging Order nisi was subsequently discharged by the court and an order was made to re-open the assessment of the JSL’s costs up to 31 August 2014.  Under the Agreement, apart from the costs of liquidation up to 1 September 2014, the re-assessment application and the District Court action were also settled.  These actions provide an indication of the relationship between the parties.

6.It must have come as an unpleasant surprise to Ms Sin to have received on 1 November 2019 another demand for liquidation costs in the sum of HK$830,010.59 for the period from 2 September 2014 to 31 October 2019.  That figure was subsequently revised to HK$796,685.25.  It appears from a report of the JSL amended on 9 May 2020 that the liquidation has still not been concluded after nearly 8 years (the Winding Up Order was made on 24 October 2012).  In other words, there is no end in sight for Ms Sin regarding her liability on the costs of liquidation. 

7.I have to say that, on the face of it, the situation is quite alarming.  The winding up arose from an ill-fated attempt to evade the payment of a debt of HK$210,000.  The Applicant was a simple company, probably used as a corporate vehicle for property holding (see the Decision, paras 5 and 10).  One would have expected that once the misfeasance was remedied, the winding up would be concluded expeditiously and in a costs effective manner.  I do not know if there had been any material change in circumstances concerning the winding up.  The JSL are officers of the court, and they are expected to discharge their duties without regard to any ill feeling which might have resulted from the disputes which lead to the Order. 

8.Despite my concern about the status of the winding up, I find this application very difficult to understand. Fundamentally, the Order did not require any further directions as to implementation.  Indeed, there is nothing in the Summons, nor the Skeleton Submissions of Mr Chong, who appeared for Ms Sin, to indicate what directions are being sought or what “implementation” is called for.   

9.O 44, r 3(1) provides that: “Where a judgment given in a cause or matter contains directions which make it necessary to proceed in chambers under the judgment the Court may, when giving the judgment or at any time during proceedings under the judgment, give further directions for the conduct of those proceedings, including, in particular, directions with respect to – (a) the manner in which any account or inquiry is to be prosecuted, …”. 

10.The meaning of paras 1 and 2 of the Order is perfectly plain.  They contain nothing which may require any follow-up proceedings.  Bluntly, the Summons is badly misconceived.  It appears from Mr Chong’s Submissions that Ms Sin is actually seeking relief from further liability over the costs of liquidation.  

11.Whilst I can understand Ms Sin’s grievance about the continuous and substantial costs of liquidation, O 44, r 3 cannot be invoked to vary an order so as to relieve her from such liability: Re Estate of Shum Kwok Hang (deceased) [2018] 1 HKLRD 434 at §§8-10.

12.I agree with the submissions of Mr Siu, who appeared for the Applicant, that this court has no jurisdiction to entertain any attempt to revisit the Order.  In respect of an order which has not been sealed (which does not apply in this case), the relevant principles were summarized by HH Judge Au (as he then was) in Whole Light Industries Ltd v Turbo-Knit Factory Ltd, DCCJ 3593/2006, unrep, 20 February 2008, at §6:

(1)     When a judgment or order has not been sealed or perfected, the court is not functus officio and has a discretion to review and vary or correct its own decision.

(2)     In the exercise of its discretion, the court may correct its decision for any minor or clerical mistake, or errors arising from any accidental slip or omission.  The court also has inherent power to vary its orders so as to carry out its own meaning or to make its meaning plain.  The error or omission must be one in expressing the manifest intention of the court, and the court cannot correct a mistake of its own in law or otherwise.

13.Further, where a judgment or an order has not yet been drawn up or sealed, the court has jurisdiction to permit a party to re-open a decision, but the circumstances in which it would be appropriate for the court to exercise this jurisdiction must be exceptional: China Metal Recycling (Holdings) Limited v Chun Chi Wai, HCA 1412/2013, unrep, 8 April 2016) at §23.

14.Where a judgment or order has been sealed (which applies here), the court’s jurisdiction to vary under the “slip rule” (O 20, r 11) is as follows: Wong Hung Kar Yee Mimi v Severn Villa Ltd [2014] 1 HKLRD 1088 at §§19-20:

(1)     The error or omission must be an error in expressing the manifest intention of the court.  The court cannot correct a mistake of its own in law or otherwise, even though apparent on the face of it.

(2)     A party cannot use the slip rule to insert, into the original order, a provision which was not there, not because of any slip in expressing the court’s intention but because it was not originally asked for.

15.In this case, the reasons for the Order had been explained in the Decision.  In respect of the costs of liquidation, paragraph 4 of the Decision recorded that it was accepted by Ms Sin that they would have to be borne by her.  Paragraphs 1 and 2 of the Order accurately reflected the Decision. 

16.In his viva voce submissions, Mr Chong said that the JSL had sought to recover from Ms Sin legal costs which fell outside the parameters of para 2 of the Order.  If that is the case, it would be a matter of taxation.  There is no reason to believe that the Taxing Master would have difficulty identifying what costs of liquidation “were incurred… for the purposes of the [Misfeasance Summons].” 

17.For these reasons, this misconceived application must be dismissed.  I make an order nisi that the costs of this application be to the Applicant. 

18.As a postscript, I am troubled by the misguided attempt to extricate from what might have been regarded as unjustified liquidation costs.  On one view, the resources wasted on this application would have been better deployed on the taxation of the liquidation costs and/or putting an end to the winding up.  Further, if there is justification for believing that the winding up is being conducted in an improper manner or for an ulterior motive, the resources should be expanded on seeking the appropriate legal redress. 

Mr Patrick Siu, instructed by ONC Lawyers, for the Applicant

Mr K M Chong, instructed by Kenneth C. C. Man & Co, for the Respondent