Re Nimble Holdings Co Ltd Formerly Known As the Grande Holdings Ltd

HCCW 177/2011

[2022] HKCFI 519

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO 177 OF 2011

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D E C I S I O N

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The Application

1.Nimble Holdings Company Limited (“Company”, formerly known as The Grande Holdings Limited)  issued a summons dated 2 July 2020 (“summons”)  for orders:

(1)  To set aside and reopen the assessments of the costs of the former provisional liquidators of the Company (“PLs”)  as set out in the Schedule to the Summons and for leave to participate in the reopened assessment.

(2)  For discovery of documents sought in the summons.

(3)  For leave to file a list of objections.

Background

2.The background to this application is novel.  The Company, which was listed on the Main Board of The Stock Exchange of Hong Kong Limited (“HKEX”), had trading in its shares suspended on 30 May 2011.  Sino Bright Enterprises Co., Ltd (“Sino Bright”)  issued a petition to wind up the Company on the following day, 31 May 2011, and applied that day for the Company to be put into provisional liquidation and the PLs appointed.  The application was successful.  As is normal, the appointment order provided that subject to the approval of the court the PLs’ costs be assessed on a time-cost basis and paid out of the assets of the Company.

3.It appears that the primary purpose for which the PLs were appointed was in order to restructure the Company’s debt and prepare submissions to the HKEX in order to achieve a resumption in trading of the Company’s shares.  Three proposals were submitted to the HKEX.  The 3^rd was successful.  I approved a scheme of arrangement restructuring the debt of the Company.  The PLs were released and discharged on 26 May 2016.

4.The PLs’ costs divide into two parts.  Those that relate to the Restructuring (“Restructuring Costs”).  Those that relate to the PLs’ activities that do not relate to the restructuring (“Liquidation Costs”).  The PLs submitted three costs packages to the court.  Three of them were for Restructuring Costs:

Package (Overall)	Package (Restructuring Costs)	Date Submitted	Claim (HK$)
4	1st Taxation Package	22 December 2014	$9,699,631.95
6	2nd Taxation Package	25 January 2016	$20,164,310.39
12	3rd Taxation Package	6 October 2016	$18,941,804.89
		Total	$48,805,747.23

5.Between 23 April 2014 and 30 August 2016 the PLs submitted the following eight costs packages to the court.  They were approved subject to small reductions made by Master Hui.  The details appear in the following table.  It is these assessments that the application concerns and which the Company wishes to reopen (“Assessments”).

Package No	Fees Claimed	Fees Allowed	Reduction	Allowed disbursements and costs	Total Amount Allowed	Date of Approval
1	$42,966,657.10	$40,818,324.24	5.00%	-	$40,818,324.24	23 Apr 2014
2	$14,344,899.10	$13,627,654.14	5.00%	$142,747.26	$13,770,401.40	8 Jan 2015
3	$28,146,650.60	$26,739,318.07	5.00%	$1,127,856.17	$27,867,174.24	10 Apr 2015
5	$3,959,946.70	$3,761,949.36	5.00%	$689,800.39	$4,451,749.75	6 Oct 2015
7	$2,575,706.00	$2,446,920.70	5.00%	$119,414.81	$2,566,335.51	17 Jun 2016
8	$7,121,726.60	$6,765,640.27	5.00%	$459,086.05	$7,224,726.32	25 Aug 2016
9	$607,140.10	$607,140.10	0%	$37,451.84	$644,591.94	20 Jul 2016
10	$982,029.00	$932,927.55	5.00%	$136,904.38	$1,069,831.93	30 Aug 2016
Total	$100,704,755.20	$95,699,874.43	4.97%	$2,713,260.90	$98,413,135.33

6.As can be seen the present application was issued some four years after the last of the Assessments took place and six years after the first of them.  There are various reasons for this.  One arises from the animosity that those behind the Company have developed towards the PLs, which has led to increasing confrontation the most extreme perhaps being Sino Bright’s judicial review in 2019 of the Secretary for Justice’s decision not to prosecute the PLs for, I believe, attempting to pervert the course of justice.  The owners of the Company seem willing to spend time and money disputing with the PLs what they find objectionable and is open to challenge.

7.The more important reason in terms of understanding how the application should be approached is the fact that those behind the Company retained control of it after it has been restructured. Commonly this is not the case and control will have passed to an investor, who worked with the PLs, and in the large majority of cases will have agreed to pay at least the costs of the restructuring and is unlikely to challenge an assessment of any other costs that go through the taxation process.  The only other case of this sort that I am aware also concerned the Company and led to my judgment on 24 January 2018, which dealt with Sino Bright’s application in these proceedings for discovery in connection with the assessment of the Restructuring Costs, which Sino Bright had agreed to pay pursuant to the restructuring agreement to which it was a party.

Legal Principles

8.A provisional liquidator’s remuneration is governed by the court’s inherent jurisdiction: Re Peregrine Investments Holdings Ltd. & Others (No 4)[1].  In [8]–[9], [14]–[17] of Re The Grande Holdings Limited[2] I explain the general principles that guide a taxation of a provisional liquidator’s costs, largely by quoting from Peregrine (ibid), which for the sake of convenience I also do here:

“8. Peregrine concerns the fees and disbursement of provisional liquidators and how they should be assessed by the court. In that case, the company was in insolvent liquidation, and the assessment was to be undertaken by the court on an ex parte basis. There was no creditor involvement. Le Pichon J’s judgment is a comprehensive review of the relevant principles. It starts at p 677G, with a consideration of the statutory basis of remuneration, which is not directly relevant in the present case in the light of the provisions of the Agreement. However, the consideration of the general principles is relevant. It is convenient to quote from Le Pichon J’s judgment starting with her Ladyship’s reference to what was commonly referred to as the Maxwell principles, which are familiar to practitioners in this area:[3]

‘The Maxwell principles

Mirror Group Newspapers Plc v Maxwell & Others [1998] BCC 324 establishes (at pp.333E-334F)  that:

(1)  Administrators, liquidators, receivers, trustees in bankruptcy or other officers (office-holders)  are fiduciaries charged with the duty of protecting, getting in, realizing and ultimately passing on to others assets and properties which belong not to themselves but to creditors or beneficiaries of one kind or another. They are appointed because of their professional skills and experience and they are expected to exercise proper commercial judgment in the carrying out of their duties. Their fundamental obligation is a duty to account, both for the way in which they exercise their powers and for the property which they deal with.

(2)  The allowance of remuneration to officer-holders represents an exception to the rule that a trustee must not profit from his trust which rule applies to all kinds of person who are in a fiduciary position. This exception inevitably involves a conflict between the interests of the fiduciary who is to receive such remuneration and the interests of those to whom the fiduciary duties are owed, who will bear whatever remuneration is allowed.

(3)  It is for the office-holder who wishes to be remunerated at a particular level to justify his claim:

(a)  Office-holders must give full particulars to justify the amount of any claim for remuneration. Where they seek to be remunerated upon the basis of time spent, they must do significantly more than list the total number of hours spent by them or other fee earning members of their staff and multiply this total by a sum claimed to be the charging rate of the individual whose time was spent. They must explain the nature of each main task undertaken, the considerations which led them to embark upon that task or to persevere in it. The time spent must be linked to this explanation so that it can be seen what time was devoted to each task.

(b)  Office-holders must keep proper records of what they have done and why they have done it. Without contemporaneous records of this kind, they will be in difficulty in discharging their duty to account. Retrospective reconstructions are unlikely to be as reliable as contemporaneous records. Office-holders whose records are inadequate are liable to find that doubts are resolved against them because they are unable to fulfill their duty to account for what they have received and to justify their claim to retain part of it for themselves by way of remuneration.

(c)  The test is whether a reasonably prudent man, faced with the same circumstances in relation to his own affairs, would lay out or hazard his own money in doing what the office-holders have done. It is not sufficient for office-holders to say that what they have done is within the scope of the duties or powers conferred upon them. They are expected to deploy commercial judgment, not to act regardless of expense. Transactions carried out at a high cost in relation to the benefit received will be subject to close scrutiny.

Mr Yu submitted that as a corollary, a provisional liquidator is not entitled to remuneration in respect of work which a reasonably prudent man faced with the same circumstances in relation to his own affairs would not have laid out his own money. Costs and expenses incurred unnecessarily should be disallowed. Re Kal Assay Southern Cross Pty Ltd (in Liquidation) (1992)  9 ACSR.245, pp.262–3 and Re Silver Valley Mines (1882)  21 Ch D 381, p.392. Further, a provisional liquidator should also be deprived of costs occasioned by a want of reasonable skill on his part. Equally, he should not be entitled to remuneration for services rendered in breach of his duties. Re Kal Assay Southern Cross Pty Ltd (in Liquidation) (1992).9 ACSR.245 at p.263.

As I understand it, Mr Fok, counsel for the provisional liquidators, accepts the general principles set out above save in the following respects:

First, Mr Fok takes issue with the suggestion that a failure to keep contemporaneous records would disentitle the provisional liquidators to remuneration. He submitted that one should approach the matter with ‘practical realism’, that the purpose of the exercise is not to apply bureaucratic red tape to make recovery impossible so that doubts ought not be resolved against the provisional liquidators, at least not until after they have been afforded an opportunity to explain.

On a proper reading, I do not accept that the judgment of Ferris J goes anywhere near to saying that office-holders who do not keep contemporaneous records are disentitled to remuneration. The burden is upon them to justify the remuneration claimed. They may do so by means other than contemporaneous records although, as Ferris J pointed out, contemporaneous records are likely to be a more reliable form of proof.

Second, as to the need to justify every dollar claimed, it was submitted that in taxation, the underlying acceptance is that what a solicitor says he has done was done. Therefore the court should accept the word of the provisional liquidators at face value and be very slow to disbelieve them or question the integrity of their assertions.

I have some difficulty in accepting this last proposition for the reason that a clear conflict of interest exists. A similar argument was put forward in Mirror Group Newspapers Plc v Maxwell & Others [1998] BCC 324 which was rejected by Ferris J (at pp.338H339C):

A particular argument against assessment of remuneration by a taxing officer which was presented by Mr Purle is that the receivers in this case are insolvency practitioners unused to taxation procedures, and that although they have records of the amount of time spent in the receivership by them and their employees these records do not show, as the records of a solicitor would do, how much time was spent by any particular individual on a particular task. The suggestion was that it would be unreasonable for insolvency practitioners to be required to justify their charges in the same way that a solicitor would have to justify his charges on the taxation of costs.

I have to say that I find this argument wholly unacceptable. Although court-appointed receivers are officers of the court and, in the absence of positive misconduct on their part, are entitled to support and protection from the court, when they seek to have their remuneration fixed they must, as I have already indicated, justify their claim. In the present case this claim is based exclusively on time expended charged at hourly rates. …

As Mr Yu pointed out, the court cannot take the provisional liquidators’ say so at face value since it is not the court’s money that is in issue but somebody else’s money. The effect of any approval is to allow the provisional liquidators to take money away from their principals. It is for that reason that office-holders are required to attain the same high standard that fiduciaries are required to attain when they charge remuneration.

…

As noted above, it is not now suggested that the Mirror Group Newspapers Plc v Maxwell & Others [1998] BCC 324 principles do not apply where express provision has been made for remuneration to be on a time basis. This is because the basis of remuneration does not alter the fundamental principle that provisional liquidators, like other office-holders, are fiduciaries and have an obligation to account.’

9. I did not understand Mr Manzoni to dispute, as regards both the Company and Sino Bright, the provisional liquidators were fiduciaries, and that these principles applied to the assessment of their fees. The Guide was developed to assist both insolvency practitioners and taxing Masters in the assessment of provisional liquidators’ fees during a period in which their appointment was becoming increasingly common, as a consequence of the impact of the Asian financial crisis at the end of the 1990s.

…

14. Mr Manzoni took me to a number of authorities which show how the court has dealt with applications by those charged with paying provisional liquidators’ fees to be involved in the taxation process. It is only necessary to refer to the judgment of Kwan J (as she then was)  in Re Boldwin Construction Company Limited.[4] Kwan J rejected the provisional liquidators’ appeal from Registrar Chan’s decision, allowing the company (which was solvent), to participate in the taxation. Kwan J said this:

‘15. The Procedural Guide, as its name suggests, gives guidance to practitioners on the preparation of documents to be lodged with the court for the determination of bills, and the steps to be followed after the necessary documents are lodged with the court. The practical and pragmatic approach adopted in the Procedural Guide is designed to streamline the documents required to be submitted by provisional liquidators and liquidators for the assessment of their fees, to ensure that a sufficient amount of information is placed before the taxing master and that the court would not be overburdened with unnecessary materials. So time sheets are not required to be produced to the court in the first place, in the interests of cost-effectiveness, and would only be called for if the master needs to query any point (paragraph 3.1). As Mr Harris, SC pointed out, the documents and information required to be provided under the Procedural Guide would not be as detailed and comprehensive as those envisaged and discussed in Re Peregrine Investments Holdings Limited [1998] 2 HKLRD 670 at 684F to J.

…

17. It seems to be common ground that the procedure for the determination of provisional liquidators’ bills envisaged in the Procedural Guide is an ex parte procedure in the sense that only the provisional liquidator is present. In most situations, and if a winding-up order is made on the petition, it is not expected that the company or any one else would take part in the determination of the provisional liquidators’ fees. Nevertheless, the Procedural Guide is only for guidance, it is not law. I would need to consider if cogent reasons are made out why the application should be heard ex parte, without the presence of the party that is to pay the costs to be assessed. I agree with Mr Grossman, SC, for the companies, that one instinctively recoils at the notion that any one may be financially encumbered without the opportunity to be heard, as natural justice demands it.

…

26. As for the objection taken on the basis that Dr Chan was the subject of investigation by the provisional liquidators and it would be inappropriate to allow him to take part in the determination of fees, the allegations of wrongdoing have been withdrawn as Dr Chan and Madam Law have settled their disputes. The confidentiality of the investigation work against Dr Chan should not be an issue here. And if Dr Chan should object to the reasonableness of work done merely or primarily because he was the subject of investigation, no doubt the taxing master would disregard any objection he considers unhelpful or without substance. Similarly, if the companies should ask the provisional liquidators to provide information which is oppressive or unnecessary for the exercise of the determination of fees, the taxing master would not entertain such requests.’

With this, I respectfully agree.

15. However, what is oppressive or unnecessary has to be considered in the light of the special position of the provisional liquidators as fiduciaries seeking payment from those to whom they owe those duties. In the present case, the provisional liquidators do not argue that the documents are irrelevant. They argue that in their view, providing them would be very time-consuming (they estimate they consist of approximately 90 conventional 3-inch box files, although the documents are largely in electronic form)  and expensive (they estimate the cost of providing them at approximately HK$2 million).

16. The provisional liquidators’ argument needs to be assessed with regard to the nature of the taxation before Master Hui. The Guide was intended for ex parte taxations, and took into account the limitations both of resources and knowledge in the High Court. The present taxation is inter partes, and adversarial. Normally, it is in the interests of both parties to a taxation to co-operate and agree as much as possible. However, if the Company and Sino Bright wish to scrutinise the bill item by item, and if they are to challenge particular items or parts of particular items it will be necessary to consider the contemporaneous documents and the taxing Master will need to have regard to their content when determining each objection. It seems to me likely that Master Hui, who has considerable experience of taxing liquidator’s fees, was aware of this. It also seems to me that the level of fees is relevant when considering whether the request is oppressive and requires work and additional costs out of proportion to the sums involved. Given the very high level of fees involved in this case, it seems to me that it is not.

17.  Finally it also is relevant, in my view, that in determining the costs of the taxation, the Master can properly have regard to the extent of the work that the provisional liquidators were put to and whether it is appropriate that the cost of such work is paid by the Company or by Sino Bright.”

9.As this passage explains, the Procedural Guide for the Taxation/Determination of Bills of Provisional Liquidators or Liquidators by a Master produced by the Judiciary (“Guide”)  does not require at the hearing of a provisional liquidators’ taxation (and it does not distinguish between ex parte and inter partes taxations)  of their professional fees and disbursements the provisional liquidators to submit to the taxation master the information and documents, which comply strictly with the Maxwell Principles.  It says in [1.1] that the Guide is “to be followed by the Provisional Liquidators or Liquidators”.  Paragraphs 3.1(B)  and (C)  require:

“3.1 …

(B)  In case it is the first bill lodged for taxation/determination:

(i)  a copy of the Court Order for the appointment of the Provisional Liquidators or Liquidators together with any other order relating to their remuneration;

(ii)  a source document prepared by the Provisional Liquidators or Liquidators with the following information:

(a)  a brief paragraph containing an introduction to the company in question, e.g. incorporation, activity, size;

(b)  a brief paragraph stating the main business activities carried on by the company before liquidation;

(c)  the ground for winding-up (e.g. insolvency, just & equitable, etc.);

(d)  if provisional liquidators were appointed, the grounds given for seeking appointment of provisional liquidators;

(e)  an ‘Assets Schedule’ showing

- the nature

- location

- estimated value and

- likelihood of recovery

of each of the company’s assets (other than those with minimal value)  at the commencement of the liquidation

Where the first bill lodged for taxation/determination was prior to the date when this procedural guide came into operation, the first subsequent bill lodged for taxation/determination after the operation of this guide shall be accompanied by the above documents.

Please note that the above is designed to provide the taxing officer with an overview of the liquidation administration. Actual documents (e.g. time sheets or documents proving assets and realizations)  are not to be produced, in the interests of cost-effectiveness. The actual documents will be called for only if the taxing master needs to query any points.

(C)  The following documents are required:

(i)  A written confirmation as to whether a Committee of Inspection has been appointed for the Liquidation, and if so, any agreement as to remuneration has been reached pursuant to s.196(2)(a)  of the Companies Ordinance;

(ii)  a brief running narrative of the work done covered by the bill together with the value of assets recovered and the costs incurred for recovery;

(iii)  a list setting out the estimated value of the assets which forms the subject matter of the bill, the likelihood of recovery and explanation for pursuing or abandoning recovery effort, giving an update to the ‘Assets Schedule’ in (B)(ii)(e)  above. The ‘Assets Schedule update’ should also include the following particulars:

a)  the value of the assets recovered since the lodging of the last bill; and

b)  the costs incurred for recovered the assets in (a);

(iv)  a list of the items of work done divided into different categories with the time spent (chargeable/non-chargeable)  by the fee earners concerned in each item, their hourly charged-out rates and the amount charged;

(v)  a brief statement on whether there have been any write-offs, and whether disbursements have been charged at a mark-up, and if so, on which disbursements and at what rate of mark-up;

(vi)  a schedule of the total amount charged by each fee earner with the time spent and their charged-out rates in respect of the different categories of work undertaken.”

10.Provisional liquidators are required to distil from their records (such as time records)  and internal documents (such as attendance notes)  information presented in a schedule that facilitates a taxing master in reviewing costs and disbursements.  Not only can a provisional liquidator not be criticised for failing to follow the Maxwell Principles, the provisional liquidator would be in breach of the Guide if a provisional liquidator were to do so and provide a Master with original documentation rather than a summary of their contents.  In Re CA Pacific Finance Ltd[5] Yuen JA describes the process, adopted in one of the largest and earliest taxations of provisional liquidators fees, which her Ladyship undertook herself.  Yuen JA refers to Ferris J’s decision in MGN v Maxwell[6], but it is quite clear that she did not expect or want the liquidators to provide the level of information or documentation that, for example, paragraph (3)(a)  of the Maxwell Principles[7] on its face requires.  As Yuen JA observes in [23] of her judgment, the assessment that she undertook was “not in the nature of an audit of the liquidators’ charges….”.

11.The position in Hong Kong is substantially the same at that in England and Wales.  In 2020 a Practice Direction: Insolvency Proceedings[8] was introduced, which is broadly consistent with the Guide although considerably more detailed.  In the English Court of Appeal’s decision in Brook v Reed[9] Richards J who had considerable experience of insolvency matters and  was sitting as an additional judge, explains in  [44]–[49] the operation and status of Practice Statement: The Fixing and Approval of the Remuneration of Appointees (2004)[10] that preceded the present version.  In [48] he says this:

“I consider that the stage has been reached where a court hearing an application to fix or to challenge the remuneration of an office-holder should proceed on the basis that the practice statement is to be applied except in so far as in the circumstances of the particular case the party objecting to its application shows that it would be wrong in principle to do so. In my judgment the statement of guiding principles in the practice statement is a correct statement of the principles generally applicable to issues relating to the remuneration of office-holders, although the particular circumstances of a case might call for the formulation of a further principle.”

In my view this also describes the current position in Hong Kong.

12.If a company wishes to take part in the taxation process it is entitled to do so.  Normally it will not, because at the time the taxation takes place the owners of the company will either not be interested in so doing or, even if they have any interest, may lack the resources to do so.  If, as is the common case, the company is insolvent there will be little point in spending time and money scrutinising a provisional liquidator’s costs when a Master, who will have far more experience than the owners of the company in so doing, is going to do it anyway.  This case is unusual because the Company’s owners retained control of it after the restructuring and thus had sufficient economic interest in the level of costs recovered, sufficient animus towards the PLs and sufficient resources to do so.

13.The PLs do not dispute that the court has a discretionary jurisdiction to reopen the Assessments:  Re Hong Kong Chiu Chow Po Hing Buddhism Association Limited[11]. The principles governing a reassessment application such as the present were considered by Godfrey Lam J in Buddhism Association, he held that:

(1)  “The starting point ….. should be that, as a matter of natural justice, the ….. paying party, ought to be permitted to take part [in the assessment] if it so desires” [26].

(2)  Under Order 32, rule 6 of the Rules of the High Court (“RHC”), the Court has jurisdiction to set aside any ex parte assessment of the remuneration and disbursements of Court appointed fiduciaries [46].

(3)  In respect of Court-appointed Receivers, the Court has express power (under RHC O.30 r.5)  to direct the fiduciary to submit accounts with the underlying books and papers, which would enable the paying party to raise objections, which, if valid, are not precluded by the ex parte assessment [47].

(4)  As recognised in Re Boldwin Construction Co Ltd[12], the fact of added expense arising from the setting aside of an ex parte assessment in order to allow inter partes reassessment is not a sufficient reason against such an exercise [59].

(5)  In reassessment applications delay is only relevant if it is causative of actual prejudice to the office-holders, but it is not prejudice for them to be required to disgorge sums that they should not have received in the first place [60].

14.It follows from these principles that an application for a reassessment will normally be allowed if it is sought within a reasonable period.  It will be difficult for an office-holder to successfully contest an application unless the case has genuinely unusual features, which render it prejudicial to the office-holder to permit it and the prejudice outweighs the right of the payor to have the bills scrutinised with the payor’s involvement.  What is a reasonable time will depend on the facts, but I think it is a reasonable starting point that if a company is aware of the taxation process it should inform the office-holder within six months of its completion that it requires a reassessment.

15.In the present case the Company has waited far longer than six months before making the application for a reassessment.  As a consequence, the payor’s entitlement to require a reassessment although remaining an important factor to be taken into account when assessing how the court’s discretion should be exercised may, depending on the facts of the case, need to be balanced against other relevant considerations.  In the Court of Appeal’s decision in the Re Hong Kong Chiu Chow Po Hing Buddhism Association Ltd[13], which upheld Godfrey Lam J’s decision, Kwan VP makes reference to the various factors that Godfrey Lam J considered in his decision.  The Court of Appeal accepted, as had Godfrey Lam J, that the extent of the delay, the prejudice it would cause to the fiduciary in that case and the possibility of tailoring the reassessment to reduce expense and inconvenience were all relevant considerations.  The shorter the delay or the more excusable, the more compelling the countervailing considerations will have to be if an order is to be refused and the converse will be true.  It is also apparent from Buddhism Association that in the exercise of the discretion to order a reassessment the court can tailor the scope of the process in order to reduce unfairness to the fiduciary or the payor and to ensure proportionality.  In summary, a payor, who was not given the opportunity to attend the ex parte assessment will generally be entitled to have a complete reassessment if it is sought promptly, however, the court’s discretion allows it to tailor the reassessment if the court concludes that it is fair in the circumstances to do so.

The Present Case

16.In the present case, the explanation for the delay would seem from the evidence of Hui Yick Lok Francis on behalf of the Company to be that it was not until after the Company had considered the 4^th affirmation of Roderick John Sutton dated 14 February 2019 (“Sutton 4”)  served following my decision on 24 January 2018 that it began to have concerns about the Liquidation Costs.  The Company wrote on 11 June 2019 for various categories of documents, because it had “serious doubt as to the accuracy and veracity of the Liquidation Costs claimed” according to Mr Hui.  On 4 September 2019, Master Hui ordered the PLs to produce documents.  They were received on 11 September 2019 and passed to Mat Ng, then of JLA Asia, for review.

17.Mr Ng had various concerns about the Liquidation Costs and deficiencies in the Liquidation Costs documents.  The Company’s position is that whilst as a matter of expediency it had been content to accept the Master’s assessment of the costs the information that has come to light as result of Sutton 4 and the review undertaken by Mr Ng it is no longer prepared to do so and wishes to exercise its right to have the Assessments reopened.  In my view the application largely turns on whether or not (1) the Company has demonstrated that the information contained in Sutton 4 was new and reasonably led the Company to reconsider its attitude to the assessment of the Liquidation Costs and (2) the subsequent work undertaken by Mr Ng and his team has identified matters, which explain the Company’s change of mind.  The determination of whether or not the Company’s change of mind justifies allowing a reassessment of the Liquidation Costs is in my view to be assessed by a combination of objective and subjective considerations.  The issue is not what the court might think justifies a change of mind, it is whether viewed from the perspective of the Company it is justified, although that does not mean that the only consideration is the subjective view of the Company, however, strongly it may be held.  If the Company’s view is genuine, but irrational, that would not justify ordering the Assessments to be reopened.

18.Sutton 4 addressed the Company’s application for documents in the taxation of the Restructuring Costs made by summons dated 19 November 2018, which had been supported by Hui 4.  Sutton 4 was made on 14 February 2019.  The Company sought confirmations and documents in relation to:

“5.1 Confirmation as to whether the time costs entries in the 1^st Taxation Package included all and only Restructuring Costs (as defined in the Amended and Restated Restructuring Agreement made on 14 December 2015 between inter alia the Company and the Provisional Liquidators (‘Amended Restructuring Agreement’)  for the period from 16 December 2013 to 30 June 2014;

5.2 Confirmation as to whether the time costs entries in the 1^st Taxation Package were contemporaneous;

5.3 The raw time cost entries extracted from the time costs entry system in excel format (for the whole period of the Provisional Liquidators acting as the provisional liquidators of the Company); and

5.4  The documents set out in the List of Documents Request in Annexure 3 of the Report by Mr Mat Ng of JLA Asia Limited dated 1 1 April 2017.”

19.Mr Sutton says in [29] that a review for the purposes of dealing with the first matter had revealed that 97 entries out of approximately 15,000 totalling in value HK$325,831.90 in fact related to the liquidation not the restructuring.  At the time Sutton 4 was made Mr Sutton notes in [31] the Restructuring Costs had already exceeded an agreed cap of HK$45 million. Mr Sutton says, unsurprisingly, that the PLs accept that they are not entitled to be paid for the 97 items as part of the taxation of the Restructuring Costs.

20.In [35] Mr Sutton explains how time entries appearing in the taxation package had been compiled:

“35.1 The Provisional Liquidators’ staff input, among other things, the time charged, matter code and narrative of work performed into FTI’s electronic time recording system, called Carpe Diem.

35.2 Staff members are required to record their time on a daily basis and to post the same into Carpe Diem at least by the end of each week, failing which FTI’s finance team will conduct follow-ups on a weekly and monthly basis.

35.3 Once the time entries were posted onto Carpe Diem they were transferred to FTI’s accounting system, Elite for bills to be issued.

35.4  To provide the time records to Sino Bright and the Company, the time entries for each of the relevant period under the Taxation Packages were extracted from Elite in excel format, and the same were reviewed and settled to ensure that the time entries can be understood by all parties including the Taxing Master. The time entries were further categorized into categories of work done during the period covered by the taxation packages, including the 1^st Taxation Package for the purpose of taxation.”

21.Mr Sutton suggests that the underlying raw data that led to production of the Excel time sheet, which shows the time costs recorded by staff members is unnecessary.  He concludes in [38] “the continued pursuit of the taxation proceedings by the Company and Sino Bright serves no commercial purpose whatsoever. Before the taxation exercise can be said to serve any proper commercial purpose, a sum of approximately HK$7.8 million will need to be taxed off the provisional liquidators invoices, a deduction of in excess of 30% from the total untaxed fees of approximately HK$24.5 million.”

22.Given the magnitude of the taxation I think it unsurprising that some mistakes in allocating particular time entries might have been made.  Given that the very large amount of work undertaken by the PLs in relation to the Company had to be divided into two parts with some times costs allocated to the restructuring and some to the liquidation it would in my view have been extraordinary if they had not.

23.As I have mentioned the Company’s evidence, which explains why many years after the relevant events took place the Company decided to make the present application is contained in the 7^th affirmation of Mr Hui (“Hui 7”).  Mr Hui says in [22] that Mr Sutton “reported maters which would also give rise to causes for concern as to the veracity of the Liquidation Costs claimed by the Former PLs”.  On 11 April 2019, Master Hui ordered production of:

(1)  The raw time cost entries extracted from the time costs entry system in excel format (for the whole period of the Former PLs acting as provisional liquidators of the Company);

(2)  The documents set out in the schedule annexed to the Company’s summons filed on 19 November 2018 save and except item numbers 5, 6, 13 and 14;

24.These documents, and further documents produced as a result of another application for disclosure made by Master Hui were provided and then passed to Mr Ng for his consideration.  Mr Hui says in [28] that Mr Ng discovered various concerns when he reviewed the documents.

25.Mr Ng was asked to prepare a report dealing with the following matters, which is dated 22 June 2020:

“13. Pursuant to your instructions on 20 September 2019 and 11 October 2019, I was engaged to perform a general review of all raw time costs entries received with the narratives of work done with a focus on restructuring work during the period as provided by the Former Provisional Liquidators. This was with a view to identify and select samples of any patterns of timesheet records, that may give indication that the raw timesheet records were being modified and are non-contemporaneous and prepare our expert report in respect of our findings.

14. Pursuant to our engagement letter dated 29 April 2020, I was further engaged by you to:-

(a)  Perform a high level review of all raw time costs entries received with the narratives of work done. With a focus on liquidation work for the period as provided by the Former Provisional Liquidators and identify if there are any time costs records that are duplicated;

(b)  Analysis the time cost entries and consider if they have been appropriately charged;

(c)  Consider if work are performed by appropriate level of staff;

(d)  Select samples of any patterns of timesheet records and prepare a summary, comment on the reasonability, if necessary;

(e)  Perform a high level review of the eight taxation bundles of the Provisional Liquidators’ taxed Bill 1, 2, 3, 5, 7, 8, 9 & 10 to consider if the summary of work done aligns with the content of taxation bundle (each bundle consists of 100-200 pages); and

(f)  Prepare an expert report of our findings.”

26.He explains that he has conducted a high level review of over 37,000 FTI time cost entries, which had been provided to him in an excel format.  He reached the following major findings:

“i. We are unable to locate and match invoice numbers and amounts as stated: Our comparison between the invoice number column from the excel provided and those invoice numbers provided in the taxation packages submitted to the Court addressed to The Grande Holdings Limited (In Liquidation)  and other companies does not match;

ii. We are unable to match invoice amounts to total time costs in our checking conducted on invoice amounts;

iii. We noted excessive or unreasonable travelling time charged;

iv. We observed excessive number of internal meetings and lack of description to support the reasonableness of time spent;

v. We noted time spent on supervising or training staff or researches is significant;

vi. We noted repetitive work performed by staff is significant;

vii. We noted senior level staff has spent unreasonable time on certain tasks; and

viii.  We noted senior level staff performed low level staff work at high charge rate.”

27.Mr Ng’s instructions were to select samples of patterns in timesheet records.  Mr Ng says his team reviewed, albeit at a “high level”, all the entries, although he does not explain what the high level review entailed.  He does not say that his team found many examples of the matters to which he refers and the items identified in his report are just a sample of them and, if this were the case, roughly the proportion the sample constituted of the total items that fell into the relevant category.  There is, therefore, nothing in [15] onwards of his report that suggests that the items that he finds questionable, and which I describe in detail later, were only a sample chosen to demonstrate his concerns.  If this had been what he intended I would have expected him to state it and explain his methodology in choosing them.  I, therefore, take his report to refer to all those time costs entries his team identified that were thought to be questionable.  In total he refers to 86 time entries (the tables on page 17 and 18 duplicate 1 item)  representing 0.234% of the number of items checked.  Mr Ng does not state in his report that as an experienced insolvency practitioner he considers the time entries he has identified cause him to think that there is a serious problem with the time recording or suggest that there may have been material overcharging.

28.In [30] Mr Hui refers to the 97 wrongly classified entries in the Restructuring Costs taxation, but does not explain why what I consider to be unremarkable errors caused the Company to think it was advisable that the Company engage Mr Ng to carry out a thorough review of the documents they had been given, at presumably a cost considerably exceeding HK$325,831.90, to see what other errors might have been made in relation to the Liquidation Costs.  Mr Hui complains in [31]–[32] that there has been no satisfactory explanation of how the mistakes came to be made.  The question he is asking is why the PLs have not been able to establish from their staff why on 97 occasions out of 15,000, a time record was incorrectly input into the liquidation file rather than the restructuring file.  Expecting the PLs to be able to get an explanation other than “I can’t remember” after between three to five years (the Restructuring Costs taxation packages were submitted between 22 December 2014 and 6 October 2016)  is ridiculous.  Facile evidence of this sort calls into question the Company’s motives.

29.In section C2 of Hui 7, Mr Hui explains that Mr Sutton has explained that although the PLs staff were required to make daily records of their time they only had to input the records into the system (called, admittedly inaptly, Carpe Diem)  weekly.  The PLs would then “review, settle and further” categorise the time entries before issuing bills to the Company.  In [34] Mr Hui purports to demonstrate why he thinks that this system creates “a series risk of inaccuracies in the time claimed”.  His concern rests on the suggestion of inaccuracy arising from not inputting the time recording daily and the fact that the entries will be reviewed and adjusted when bills come to be reviewed.  I can see no sensible reason for thinking that such risk as there might be (and I am not satisfied that there is any risk other than one of omission)  of some item being incorrectly entered because the process of inputting does not take place daily justifies the reassessment exercise the Company now wants.  The suggestion that there is something troubling about the PLs reviewing the time records and refining them when bills are prepared is also wholly unconvincing.  This is an entirely conventional thing for professional accountants and solicitors to do when preparing bills to be sent to clients. 

30.In [35] Mr Hui refers to Mr Ng’s preliminary report.  Mr Ng does not address the matters to which I have referred.  Instead he identifies various matters in the documents with which he had been provided, which he considers unsatisfactory.  Before considering Mr Ng’s report in detail there are a number of general points to be made.  First, that Master Hui did not suggest that the taxation package presented to him for the taxation of the Liquidation Costs failed to comply with the Guide or was in any way unsatisfactory.  Secondly, in the case of the taxation of the Restructuring Costs Master Hui appears to have expressly rejected the Company’s law costs draftsman’s arguments that the taxation had to be conducted item by item.  The 31^st affirmation of Fok Hei Yu, Vincent (“Fok 31”)  exhibits a note of the taxation of the Restructuring Costs before Master Hui on 16 and 17 September 2020.  It reads as follows:

“AW: In principle I have no objection. For Item 10, we cannot tax it alone, in fact Item 9 and Item 11, these all relate to the same type of work. Master you have to go through each and every item. You cannot just tax the big item as suggested by my learned friend. It depends on whether there are any related items.

Master: I believe we should adopt a broad brush approach, we had discussed in the previous hearing, the work done by the Former PLs should be classified into categories. With the time entries provided, the paying party should know what work has been done by whom and on which day in respect of the work done under a particular category. Now, equipped with this information, the paying party should be able to raise objection to that particular categories, in the light of the information provided. We are not going to tax the individual entries like ordinary party-party taxation. Not possible. In previous occasions concerning similar disputes, the court would adopt this approach. The court will not, after hearing the parties’ submission on a particular entry, make a decision on the particular entry but the court will take the submission into account for that group of entries. The court will take a global approach. Five fee earners spending 100 hours on a document which is just a covering sheet of a fax message. I will take note of their submission, I will consider how much time should have been incurred and how much the Former PLs are claiming and I will take submissions from the paying party for each and every entry that the paying party wants to make and make a global view on that category. In a sense, you are right Mr Wong we cannot take one item in isolation. You should be in a position. Sometimes, one piece of work, some involve difficult question of law, fact finding blah blah blah. With the information equipped, the paying party should be able to address the court. I believe I should have mentioned it earlier, that is the approach we are taking.

AS: I agree, the Court has taken a very sensible approach.

AW: In principle, I would agree to assess the work in categories on a global basis for example when you find there are a few items in relation to a specific work but bear in mind I just say that taxation should take place on an item by item basis.

Master: You mean category by category. Having 15,000 entries?

AW: That is the case. The role of the taxing master to each and every item. Can I refer you to a case. If in specific items, you can assess.

Master: I can’t stop you from making submissions but the approach should be what I said just now. You can make your submission, fine.

AW: The fact is that Master has to go through each and every item. For instance on a specific day, they charged certain hours.

Master: What is the difference between entry by entry taxation and global approach?

AW: If Master, there is a certain deduction, you have to make each and every item. Each and every item.

Master:  I am saying it cannot be done. It is not possible, how much time do we have.”

31.Mr Hui does not in his 9^th affirmation (“Hui 9”)  suggest that this record is inaccurate.  “AW” was the Company’s law costs draftsman.  What he proposed was entirely unworkable as the taxation involved 15,000 items.  Assuming it only took 1 minute to deal with each item the taxation would have lasted 250 hours: roughly 10 weeks.  It is difficult not to conclude that at the Company’s direction the submission was made with a view to disrupting the taxation and with a very unattractive disregard to the waste of judicial resources that would result.  I note the Master’s refusal to accede to AW’s submission was not appealed.

32.Thirdly, the Company was familiar with the taxation process and what information and documents would, or would not, be put before the taxing Master.

33.Fourthly, Mr Ng makes no reference to the Guide, although in his 2^nd report dated 13 September 2021, which I consider in more detail later he does make reference to the Peregrine Decision[14] and the Maxwell Principles[15] which he quotes.  He tells the court, no doubt correctly, that he has personally attended the taxation of provisional liquidators’ fees.  This makes his failure to refer to the Guide and acknowledge that the kind of documentation and information he complains are absent would not be included in the taxation packages, all the more surprising.  He says at the end of his report that he had read the Rules of the High Court pertaining to the Code of Conduct for Expert Witnesses and agrees to be bound by them.  In my view if he was alive to the obligation to give objective evidence to assist the court he should have referred to the Guide and acknowledged what I have just referred to.

34.Mr Ng raises a number of issues.  First that the invoice numbers do not match the time cost tables.  The second is that there is overcharging for foreign travel.  Mr Ng is correct that some of the time allocated to travel is inconsistent.  However, Mr Ng’s critique is disingenuous.  Mr Ng does not say that the PLs were not entitled to charge travelling time.  He does not say how travelling time is to be calculated: is it, for example, home/office to a hotel.  It is quite clear from the table that the travelling time recorded is not on each occasion an estimate of the time spent travelling from home/office to a hotel or an office.  What Mr Ng has done is to pick examples of inconsistences in the travelling time to Tokyo (and I think I can take judicial notice that if the PLs were entitled to charge for time spent time travelling from home/office to a hotel that he is plainly wrong that it generally takes five hours to travel from Hong Kong to Japan), which superficially work to his advantage in creating the impression that there is something suspicious about the time recorded.  He does not refer to the fact that most of the time recording seems to err significantly in the Company’s favour.  The PLs have charged 8 hours for each of four trips between Hong Kong and New York.

35.Mr Ng then goes on to say that in order to opine on the necessity of the trips he would need to see things like board minutes justifying the need for them.  But that is not of itself relevant to the question of whether the Company is now entitled to have a fresh taxation.

36.Mr Ng also objects to the inclusion of some items (he does not say how many in total he has identified)  for local travel, which he suggests are in general non-billable.  He does not explain why or when they would be properly billable.

37.Mr Ng next suggests that there were excessive internal meetings and the documents he has do not allow him to assess whether or not individual meetings were justified.  He also objects to items, which contain work descriptions that suggest some degree of supervision and guidance.  He seems to think that it is not appropriate for senior staff to charge for supervising junior staff.  It is not clear to me why that would be the case.  I would have thought that the function of the senior staff was partly to supervise less experienced and cheaper staff.  The items to which he refers do not as the narrative on page 13 of his report suggests, record staff training.  He also refers to a substantial amount of research being undertaken and his inability to check it as a result of him not having documentation, which explains why it was necessary.

38.Mr Fok deposed Fok 31 in response to Hui 7 and Mr Ng’s report.  Fok 31 is lengthy and details the history of the insolvency, the restructuring, the taxation of the PLs fees and matters, which the PLs take the view demonstrate the Company’s animosity towards them and pursuit of a vendetta.  What is most germane for the purposes of this application are his responses to Mr Ng’s report and his observations about the Company’s involvement in the taxation of the Restructuring Costs.

39.The total costs claimed in respect of the liquidation were HK$103,418,016.10.  This was taxed down to HK$98,413,135.33.

40.Mr Fok explains that the reason Mr Ng has not been able to reconcile some of the invoice numbers in the Liquidation Costs Packages in the Time Cost Table is because the invoices exhibited to the Liquidation Costs Taxation Packages 1, 3 and 10 were the proforma invoices before taxation.  The invoices in the Time Cost Table are the final invoice numbers.

41.Mr Fok agrees in [64]–[65] with Mr Ng’s suggestion that the invoices issued by the Company’s subsidiaries should be paid by them.  Mr Fok explains that this is what happened and says the Company had this information.

42.Mr Fok then goes onto address the other matters identified by Mr Ng.  In relation to travel expenses he makes the obvious point that if one looks at all the items there has been unrecording of travelling time. 

43.It seems to me that Mr Ng’s evidence simply does not suggest any substantive reason to reopen the taxations so long after the event.

44.Mr Fok says in [37.10] that the Company’s involvement in the taxation of the Restructuring Costs was substantial.  At the taxation on 16 and 17 September 2020 Master Hui observed that he was finding it very difficult to conduct the taxation and this he appeared to attribute to the Company’s unconstructive involvement, which seems to have involved making objections to items and then not being able to substantiate the objection.

45.I granted the Company leave to file and rely on the 9^th affirmation of Mr Hui (“Hui 9”)  made on 5 October 2021, which was shortly before the hearing commenced (it being adjourned part heard to 28 January 2022).  Mr Hui repeats what I find his unconvincing explanation that it was Sutton 4 that was the catalyst for the Company seeking to reopen the taxation of the Liquidation Costs.  Most of Hui 9 is a descent into a detailed critique of Fok 31.  Paragraphs 32 to 33 address Mr Fok’s contention that the Company was familiar with the taxation of the Liquidation Costs through the communication the PLs had with its staff such as Mr Hui, and that if they had had genuine concerns about the Liquidation Costs and their taxation they could have raised them earlier.  Rather than demonstrate, as I assume is intended, that the Company’s staff did not know what was going on, it seems to me that the evidence illustrates that they knew enough that I would have expected them to have been alert to how it was progressing and if they were as sensitive to the implications of limited information and questionable time recording and billing as the emphasis placed on it in Sutton 4 necessarily suggests the Company is, that the Company would have participated in the taxation of the Liquidation Costs.

46.The remainder of Hui 9 does not demonstrate reasons why the Company decided to seek a reassessment of the Liquidation Costs; Mr Hui seeks to address points of detail about the level of information that has been provided.  It is not difficult to see why Master Hui would have become frustrated when faced with a complicated taxation and a payee who seemed only interested in finding things to argue about rather than demonstrate a substantial reason to think that there has been material overcharging.

47.Mr Ng has produced another report dated 13 September 2021.  Unfortunately, this report reveals Mr Ng to either have misunderstood what is the issue for the court or to have taken upon himself the role of advocate for the Company.  Which ever it maybe he has fallen short of the standard the court expects of professional people giving what they know is meant to be independent opinion evidence.  For example on page 8 he says “The quantum of FTI’s time costs for the Active Subsidiaries, and their reasonableness, need to be assessed and justified, in the same way as the Former Provisional Liquidators’ time costs incurred during the Restructuring and Liquidation phases.  The fact that FTI’s time costs are already paid out of the Active Subsidiaries does not alter the fact that these costs are paid out of Grande’s overall assets.  The Former Provisional Liquidators still need to justify these time costs.” Mr Ng is wrong.  It is for the court to decide whether to require the PLs to have the Liquidation Costs taxed again.  He goes onto say “Therefore, I consider (sic)  appropriate to set aside and reopen the invoices of the Active Subsidiaries”.  This is an issue for the court and his evidence is clearly inadmissible.  He should have known this and certainly the Company’s legal team should have done so and not allowed this evidence to be put before the court.

48.The remainder of Mr Ng’s report is a critique of the time recording and the level of information that he has available, which he says limits his ability to check what has been done.  By way of example Mr Ng says this in the final paragraph on page 9 of his new report:

“In relation to the 10 hours charged by Mr. Roderick Sutton for traveling from Spain to Hong Kong, I consider that the expected business practice is for a time keeper to charge up to the total billable hours in a working day, i.e. 8 hours.  Indeed Mr. Fok acknowledged at paragraph 74 of his 31^st Affirmation that the time entries of himself and Mr. John Batchelor for travel to New York and New Jersey were only 8 hours, despite the flight time being much longer. Therefore, the same principle should be applied to Mr. Sutton’s time entry, i.e. Mr. Sutton’s time entry should be capped at 8 hours. Furthermore, it is unclear the nature and purpose of the “Chambers Hearing” that Mr. Sutton had denoted in his time narrative.  I am unsure of the circumstances that required his physical attendance at a chambers hearing, rather than instructing solicitors to attend on the provisional liquidators’ behalf at the hearing.”

49.The information that Mr Ng comments on[16] was available to the taxing Master.  There was nothing hidden from the taxing Master.  To allow an entire reassessment of the PLs costs of conducting the litigation in order to resolve this kind of dispute and the resources that would be required, seems to me manifestly disproportionate in terms of the resources required of the PLs and the court.  Given the observation of Master Hui to which I have referred, which has not been contradicted by the Company, I have little confidence that the Company would do anything other than waste both the court’s and the PLs’ time.

50.It does not seem to me that the Company has demonstrated a good reason for their delay in deciding that the taxation of the Liquidation Costs should be taxed on inter partes basis.  Neither have they demonstrated that the very substantial costs involved are justified by the concerns that they purport to have about the result of the taxation process; and I note that it is Mr Ng’s evidence that a detailed review of the Liquidation Costs by his firm would cost at least HK$18.8 million.  I accept that the prejudice to the PLs of allowing the application would be considerable.  Mr Fok explains in [50] of Fok 31:

“50. As a result of the Company’s (unexplained and unjustified)  delay, the Former Provisional Liquidators will now face substantial prejudice if the Assessments are reopened:

50.1 some of the Liquidation Costs date back to 2011 (i.e. 9 years ago). Given the passage of time, and the other work or projects that the Former Provisional Liquidators and their staff have undertaken in the interim, the Former Provisional Liquidators and their staff cannot possibly, and should not be expected to, recall details of each and every time entry or activity they conducted in the substantial winding up of over 100 entities across multiple jurisdictions;

50.2 the Former Provisional Liquidators have reviewed their staff records and identified that 132 staff members across FTI’s offices recorded time to work relating to the Liquidation. However, only 25 (i.e. 19%)  remain employed by FTI Hong Kong or FTI’s other offices. Staff members who no longer work for FTI include core members of the Former Provisional Liquidators’ team such as Kwok Hung Siu who recorded 3,075 hours (or HK$8,367,722.20)  and stopped working for FTI in 2017 and Hoi Wan Tam who recorded 2,922 hours (HK$11,321,005.30)  and stopped working for FTI in 2018. Overall, 22,148 hours and HK$46,958.252.50 (i.e. approximately 46%)  of the fees billed before taxation are attributable to time entries recorded by staff that are no longer employed by FTI. It will be difficult for the Former Provisional Liquidators to make the necessary enquiries with staff who no longer work for FTI if their entries are objected to and reopened. Had the application been made earlier, the Former Provisional Liquidators would have been in a much better position to consult with staff to explain each time entry. A table setting out the time keepers that no longer work for FTI, the year they stopped working for FTI, and their billable hours and amounts is exhibited at Tab 16;

50.3 given the lapse of time, it is possible that some records (including data or emails from FTI’s servers)  have been deleted or are otherwise no longer readily accessible. In particular, the process of identifying and collating documents in respect of the 107 staff that no longer work for FTI (“Former Staff”)  will be extraordinarily difficult and time consuming. The Former Staff worked in different teams and across multiple jurisdictions. It is therefore not a simple task of retrieving one master back up with all documents. More specifically:

50.3.1 there are different policies and procedures as to how documents are retained in different offices, depending on their IT structure and the jurisdiction’s data protection and privacy laws;

50.3.2 ordinarily, FTI’s internal policy is that an employee is not entitled to access another employee’s inbox without their express consent. Obtaining the consent of Former Staff will be extremely difficult, if not impossible;

50.3.3 accordingly, if the Former Provisional Liquidators want to obtain and review documents without the consent of Former Staff, they will need to go through multiple layers of approval including the team leaders of the Former Staff, the IT teams in each office, and the compliance and legal teams in each office to ensure they are acting in accordance with the relevant data protection and privacy laws that operate in the particular jurisdiction; and

50.3.4 Former Staff acted on more than one administration. Depending on how Former Staff filed their emails and documents, documents in other administrations, which may be subject to their own confidentiality orders, will be made available to staff who were not acting on the other administrations.

50.4 practically speaking, while it may still be technically possible to retrieve some documents and emails dating back as early as 2011, it will take an extraordinary amount of time and cost to recover the information of 132 time keepers across multiple offices. The raw information that will need to be filtered and reviewed will likely consist of millions of emails across multiple administrations;

50.5 as set out in Section D, the Company/Sino Bright has pursued a pattern of commencing litigation against the Former Provisional Liquidators and have employed a variety of delay tactics. Reopening the Assessments will likely cause the Former Provisional Liquidators to be party to several further years of litigation incurring substantial legal costs and management time despite their appointment being nearly 10 years ago and their discharge over 4 years ago; and

50.6  as set out at paragraphs 31 to 33, the Former Provisional Liquidators provided all required information to the Court, and followed all proper procedures, in having their fees and costs approved. They should not be expected to retain the funds that are paid to them for an undefined and lengthy period due to concerns that the Company, if it successfully resumes trading, will one day potentially challenge those fees.”

Conclusion

51.It seems to me quite clear that the prejudice to the PLs significantly outweighs any benefit (which in any event seems to me on the evidence unlikely to be material compared to the costs it will incur)  to the Company. I, therefore, dismiss the application.  I make an order nisi that the Company pays the PLs’ costs forthwith with a certificate for two counsel, such costs to be taxed if not agreed.

Mr Barrie Barlow SC, Mr Jonathan Lee, instructed by Johnnie Yam, Jacky Lee & Co., for the company

Mr William Wong SC, Mr Look Chan Ho and Mr David Chen, instructed by Karas LLP, for the former provisional liquidators