Siu King Cheung Hing Yip Co Ltd and Others v. Malaysia Borneo Finance Corporation (M) Berhad

CACV000057/1980

Company - compulsory winding-up - application to strike out Petition dismissed - costs reserved but applicant contributories prohibited from taking further part in proceedings without leave unless they made payment into court to cover costs - appeal - leave to appeal not required as appeal not "as to costs only" - no justification for reserving costs but there was ground for reserving question Which of unsuccessful Applicants should pay? - no power to order payment into court.

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Coram: Huggins and Cons, JJ.A. and Zimmern, J.

Date of Judgment: 7 August 1980

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JUDGMENT

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Huggins, J.A.:

1. This is yet another chapter in the continuing saga of the San Imperial Corporation Ltd. ("San Imperial"). There was a petition by Malaysia Borneo Finance Corporation (M) Berhad ("MBF") for the compulsory winding up of San Imperial. This was supported by the receiver of 822,500 shares in the company held by the receiver for the benefit of MBF. There was an application by the company and by the present Appellants to strike out that petition. That application was dismissed. There has been an appeal against the dismissal of that application, but we are not now concerned with it.

2. The present appeal is against an order made consequent upon the dismissal of the application to strike out. The order which appears at p. 13 of Vol. I of the record was that the costs be reserved (i.e. para. 2) and (in para. 3) that the Appellants be prohibited from taking further part in these proceedings, except by special leave of the judge, unless $250,000 were paid into court. It is para. 3 which is principally objected to, but the whole of the order as to costs is appealed.

3. Counsel for the receiver invited the judge to order that the costs of the application to strike out be paid not by the company but by the Appellants. She complained that if the order were against the company her clients and the petitioning contributories would in effect be paying part of the costs of their own successful opposition to the application. As an alternative she asked that the Appellants should pay into court a sum to cover her costs and those of the Petitioners and also that the same persons should pay the costs of the company itself. The judge indicated a preference for the second alternative and then there was a discussion about the amount of any payment in, after which the judge made the order I have described. The sanction for default in payment in was not one which had been asked for by any one but it was happily adopted by the Respondents to this application.

4. The first question which we had to decide was whether there was jurisdiction to hear the appeal. There was, it was said, no leave granted by the trial judge to appeal and leave of the trial judge was required if the appeal was one as to costs only. I am prepared to assume that no leave was given by the trial judge since it is not clear that he did give leave. Section 14(3)(c) of the Supreme Court Ordinance says that leave may be given by the High Court or by the Court of Appeal. That is different from the English statute, which requires the leave of the trial judge. We, in the event, gave leave in case it should be necessary. It is, I think, still a question whether leave was required: are matters of stay and security (and I think this was a matter of security) within the words "as to costs only", or do those words mean "on the question by whom and to what extent the costs are to be paid"? It is argued that at best they relate to matters of discretion and not to the jurisdiction to make the order. No authority directly in point has been cited but we have been referred to the notes on O.26 r.2 in Vol. 1 of the 1979 edition of the Supreme Court Practice and these show that in England an appeal is allowed without leave where the discretion has not, in law, been exercised at all because there was no material upon which the exercise could be made. I now incline to the view that no leave was required in the present case.

5. Turning to the substance of the matter it is necessary to consider what the judge's order was. As drawn up, as I have indicated, it was in two parts. The first part was "costs reserved", the second that the Appellants be prohibited from taking further part in the proceedings without special leave, unless they made the payment into court. It has been suggested that this does not represent what the learned judge intended to order. It is perhaps unfortunate that we do not have any order endorsed by him. All we have is a formal order drawn up and approved by the judge's clerk and the notes that the learned judge made at the time that the matter was under consideration. There are two passages at p. 76 of the record which I think are material. He said:

"I will order that Mr. Tong's clients who are directors that is James Coe, Jack Choa, Hui Chan Tze pay into court a sum sufficient to cover costs of Petitioner and receiver and sum to remain in court till end of winding up or further order."

That was an indication of what he intended or was going to order. The only order which he has in fact noted is that the Appellants be prohibited, save by special leave, from taking any further part in the winding up proceedings, until they have paid into court $250,000, which sum to remain court till conclusion of winding up or further order. I think that we must consider ourselves bound by the terms of the order as it was drawn up. It was drafted by the solicitors for the petitioning contributories and they have not seen to challenge it at any time thereafter. Indeed, they were happy to accept that part of para. 3 which neither they nor those supporting them had asked for.

6. I cannot accept the submission that these two paragraphs were, in truth, one integrated order. I think that in respect of each part we have to consider two things: (a) whether there was jurisdiction to make the order and (b) whether it would be proper for this court to interfere with the exercise of the judge's discretion. Clearly, where there is power to order the payment of costs there is also power to order that costs be reserved. However, the judge gave no reasons for reserving costs. I think there are two important considerations which enter into the picture. The first is that unless there are special circumstances justifying a different order costs ought to follow the event; that is provided by statutory rule. Secondly, a court ought not to delay its decision once it has before it all the relevant material which the parties wish to put before it. In the present case the petitioning contributories and their supporters were successful and the judge indicated no special circumstances which in my judgment would justify depriving them of their costs. I see no special circumstances.

7. There was, therefore, no justification for reserving any question in relation to costs unless the judge was in doubt as to who should pay. It is arguable that, as he went on to order that only the present Appellants should make the payment into court, he had made up his mind that it was the Appellants who would eventually have to pay the costs of the applications to strike out, although on the face of it the company (being equally unsuccessful) might also have been ordered to pay part of the costs. It would seem that the judge thought the sum of $250,000 would "cover" the entire costs; this was the word that counsel had used in her application to the judge and the judge adopted it. Paragraph 3 was not, I think, intended as a payment of part of the costs. An argument had been addressed to the judge, and it was based on dicta from In re E.K. Wilson and Sons Ltd. 1972 1 W.L.R. 791, to the effect that an order for payment by the company would result in the successful parties' paying, as contributories, part of their own costs. We do not know to what extent this argument affected the judge's decision. On the other hand there was an argument that the directors had been advised by counsel upon the company's application to strike out and that that made an order against the directors personally for payment of all the costs unfair. Although he did not say so I think it may have been in the judge's mind that by reserving the costs he would have an opportunity of deciding to what extent, if any, the directors had been motivated by bad faith in authorizing the company's application to strike out. That would have been a valid reason for reserving the question who should pay, although I do not think that para. 2 of the order can be upheld as it stands. The proper order was, in my judgment, that the successful parties should receive their costs of the applications to strike out, whatever the result of the petition to wind up the company, but that the question who should pay those costs should be reserved.

8. I turn then to para. 3, which not only required a payment into court but also imposed a sanction for default which no one had asked for. The judge, having reserved the costs both as to who should benefit and as to who should pay, probably intended to provide some security for the successful parties while at the same time not making the money available to them. However, in the light of the order which I think he ought to have made as to costs, the effect was to give the unsuccessful party security for the costs of the petition - which had never been sought - without a consideration of all the matters which would have been relevant to an application under O.23. It is no answer to the appeal to say that the overall effect of the judge's order as drawn up was less onerous than an order that the Appellants pay the costs of the successful parties forthwith: in my view there was no jurisdiction to make the order for payment in. The sanction was, I think, equally imposed without jurisdiction - and that is conceded by counsel for the petitioning contributories, although not by counsel for the supporting contributories. Neither side had a right to either part of the order in para. 3.

9. The result is that I would allow the appeal and would allow the cross-appeal to the extent that I would substitute an order that the successful parties be paid their costs of the applications to strike out in any event, reserving the question whether those costs should be paid by the Appellants or by the company, or in part by the one and in part by the other and, if the latter, in what proportions.

Cons, J.A.:

10. I agree with the order proposed by the learned President and for reasons similar to those which he has just expressed.

Zimmern, J:

11. I also agree.

7th August 1980.

Representation:

I. Hunter Q.C. & R. Wong (Stevenson, Low & Co.) for Appts.

R. Yorke, Q.C. & P. Fung & W. Poon (J.S. & M.) for Respondents.

Miss E. Appleby, Q.C. & Sakhrani (Slaughter & May) for the Receiver, Marvin Kin Tung Cheung.