Read the full judgment text of CACV 000087/1999 on BabelCite. This Court of Appeal judgment was delivered on 30 July 1999 before Nazareth V-P, Mortimer V-P and Suffiad J.
Company law – winding-up – liquidators' costs – Scheme of Arrangement under s.166 of Companies Ordinance (Cap. 32) – taxation of liquidators' fees and disbursements as condition of sanctioning scheme – court's supervisory jurisdiction over winding-up – liquidator as officer of the court – Kansa General International Insurance Company Limited (Kansa HK) is the Hong Kong branch of a group of Finnish insurance companies authorised to undertake certain classes of general insurance, which commenced underwriting in Hong Kong in 1979 – parent company experienced financial difficulties during the 1980s, leading to restrictions on Kansa HK in 1987, and the main Finnish company was declared bankrupt in December 1994 – Commissioner for Insurance petitioned to wind up Kansa HK on 10 July 1990 with winding-up order made on 13 September 1995 – two joint liquidators appointed – joint liquidators petitioned the court to sanction a Scheme of Arrangement between Kansa HK and two ranks of scheme creditors, namely direct insurance preferential creditors and re-insurance preferential creditors – judge (Le Pichon J) sanctioned Scheme subject to modifications including an order that the Scheme Costs of the Liquidators and the legal fees of Clifford Chance be taxed, and required undertakings from the liquidators and Clifford Chance – joint liquidators appealed – s.196(2) of Companies Ordinance (Cap. 32) provides for remuneration of liquidator by agreement with Committee of Inspection or by court – s.196(2A) provides that Official Receiver may apply to court to review remuneration – s.203 requires liquidator to send accounts to Official Receiver – s.204 requires Official Receiver to take cognizance of liquidators' conduct with power to bring liquidator before court – rules 172, 176 and 179 of Companies (Winding-Up) Rules require taxation of professional costs and Registrar's consideration – whether court has jurisdiction to order taxation of liquidators' costs where Committee of Inspection has agreed remuneration and Official Receiver has not objected – held yes – court has comprehensive supervisory jurisdiction over winding-up and may impose conditions before approving a Scheme of Arrangement – whether sound basis for exercise of discretion in ordering taxation as condition of sanctioning scheme – held yes – judge had sufficient factual basis demonstrated by her grasp of the Scheme and the financial information – whether liquidators should have been given further right to be heard before order made – held no – no significant prejudice – procedural direction not interfered with unless plainly vitiated by error – Ashmore v Corporation of Lloyds – Thermawear Ltd v Linton – Mirror Group Newspapers plc v Maxwell – Re Peregrine Investment Holdings Ltd (No.1) and (No.2) – appeal dismissed
Legal issues: Court's jurisdiction to order taxation of liquidators' costs · Sound basis for exercise of discretion in ordering taxation · Right to be heard before imposing condition of taxation
Outcome: Appeal dismissed