Silver Achiever Investments Ltd v. Frank Joseph Prineppi and Others

HCCW 203/2016

[2023] HKCFI 2700

HCCW 203/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO 203 OF 2016

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R E A S O N S   F O R   D E C I S I O N

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1.On 1 September 2022 I heard the 1^st, 2^nd and 4^th Respondents’ (“Respondents”) application for security for costs of HK$4,000,000 of the proceedings in HCCW 203/2016. The application had been issued on 19 August 2022. The trial was fixed to commence on 14 September 2022. I dismissed the application and reserved the reasons to be handed down at the same time as the judgment after trial. After trial I dismissed the Petition and ordered that the Petitioner pays the Respondents’ costs.

2.The application was made under RHC O23 r1 and section 905 of the Companies Ordinance, Cap. 622 on the grounds that the Petitioner is incorporated in the British Virgin Islands. The justification for the lateness of the application was said to be that the Respondents’ solicitors had understood from the evidence that had been filed that the Petitioner was the indirect subsidiary of a listed company, SEA Holdings Limited (“SEA”), and they assumed that in the event the Petition was dismissed SEA would voluntarily honour any costs order made against its subsidiary, although there was no evidence to suggest it would. I note that it has not been suggested that the Respondents’ solicitors assumed SEA was under any obligation to pay. It was only when supplemental witness statements of David Runciman and Yap Shee Liam were served on about 4 August 2022, that it became apparent that although the Petitioner was an indirect subsidiary of SEA at the time the relevant joint venture agreements were signed it might have ceased to be the case during the progress of the Petition, which it transpired is what had happened.

3.I dismissed the application because in my view it was brought far too late. I do not accept that the solicitors were entitled to assume that SEA would pay its ultimate subsidiary’s liability. It is quite common for holding companies to let insolvent subsidiaries fail and given the obvious animus SEA’s major shareholder had towards the Respondents it would have been prudent to have assumed this. What in my view the Respondents’ solicitors clearly should have done was to write to the Petitioner’s solicitors asking them to obtain written confirmation from SEA that it would undertake to honour any costs order and, if the confirmation was not forthcoming, to have applied for security. I do not think that there is any excuse for the application being issued less than one month before trial.

4.I will make a costs order nisi that the Respondents shall pay the Petitioner’s costs of the application forthwith with a certificate for one counsel such costs to be taxed if not agreed.

Ms Candice Lau, instructed by Lewis Silkin, for the petitioner

Mr Colin Wright, instructed by Anthony Evans & Co. for the 1^st, 2^nd and 4^th respondents

The attendance of the Official Receiver was excused