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Re Axona International Credit and Commerce Ltd

Read the full judgment text of HCCW 26/1983 on BabelCite. This High Court CFI judgment was delivered on 17 December 1984 before Hunter J.

Costs – scale of taxation – liquidation – joint liquidators – official receiver – common fund – indemnity – solicitor and own client – Rules of the Supreme Court O.62 – Companies Ordinance Cap 32 – E. M. I. Records Limited v. Ian Cameron Wallace Limited – Project Development Co. Ltd v. K.M.K. Securities Limited – Re National Life Insurance Co. Ltd – heavy litigation – US law – plaintiffs adopted multiple course – no penal element – common fund taxation with discretion – direction to Taxing Master – plaintiffs ordered to pay costs

Legal issues: Scale of costs in liquidation proceedings

Outcome: The plaintiffs are ordered to pay the costs of the defendants and the official receiver on a common fund basis.

Cited by 1 case

Case No.HCCW 26/1983[1984] HKLR 372
Court
High Court CFI
Date17 Dec 1984
JudgeHunter J
Case Document
100%Judiciary

HCCW000026/1983

IN THE SUPREME COURT OF HONG KONG

COMPANIES (WINDING-UP) NO. 26 OF 1983

______________

IN THE MATTER of THE Companies Ordinance, Cap. 32

and

IN THE MATTE of Axona International Credit And Commerce Limited

_______________

No. 14594 of 1983

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

____________

BETWEEN

AMERICAN EXPRESS INTERNATIONAL BANKING CORPORATION 1st Plaintiff
STATE STREET BANK INTERNATIONAL 2nd Plaintiff
MANUFACTURERS HANOVER TRUST COMPANY 3rd Plaintiff

AND
MICHAEL J. JOHNSON 1st Defendant
EOGHAN M. McMILLAN 2nd Defendant

___________

Coram: The Hon. Mr. Justice Hunter in Chambers

Date of Hearing: 19 November 1984

Date of Delivery of Ruling: 17 December 1984

__________________

RULING ON COSTS

__________________

1. On 28th May last I gave judgment against the plaintiffs on the summons in the liquidation and on the two remaining summons in the action. At the parties' request I then stood over the argument on costs. It is with this that I must now deal.

2. This was a heavy piece of litigation. The plaintiffs avoided the simple, and adopted a multiple course which I earlier said "placed maximum risk and maximum expense on the joint liquidators". The issues were not purely domestic considerable investigation was necessary into U.S. law. I have no doubt that the joint liquidators and the official receiver are entitled to the costs of all the matters argued before me, including all costs reserved to me, upon the most generous appropriate scale. The problem has been to identify this scale.

3. In E. M. I. Records Limited v. Ian Cameron Wallace Limited (1983) 1 Ch. 59, Megarry V.C. most usefully identified and described the various scales available to the court under both the rules and judicial decisions. He concluded that or the latter basis, the court still had jurisdiction to award costs on the highest scale, namely an indemnity, notwithstanding the lack of provision for this in the rules. But in the vast majority of cases where this jurisdiction has been exercised a penal element associated with some contempt of court has arisen. There is no such consideration here, and for this reason I do not regard such an order as appropriate.

4. The choice then rests between the two forms of order considered by Parker J. (as he then was) in Project Development Co. Ltd. v. K.M.K. Securities Limited (1982) 1 W.L.R. 1470, namely: -

(1) A common fund taxation under O.62 r. 28(2) and (3) with a direction to the Taxing Master to exercise his discretion under O.62 r. 32(2): or

(2) The special solicitor and own client taxation under O.62 r.29 ordered in that case, namely one which reversed r. 29(1) and left the onus on the applicants to prove the reasonableness of the costs they sought.

5. I share Parker J. 's aim. I think that the respondents here should have all their "reasonable costs": and that "it is right that (they) should have to establish as (they do) on the common fund basis the reasonableness of the costs for which they are contending" p.1472. My difficulty has been to detect the real differences in practice between these two approaches.

6. I agree with Parker J. that under the first alternative "the decision as to the extent to which that discretion will be applied will be left to the Taxing Master". But he is likewise the person who has to judge the reasonableness of any item in the bill under the second alternative. Once what Parker J. called "the constraints" of the first schedule are removed by direction, the reasonableness of any item should, to my mind, become a purely objective question of fact and degree, and answered without regard to the figures in the schedule. Given the target of "reasonable costs", it seems to me that if in all the circumstances a particular item is reasonable, that it should be allowed under both types of taxation and not allowed under one and disallowed under the other.

7. In these circumstances I am regrettably unable to follow Parker J. 's example. I share Megarry V.C. 's aversion to novel orders, p.75(C). I am minded to stick to the familiar, and to a form of taxation appropriate in liquidation, Re National Life Insurance Co. Ltd. (1978) 1 W.L.R. 45.

8. I therefore direct that the applicants do pay the costs of the respondents and of the official receiver and that (if not agreed) such costs are to be taxed on a common fund basis with a direction to the Taxing Master to exercise his discretion under O.62 r.32 (2).

(D.S. Hunter)
Judge of the High Court

Representation:

Robert Ribeiro (M/s Deacons) for 1st, 2nd and 3rd Plaintiffs.

Anthony Dicks (M/s Wilkinson & Grist) for Defendants.

Wodlard for Official Receiver.

Cited by 1 case

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