Tam Hing Lok v. New Bright Footwear Manufactory Ltd and Another

HCCW000199/1982

IN THE SUPREME COURT OF HONG KONG

COMPANIES (WINDING-UP) NO. 199 OF 1982

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BETWEEN

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Coram: Hon. LIU J.

Date: 28th March, 1983.

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JUDGMENT

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1. The petition was presented by petitioner against the 1st respondent and the 2nd respondent. In substance, the petitioner based his petition on the "just and equitable" ground. Concession has been made by Miss Mok on behalf of both respondents for a winding-up order to be made. The concession was, in substance, that the mutual confidence envisaged between the petitioner and the 2nd respondent in the 1st respondent company had wholly gone.

2. Much time has been taken up on argument on costs of the two summonses as well as a notice to produce. Accusation has also been made as to an alleged misappropriation of sums in total $00,000 by the 2nd respondent out of the funds of the 1st respondent company.

3. Having listened Patiently to the submission of counsel on behalf of petitioner and the respondents, the Official Receiver could no longer find himself in agreement with what was virtually to be an unopposed winding-up order to be made by this court.  It was pointed out by the Official Receiver that the entire matter savoured of personal disputes between the petitioner and the 2nd respondent, and that the Official Receiver would have, in time to come, to be called upon to resolve allegations and counter-allegations. Mr. Mckinnes stressed that such was not the proper function of the Official Receiver. In the circumstances, the Court was invited to consider whether or not it was more desirable to have the petition dismissed with the responsibility for costs to be shouldered by the party or parties to blame in a voluntary winding up.

4. The presentation of the petition is not inappropriate, the ground in support is not said to be unfounded, resistance has been withdrawn and unless matters are grave enough for the prayer to be rejected, the court would not lightly dismiss the petition. Obviously I share the anxiety envinced in the submissions of Mr. Mckinnes on behalf of the official Receiver, and special directions as regards any possible abuse of the facilities of the Official Receiver's Office must be provided for. I would, therefore, grant the winding-up order, but I would direct and empower the Official Receiver to refer all matters for factual decision to an accountant or barrister to be selected by the Official Receiver and appointed by him as his agent with costs therefor be paid out of the company's assets or, if feared to be insufficient, to seek costs on account of estimated reimbursements from the petitioner and the 2nd respondent personally in equal shares. Costs of the petition be costs to the petitioner and such costs be paid out of the company's assets.

5. The remaining matter is costs of the two summonses and costs of the notice to produce. As for the costs of the notice to produce, I can see the wisdom in the suggested precaution not infrequently adopted, as it has been adopted in these proceedings, by the service of a notice of this kind. I would not therefore exclude costs of the preparation and service of the notice to produce on behalf of the petitioner.

6. An order for discovery was made and both respondents were enjoined to make full discovery. It was alleged and is still being alleged that that had not been done, hence, the issuance of the summons against both respondents, the 1st respondent company and the 2nd respondent for making specific discovery. A further summons was issued against the 2nd respondent for an inspection of his account No. 27-40-2651. Counsel for the petitioner contended that whatever were the merits of his client's criticisms and allegations, these applications were justified in the sense that the documents canvassed in both summons were material to his client's allegations against the 2nd respondent. The argument of counsel seemed formidable. However, the matter of costs on the summonses is one of triviality, and it could be reasonably disposed of, in my view, by commonsense.

7. It has been the consensus that costs for the first summons against both respondents for specific discovery was to be borne by the 1st respondent company and out of its assets. There are five substantive prayers in that summons, only two of which relate directly to the 2nd respondent. I have been told that in the schedule setting out specific documents, the account referred to paragraph (b) is the same personal account of the 2nd respondent's. If costs of that summons is to be borne by the 1st respondent company, it could readily be appreciated that costs outstanding on that 1st summons to be met personally by the 2nd respondent would be minute, if not negligible.

8. The second summons against the 2nd respondent is for inspection. If the petitioner's first summons for specific discovery against both respondents were to be successful, there would be little likelihood of any opposition to inspection by the petitioner of the personal account of the 2nd respondent. Thus, the outcome of the second summons must inevitably hinge on the outcome of the first summons. Counsel for the respondents, in particular the 2nd respondent, complained that there was no specific request for inspection.  By specific request, if I understand her correctly, counsel meant specific request in writing. Moreover, the second summons could have been made part and parcel of the first summons, and there was no necessity for separating the prayers in these two summonses in their present form as they had been in fact filed and proceeded with. Hardly, there could have been any lengthy arguments on the second summons which was set down for hearing at the same time, on the same date as the first summons. Therefore, costs of the second summons against the 2nd respondent alone, if allowed in addition, could not have been appreciable. Much time has been taken up on the pros and cons in argument for allocating the responsibility for costs of these two summonses. Without having to decide on the merits or demerits of counsel's arguments, suffice it for me to say that commonsense dictates that the petitioner's costs of these summonses should best be paid out of the assets of the company. It did not appear to be argued that the respondents were themselves also entitled to costs, but if that had been in the mind of counsel for the respondents, the circumstances, I think, would justify a small concession in favour of the petitioner. I am, in the circumstances, not prepared to award any costs in favour of the respondents on either of the two summonses. The respondents have withdrawn their resistance to the petition, and I would also not award costs in these proceedings in favour of either of them. Consequently, I order costs of the two summonses be costs of the petitioner to be paid out of the assets of the company.

Representation:

Mr. Walter Lau instructed by Messrs. Ng & Yung for the Petitioner.

Ms Alice Mok instructed by Messrs. Gallant Y. T. Ho for the Respondents.

Mr. McInnes for Official Receiver.