Wong Yau Kwan and Others v. Zhang Hongjie and Others

HCCW574/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING‑UP PROCEEDINGS NO.574 OF 2009

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BETWEEN

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Before : Hon Poon J in Chambers

Dates of written submissions on costs : 7 and 10 May 2010

Date of Decision on Costs : 19 May 2010

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DECISION  ON  COSTS

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1.By decision dated 13 April 2010, I dismissed the 1^st respondent’s application, supported by the 2^nd respondent, to strike out the winding-up relief in the amended petition. I further directed the parties to lodge their submissions on costs within 28 days, which they have done. This is my decision on costs.

2.There are three sets of costs that the court needs to deal with.

3.First, as between the petitioners and the 1^st respondent, I reject the 1^st respondent’s submission that costs should be reserved until trial. Contrary to its submissions, I fail to see how the trial will impact on the costs of the striking out application. Indeed, I can see no justification whatsoever why costs of the striking out application, which is self-contained, should not be disposed of at this stage.

4.After the CJR, as well as before it, the parties should be discouraged from unnecessarily and unreasonably maintaining or resisting interlocutory applications. If they do, the courts will not hesitate to order the losing party to pay the costs forthwith. See a similar observation by Sakhrani J in Hui Yin Sang v Tsoi Ping Kwan, HCA392/2008, unreported, 14 July 2009, at para.17. See also Re Mahr China Ltd [2008] 4 HKLRD 141, per Deputy Judge Harris, SC (as he then was) at para.17. I therefore order the 1^st respondent to pay the petitioners the costs of the application including all the costs reserved, to be paid forthwith and to be taxed if not agreed.

5.Second, as between the petitioners and the 2^nd respondent, as I understand its submission, the petitioners are not seeking costs against the 2^nd respondent. I will therefore make no order.

6.Third, the petitioners argued that it is unnecessary and inappropriate for the 2^nd respondent, the company, to participate in the striking out application. The costs incurred should not be borne by the 2^nd respondent but should be borne by those who authorized such costs to be incurred. The 2^nd respondent argued that it supported the application because it owed a duty to the shareholders and it was in the interest of the shareholders to have the winding up relief removed.

7.Unless there exist exceptionally good reasons, it is ordinarily inappropriate for a company, as a nominal party, to actively participate or to expend its funds in proceedings by shareholders for relief under section 168A or section 177(1)(f) of the Companies Ordinance (Cap.32) : See Re Core Pacific-Yamaichi International (HK) Ltd, HCCW804/2003, unreported, 17 October 2003, per Barma J at paras.47-48.

8.Here, I can see no good reason why the 2^nd respondent needed to participate in the striking out application, let alone supported it. The costs incurred in so doing should not be borne by the company. I therefore order that the costs so incurred should not be borne by the 2^nd respondent.

Mr Anderson Chow, SC, leading Mr Adrian Leung, instructed by Messrs K.C. Ho & Fong, for the Petitioners

Mr Anthony P.W. Cheung, instructed by Messrs S.W. Tai & Co., for the 1^st and 3^rd Respondents

Ms Mak Chui Wah, instructed by Messrs Chan & Chan, for the 2^nd Respondent

Official Receiver: excused from attendance