Re Concord Knitting Factory Ltd

IN THE SUPREME COURT OF HONG KONG

COMPANIES WINDING UP

ACTION NO.30 of 1971

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REVIEW OF TAXATION

DECISION

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1. This is a review of my taxation of the Petitioners' bill of costs in this matter. The Solicitor for the Petitioners set out in a letter to me dated the 4th February, 1972 the reasons for the objections which he was making in respect of deductions I made to the said bill. He also in his submission to me gave me additional information concerning the circumstances surrounding this matter when he received instructions to represent the Petitioners from the Director of Legal Aid. He advised me that there was an extreme element of urgency attaching to the matter at that stage. He advised me that his clients were all employees of Concord Knitting Factory Limited and that their claim on the said Company was in respect of outstanding wages which were due and owing to them. In addition to this, he was instructed that the only assets which would be available to satisfy any judgment which was obtained or would be available to any liquidator of the Company was the plant and machinery which were situated on the premises where the said Company conducted its business. It was, therefore, essential that immediate action be taken to protect the said assets and accordingly it was necessary that a provisional liquidator be appointed. Before any application for such an appointment could be entertained by the Court it was essential that a petition for the winding-up of the Company must be presented. I was informed that the Director of Legal Aid had only sent a notice to the Company in accordance with Section 178(a) of the Companies Ordinance on the 7th of November. It will be noted from Section 178(a) that a period of 3 weeks must elapse under this section before the Company shall be deemed to be unable to pay its debts. It was the submission of the Petitioners’ Solicitor that it was therefore essential if the interests of his clients were to be properly and adequately safeguarded that he must base his application to the Court for the winding-up of the Company on Section 178(c) of the Companies Ordinance if delay was to be avoided which might frustrate the interests of his clients. It will be noticed that under Section 178(c) it is necessary to go into the whole question of the financial situation of the Company which of necessity involves a considerable amount of additional work. I accept that it was necessary for such work to be undertaken and having regard to the fact that this is a common fund taxation there is no doubt in my mind that the items which were claimed in Items 95 to 103 should not have been disallowed. I would mention in passing that it is perhaps a pity that my attention was not drawn to this matter in more detail when I originally taxed this bill. I therefore order that Items 95 to 103 shall be reinstated and allowed as claimed.

2. The position concerning Counsel’s fees is not so simple. In his submission to me the Petitioners’ Solicitor produced to me a letter from Counsel the object of which was to justify the fees which he was claiming. The Petitioners’ Solicitor has undertaken to file the original of this letter on the Court file. In the said letter Counsel has referred to the Registrar’s letter dated the 14th June, 1971 to the Hon. Secretary of the Hon Kong Bar Association in which he set out a scale of fees which he regarded as being fair and reasonable remuneration for work done by Counsel in run-of-the-mill cases. Neither Counsel nor the Petitioners’ Solicitor attempted to argue that I was bound in any way by the figures which was set out in this letter. Counsel did, however, in his letter attempt to draw an analogy between the work undertaken by him in this matter and the work which is normally undertaken in an undefended divorce action. He claimed that if such an analogy was drawn it was obvious that the deductions I had made in respect of the fees he was claiming were unreasonable. Even if I were to accept the argument which was advanced before me that work which was done in this case was comparable to that undertaken in an undefended divorce, I still consider that the fees which have been charged by Counsel are excessive. I consider that when exercising a discretion as to the amount which is properly allowable in respect of Counsel’s fees I must have regard to all of the fees which are claimed by Counsel. I note that I allowed $300 to Counsel by Item 33 on the bill in respect of the preparation of a simple summons and supporting affidavit. Having regard to this fact I think that the total of $800 which was claimed in respect of Items 33 and 44 was excessive and it was right for me to deduct $200 from Item 49.

3. Item 126 related to Counsel’s brief fee in respect of the hearing of the Petition for winding-up the Company. When I taxed this bill I took into account the fact that the amount being claimed was a brief fee and accordingly would reflect the fact that Counsel would have spent time in preparing the case. I consider that it is relevant to take into account the fact that Counsel should have already been familiar with the matter as a result of the previous work undertaken by him a short time before. I would observe that in exercising the discretion which is vested in me to determine the quantum of fees which shall be allowed it is incumbent upon me to have regard to the matters referred to in Part II of Order 62 of the Rules of Supreme Court. The factors which I must consider are laid down in paragraphs (a) to (g) of 1(2) which appear on Page 213 of the Rules of the Supreme Court. Whatever criteria is adopted I do not consider that the work which was undertaken by Counsel could be described as being complex nor would it require any special skill or knowledge. There were not a large number of documents to be considered. The main requirement for presenting a petition to wind-up a company is to ensure that the statutory requirements of the Companies Ordinance and its subsidiary legislation are adhered to. These requirements are simple and straightforward. I would observe that there does not appear to have been any great difficulty in proving in this case that the Company was unable to pay its debts. In my opinion whatever criteria is adopted a brief fee of $1,000 in respect of this work is manifestly excessive. I feel, however, that I deducted too much from this item. I consider on all of the information which is now available to me that a proper amount for such a brief fee in a case such as this would be $600 and accordingly I revise my assessment of this matter by allowing a further $200.