Re Grande Holdings Ltd

HCCW 177/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP NO 177 OF 2011

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RULING ON COSTS

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1.This is my Ruling on Costs.

2.In a Judgment handed down on 12 September 2013, I made a winding up order in respect of The Grande Holdings Ltd (“the Company”). Costs were reserved pending written submissions from the parties.

3.On 30 May 2011 Sino Bright Enterprises Co Ltd (“Sino Bright”) presented a petition to wind up the Company.  Provisional liquidators were appointed the following day and they were authorised to consider and report on the prospect of restructuring the Company.

4.On 2 August 2011 the Kayne Creditors filed a notice of intention to appear on and to support the Petition based on a debt owed by the Company without prejudice to its right to challenge the legitimacy of Sino Bright’s petitioning debt.  There were 2 hearings before the masters,   with costs reserved.

5.The petition was adjourned by the Companies Judge on a number of occasions thereafter with a view to enabling the provisional liquidators to pursue and report on a restructuring proposal.  On each occasion, Harris J ordered that costs be in the cause of the petition.

6.The Kayne Creditors who, by 3 October 2012, were opposed to further adjournments, applied to be substituted as petitioners in place of Sino Bright.  The substitution application succeeded and they were substituted as petitioners by order dated 20 March 2013.  This Ruling does not concern the costs of and incidental to the substitution application, provision having already been made for those costs.

7.There was a further directions hearing before Harris J on       29 April 2013, Gain Alpha Finance Ltd (“Gain Alpha”) having shortly before given notice of its intention to appear on and to oppose the petition.  Costs were ordered to be costs in the petition.

8.Shortly before the petition was heard on 3 September 2013, Sino Bright and Gain Alpha respectively took out summonses both dated 26 August 2013 and filed on 27 August 2013to be substituted as the original petitioner/replacement petitioner if the court were to hold that the petitioners (i.e. Kayne Creditors) are not entitled to present the amended petition.

Costs

9.The general rule is that costs should follow the event.  Much of the hearing on 3 September 2013 was devoted to resolving the jurisdictional issue raised at the 11^th hour by Sino Bright and Gain Alpha challenging the petitioners’ locus to be petitioners.  That was the real battle which Sino Bright and Gain Alpha lost.  There is no reason why the normal rule should not apply.

10.Further, the court also rejected their request for a further adjournment.  Given the evidence (which I have set out in my Judgment), their opposition to an immediate winding up order was unreasonable and doomed to fail.

11.In the circumstances, the costs of and incidental to the summonses dated 26 August 2013 and filed on 27 August 2013 as well as the costs of the amended petition incurred by the petitioners and the provisional liquidators on and after 27 August 2013 (including the costs attributable to the 7^th affirmation of Fok Hei Yu) are to be borne by      Sino Bright and Gain Alpha jointly and severally.

12.The various adjournments that took place prior to the substitution application were unopposed.  The parties were content to give further time to the provisional liquidators to explore a possible restructuring.  The directions hearing that took place on 29 April 2013 was necessary in the ordinary course in order to bring the proceedings to a conclusion.  In those circumstances, I see no basis for departing from the ordinary practice in winding up proceedings as regards the costs of the various adjournments including that of 29 April 2013. 

13.Accordingly, the costs incurred by the petitioners and the provisional liquidators in respect of the adjournments mentioned are to be paid out of the assets of the company as an expense of the liquidation.

Robertsons, for the petitioners

K & L Gates, for Sino Bright Enterprises Company Limited

Ms Ebony Ling, instructed by WK To & Co, for Gain Alpha Finance Limited

Lipman Karas, for the provisional liquidators