Re China Metal Recycling (Holdings) Ltd

HCCW 210/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO 210 OF 2013

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DECISION
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1.On 14 and 15 October 2014 I heard an application by the Company to discharge the Provisional Liquidators and replace them with an independent board to manage the Company alternatively replace them with different insolvency practitioners. I handed down judgment on 12 November 2014. I made an order nisi that Mr Yan, who had been conducting the defence of the Company to the Petition, pay the costs of the application on an indemnity basis. On 20 and 21 November 2014 respectively the Provisional Liquidators and the Commission sought an order that Chun Chi Wai, the 2^nd Respondent, and Mr Yan pay the costs of the application on an indemnity basis. The application was heard at 2.30pm on 24 November 2014. Mr Chun had supported the application although it had been advanced largely by counsel on behalf of the Company. On 12 November 2014 I had granted an order, made on the application of Mr Chun, that he ceases to be a party to the proceedings. The application for a costs order against him was, however, served on him and he was represented by counsel and contested the application.

2.I informed the parties that I would determine the costs application after the determination of the trial, because I thought I would be better able to assess the application when I had greater familiarity with the subject matter of the Petition.  The parties, including Mr. Chun, did not object to this.

3.The trial took place on 24 to 26 February 2015 and as it transpired the Company did not contest it.  I delivered judgment on 9 March 2015.

4.I delivered my judgment on the costs applications made on 20  and 21 November 2014 in a decision dated 12 March 2015.  In paragraph 3 of that decision I say this:

“On 9 March 2015 I delivered my reasons for having made an order to wind up the Company on 26 February 2015. It is clear from my reasons for dismissing the application to discharge the Provisional Liquidators and my reasons for making a winding‑up order that it is a compelling inference that Mr Chun has been behind the Company's defence of the Petition and had been paying for it. It seems to me that in these circumstances he should be ordered to pay the costs of the discharge application, which it is highly probable, he instigated.”

5.On 25 March 2015 Mr Chun issued a summons for leave to appeal from the costs order dated 12 March 2015.  The summons has appended to it a draft notice of appeal. Two grounds of appeal appear in that notice.  First, that I had erred in taking into account findings of fact in my 9 March 2015 Reasons for Decision.  I understand that it is suggested that as Mr Chun took no part in the trial it was wrong to take into account any of the evidence produced at trial that was not before me in October.  Secondly, that if I was going to take into account any such evidence Mr Chun should have been given a reasonable opportunity to be heard.

6.The only reference to the discharge application in the Reasons for Decision of 9 March 2015 is in paragraph 24.  It says:

“Mr. Chun played a significant role throughout these proceedings, including in the Discharge Application. In my assessment Mr. Chun, in conjunction with Mr. Yan, has been uncooperative and has used excuses to avoid assisting the Provisional Liquidators in taking control of the Company’s subsidiaries: paragraphs 36-37 of the Discharge Application Judgment. It is plain that Mr. Chun, who indisputably was the Company’s founder, Chairman and CEO and the person exercising control over the Company and its subsidiaries prior to the appointment of the Provisional Liquidators, clearly would have knowledge of the matters which give rise to the Commission’s complaints. Mr. Chun was the main protagonist in these proceedings and had worked closely with Mr. Yan in the conduct of the defences. It seems an obvious inference that every major step taken by Mr. Yan on behalf of the Company in these proceedings was taken with the knowledge or approval of Mr. Chun.”

7.As I have mentioned earlier the reason for waiting until trial before dealing with costs was in order that I was better acquainted with the subject matter of the Petition.  Particularly as the Petition was uncontested waiting until after trial before determining costs simply resulted in me having a greater understanding of background matters primarily the I.P.O. and the Commission’s substantive complaints.  It did not materially affect the deliberations which led me to decide costs.  Paragraph 24 of the judgment of 9 March 2015 is consistent with what I found in the judgment of 12 November 2015.  Also when asked by me, Ms Yu, who appeared for Mr. Chun, could only point to paragraphs 22 to 24 as objectionable, but they only recite the progress of the proceedings up to the time of the discharge application, the discharge application itself and my conclusion about Mr. Chun being behind Company’s defence.

8.I consider there is no substance in Mr. Chun’s complaint and, as I have noted, he did not object at the time to my indication that I intended to deal with costs after trial.  I will dismiss the application.  Mr. Chun will pay the Commission and the Provisional Liquidators’ costs.

Ms Bianca Yu, instructed by Anthony Siu & Co, for Chun Chi Wai

Mr Jonathan Chang and Ms Bonnie Cheng, instructed by Securities and Futures Commission, the petitioner

Mr C Dobby, of Hogan Lovells, for the Provisional Liquidators

The respondent: China Metal Recycling (Holdings) Limited, was not represented and did not appear

Attendance of the Official Receiver was excused