Marrakesh Investments Ltd v Tangiers Holdings Ltd And Another

Court:High Court (Hong Kong)
Judgement Number:HCCW352/2016
Judgment Date:28 Nov 2017
HCCW352B/2016 MARRAKESH INVESTMENTS LTD v. TANGIERS HOLDINGS LTD AND ANOTHER

HCCW 352/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING‑UP PROCEEDINGS NO 352 OF 2016

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IN THE MATTER of Jessop & Baird (Hong Kong) Limited
and
IN THE MATTER of section 177(1)(f) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, Cap 32

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BETWEEN
MARRAKESH INVESTMENTS LIMITED Petitioner
and
TANGIERS HOLDINGS LIMITED 1st Respondent
JESSOP & BAIRD (HONG KONG) LIMITED 2nd Respondent

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Before: Hon Harris J in Chambers
Date of Hearing: 28 November 2017
Date of Decision: 28 November 2017

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D E C I S I O N

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1. On 3 October 2016 the petitioner issued the petition in these proceedings seeking a winding-up order and other incidental relief. The petition is a just and equitable petition and the underlying dispute is a shareholders’ dispute. The petition was amended on 8 March 2017. Those amendments are not material for present purposes.

2. On 27 February 2017 the 1st respondent issued a summons to strike out the petition. In broad terms the 1st respondent’s complaint was that there was no realistic prospect of the court making a winding-up order as the dispute between the parties would be resolved by the court, if the matter could not be settled, ordering that one or other of the shareholders buy out the other.

3. The background to the issue of the petition is unusual. The petitioner had already issued another petition with an HCCW number. However, for reasons which were never clear, the petition only sought a buy-out order. Those proceedings have subsequently been converted to miscellaneous proceedings.

4. The court was informed on 27 November 2017 that the petitioner agreed to the dismissal of the present petition. The only issue before the court today is costs.

5. The petitioner, who is represented by Mr Martin Ho, recognises that my decision in Re Lucky Ford Industrial Ltd [2013] 3 HKLRD 550, paras 14 to 15, establishes that as a general rule where an applicant obtains, by agreement prior to the hearing of an application, substantially what by the application he sought, costs will follow the event, and the court will not be concerned to explore the circumstances in which the respondent to the application came to agree to it when considering who should pay the costs.

6. Mr Ho referred me to Barma J’s (as he then was) decision in Re Peaktop Technologies (USA) Hong Kong Ltd [2007] 4 HKLRD 207 para 8, which pre-dates my decision, which reads as follows:

“8. Further, it seems to me that where an applicant’s application is doomed to failure by reason not of anything which he has done or not done, but because of an act of the respondent which is within its control and out of the hands of the applicant and is, further, a step which could have been taken either prior to the application being made or at an earlier stage in the application so as either to obviate the possibility of the application being made, or to minimize the costs associated with it, it may well be appropriate to recognize this by an appropriate costs order.”

7. It is suggested that this demonstrates that the court should have regard to whether or not the costs which have been incurred had been incurred for reasons which are, in the present case, in part the responsibility of the 1st respondent.

8. There will always be unusual cases which may justify a departure from the approach which I described in Re Lucky Ford, however, such cases will be rare and practitioners should be slow, rather than quick, to seek out reasons which may militate against adopting the straightforward and cost effective approach I described in Re Lucky Ford.

9. In the present case, the petitioner suggests that the correct costs order would be that the 1st respondent bears the petitioner’s costs on a party-and-party basis, to be taxed if not agreed. The reason for this suggestion is as follows.

10. Mr Ho submitted that the reason why the petitioner agreed to the strike-out application was because, in the 1st respondent’s affirmation in reply dated 13 October 2017, for the first time Mr Jessop states that he has the financial ability to fund the acquisition of the petitioner’s shares and exhibits documents proving this. As I understand it, it is accepted that once this became clear, the 1st respondent’s argument that there was no prospect of a winding-up order being made became sufficiently compelling that the petitioner accepted that there was no realistic prospect of a winding-up order being made and, therefore, the winding‑up petition should be dismissed.

11. This argument, however, presupposes that it was a concern about the 1st respondent’s ability to finance the purchase of the petitioner’s shares which was the reason, or the principal reason, why the petition was issued in March 2017. The petition, however, does not state any reason why it was felt necessary, despite a petition seeking a buy-out already having been issued, to seek as an alternative remedy a winding‑up order.

12. This in itself was a defect in the petition. It is well established by a series of...

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