RE PATRICK COWLEY AND LUI YEE MAN, JOINT AND SEVERAL LIQUIDATORS OF THE COMPANY

RE PATRICK COWLEY AND LUI YEE MAN, JOINT AND SEVERAL LIQUIDATORS OF THE COMPANY

A liquidator does not require the court's prior sanction to enter a funding agreement which either effects an assignment of a chose in action or funds litigation, because such actions fall within the statutory powers conferred by Parts 2 and 3 of Schedule 25 (notably para 9) read with s251(1)(b) for voluntary liquidations and s199(3) for winding-ups by the court; court directions should be sought only to resolve discrete legal questions or genuine legal uncertainty, not to approve ordinary commercial judgments of the liquidator.

Citation
[2020] HKCFI 922
Parties
Joint and Several Liquidator (applicant): Patrick Cowley; Joint and Several Liquidator (applicant): Lui Yee Man; Company in Voluntary Liquidation: The Company (name withheld)
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
27 May 2020
Case Number
HCMP373/2020
Procedural Posture
Section 255 Application for Directions Under Companies (winding Up and Miscellaneous Provisions) Ordinance (cap 32) / Interlocutory Application for Court Direction/clarification
Outcome
Direction given that court sanction is not required for the liquidators to enter the funding agreement; guidance provided on appropriate circumstances to seek directions under s255.
Legal Topics
Liquidator Powers, Third Party Litigation Funding, Assignment of Choses in Action, Maintenance and Champerty, Court Directions Under S255
Source Language
EN
Company Law Insolvency Law Civil Procedure Liquidator Powers Third Party Litigation Funding Assignment of Choses in Action Maintenance and Champerty Court Directions Under S255

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Parties

Patrick Cowley

Joint and Several Liquidator (applicant)

Lui Yee Man

Joint and Several Liquidator (applicant)

The Company (name withheld)

Company in Voluntary Liquidation

Procedural Posture

Section 255 Application for Directions Under Companies (winding Up and Miscellaneous Provisions) Ordinance (cap 32) / Interlocutory Application for Court Direction/clarification

Legal Issues

  1. 1 Whether liquidators require court sanction to enter a funding agreement
  2. 2 Whether assignment of a cause of action or other funding structures fall within liquidators' statutory powers
  3. 3 When a liquidator may properly seek the court's directions under s255

Ratio Decidendi

A liquidator does not require the court's prior sanction to enter a funding agreement which either effects an assignment of a chose in action or funds litigation, because such actions fall within the statutory powers conferred by Parts 2 and 3 of Schedule 25 (notably para 9) read with s251(1)(b) for voluntary liquidations and s199(3) for winding-ups by the court; court directions should be sought only to resolve discrete legal questions or genuine legal uncertainty, not to approve ordinary commercial judgments of the liquidator.

Court Disposition

Direction given that court sanction is not required for the liquidators to enter the funding agreement; guidance provided on appropriate circumstances to seek directions under s255.

Orders

  • Court declares that the liquidators do not require the Hong Kong court's sanction to cause the Company to enter the funding agreement as it falls within statutory powers in Schedule 25 read with s251(1)(b) and s199(3) where applicable.
  • Guidance and directions that future applications under s255 must identify discrete legal issues for determination rather than seek general approval of broad commercial arrangements; reformulation of the originating summons recommended.