ADVANCED EPI TECHNOLOGY CORPORATION v. VITELIC (HONG KONG) LTD AND OTHERS

ADVANCED EPI TECHNOLOGY CORPORATION v. VITELIC (HONG KONG) LTD AND OTHERS

The court exercised its discretion to grant the retrospective validation order because, viewed objectively at the time the work was done and the validation application was made, the legal services were rendered in good faith and for the benefit of the company and its creditors as a whole; knowledge of the petition was not fatal; the subsequent failure of the proposed transaction cannot be used with hindsight to deny validation; no special circumstances justified taxation of the bills, and the costs order of Deputy Judge To did not convert the validation application costs into petition costs requiring taxation under the winding-up rules.

Citation
ADVANCED EPI TECHNOLOGY CORPORATION v. VITELIC (HONG KONG) LTD AND OTHERS
Parties
Petitioner: Advanced EPI Technology Corporation; 1st Respondent: Vitelic (Hong Kong) Limited; 2nd Respondent (liquidators): Wong Kwok Man and Alison Wong Lee Fung Ying
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
2 August 2007
Case Number
HCCW130/2006
Procedural Posture
Companies (winding Up) Proceedings / Application for Retrospective Validation Order Under Section 182 of the Companies Ordinance; Decision on Summons Dated 18 May 2007
Outcome
Validation order granted in the terms sought by the summons of 18 May 2007
Legal Topics
Validation Order, Solicitor's Fees, Winding Up, Pari Passu Distribution, Taxation of Costs
Source Language
EN
Company Law Insolvency Law Civil Procedure Validation Order Solicitor's Fees Winding Up Pari Passu Distribution Taxation of Costs

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Parties

Advanced EPI Technology Corporation

Petitioner

Vitelic (Hong Kong) Limited

1st Respondent

Wong Kwok Man and Alison Wong Lee Fung Ying

2nd Respondent (liquidators)

Procedural Posture

Companies (winding Up) Proceedings / Application for Retrospective Validation Order Under Section 182 of the Companies Ordinance; Decision on Summons Dated 18 May 2007

Legal Issues

  1. 1 Whether a retrospective validation order under s182 can validate payments of legal fees made after presentation of a winding-up petition but before the winding-up order
  2. 2 Whether knowledge of the presentation of the petition by the payee precludes a validation order
  3. 3 Whether fees were incurred for the benefit of the company and its creditors as a whole

Ratio Decidendi

The court exercised its discretion to grant the retrospective validation order because, viewed objectively at the time the work was done and the validation application was made, the legal services were rendered in good faith and for the benefit of the company and its creditors as a whole; knowledge of the petition was not fatal; the subsequent failure of the proposed transaction cannot be used with hindsight to deny validation; no special circumstances justified taxation of the bills, and the costs order of Deputy Judge To did not convert the validation application costs into petition costs requiring taxation under the winding-up rules.

Court Disposition

Validation order granted in the terms sought by the summons of 18 May 2007

Orders

  • Validation order pursuant to section 182 Companies Ordinance in respect of fees paid to Messrs Cordells relating to the proposed transfer of the Tai Po Industrial Estate lease
  • No taxation of the solicitor's bills ordered (no special circumstances shown)