Re Full Apex (Holdings) Ltd (Costs)
| Jurisdiction | Bermuda |
| Judgment Date | 13 December 2019 |
| Date | 13 December 2019 |
| Docket Number | Commercial Jurisdiction 2018 No 24 |
| Court | Supreme Court (Bermuda) |
[2019] Bda LR 104
In The Supreme Court of Bermuda
Commercial Jurisdiction 2018 No 24
Mr B McCosker for the Petitioner
Mr R Williams for the Company
The following cases were referred to in the judgment:
Binns v Burrows [2012] Bda LR 3
Rabilizirov v A2 Dominion and Ors [2019] EWHC 863
Gomba Holdings (UK) and Ors v Minories Finance Ltd and Ors [1993] Ch 171
Fairview Investments Ltd v Sharma (2009 WL 1071265, unreported)
Forcelux Ltd v Binne (Costs) [2009] EWCA Civil 1077
Ebbvale Ltd v Hosking [2013] 2 BCLC 204
Re LAEP Investments Ltd [2017] Bda LR 103
Re Nowmost Co Ltd [1996] 2 BCLC 492
Costs — Winding-up petition | Collateral purpose — Test for award of indemnity costs — Contractually agreed costs
RULING ON COSTS of Duncan AJ
1. In these proceedings, Standard Chartered Bank (Hong Kong) Limited (the “Petitioner”) seek costs against Full Apex (Holdings) Limited (“the Company”) in connection with the petition presented to this Court on 8 February 2018 (the “Petition”).
2. Originally, the Petitioner's costs application was set down for hearing before me at 2:30 pm on 18 September 2019, pursuant to paragraph 3 of the Order I made in these proceedings on 21 June 2019, which provided that:
“Counsel for the Company and the Petitioner are to submit to the Registrar mutually convenient dates and times for a one hour hearing as to the Petitioner's entitlement to its costs of the Petition”.
3. On 18 September 2019, the Court was closed due to Hurricane Humberto. The parties proposed that the matter be addressed by way of written submissions only. The Court confirmed by email dated 23 September 2019 that written submissions were to be submitted electronically and filed with the Registry on 4 October 2019 in order to resolve the question of the Petitioner's entitlement to its costs.
4. The part-heard hearing of the substantive application in this matter was fixed for 19 and 20 September 2019. That hearing was also adjourned due to the closure of the Court as a result of Hurricane Humberto. The substantive hearing was rescheduled for hearing on 19 and 20 November 2019. The claim for indemnity costs in this application touches upon outstanding issues in the substantive application. For that reason, I thought it prudent to deliver this judgment after the hearing on 19 and 20 November 2019.
5. Paragraphs 2 through 6 of the Company's written submissions conveniently set out the uncontroversial background of this application. I reproduce those paragraphs below:
“2. The Company was a guarantor of a loan facility (“Loan”) provided by the Petitioning lenders (“Lenders”) to a subsidiary of the Company. Upon the failure by the subsidiary to make payment of the Loan, the Lenders called on the guarantee and subsequently served a statutory demand. The Company failed to pay the demand.
3. The Petition was therefore presented on 8 February 2018 along with an Ex Parte Summons seeking the appointment of JPLs. The Petition returned to Court on 9 March 2019 when it was adjourned. The Petition was then adjourned repeatedly
4. On 15 June 2018 the Lenders entered into a loan transfer agreement (“LTA”) pursuant to which, upon completion, the Loan was to be assigned to Skyblue Global International Limited (“Skyblue”), the Petition was to be withdrawn, and the costs of the Petition were to be paid by the Chairman of the Company, Guan Lianxiang.
5. 15 May 2019 the “Completion Date” as defined in the LTA occurred. On 16 May 2019, the Petitioner filed a summons seeking leave to withdraw the Petition conditional upon meeting his obligations under clause 9.3 of the LTA (“Contingent Withdrawal Application”). On 17 May 2019 directions were given for the hearing of the Contingent Withdrawal Application.
6. On 13 June 2019, the Company applied for the dismissal of the Petition. At the hearing of the Petition on 21 June 2019, the Petitioner abandoned its Contingent Withdrawal Application, and sought unconditional withdrawal. That application was granted, and the issue of the costs of the Petition was adjourned.”
6. The LTA binds the Chairman of the Company to pay the Petitioner's costs, including legal costs. In some instances, the costs are capped. The central argument, in this case, concerns whether the LTA and specifically section 9 of the LTA prohibits the Petitioner from claiming additional costs over and above the costs provided for in the LTA, or whether, in the ordinary course of an application for costs, the Petitioner can claim costs against the Company in excess of the costs identified in the LTA. My findings are as follows:
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i. I find the Petitioner is entitled to its costs of the Petition against the Company.
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ii. I also find the Petitioner is entitled to the costs of the Petition on an indemnity basis.
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iii. The Petitioner's costs should be taxed if not agreed.
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iv. I find that the Petitioner is entitled to claim 25% of its additional costs against the Company which have been incurred in excess of the costs paid under the LTA. These costs are awarded on the standard basis.
7. Before addressing the parties' submissions, I set out the material sections of the LTA:
Section 1.1, “Completion Date” means the date of the notice referred to in Clause 7.1.1 (Completion Date).
Section 1.1, “Costs Amount” means the amount payable by the Chairman pursuant to paragraph 2 of Schedule 3 (Payment Schedule).
Section 2 Third-party rights
2.1.1 Save as provided in Clause 2.1.2, a person who is not a Party has no right under the Contracts (rights of Third Parties) Ordinance (Cap. 623) to enforce or to enjoy the benefit of any term of this Agreement.
2.1.2 The Liquidators (in their capacities as joint and several liquidators of Jetzen) and the Provisional Liquidators (in their capacity as joint and several provisional liquidators of Full Apex Holdings) shall have the benefit of, and shall be entitled to enforce, the obligations of the Obligors under Clause 9 (Bermuda Petition and the BVI Liquidation) and the obligations of the Chairman under Clause 11.2.1 (Undertakings).
2.1.3 Notwithstanding any terms of this Agreement, the consent of any person who is not a Party is not required to rescind or vary this Agreement at any time.
Section 9 Bermuda Petition and the BVI Liquidation
9.1 Subject to Clause 12 (Termination) and to compliance by the Obligors with all of the obligations under this Agreement, the Lenders shall take steps to apply (or instruct the Agent to apply), promptly after the date of this Agreement, for an adjournment of the Bermuda Petition to a date no earlier than 10 October 2018 (the “return Date”), provided that the parties to this Agreement agree that in the event that the Termination Date occurs or there is any breach by an Obligor of its obligations under this Agreement prior to the Return Date, there will be liberty to apply on not less than 3 days' notice to have the Bermuda Petition heard.
9.2 Provided that the Chairman has complied with his obligations Under Clause 9.3 (whether by providing security against costs to be incurred or otherwise), the Nominee irrevocably hereby instructs the Agent to take (provided the Agent has not resigned in accordance with Clause 7.2.1 (Resignation of Agent following Completion Date) such steps as are reasonably necessary to seek a withdrawal of the Bermuda Petition, the discharge from office of the Provisional Liquidators, and a termination of the BVI Liquidation as soon as reasonably practicable following the completion of the transfer of the Loans pursuant to Clause 5.1 (Transfer). The Nominee gives such instructions in its capacity as Lender under the Facility Agreement.
9.3 The Chairman shall pay promptly upon demand, to the extent the same are not paid from the Costs Amount:
9.3.1 all costs of the BVI liquidation and the provisional liquidation of Full Apex Holdings accrued during the period after 27 April 2018 and on or prior to the Completion Date, to the extent such costs do not exceed US$15,000 per week; and
9.3.2 any of the following accrued during the period after the Completion Date:
(i) any costs of each Lender and the Agent associated with any withdrawal of the Bermuda Petition, the discharge of the Provisional Liquidators and/or a termination of the BVI Liquidation in accordance with Clause 9.2;
(ii) reasonable costs of the BVI Liquidation and the provisional liquidation of Full Apex Holdings, to the extent such costs are associated with the discharge of the Provisional Liquidators and/or the termination of the BVI Liquidation; and
(iii) all other costs of the BVI Liquidation and the provisional liquidation of Full Apex Holdings, to the extent costs falling under this item (iii) (not including, for the avoidance of doubt, costs falling under item (ii) above) do not exceed US$15,0000 per week.
The Provisional Liquidators and the Liquidators may rely on and enforce this Clause 9.3.
9.4 The Costs Amount shall be applied in the following order:
9.4.1 firstly, to meet the following costs of the Lenders and the Agent, incurred at any time whatsoever:
(i) all costs of each Lender and the Agent in connection with the enforcement and protection of rights under the Finance Documents (including without limitation in connection with the Bermuda Petition, the provisional liquidation of Full Apex Holdings and the BVI Proceedings)...
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