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15 October 2019
The Court of Appeal has refused permission to appeal an apparently wide-ranging order for the production of documents made in favour of the liquidators in China Medical Technologies Inc v Tsang.(1) That order had been granted pursuant to Section 221(3) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap 32).(2) Despite the respondent's best efforts, the Court of Appeal decided that the issues stated to arise out of its judgment did not raise questions of great general or public importance. The outcome of the appeal is bolstered by a legislative amendment which amounts to a more coextensive power – namely, to order persons to answer questions concerning the affairs or property of a company in liquidation, and to produce documents relating to the company or its affairs.
The liquidators sought the production of a wide range of documents from the respondent and his examination regarding the affairs of the company. At first instance, a judge granted an order for examination (Section 221(1)) but not the extent of a wide-ranging order for the production of documents sought by the liquidators (Section 221(3)).
Based on the legislation at the time, the judge considered that there was a distinction between the scope of information in respect of which a person could be examined and the range of documents that they could be ordered to produce. At the time, the power to order the examination of a person was with respect to matters concerning (among other things) the dealings or affairs of a company (Section 221(1)), while the power to order the production of documents was with respect to the books and papers in a person's custody or power relating to a company (Section 221(3)). In effect, the judge considered that these two powers were separate and not coextensive.
The judgment was successfully appealed by the liquidators. The Court of Appeal adopted a more purposive approach to the two legislative provisions and held that their language called for a wider interpretation – therefore, the scope of the power to order production should cover at least the same material as that covered by an order for examination. The Court of Appeal considered that an order for oral examination of persons connected with a company in liquidation and an order for documentary production were directed at the same purpose and should have the same (or at least a similar) scope (for further details please see "Production of company documents to liquidators").
The respondent applied for permission to appeal. As the Court of Appeal noted, disputes over the scope of Section 221 have to a large extent been overtaken by Sections 286B and 286C of the ordinance, which came into effect in February 2017 – after the hearing in the Court of Appeal. The contents of these two provisions amount to a more coextensive power to order the examination of persons and the production of documents.
Going forward, few cases remain to be decided on the basis of the provisions in Sections 221(1) and (3). However, the respondent's case fell to be determined according to those provisions.
In his application for permission to appeal, the respondent raised a number of interesting issues, which were stated to justify a final appeal to the Court of Final Appeal. These included:
The Court of Appeal appears to have had little difficulty in refusing to grant permission to appeal to the Court of Final Appeal.
The court accepted that while it was arguable on an appeal that the scope of one of the statutory provisions might be narrower than the other, this did not give rise to a question of great general or public importance justifying permission to appeal.
The court also accepted the principle that a difference in wording between two expressions within the same statutory provision might generally denote a different meaning – however, in this case, that principle of statutory interpretation had been displaced and did not give rise to an appeal point. Neither did the third point in respect of which permission to appeal was sought – with the court noting that:
The potential relevance of subsequent amendment of a piece of legislation to the interpretation of the legislation is also not a matter of particular controversy. In this case, no reliance could have been placed on the subsequent amendment at the time of the hearing, as the amendment had not yet been enacted. Nor did we rely on it in our judgment.(3)
As for the fourth point, this did not give rise to an issue that justified a final appeal. Apparently, during the substantive appeal hearing, it had not been suggested that orders for production or examination directed at the recoverability of potential claims by the liquidators went beyond the jurisdiction of the courts under Section 221.
The respondent's application to stay the order for production was also refused.
The outcome in the case thus far is not surprising. It illustrates an appeal court's confidence to give a wider purposive interpretation to a statutory provision, particularly in the context of the role of liquidators.
It will be interesting to see whether the respondent makes an application for permission to appeal to the appeal committee of the Court of Final Appeal. In the whole scheme of things, this would not be a surprise. Clearly, having gone this far, the proceedings appear to matter to the respondent.
However, future disputes between liquidators and other parties regarding the provision of information or an examination as to a company's affairs will be determined according to the more recent statutory powers.
For further information on this topic please contact Antony Sassi or Warren Ganesh at RPC by telephone (+852 2216 7000) or email (firstname.lastname@example.org or email@example.com). The RPC website can be accessed at www.rpc.co.uk.
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