Lawyers acting on behalf of a former liquidator of Wing Fai Construction, David Kennedy, have issued a statutory demand for HK$2.7 million against businessman Robert Yip Kwong.
James Wadham, a partner of law firm Clifford Chance, said the demand was issued against Yip for the partial payment of unpaid legal bills relating to a contempt case Yip and Kelly Cheng Kit-yin brought against Kennedy.
The pair had claimed Kennedy was in contempt of court after he gave police transcripts of their private examinations during a liquidators' investigation into the collapse of Wing Fai Construction in 2002.
In October 2009, in a judgment by the Court of Final Appeal, five judges ruled in Kennedy's favour: 'A liquidator's functions include serving the wider public interest by investigating wrongdoing and reporting the same to the authorities so as to enable them to take appropriate action.'
The judges, led by Mr Justice Kemal Bokhary, said a liquidator 'may use any information obtained through such examinations to perform his functions, including that of reporting wrongdoing to the authorities'. 'In so reporting, he may disclose such information. And he may make such disclosure by supplying the transcripts of private examinations to the authorities. In doing that, he would not be violating any confidence.'
The judges ruled Yip and Cheng were liable for Kennedy's legal costs.
A subsequent police investigation also led to Cheng and four other defendants - including her daughter Carmen Cheng Wei-ming - being charged with 11 counts of conspiracy to defraud. The case is due to start in the District Court on October 24. Yip is not one of the five defendants.
Wing Fai's liquidators and a legal team at law firm Reed Smith Richards Butler are locked in a series of civil cases with Yip and Cheng over the failure of the company.
Wadham said the full amount of Kennedy's legal costs had still to be assessed by the High Court's taxation master. But the statutory demand covered the initial tranche of those costs. Wadham said if Yip failed to respond to the demand in 21 days he would be 'deemed to be unable to pay' and bankruptcy proceedings could be brought against him.
Yip was a former chairman and substantial shareholder in China Rich Holdings, which owned Wing Fai Construction until April 2002, when it was sold for HK$5 million.
Wing Fai Construction subsequently collapsed, owing around HK$70 million in unpaid wages to building workers. Kennedy, who was with RSM Nelson Wheeler, was one of the liquidators appointed three months later in July to investigate the construction firm's affairs.
Yip was also chairman of CR Airways, which he formed in 2001. He stepped down after Hainan Airlines took a 45 per cent stake in CR Airways in 2006. It changed its name to Hong Kong Airlines in November 2006.