[d]oes the judgment or order, as made, finally dispose of the rights of the parties? If it does, then … it ought to be treated as a final order; but if it does not, it is then … an interlocutory order.

… an application for leave to apply for judicial review, and … an application for pre-action interrogatories, are examples of applications that are clearly not interlocutory. Such applications are entirely self-contained, in that there is no pending proceeding in which the application may be said to have been made. They will also not lead to any trial on their merits regardless of which way the court decides the application. The hearing of the application is itself the only main hearing, and once the application is disposed of, there is ‘nothing more to proceed on’, in the words of the court in [OpenNet Pte Ltd v Infocommunications Development Authority of Singapore [2013] 2 SLR 880] at [21].

[emphasis added]

72     This brings us to the third preliminary point, namely the rationale that underlies the Creditor Duty. This lies in the shift in who may be said to be the main economic stakeholder of the company as the company approaches insolvency (see Sequana at [86], per Lord Reed) and the asymmetry in corporate governance. To take each point in turn, whereas shareholders are the primary bearers of the risk of loss arising from the manner in which directors exercise their powers when the company is solvent (see [70] above), creditors displace them from this position when the company is insolvent because an insolvent company effectively trades and conducts its business with its creditors’ money (see Progen ([2] supra) at [52]). And even as creditors bear the risks of continued corporate trading in such a situation, they generally have no control over the conduct of the company’s business (see Sequana at [263], per Lady Arden). There is consequently a need to constrain directors from externalising the risks of continued trading onto creditors, bearing in mind that shareholders usually have nothing to lose and everything to gain, and creditors, contrastingly, have everything to lose and nothing to gain by the continued trading of a company which is on the cusp of insolvency (see Progen at [52]; Sequana at [57], per Lord Reed, and at [238], per Lord Hodge). In essence, the law responds to the misalignment of incentives between those running the company and those bearing the consequences of actions undertaken by a financially distressed company by enjoining directors of such firms to take corporate decisions with the interests of creditors in mind (see Aurelio Gurrea-Martinez, “Towards an optimal model of directors’ duties in the zone of insolvency: an economic and comparative approach” (2021) 21(2) Journal of Corporate Law Studies 365 (“Towards an optimal model of directors’ duties”) at 367–369).

In In Re Wilson and Sons Ltd [1972] 1 WLR 791 (“Wilson”), the company appealed against the winding up order made against it and the issue arose as to who should be the party to provide security for the costs of the appeal. The English Court of Appeal held that the costs of the appeal ought to be borne directly by those promoting the appeal and not the company itself. The court noted that in the earlier case of In Re Consolidated South Rand Mines Deep Ltd [1909] WN 606, the view had been stated that a company in winding up had a right to appeal but should only be allowed to do so upon the terms of finding security from a source outside the company’s assets, namely, from the directors or shareholders who were at the back of the appeal. The rationale was that if the appeal failed, the company should have their costs from the persons who really promoted the appeal. This approach was followed in Wilson where the court held that security for the costs of the appeal had to be secured from those concerned with promoting the appeal. This would mean that the company would not have to use its assets to pay the legal costs for the appeal if it failed. In a later Hong Kong case, In the matter of S Y Engineering Company Limited, Civil Appeal No 1986 of 2001, the court observed that it would not be just that any costs occasioned by an unsuccessful appeal from a winding up order should be thrown upon the assets of the company to the prejudice of the creditors.

The company now asks for its costs of unsuccessfully opposing the petition to be taxed and paid out of the assets of the company under r 195 of the Companies (Winding-up) Rules 1949, subject only to the claims of the mortgagees and the costs of preserving, realising and getting in the assets. Under r 195, and subject to any order of the court, the taxed costs of the petition are a first charge on the net assets. If there is a surplus of assets in the liquidation, after all costs, expenses and debts have been paid, such an order will ex hypothesi not prejudice the creditors. If, however, there is not a surplus—and no one at this stage can confidently predict a surplus—the result of the order will be to reduce the assets available for creditors. Prima facie there would seem to be a great injustice in permitting the beneficial owner of all the shares in a company to oppose a winding-up petition in order to seek to secure a benefit for himself as shareholder and then, having failed in his opposition, to charge the costs of such unsuccessful opposition to the creditors of the company. In the present case, counsel for the company also appeared for Mr Harrison as opposing contributory and creditor.

In my opinion, the court ought to look critically at costs incurred by an insolvent company in unsuccessfully opposing a winding-up petition on the ground that the debt is disputed, when the advantage and perhaps the purpose of delaying liquidation is a possible surplus for the beneficial owner of the company's capital. I do not charge Mr Harrison with lack of good faith but why, I ask myself, should the beneficial owner of the company's capital be entitled to finance such litigation at the expense of the creditors? In the instant case Mr Harrison had little or nothing to lose and everything to gain by causing the company to dispute the debt. If he failed in that litigation, which he has promoted, no hardship is caused if the solicitors' bill falls to be paid by him personally rather than by the general body of creditors. I do not intend to make any inroad into the general practice of allowing a company its costs of appearing on and consenting to a winding-up petition. All that I am seeking to do in the present case is to exercise my discretion in such a way as to produce a result which is just and fair as between Mr Harrison and his alter ego the company on the one hand, and the general body of creditors on the other hand.