INDUSTRIAL AND COMMERCIAL BANK OF CHINA (ASIA) LTD v. INTERPRO MANUFACTURING LTD AND OTHERS

HCMP 1619/2016

[2019] HKCFI 2560

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1619 OF 2016

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D E C I S I O N

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1.  In the hearing on 18 July 2019 (“the July Hearing”), there were 2 summonses before me, namely (a) the 3^rd Defendant (“D3”)’s summons dated 9 July 2018 (“D3’s Summons”) for an order that these proceedings be continued as if the cause or matter had been begun by writ; and (b) the Plaintiff (“P”)’s summons dated 11 July 2019 (“P’s Summons”) for leave to file a further affirmation (“the New Affirmation”). After hearing submissions from the parties, I made the following orders in the hearing:

(1)  On D3’s Summons, I made an order converting these proceedings to writ proceedings and gave some consequential directions. I ordered that costs of D3’s Summons be costs in the cause.

(2)  On P’s Summons, I made no order on that summons, save that costs of P’s Summons be costs in the cause.

2.  By a summons filed on 1 August 2019 (“the Summons for Leave to Appeal”), D3 seeks leave to appeal from my costs order concerning D3’s Summons. Counsel for D3 in his written submissions mentions that D3 is seeking leave to appeal against both my costs order on D3’s Summons and my costs order on P’s Summons[1]. With respect, I am of the view that D3 has only applied for leave to appeal against the former, not the latter.

Costs Order on P’s Summons

3.  As set out in the Draft Notice of Appeal annexed to the Summons, if leave to appeal is granted, D3 would seek an order from the Court of Appeal setting aside the costs order made by me in the July Hearing, awarding costs of D3’s Summons to D3, and specifying that costs of P’s Summons be in the cause. In other words, if leave to appeal is granted, D3 would only seek a different costs order on D3’s Summons, and would ask the Court of Appeal to affirm my costs order on P’s Summons. It is plain that as per the Summons, D3 is seeking leave to appeal against the costs order on D3’s Summons only.

4.  In the July Hearing, I told the parties that my view on D3’s Summons would not be affected by the New Affirmation in any way. Accordingly, it would not be necessary for P to have leave to file the New Affirmation for the purpose of the July Hearing. I was minded to make no order on P’s Summons, save that costs of P’s Summons should be costs in the cause. After telling the parties my provisional view on P’s Summons, I invited submissions from counsel for P and counsel for D3. Both counsel told me that they had no submission. Thereafter, I made the order concerning P’s Summons as set out in [1] above.

5.  I am surprised that counsel for D3 now intends to challenge the costs order on P’s Summons. As said in the above, in the July Hearing, after telling the parties my provisional view on P’s Summons, I invited the parties to make submissions. Any submissions concerning my provisional view on P’s Summons, including costs of that summons, should be made there and then. At that time, counsel for D3 expressly told the Court that he did not have any submission. That being the case, D3 cannot now have any legitimate complaint against the costs order concerning P’s Summons. In any event, the scope of D3’s application is determined by the Summons, not by counsel’s submissions.

Costs Order on D’s Summons

6.  The principles concerning leave to appeal are well established. Leave can only be granted if the appeal has a reasonable prospect of success (which means that the prospect of success is reasonable and more than fanciful, without having to be probable), or there is some other reason in the interests of justice why the appeal should be heard[2].

7.  A decision on costs of a particular matter is within the discretion of the judge hearing the matter. The Court of Appeal will not interfere unless it has been shown that the judge failed to exercise the discretion, or exercised it upon a false principle, did not exercise it judicially, or the exercise of the discretion was demonstrably flawed[3]. Further, the appeal would not be entertained unless it can be shown that the conclusion reached was “outside the generous ambit within which a reasonable disagreement is possible”[4].

8.  In the Draft Notice of Appeal, D3 says that I have erred in principle by failing to make an order that costs should follow the event, and I was plainly wrong in the exercise of my discretion in the July Hearing by reason of the following:

(1)  D3 was wholly successful with respect to D3’s Summons, and did not contest P’s summons upon which no order was made.

(2)  D3’s Summons is proper and reasonable in all respect.

(3)  D3’s Summons was opposed in its entirety by P.

(4)  P’s skeleton submissions for the hearing on 18 July 2019 are unnecessarily prolix and have no direct relevance to D3’s Summons.

(5)  By letters dated 25 April and 17 May 2018, D3 invited P to consent to D3’s Summons, but P unreasonably refused without any proper basis.

(6)  D3’s Summons was filed at the first possible opportunity after it became apparent that P did not consent to converting these proceedings to writ proceedings.

(7)  In the hearing on 10 January 2019, DHCJ Leung had warned P that the originating summons procedure was inappropriate. The warning was ignored by P and hence there was a hearing before me on 18 July 2019.

(8)  D3’s counsel was not called upon in the hearing on 18 July 2019 in relation to D3’s Summons.

(9)  Despite having no obligation to do so, on 7 January 2019, D3 put P on notice that an application for summary judgment was available to P if the action was to proceed as if the same had been begun by writ.

9.  In the July Hearing, P submitted that converting these proceedings to writ proceedings would cause P to wait for a longer time and to incur more costs in order to obtain a final judgment in the proceedings. In P’s submissions, the so-called factual disputes put forward by D3 had no substance and could not be any valid defence to P’s claim, and those matters would only waste time and costs. The further time and costs involved in writ proceedings would be a prejudice to P. D3 submitted that there were substantial factual disputes which would affect the outcome of these proceedings, and those factual disputes could only be properly resolved in writ proceedings.

10.  After hearing the submissions, I made the order concerning D3’s Summons as set out in [1] above. I have also given reasons for the decision, which are as follows:

(1)  The July Hearing is a hearing for directions. That would not be an appropriate occasion for the Court to make comments on the merits of the parties’ respective cases.

(2)  Converting these proceedings to writ proceedings would not prevent P from making an application for a summary judgment in the writ proceedings. If P is of the view that by just reading the affidavit evidence, the Court can come to a conclusion that D3 has no arguable defence to P’s claim or any part of P’s claim, P may make an application for a summary judgment in the writ proceedings. The affidavit evidence prepared by P in the originating summons proceedings can be adopted as evidence in the Order 14 application. If P is correct, P would get a summary judgment. In this scenario, P would not have to wait for a long time and P would also have no need to incur much more costs in order to get a final judgment.

(3)  If P is not correct and the Court is of the view that the disputes in the proceedings can only be resolved after hearing live evidence from the witnesses, the Court can give proper directions for the resolution of the disputes in the writ proceedings.

(4)  Accordingly, the proceedings should be converted to writ proceedings.

(5)  It would not be necessary for the parties to go into the details of the case and put in voluminous materials in the application made by D3’s Summons. The Court should not and has not given any comment on the merits of the parties’ respective cases in the July Hearing. The decision on D3’s Summons is a mere case management decision.  The Court is of the view that the proper costs order should be costs of D3’s Summons be costs in the cause. The successful party in these proceedings would get the costs of D3’s Summons.

11.  With respect to counsel for D3, I am of the view that the intended appeal does not have a reasonable prospect of success.

(1)  In the July Hearing, I have given reasons for the decision. The costs orders concerning D3’s Summons must be viewed in the context of those reasons.

(2)  In the July Hearing, I noted the respective positions of P and D3. I refused to go into the merits of their respective cases, as I was of the view that the July Hearing was not an appropriate occasion for adjudicating their respective cases on merits. My task was to hold the ring between P and D3. In my view, the July Decision has sufficiently taken care the respective interests of P and D3. If P is right and all the matters raised by D3 are not matters of substance, P may get a summary judgment in the writ proceedings without much delay and without incurring much costs. If D3 is correct and the matters put forward by her are genuine factual disputes which would require investigation, D3 would have an opportunity to investigate those matters in the writ proceedings. Both P and D3 would not be prejudiced in this arrangement.

(3)  In the July Hearing, I asked counsel for D3 whether the idea in subparagraph (2) above had been discussed between the parties prior to the July Hearing. Counsel for D3 referred me to D3’s solicitors’ letter dated 17 May 2018 and paragraph 35 of his skeleton submissions dated 7 January 2019 (“the January Skeleton”). I was of the view that what had been put down in the said letter and in the said paragraph of the January Skeleton did not reflect the idea as set out in subparagraph (2) above. Counsel for D3 did not draw my attention to D3’s solicitors’ letter dated 25 April 2018 and paragraphs 36 and 37 of the January Skeleton in the July Hearing[5]. Counsel for D3 also did not say that the idea mentioned in subparagraph (2) above had been discussed in any previous hearing.

(4)  Looking at D3’s solicitors’ letter dated 25 April 2018 and paragraphs 36 and 37 of the January Skeleton now, I am of the view that the idea in subparagraph (2) above has not been conveyed or clearly conveyed to P in these documents.

(5)  In these circumstances, I am of the view that the costs order on D3’s Summons is proper and fair.  Bearing the principles in [6] and [7] in mind, I am of the view that an appeal based upon the grounds set out in the Draft Notice of Appeal does not have a reasonable prospect of success. 

12.  I am also of the view that there is no reason why in the interests of justice the appeal should be heard.

Disposition

13.  I dismiss the Summons for Leave to Appeal.

14.  Costs of the Summons for Leave to Appeal should follow the event and be paid by D3 to P forthwith. I so order. Those costs are summarily assessed at HK$40,000.