HING YIP HOLDINGS (HONG KONG) LTD v. CELLMARK CHINA LTD AND ANOTHER

HCCL 15/2016

[2018] HKCFI [1653]

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO 15 OF 2016

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DECISION

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Application

1.  Before the court is the 2^nd defendant’s application by summons dated 19 June 2018 (“Summons”) for further security in the sum of HK$26,797,734.76 (or such other sum deemed just) for its costs incurred and to be incurred up to and including the completion of the trial pursuant to s 905 of the Companies Ordinance (Cap 622).[1]

Earlier applications and orders for security for 2^nd defendant’s costs

2.  This action is the outcome of the consolidation of HCA 290/2012 and HCA 866/2014 pursuant to the order of Master Chow dated 7 May 2015 and the transfer of the consolidated actions to the Commercial List pursuant to the order of Madam Justice Mimmie Chan dated 8 June 2016.

3.  The trial is scheduled to commence on 10 September 2018, initially with 32 days reserved.  The estimate of 32 days was adopted before discovery and exchange of witness statements and expert reports.  In May 2018, I directed the parties to confirm if their estimate of the length of the trial remained 32 days. Pursuant to such direction, the plaintiff and the 2^nd defendant have advised that they now reckon the trial would take 18 days / 25 days respectively.  Both estimates are said to be conservative.  In particular, the 2^nd defendant has expressly factored in its witnesses and expert’s requirement for interpretation and that the attendance and participation of the 1^st defendant (which has recently gone into liquidation).  The liquidators of the 1^st defendant have since asked to be excused from all future hearings including the pre-trial review and the trial, which was granted.  In light of such development, I have directed that there will be no sitting in the week commencing 24 September 2018.  Out of abundance of caution, pending the pre-trial review, I have however not yet vacated the extra hearing days. 

4.  By a summons issued on 15 August 2014 in HCA 290/2012, the 2^nd defendant first sought security for its costs up to and including the completion of discovery.  The sum then asked for was HK$3,446,743.40.  After a contested hearing, by and pursuant to an order made by Master Chow on 23 April 2015 (“1^st Order”), the plaintiff was ordered to and did provide security (by payment into court) for the 2^nd defendant’s costs up to the completion of discovery in the sum of HK$1.6 million.

5.  By a summons issued herein on 5 January 2018, the 2^nd defendant sought further security for its costs from 1 September 2016[2] up to and including the completion of the trial.  The sum asked for was HK$19,055,126.94.  By and pursuant to an order made bythis court by consent on 5 February 2018 (“2^nd Order”), the plaintiff was ordered to and did provide further security (again by payment into court) for the 2^nd defendant’s costs from 1 September 2016 up to and including the completion of the trial in the sum of HK$10 million.

Applicable principle

6.  The court retains a residual discretion to vary an order for security for costs (even one made by consent) or make further orders for security.  The test for the award of further security for costs for a stage of the proceedings for which security has already been provided (whether by agreement without an order or pursuant to an order whether made by consent or not) is well established.  The question to be asked is whether there has been a material change of circumstances that justifies the application for further security.[3]  See Republic of Kazakhstan v Istil Group Inc [2006] 1 WLR 596 (CA), per Sir Anthony Clarke MR at [32]-[35].  See also AS Elektronik v Great Wall Electronics Limited, HCA 442/1994, unreported (21 December 1998), per Yeung J (as the Vice President then was) at page 3;and Aldo Trading Ltd v Partner Decoration Engineering Ltd, HCA 1199/2005, unreported (14 August 2007), per Chu J (as she then was) at [3]-[4].

7.  I am unable to accept the suggestion made by Mr Allan Leung on behalf of the 2^nd defendant that further security should be ordered when the existing security becomes insufficient, which is made with reference to the first sentence of the third paragraph of paragraph 23/3/19 of Hong Kong Civil Procedure 2018, Volume 1 and what Burrell J said in Cheong Shing Ltd v Yu Kwan, HCA 12021/1998 & 2183/2001, unreported (19 December 2005), at [11] (from which the editors of the White Book derive the proposition).  These authorities should be read in context.  In Cheong Shing Ltd v Yu Kwan, the trial was adjourned part-heard after 12 days of hearing.  It was estimated that a further 18 days would be required.  That is to say, the insufficiency of the existing security resulted from the serious overrun, which was a material change of circumstances in Cheong Shing Ltd v Yu Kwan.[4]

8.  In short, the insufficiency of the existing security should be caused by a material change of circumstances and not, for example, the miscalculation or under estimation or budgeting of how much a known step in the litigation would cost or of the impact that an existing circumstance may have on costs.

9.  Even where a material change of circumstance has been shown and the question of quantum arises, the application is not an opportunity to reopen argument about security for costs already ordered.  One would expect the further security that might be ordered to be limited to the costs referable to the changed circumstances.  See, for example, Chiu Hsiung v Wang Chao Huang, HCA 1974/2009, unreported (21 October 2013) where, at [18], Anthony Chan J criticised the applicant for not demonstrating how much further costs would be incurred by reason of the additional length of the trial, which was the material change of circumstances put forward in that case.  See also Cheong Shing Limited v Yu Kwan, supra, in which applications for further security for costs were made as a result of the trial overrunning after the trial had been adjourned part-heard and Burrell J limited the further security ordered to future costs.  See [18].

10.  In this regard, bearing in mind the broad brush approach adopted by the court in assessing quantum for security for costs, what is expected from the applicant is not “a line by line review of voluminous work items covering an extended period and pulling out the exact time which relates to the item of additional work”, as feared in paragraph 5 of Mr Leung’s written reply submissions. However, where the court is asked to revisit the security for costs for a stage of the proceedings already provided for based on a material change of circumstances, the court and the plaintiff are entitled to be told, in round ballpark terms, the amount of the additional costs said to be occasioned by the change of circumstances.  This should not be a matter of any or any great difficulty where the applicant is able to identify a material change of circumstances.   

11.  This is in fact part and parcel of the applicant’s onus to put forward evidence on a proper basis to establish the appropriate quantum of security, failing which the application may as a matter of last resort be dismissed.  See Dr Pete Fashions Company Limited v C& C Textiles Corporation, HCA 6733/1995, unreported (12 August 1996), per Jerome Chan J at page 8 and Hero Rich International Limited v Benefun International Holdings Limited, HCA 1433/2009, unreported (7 October 2009), per Recorder Jat SC at [39]; Long Hai Hong v Chan Yu Lydia, HCMP 3179/2013, unreported (10 August 2016), per Deputy High Court Judge Marlene Ng at [112]; and Chris Au v Yoon Soo Kim, HCA 1285/2014, unreported (25 November 2016), per Deputy High Court Judge Marlene Ng at [110].

The supporting costs schedule

12.  Before I turn to the “material change of circumstances” relied upon by the 2^nd defendant as justifying further security for costs, in support of the assertion that the security provided under the 1^st and 2^nd Orders is insufficient, the 2^nd defendant has produced a schedule prepared by its law costs draftsman (“LCD”), setting out the costs already incurred by the 2^nd defendant from 1 February 2012 (i.e. the beginning) up to the end of April 2018 as well as the estimated costs required to be incurred from May 2018 up to the completion of the trial based on the 2^nd defendant’s current 25 day estimate (“New Costs Schedule”).

13.  Mr Charles Manzoni SC (leading Mr Tim Kentish, solicitor advocate), for the plaintiff, has spent some time on the New Costs Schedule at the hearing.  A lot can certainly be said about it.

14.  First, the claimed past and estimated future costs add up to HK$38,767,734.76.  The amount of further security sought under the Summons (HK$26,797,734.76) is arrived at by deducting from the said sum of HK$38,767,734.76:

(1)  the security already provided (i.e. HK$11.6 million); and

(2)  the costs already dealt with by way of gross sum assessment (i.e. HK$370,000). 

In other words, the 2^nd defendant is in effect seeking a complete indemnity for its costs, which is not the purpose of an application for security for costs.  See, for example, Chiu Hsiung v Wang Chao Huang, supra, 23 September 2013, per Anthony Chan J at [7].

15.  Second, the New Costs Schedule is divided into chronological parts covering different periods of the litigation.  Part A and Part B concern 1 February 2012 – 23 May 2014 and 24 May 2014 – 30 August 2016 for which the respective sums of HK$1,380,389.40 and HK$4,085,352.20 (totalling HK$5,465,741.60) are claimed.  These periods are already covered by the 1^st Order, which is apparent from the fact that the 2^nd defendant started from 1 September 2016 when it applied for the 2^nd Order.  The total sum of HK$5,465,741.60 claimed under these 2 parts should therefore be irrelevant.

16.  The same should apply to Parts (C)(1) to (4) of the New Costs Schedule which correspond to Parts (A)(1) to (4) of the costs schedule put forward by the 2^nd defendant to support the application for the 2^nd Order (“Old Costs Schedule”).  They cover the periods of (1) 1 September 2016 – 29 November 2016; (2) 29 November 2016 – 24 April 2017; (3) 18 April 2017 – 29 August 2017; and (4) 30 August 2017 – 29 November 2017.  The costs claimed for these periods under the New Costs Schedule (i.e. HK$1,075,565.10 + $1,754,617.14 + HK$1,329,265.70 + HK$2,036,494 = HK$6,195,941.94) has clearly been dealt with as costs already incurred under the 2^nd Order.

17.  Third, I have compared the New Costs Schedule and the Old Costs Schedule.  The latter was compiled by the same LCD and dealt with the 2^nd defendant’s costs from 1 September 2016. 

18.  The first thing to note is that the LCD has adopted increased hourly rates for all levels of fee earners of the 2^nd defendant’s solicitors as follows:

Personnel	Rates under Old Costs Schedule (HK$)	Rates under Costs Schedule (HK$)	Percentage of increase
Partner	6,500	7,100 – 9,400	10% - 45%
Consultant	5,200	5,800 – 7,300	12% - 41%
Associate	3,500	3,900 – 6,700	12% - 92%
Trainee	2,200	2,500 – 3,100	14% - 41%
Paralegal	2,500	2,550 – 2,900	2% - 16%

19.  To begin with, either of these sets of hourly rates is considerably higher than what is generally recoverable on a party and party taxation as follows:

(1)   Before 1 January 2018:

Post qualification experience	Solicitors’ hourly rates for party and party taxation in High Court
Over 10 years	$3,200 - $4,000
7-8 years	$2,900 - $3,500
5-6 years	$2,400 - $3,000
2-3 years	$2,000 - $2,500
Newly admitted	$1,600 - $2,000
Trainee solicitor	$1,066 - $1,300
Litigation clerk / paralegal	$800 - $1,000

(2)   With effect from 1 January 2018:

Post qualification experience	Solicitors’ hourly rates for party and party taxation in High Court
Over 15 years	$5,800
9-15 years	$5,200
7-8 years	$4,500
5-6 years	$3,900
2-4 years	$3,200
Newly admitted	$2,600
Trainee solicitor	$1,700
Litigation clerk / paralegal	$1,300

20.  While I appreciate that the taxation master always has the discretion to allow higher rates in an appropriate case, these rates were fixed after prolonged discussions with the Law Society which has had the benefit of the results of surveys conducted cross the profession.  Mr Leung suggests that the taxation master may view this case more favourably because it is very complicated.  However, I would have thought that complexity may justify a claim for more hours, rather than for higher than normal hourly rates.  I therefore caution myself that the New Costs Schedule is inflated from the point of view of a party and party taxation.

21.  Moreover, the increased hourly rates are applied to all works done since 24 May 2014.

22.  The result is that the difference between the costs estimated for the period from 24 May 2014 up to the completion of discovery in the costs schedule in support of the application for the 1^st Order and the costs claimed to have been incurred from 24 May 2014 to 30 August 2016 under the New Costs Schedule, which is HK$2,018,998.20 (i.e. HK$4,085,352.20 – HK$2,066,354), is attributable partly to the higher hourly rates.

23.  Also, if one compares the sections on the period from 1 September 2016 to 29 November 2017 in the Old and New Costs Schedules, the description of works and the number of hours said to have been spent are the same but the amount of costs claimed has increased from HK$4,747,326.94 to HK$6,195,941.94 giving rise to a difference of HK$1,448,615 as follows:

Period	Amount claimed under Old Costs Schedule (HK$)	Amount claimed under Costs Schedule (HK$)
1.9.2016 – 29.11.2016	859,610.10	1,075,565.10
29.11.2016 – 24.4.2017	1,486,497.14	1,754,617.14
18.4.2017 – 29.8.2017	1,001,515.70	1,329,265.70
30.8.2017 – 29.11.2017	1,399,704.00	2,036,494.00
	4,747,326.94	6,195,941.94

24.  Apart from taking over the 1^st defendant’s 50% share for the fees of the expert witness in the sum of HK$105,000, this difference is attributable entirely to the higher hourly rates and has nothing whatsoever to do with the “material change of circumstances” relied upon.

25.  There is no explanation of what material change of circumstances has brought about this revaluation of works done in the past.

26.  The same goes for the following components of the estimated future costs for the works to be done by the 2^nd defendant’s solicitors under Part (B) of the Old Costs Schedule and Part (D) of the New Costs Schedule:

Works Description	Amount claimed in Old Costs Schedule (HK$)	Amount claimed in New Costs Schedule (HK$)	Increase (HK$)
Works done by solicitors in respect of expert report	$397,000 ($228,000 + $169,000)	$563,000 ($323,000 + $240,000)	$166,000
Plaintiff’s request for further discovery	$157,200	$187,500	$30,300
Solicitors’ preparation for trial	$1,432,600	$2,055,800	$632,200
Solicitors’ attendance at trial	$2,528,400	$2,905,400	$377,000
			$1,205,500

Again, these increases in projected costs are due wholly to the higher hourly rates for the 2^nd defendant’s solicitors’ fee earners so much so that higher total costs figures are yielded in the New Costs Schedule for dealing with the plaintiff’s request for further discovery despite the reduced number of hours claimed and for attending the trial even though the trial estimate was reduced from 32 days to 25 days.

27.  In the absence of any or any proper explanation for the adoption of the higher hourly rates for the 2^nd defendant’s solicitors’ fee earners, the supposed increase in costs caused thereby should be disregarded. 

28.  In this connection, I do not see how the facts that these higher rates are in line with the hourly rates charged by other city firms or that this case is very complex, as suggested by Mr Leung, could be a “material change of circumstances”.

29.  Fourth, the increases that are not referable, or referable entirely, to the higher hourly rates are:

(1)   Part (C)(5) – (10) of the New Costs Schedule for which there is no direct match in the Old Costs Schedule save in relation to the preparation of the rejoinder and the 2^nd defendant’s request for further discovery as follows:

Period	Amount of costs claimed (HK$)
30.11.2017 – 21.12.2017	$1,053,980.00
22.12.2017 – 31.12.2017	$60,325.00
2.1.2018 – 31.1.2018	$1,523,913.62
29.1.2018 – 28.2.2018	$840,000.00
1.3.2018 – 29.3.2018	$1,500,000.00
3.4.2018 – 30.4.2018	$1,772,532.16
	$6,750,751.22

The description of works is however every generic.  It is thus unclear what parts of these costs were caused by the “material change of circumstances” relied upon by the 2^nd defendants.

(2)   Senior and junior counsel’s fees for the trial:

	Under Old Costs Schedule for 32 day trial (HK$)	Under New Costs Schedule for 25 day trial (HK$)	Difference (HK$)
Senior Counsel	$6,630,000	$10,440,000	$3,810,000
Junior Counsel	$2,172,500	$2,695,000	$522,500
Total			$4,332,500

In the Old Costs Schedule, the 2^nd defendant budgeted for counsel’s fees on the basis of a 32 day trial for which an additional 7 days would be required for preparation. Despite the reduction of the trial estimate to 25 days, projected counsel’s fees has increased because senior and junior counsel have now confirmed brief fees based on 33 days and 24 days of preparation and the daily refresher of senior counsel has increased by HK$10,000.

(3)   The fees charged and budgeted for the expert report has increased from HK$712,000 to HK$1,361,000.

(4)   There is also the costs of the mediation in the total sum of HK$302,500.

30.  All in all, it is an understatement to say that the New Costs Schedule is unhelpful. It actually confuses or misleads, depending on whether one is minded to be charitable.

31.  On this note, I turn to the matters put forward by the 2^nd defendant as constituting a “material change of circumstances” which has significantly increased the costs already incurred and to be incurred by the 2^nd defendant to see this case to the end of trial.

Circumstances relied upon by 2^nd defendant to justify further security

32.  They are:

(1) the introduction of a new witness namely, Ng Wai Wayne for whom a witness statement was prepared;

(2) the preparation of a supplemental witness statement of an existing witness namely, Lee Wing Ping Thompson;

(3) further discovery of almost 800 documents by the 2^nd defendant through its supplemental list of hard copy documents dated 12 April 2018;

(4) the ascertainment of the brief fees of senior and junior counsel, which are considerably higher in aggregate than previously estimated;

(5) the extensive exchanges between the expert witnesses in connection with the preparation of the joint expert report; and

(6) the mediation between the plaintiff and the 2^nd defendant conducted by London Queen’s Counsel which started after the 2^nd Order was made.

No material change of circumstances

33.  I agree with Mr Manzoni that these 6 matters, whether taken individually or cumulatively, do not amount to a material change of circumstances after the making of the 2^nd Order by consent in early February 2018. 

Introduction of new witness and preparation of supplemental statement for existing witness

34.  First, the supplemental statement of Lee Wing Ping Thompson is a document of 5 pages with an appendix of 4 pages while the statement of Ng Wai Wayne runs to 4 pages with an appendix of 5 pages. 

35.  In an attempt to persuade the plaintiff to consent to leave to the 2^nd defendant to adduce these statements, the 2^nd defendant itself made these points about such additional evidence through their solicitors’ second letter dated 10 April 2018 to the plaintiff’s solicitors:

“1. The witness statements are short. Leaving aside the typical introductions, the statement of Mr Lee is only about 3 pages long and the statement of Mr Ng is only 2 pages long.

2. They do not raise any new substantive issues but clarify and/or supplement matters already in the earlier filed witness statement of Mr Lee.

3. It is trite that a party should not be deprived of his right to adduce evidence which would assist the just resolution of the dispute as long as it does not unduly prejudice the other party. The supplemental witness statements do not raise any matters that should “take your client by surprise” or otherwise cause injustice to your client.”

36.  I do not see how the need for these short depositions to be prepared can be said to be a material change of circumstances.

37.  Second, as spotted by the plaintiff, it appears that the preparation of the further witness statements was already underway prior to the making of the 2^nd Order.   In this regard, reference is made to “Drafting supplemental witness statements” in the New Costs Schedule under Part (C)(7) with the heading “02.01.2018 to 31.01.2018”.  Mr Leung has drawn my attention to paragraph 10 of Flaux J’s judgment in Republic of Djibouti v Boreh [2016] EWHC 1035 (Comm) for the proposition that there is no requirement for an applicant for further security for costs to show that the change of circumstances was unforeseeable.  Well, each case turns on its own facts.  In Republic of Djibouti v Boreh, the applications for additional security for costs were made after judgment in favour of the defendants with costs on indemnity basis.  In this case, I do not consider the need for more witness statements to be a material change of circumstances because such need had arisen even before the 2^nd Order.  It is not a question of foreseeability at all.  The 2^nd defendant actually knew.    

38.  Mr Leung then says that the 2^nd defendant, though anticipating the further witness statements, was not in a position to assess, with any reasonable degree of precision, the full extent of the additional work that would be required at the time when it applied for the 2^nd Order. With respect, every application for security for costs would involve the projection of future costs.  If an applicant is permitted to come back for more simply because it turns out that he has under-budgeted for a known step in the litigation, the court and plaintiffs would be inundated with further security applications.  Anyway, given the brevity of the statements in question, in the absence of evidence, I am not convinced that the costs associated with their preparation could be described as material, especially measured against the scale of costs that we are talking about in this case.

39.  This brings me to my third point under this heading.  Apart from Part (C)(7), references to supplemental witness statements can also be found in Parts (C)(8), (9) and (10) of the New Costs Schedule.  However, the costs claimed under these parts are expressed in lump sum figures.  The 2^nd defendant has not identified the additional costs that is said to have been incurred by the preparation of these 2 witness statements.

40.  In answer, Mr Leung invites the court to give the 2^nd defendant an opportunity to rectify the omission.  I am not attracted by this course as a matter of case management.  The trial is just 2 months away.  The parties should be allowed to focus on preparing for the trial and not be further distracted by this application.    

Provision of further discovery by 2^nd defendant

41.  First, the 1^st Order covers the 2^nd defendant’s costs up to and including the completion of discovery.  I do not read “completion of discovery” to mean just the filing and service by the 2^nd defendant of its first list of documents.  In my opinion, it embraces all the steps required of the 2^nd defendant to discharge its obligation as to discovery. Therefore, I take the view that the costs associated with the preparation of the 2^nd defendant’s supplemental list of hard copy documents is already covered by the 1^st Order.   

42.  Second, to give me some sense of proportion, I am told that the 800 documents, being transaction documents but not of the transactions that gave rise to the plaintiff’s claims herein, could fit into 6 leverarch files.  The impression that I get is that, speaking in relative terms, 6 more leverarch files may not have added significantly to the papers in this case.

43.  Third, as in the case of the further witness statements, the 2^nd defendant had actually commenced preparation of its supplemental list of hard copy documents in January 2018, prior to the making of the 2^nd Order.   The delivery of the supplemental list by the 2^nd defendant therefore did not represent any material change of circumstances from when the 2^nd Order was made. 

44.  Fourth, the 2^nd defendant has likewise not specified the costs incurred in providing the supplemental discovery. 

Higher brief fees to counsel

45.  According to Mr Leung, prior to the application for the 2^nd Order, both senior and junior counsel had been repeatedly approached to give estimates for their brief fees (which would cover preparation and attendance on the first day of trial).  However, they did not get back to the 2^nd defendant’s solicitors until April 2018.  In the absence of counsel’s indication, in applying for the 2^nd Order, the LCD estimated counsel’s brief fees based on 7 days’ preparation.   

46.  As stated above, senior and junior counsel have now confirmed their respective brief fees, inclusive of 33 days and 24 days of preparation.  

47.  While I have some sympathy for the 2^nd defendant in this regard, it is incumbent upon an applicant for security for costs covering the trial to obtain a reliable estimate of counsel’s brief fee before he makes the application.  And one would expect co-operation from counsel.  It was obviously known to the 2^nd defendant that it would have to pay counsel for their preparation work and the 2^nd Order provided for security for the 2^nd defendant’ costs of the trial including its counsel’s fees for preparation. 

48.  It is wrong in principle to allow a second bite of the cherry simply because the estimate for counsel’s preparation for the trial has changed, especially when such change is not caused by a change in the case itself.  Such a change is, in my opinion, not a material change of circumstances that justifies further security for costs.  And it is not suggested that this case has altered in complexion or complicity since January 2018.

49.  Anyway, I am not convinced that there may be such a material shortfall in the provision for counsel’s fees for the trial that justifies further security.

(1) Mr Leung harps on the fact that the amount of security directed under the 2^nd Order was agreed between the parties on the basis that the trial would last 12 to 16 days only.  The trial estimate has now increased to 25 days as far as the 2^nd defendant is concerned. 

(2) Even allowing for the possibility that the 12-16 day estimate was used as part of a “give and take” approach in the process of negotiation that led to the making of the 2^nd Order, I am not told what it is about the case that has caused the 2^nd defendant to revise its estimate of the duration of the trial upwards to 25 days.

(3) In any event, the estimate of 25 days is expressly stated to be conservative.

(4) It also factors in the attendance and participation of the liquidators of the 1^st defendant, which is not going to happen.

(5) For present purposes, I will proceed on the basis that the trial would not take as long as 25 days but just somewhere between 18 days and 25 days.

(6) Although the fees for preparation by senior and junior counsel for the 2^nd defendant has increased from 7 days to 33 days and 24 days respectively, I note that the costs for all the works to be done by senior counsel is computed with reference to a daily rate of HK$180,000 in the New Costs Schedule or HK$170,000 in the Old Costs Schedule (upon which the 2^nd Order was made by consent).

(7) As we are talking about costs on a party and party taxation, I believe there would be scope for the fees of senior counsel to be taxed, not as claimed, but downwards.

50.  Looking at these factors in the round, even if I am wrong in the conclusion set out in paragraph 48 above, I do not see a sufficient case to order further security on account of increased counsel’s fees.  As stated above, the purpose of security for costs is not to give the defendant a complete indemnity for its costs.

Extensive exchanges between experts for preparation of joint expert report

51.  A joint expert report was ordered by Mimmie Chan J back in June 2016 with provision for the experts to meet after the exchange of their provisional reports.

52.  The 2^nd defendant therefore knew that they would have to pay its expert for the time he spent in meeting and communicating with the plaintiff’s expert long before the application for the 2^nd Order.  And the security for costs directed under the 2^nd Order includes provision for such expert fees.  I repeat what I have said in paragraphs 37 and 38 above in relation to the increased claim for supplemental witness statements, which is equally apt to the increased costs for the expert report.

Costs of mediation

53.  The possibility of mediation has been known since April 2016 after the parties filed their respective mediation notice and mediation response.  And, according to Part (B)(21) and (23) of the New Costs Schedule, some work had been done towards mediation by the 2^nd defendant’s solicitors in the months after April 2016.  Again, I repeat paragraphs 37 and 38 above.  

54.  In any event, half of the mediator’s fee is paid by the plaintiff, leaving the 2^nd defendant with the costs of HK$242,500 (HK$182,500 + HK$60,000).  Against the scale of costs in this case, I do not think that a step causing an additional expenditure of HK$242,500 is a material change of circumstances.

55.  For the avoidance of doubt, I have also considered the combined effect of all the matters relied upon by the 2^nd defendant as constituting a material change of circumstances but have not come to a different conclusion.

Order

56.  For the above reasons, I dismiss the Summons and make an order nisi that the 2^nd defendant should pay the plaintiff’s costs to be taxed on a party and party basis if not agreed with certificate for counsel