LINK FISH IMPORT & EXPORT S.L. v. MULTIPLY IMPORT & EXPORT HK LTD AND ANOTHER

HCMP 331/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 331 of 2016

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D E C I S I O N   O N   C O S T S

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Background

1.  The background fact of this matter has been set out in my earlier Decision dated 30 June 2016 and will not be repeated here.  I adopt the same abbreviations used in the Decision.

2.  On 5 April 2016, I ordered Messrs Fung & Fung (“F&F”), the solicitors for the 2^nd defendant, to show cause as to why they should not be ordered to pay the costs incurred by the plaintiff in dealing with the 2^nd defendant’s skeleton submissions and list of authorities both dated 31 March 2016 seeking a discharge of the Mareva Injunction and the Bankers’ Order in terms of the 2^nd defendant’s summons dated 4 March 2016 (“2^nd defendant’s Summons”).

3.  The hearing on 5 April 2016 was set down to hear the plaintiff’s summonses for continuation of the Mareva Injunction and the Bankers’ Order against the 1^st defendant and the 1^st defendant’s summons for discharge of the same.  Without leave of the court, F&F saw fit to include the following documents into the hearing bundles:

(1) The 2^nd defendant’s Summons.

(2) The Affirmation of Antonio Camps dated 27 February 2016 in opposition to the continuation of the Mareva Injunction and Bankers’ Order.

(3) The 2^nd Affirmation of Antonio Camps dated 4 March 2016 in support of the 2^nd defendant’s Summons.

(4) The Affirmation of Fung Kwok Ki dated 29 March 2016 in support of the 2^nd defendant’s Summons.

(5) The undated draft 3^rd Affirmation of Antonio Camps in support of the 2^nd defendant’s Summons.

4.  In addition, F&F instructed counsel to lodge skeleton submissions together with nine authorities on 31 March 2016, one day after the 1^st defendant had lodged its skeleton submissions and list of authorities.  In the skeleton submissions, counsel for the 2^nd defendant submitted that:

(1) The date of hearing the Discharge Summons “has yet been set down”.

(2) The 2^nd defendant “supports” the 1^st defendant’s application to discharge the Mareva Injunction and the Bankers’ Order as against the 1^st defendant.

(3) If the court is minded to discharge the Mareva Injunction and the Bankers’ Order against the 1^st defendant, such orders “ought to be discharged altogether as similar considerations apply”.

(4) There was material non‑disclosure by the plaintiff vis‑à‑vis the 2^nd defendant in that it failed to disclose the previous “successful transactions” between the plaintiff and the 2^nd defendant, the 2^nd defendant’s reputation and business and the defence available to the 2^nd defendant.

(5) The plaintiff has no good arguable case against the 2^nd defendant in respect of the Impugned Orders, the subject matters of the plaintiff’s claim.

(6) Balance of convenience lies in favour of the discharge of the Mareva Injunction against the 2^nd defendant.

(7) There was no risk of dissipation of assets on the part of the 2^nd defendant.

(8) The Bankers’ Order should be discharged as the plaintiff’s claim for the Sum is not proprietary in nature, and the court will usually refuse to order disclosure beyond the usual ancillary disclosure of assets.

(9) The Bankers’ Order was in any event a “fishing expedition”.

5.  Nowhere in the hearing bundles or the skeleton submissions did F&F or counsel draw to the attention of the court that in fact on 23 March 2016, DHCJ Wilson Chan had already made an order (upon the consent summons dated 16 March 2016) that the 2^nd defendant’s Summons be adjourned to a date to be fixed not earlier than 5 April 2016.  As a result, this court had to spend time to read the affirmations and submissions in relation to the 2^nd defendant’s Summons.

6.  Upon reading them, it became clear that it was not possible for the court to hear all the arguments advanced by the parties on the 2^nd defendant’s Summons, the Strike out Summons and the Conversion Summons at the hearing on 5 April 2016.  Consequently, on 1 April 2016, the parties were informed by letter that at the hearing, the court would only deal with the substantive arguments on the first three summonses relating to the continuation and discharge of the Mareva Injunction and Bankers’ Order as against the 1^st defendant and would only give directions on the 2^nd defendant’s Summons, the Strike out Summons and the Conversion Summons.

7.  It must be obvious to F&F, upon reading the letter from the court, that the court had been labouring under the misapprehension that the 2^nd defendant’s Summons had been properly listed for hearing on 5 April 2016.  This notwithstanding, no attempt was made by F&F to disabuse the misleading impression given to the court.  Although counsel for the plaintiff put in a skeleton in the late afternoon of 1 April 2016 to oppose the 2^nd defendant’s act in seeking to “interfere” in the 1^st defendant’s discharge summons and pointed out the fact that a consent order had been made to adjourn the 2^nd defendant’s Summons, such submissions were not considered by the court before the hearing as 2 – 4 April 2016 were public holidays.

8.  It was only until this court asked counsel for the 2^nd defendant what directions he proposed to seek in respect of the 2^nd defendant’s Summons that he informed the court about the existence of the consent order.  Counsel has not been able to offer any explanation as to why F&F did not draw to the attention of the court the existence of the consent order and why they saw fit to instruct counsel to appear and argue on the 2^nd defendant’s Summons.

Applicable principles

9.  Order 62, rule 8(1) – (2) of the Rules of the High Court (Cap 4A) provides:

“ (1) The Court may make a wasted costs order against a legal representative, only if–

(a) the legal representative, whether personally or through his employee or agent, has caused a party to incur wasted costs as defined in section 52A(6) of the Ordinance; and

(b) it is just in all the circumstances to order the legal representative to compensate the party for the whole or part of those costs.

(2) A wasted costs order may–

(a) disallow the costs as between the legal representative and his client; and

(b) direct the legal representative to–

(i) repay to his client costs which the client has been ordered to pay to other parties to the proceedings; or

(ii) indemnify other parties against costs incurred by them.”

10.  Section 52A(6) defines “wasted costs” as:

“ ... any costs incurred by a party as a result of–

(a) an improper or unreasonable act or omission; or

(b) any undue delay or other misconduct or default,

on the part of any legal representative, whether personally or through an employee or agent of the legal representative.”

11.  The principles governing the wasted costs jurisdiction under Order 62, rule 8 of the Rules of the High Court have been explained in Ma So So v Chin Yuk Lun (2004) 7 HKCFAR 300 at §§2 – 24, per Li CJ, and may be summarised as follows:

(1) The jurisdiction is compensatory and punitive (at §7).

(2) It is a summary jurisdiction and should be strictly confined to questions which are apt for summary determination.  The need for such an order is “reasonably obvious”, when there is “a clear picture” of the fault of the lawyer (at §§8 – 9).

(3) Where an order is sought against an opposite party, the court must make allowance for the respondent solicitor’s inability to tell the whole story in the absence of any waiver of privilege (§§11 – 12).

(4) The jurisdiction is discretionary and the court is not bound to make an order.  In considering the exercise of its discretion, the court should give the solicitor an opportunity to be heard (§§13 – 18). This is now expressly provided in Order 62, rule 8(3).

12.  Although Ma So So was decided prior to CJR, F&F accept that the same principles apply post‑CJR.

Discussion

13.  In their submissions to show cause, F&F contend that they should not be ordered to pay costs to the plaintiff for the following reasons:

(1) their conduct of the case is “necessary” to protect the interests of the 2^nd defendant, and are within “the duty to aid in promoting in the cause of justice in its own sphere”;

(2) the 2^nd defendant is a party to the proceedings and, as such, is entitled to be heard;

(3) the 1^st defendant’s discharge summons was served on the 2^nd defendant and F&F “cannot be blamed for appearing at the hearing”, especially when the outcome of the hearing “may have an immediate impact” on the 2^nd defendant;

(4) the court may require assistance from the 2^nd defendant’s legal representative should it decide to discharge the Mareva Injunction against the 1^st defendant;

(5) it was stated in the skeleton submissions that the 2^nd defendant did not intend “to substantially argue its case” at the hearing, but to support the 1^st defendant’s discharge summons and ask for a discharge if the court is minded to accede to the 1^st defendant’s summons;

(6) there was a sentence in the skeleton stating that the date of the hearing of the 2^nd defendant’s Summons had yet been set down;

(7) the length of the skeleton submissions was “due to the honest zeal in pursuing the interests of [the 2^nd defendant] and providing the court with information to assist its decision”;

(8) the consent summons “itself does not prohibit the discharge of the Injunction”;

(9) no injustice has been caused to the plaintiff as the 2^nd defendant did not “seek to argue its substantial case” and the plaintiff was “merely required to answer [the 1^st defendant’s] allegations and arguments”; and

(10) F&F were not negligent in failing to produce the consent summons and the consent order to the court.  The court “ought to take into account the close proximity in time” between the date when the consent order was made and when the hearing bundles were lodged by the plaintiff.

14.  In my view, the matters relied upon by F&F only go to show that they considered that the 2^nd defendant was entitled to appear at the hearing and to argue for a discharge of the Mareva Injunction and the Bankers’ Order against the 2^nd defendant at the hearing on 5 April 2016 which is clearly wrong.  The 2^nd defendant had no such right, as it was bound by its agreement, embodied in the consent summons dated 16 March 2016, that its application for discharge should not be listed before 5 April 2016.  I am unable to see how the 1^st defendant’s discharge summons would have any of the alleged impact on the 2^nd defendant or that the court would discharge the Mareva Injunction and the Bankers’ Order as against the 2^nd defendant in the absence of a proper application before the court.

15.  I consider that given their knowledge that the 2^nd defendant’s Summons had already been adjourned and, therefore, should not have been put before the court at the hearing on 5 April 2016, the following act of F&F was improper and constituted misconduct on their part:

(a) putting the 2^nd defendant’s Summons and the supporting affirmations in the hearing bundles as if the application had been listed to be heard at the hearing;

(b) concealing from the court the existence of the consent summons and the order made by DHCJ Wilson Chan adjourning the 2^nd defendant’s Summons; and

(c) instructing counsel to prepare and lodge extensive submissions and list of authorities to argue for a discharge of the Mareva Injunction and the Bankers’ Order as against the 2^nd defendant.

16.  As a result of F&F’s conduct, the plaintiff had to incur costs by instructing its counsel to respond to the submissions lodged by the 2^nd defendant on 1 April 2016 and to deal with the matter at the hearing on 5 April 2016.  The costs incurred by the plaintiff constituted wasted costs which could have been avoided but for the misconduct of F&F. I consider that it is just in all the circumstances to order F&F to indemnify the plaintiff for the whole of such costs.

Conclusion

17.  I order Messrs Fung & Fung to indemnify the plaintiff against the costs incurred in dealing with the 2^nd defendant’s skeleton submissions and list of authorities seeking a discharge of the Mareva Injunction and the Bankers’ Order as against the 2^nd defendant at the hearing on 5 April 2016.