AIG INSURANCE HONG KONG LTD v. LYNN MCCULLOUGH AND ANOTHER

HCMP 2216/2018

[2021] HKCFI 41

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2216 OF 2018

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DECISION ON COSTS

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1.  On 30 July 2020, this court handed down the decision (“the Decision”) in respect of the defendants’ application for leave to appeal against the decision of DHCJ Blair dated 3 July 2019 and the consequential costs decision dated 16 August 2019. A nisi costs order, which the defendants seek to vary. The application for variation is now disposed of on paper.

Background

2.  I shall not repeat the background and the reasons for this court’s decision in granting leave to appeal.

3.  The defendants sought leave to appeal on grounds set out in 14 paragraphs of the draft notice of appeal.  The grounds were categorised under the following headings:

(1)  service out;

(2)  merits of an anti-suit injunction;

(3)  abuse of process and exercise of discretion;

(4)  material non-disclosure (under which contentions of inconsistent cases, stay application, inconsistent judgments were argued); and

(5)  costs (even assuming that DHCJ Blair’s decision is upheld).

4.  This court gave leave to appeal on the grounds under heading (1) and (2), in respect of which the characterization issue as discussed in the Decision has a major bearing.  Leave was given in respect of the ground under (5) on the basis that costs will depend on the outcome of the appeal on grounds (1) and (2).

5.  A nisi order was made in respect of the costs of the application for leave to appeal, namely, half of the costs be to the plaintiff to be taxed, if not agreed, with certificate for two counsel; and half of the costs be in the cause of the appeal.  The parties had 14 days to apply to vary the nisi order.

6.  By letter dated 13 August 2020, the defendants sought variation of the nisi costs order to costs of the application to be in the cause of the appeal.  The plaintiffs responded by letter dated 17 August 2020.  The defendants replied by letter dated 19 August 2020.  In view of the simple terms of the variation sought, this court took the view that the application might be disposed of on paper, notwithstanding the lack of a formal summons.  On 20 August 2020, this court gave directions accordingly.  No objection to that was raised, and the parties endorsed the representations and authorities cited in their respective letters for the purpose of the application to vary.

Discussion

7.  Costs is a matter of discretion of the court.

8.  For their application, the defendants essentially raise the following grounds:

(1)  The normal costs order upon granting of leave to appeal is that the costs of the application for leave to appeal should be in the cause of the appeal.

(2)  Whilst leave to appeal was granted only in respect of some of the proposed grounds in the draft notice of appeal, if the defendants ultimately succeed on the permitted grounds, it is highly likely that it would be dispositive of the entire matter, ie, the plaintiff’s ex parte orders for service out and antisuit injunction.  In that case, the defendants ought not to have had to incur the time and costs that were occasioned by the plaintiff’s proceedings.

(3)  The crux of the defendants’ case and submissions in the application as well as the time spent were devoted to the arguments on the permitted grounds.

(4)  Though the other proposed grounds of appeal were not accepted, they were not frivolous or unmeritorious, and in respect of which minimal time and costs were spent during the hearing.

(5)  Attention was drawn to the plaintiff’s previous request for security for costs, partly as evidence of abusive conduct of proceedings.

9.  The plaintiff opposes the application on the following grounds:

(1)  Whilst it acknowledges that the significance of the permitted grounds, it endorses this court’s 50% allocation of the costs of the application for leave to appeal to be in the cause.

(2)  That the grounds not permitted were not frivolous or unmeritorious is irrelevant.

(3)  The plaintiff acknowledged that it would not be entitled to security for costs at the leave stage, and therefore did not pursue that.  Suggestion of bad faith is denied.

10.  Various decided cases are cited by the defendants.  They include Winbless Inc v Silver Shadow Co Ltd, HCCW 369, 370 and 375/2011 (12 May 2014); Incorporated Owners of Tung Lo Court v Tsui Wai Yip, HCMP 3089/2014 (27 January 2015); China Construction Bank (Asia) Corp Ltd v Shanghai Pudong Development Bank Co Ltd, HCA 1323/2014 (20 January 2016); Shenzhen Futaihong Precision Industry Co Ltd v BYD Co Ltd, HCA 2114/2007 (15 March 2017).  I have fully considered the circumstances of these cases, which were instances of the court’s exercise of discretion instead of statement of principles as to costs of the application for leave to appeal.

11.  All submissions considered, I am persuaded that it is more appropriate to vary to the nisi costs order as sought by the defendants.  I accept that success of the appeal on the permitted grounds will have the effect contended by the defendants.  Yet this was precisely why leave to appeal on a ground in any given case will be given.  I doubt leave would be given in respect of a ground if its success on appeal will have no material bearing on the conclusion in the determination of the matter before the court.  The starting point is that this court did give leave, though at the same time exercised the power to limit the grounds.  The fact that the other proposed grounds of appeal were not accepted did not connote that they were frivolous or ought not to have been advanced at all.  I accept that attention was relatively more focused on the argument on the permitted grounds during the hearing.  Reference to the plaintiff’s previous request for security for costs in my view is not relevant for the present purpose.

12.  In the circumstances, the nisi costs order dated 30 July 2020 is varied so that the costs of the application for leave to appeal shall be in the cause of the appeal.  The defendants succeed in the application, and I order that the defendants shall have the costs of this application to vary, to be taxed if not agreed.