SUN YAN v. SUPERB JADE LTD AND OTHERS

HCA 813/2014

[2021] HKCFI 2971

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 813 OF 2014

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(by Original Action)

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(by Counterclaim)

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DECISION ON COSTS

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1.  This is the paper application to vary the costs order nisi I made in the Decision handed down on 24 July 2020 (“the Decision”).

2.  I would adopt the same abbreviations that were used in the Decision.

3.  The costs order nisi was made in respect of the Further Security Summons taken out by the Defendants identified in the Decision.  The background for the application and my reasons for allowing the application have been set out in the Decision and I do not want to repeat the same here.

4.  In the Decision, I made a costs order nisi that the Plaintiff shall pay the Defendants half of the costs of the Further Security Summons and the Amendment Summons.  Both parties apply to vary such order:

(i)   by way of summons dated 6 August 2020, the Plaintiff seeks an order that half of the costs of the Further Security Summons and the Amendment Summons be the Defendants’ costs in the cause;

(ii)  by summons dated 7 August 2020, the Defendants seek to affirm the costs order nisi save that such costs should be summarily assessed and paid forthwith.

5.  Prior to the scheduled hearing of the Further Security Summons on 22 July 2020, the Plaintiff had offered to pay the Defendants further security of $1.7 million by way of a letter dated 20 July 2020 (“the Letter”). The Defendants had not given a response to the Letter.

6.  In support of the application to vary the costs order nisi, Mr Lo, counsel for the Plaintiff, submits the following:

(i)   Relying on the case of First Laser Ltd v Fujian Enterprises (Holding) Co Ltd[1], the “usual and only reasonable” costs order in similar circumstances should be the defendant’s cause in the cause.  The reason is that, if the foreign plaintiff eventually succeeds in the trial, the security “need not have been given in the first place.”

(ii)  There are authorities suggesting that where the amount of security awarded is much lower than that requested, the costs of the application should be in the cause.[2]

(iii) By reason of the offer made in the Letter, the Plaintiff should only be asked to pay the Defendants half of their costs in the cause. The sum offered ($1.7 million) is extremely close to the further security eventually ordered ($1.8 million).  Had the original scheduled hearing on 22 July 2020 stood, the Letter dated 20 July 2020 might not be a material factor in deciding costs.  But due to the vacation of the hearing, the Defendants were not required to file their submissions until 23 July 2020.  In the circumstances, the Defendants had ample time to consider the Letter and accept the offer to avoid incurring the costs of the submissions.

7.  In reply, the Defendants submit that First Laser shall not be taken to have established any general proposition and each case must depend on its own facts.  Further, they say that the present case is akin to Wingames Investment Ltd v Mascot Land Ltd[3], in which DHCJ Pow SC ordered the plaintiffs to pay to the defendants two-thirds of the costs of the application even if the defendants did not get the full amount of the security requested.  In the present case, the Plaintiff had tried very hard to establish that there was no material change of circumstances which justified the ordering of further security.  The Plaintiff had failed in such contention with the result that the court had ordered the provision of further security. For the offer made in the Letter, it was made in the eleventh hour which gave no sufficient time to the Defendants to consider the offer or to conduct meaningful negotiation.

8.  It is trite that question of costs is a matter of discretion by the court.  It is fact-sensitive and each case has to be decided on its own facts.  In any event, the cited cases are for reference only and they are not binding on this court insofar as the exercise of discretion is concerned.

9.  I can certainly see the logic and the reasoning of the approach adopted in First Laser.  However, the costs order should, on some occasions, be tailored to cater for the fact that the plaintiff may have spent a lot of unwarranted effort in pursuing unarguable or unmeritorious arguments.  Adopting the approach in First Laser, the Defendants will get their costs in any event if they succeed in their defence.  The question to be asked in the present case is therefore, assuming that the Plaintiff eventually succeeds in her claim, whether the Plaintiff would still have to pay the Defendants for their costs resulting from her failure to oppose the application for further security.

10.  In my judgment, the answer should be no. Applying the reasoning in First Laser, if the Plaintiff eventually succeeds in her claim, the order for security need not have been given in the first place.  Though the Plaintiff tried to oppose the provision of further security by arguing that there was no change of circumstances, I do not find that the conduct of the Plaintiff is so unreasonable to the extent that, even if she succeeds in her claim, she should be asked to pay for the costs of the Defendants in applying for further security for their costs in conducting an unmeritorious defence.  I agree that the observations of To J in First Laser are also applicable in the present case.

11.  There is no serious dispute that the Plaintiff should only be asked to pay for half of the costs of the Further Security Summons and the Amendment Summons.

12.  I do not find that the making of the offer in the Letter should be a significant factor in determining the question of costs as it was made in the eleventh hour of the application.

13.  By reason of the aforesaid decision on costs, I do not need to deal with the Defendants’ request for summary assessment of their costs.

14.  Hence, I allow the Plaintiff’s variation application but dismiss the Defendants’ one.  Costs should follow the event.  I make a costs order nisi that the costs of both variation summonses be to the Plaintiff which shall be made absolute 14 days after the handing down of this Decision on Costs.