LAMMAS GLOBAL CORPORATION v. BARCLAYS BANK (SUISSE) S.A. AND OTHERS

HCA 2411/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2411 OF 2009

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DECISION ON COSTS

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The orders:

1.  On 30 March 2011, I made orders in terms of summonses filed by the defendants in this matter thereby disposing of these proceedings.  At that time I made an order nisi that Lammas must pay the costs of the application incurred by both Barclays Suisse and Barclays plc on a party and party basis if not agree.  Barclays Suisse now seek to vary the order so that their costs are paid on a common fund basis. 

2.  Very sensibly, the parties agreed to deal with the matter by way of written submissions made through the solicitors.

3.  The basis upon which the application is made is threefold:

(i)  First, on 5 November 2009, Barclays Suisse informed Lammas that Hong Kong was not the appropriate jurisdiction of the proceedings against it, but that the dispute should be referred to the Swiss courts.  That assertion was repeated by Barclays Suisse’s Swiss legal representatives on 27 November 2009.  Following the issue of the proceedings on 2 December 2009, 23 December 2009, the Swiss legal representatives again reminded those advising Lammas that Hong Kong was not valid for the dispute, and that any proceedings commenced before any court other than the competent courts in Geneva, Switzerland, would be opposed;

(ii)  In its ex parte application Lammas failed to disclose to the court that at the time the account was opened, Barclays Suisse did not have an office in Hong Kong.  It is said that had that fact been disclosed the Master would have had cause to question whether the contractual jurisdiction was Hong Kong, and in all likelihood, would have concluded that it was not;

(iii)  In support of its argument Lammas sought to rely upon expert evidence which was partisan manner and, despite being invited to confirm the fact, failed to explain whether the Swiss law expert was in fact independent.

4.  As to the costs order nisi in respect of Barclays plc, Lammas seek to have the order nisi held over from a period of three months pending the decision of the Geneva court in its determination of its jurisdiction over Lammas’s claim against Barclays plc.

5.  The law as to an entitlement to an enhanced order for costs is stated by Godfrey J in Overseas Trust Bank Ltd v Coopers & Lybrand (a firm) & Ors [1991] 1 HKLR 177 in the following terms:

“To justify an order for costs on the common fund basis, the case has to have some special or unusual feature.... The court has a discretion to order that the costs of the successful party be taxed on an indemnity basis; but, in my judgment, in ordinary hostile litigation it should only exercise that discretion in that way, and so depart from the ordinary rule that the costs ought to be taxed as between party and party, when it feels a proper sense of indignation at the unsuccessful party’s conduct, and that is not this case. For the same reasons, I do not think this is a suitable case for an award of costs on the common fund basis either. This is, in my judgment, ordinary hostile litigation; and I see nothing in it to justify a departure from the ordinary rule.”

6.  The submissions made by the solicitors for Lammas did not seek to suggest that that statement of the law should not be followed, even now after CJR.

7.  It is quite right that on a number of occasions prior to the commencement of proceedings, and even afterwards, the solicitors for the defendants expressed, in firm, if not trenchant terms, the view that Hong Kong was not the appropriate jurisdiction of the proceedings against Barclays Suisse.  They have ultimately been proved to be right.  But I cannot say that the contention that, in the factual circumstances that existed, particularly the fact that Lammas were perfectly entitled to bring proceedings against Barclays plc in Hong Kong, bringing the proceedings against all defendants in Hong Kong was wholly misconceived.

8.  I am satisfied that a sufficient argument was available to those advising Lammas that the positions adopted by the parties can be appropriately described as nothing more than those which might be adopted by parties in hostile litigation, and accordingly not a position which would raise a sense of indignation in the court such as to lead to an enhanced order for costs.  It is not law that a party who persists in proceedings in the face of the contrary contention that ultimately proved to be right necessarily attracts an enhanced costs order.

9.  The first ground relied upon fails. 

10.  Again it is right that in the ex parte application for leave to serve the writ against Barclays Suisse, Lammas did not disclose, in terms, that Barclays Suisse did not have an office in Hong Kong at the time the account was opened. 

11.  The cases are clear in respect of a failure to disclose information on an ex parte application.  There is no doubt that a deliberate concealment, in other words a failure to disclose information that is known and is plainly relevant, is likely to lead to enhanced order for costs.  But there may be a failure to disclose information which is simply not fully appreciated to be relevant.  In those circumstances the failure to disclose will not necessarily lead to an enhanced order for costs.

12.  In the present case Lammas, took the view, now shown to be wrong, that because the dealings of its officers, and their interaction with personnel from the Barclays Group generally, was in Hong Kong, an argument may be mounted that the account was maintained in Hong Kong.  In those circumstances it can be understood how they may have failed to consider the importance of the fact that, as a matter of companies law and banking law in Hong Kong, Barclays Suisse did not have a legal presence in Hong Kong.  In those circumstances I am satisfied that the failure to disclose information did not fall within the class of a deliberate failure which might otherwise attract an enhanced order costs.

13.  The second ground relied upon fails.

14.  I am satisfied that the expert evidence put to the court by those advising Lammas may properly be described as having been partisan, having regard to the terms in which it was couched.  I so found in paragraphs 18 and 19 of my decision.  That alone was enough to entitle me to reject the evidence of Professor Jeandin, where there was a difference between him and Mr. Marguerat. 

15.  It was ill-advised of those advising Lammas, in the circumstances, to rely upon that evidence.  However again, I find the position adopted to be nothing more than a position adopted in hostile litigation, and not such as to raise a sense of indignation in the court such as to lead to an enhanced order for costs.  The appropriate sanction was the rejection of the evidence.

16.  The third ground relied upon fails.

17.  The order that Lammas must pay Barclays Suisse costs on a party and party basis is made absolute.

18.  In the application to hold open the order for costs against Barclays plc, Lammas raise what they say is a distinct possibility that the Swiss courts will reject jurisdiction in respect of Barclays plc.  As the proceedings that will be commenced will inevitably be against all of the present defendants, I think it highly unlikely that the Swiss courts will reject jurisdiction, as it is inevitable that they will accept jurisdiction in respect of the proceedings against Barclays Suisse.

19.  However, I accept that the argument is open that the Swiss courts will reject jurisdiction in respect of some of the defendants, and that then Hong Kong may well be the appropriate jurisdiction for the litigation.  In those circumstances it would be proper to revisit the question of costs.

20.  There will accordingly be in order that the costs order nisi in favour of Barclays plc be held over a period of three months from the date of this order pending the Swiss court’s determination of its jurisdiction of Lammas’ claim against Barclays plc.

21.  Liberty to apply is reserved.

22.  Lammas has succeeded in all respects on the argument on the question of costs.  The defendants must pay Lammas’ costs on the costs argument, on a party and party basis.