CITIC PACIFIC LTD v. SECRETARY FOR JUSTICE AND ANOTHER

HCMP767/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 760 OF 2010

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BETWEEN

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RULING ON COSTS (2)

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1.  A hearing was held on 9, 10 and 11 March 2011 of an originating summons filed on 23 April 2010 concerning the issue of whether legal professional privilege (LPP) applied to (a) documents which had been seized by the police from the plaintiff's premises (the seized material) and (b) documents which had been surrendered by the plaintiff to the Securities and Futures Commission (the surrendered material).

2.  It was recognised by the parties that different considerations applied to the two sets of material. When the hearing commenced on 9 March 2011 it became apparent that further investigations were required concerning the very substantial number of documents which comprised the seized materials. As a result the hearing in respect of those documents, being the relief sought in §§ 1(i), (ii), (iii) and (iv)(b) of the originating summons, was adjourned to 18 July 2011 for mention, with directions regarding the further hearing, with cost reserved.

3.  There was a brief hearing on 18 July when it was indicated that the documents were still being categorised and that there were ongoing discussions between the parties to ascertain just which documents would be referred to this court for determination, as opposed to which documents could be agreed between the parties as either being subject to or not subject to LPP. The matter was adjourned to 30 September for mention, with costs reserved.

4.  The whole month of October had been reserved for the court to inspect the documents. At the hearing date on 30 September it was indicated by the plaintiff that although the majority of the documents would be available on 3 October for the exercise to begin the balance of the documents, estimated at some 20%, would be filed later. A further mention date was fixed for 28 October, with costs reserved.

5.  The exercise commenced on schedule. A series of matters arose from the inspection of some of the documents upon which clarification was required, especially from plaintiff. The parties were informed of the assistance required. There was a brief hearing on 20 October during which the court was addressed on those issues. Again, costs were reserved.

6.  At the hearing on 28 October it was indicated that a further "183 documents" required determination and were ready to be filed in court. In truth, those 183 items were envelopes containing several thousand individual documents, each of  which required inspection, albeit that many of them were duplicates of documents already inspected. In addition at that hearing an order was made in regard to audio recordings which also had been seized by the police.

7.  Judgment was handed down respect of all of the seized materials on 19 December 2011. The parties were invited to submit written representations in regard to costs, with the plaintiff being granted leave to apply to the defendants’ representations. Each has done so.

8.  The plaintiff submits that it was substantially successful in securing the release of a large volume of the seized materials; costs should follow the event; in the circumstances, it should be awarded the costs of the proceedings including the hearings referred to above.

9.  I accept the principle that cost should follow the event. In the context of this matter I regard it as artificial to try to apportion costs between the number of documents according to where they appear in a particular part of a particular schedule.

10.  What the plaintiff seems to have failed to appreciate is that my finding was that there existed a prima facie case of both the existence of a conspiracy to defraud as well as offences pursuant to s 21 of the Theft Ordinance, Cap. 210. The effect of that on the documents was, in reality, that the defendants were the substantially successful parties in respect of those seized documents adjudicated upon by the court.

11.  The alternative finding was made only so that if the finding that there existed a prima facie case of conspiracy and s 21 offences were found to be erroneous, it would not be necessary for the the documents to be examined for a second time. The result was, in the context of the alternative finding, that the parties were fairly evenly balanced in the respective levels of success of their contentions. That, however, was purely a contingent finding made simply on a pragmatic basis to avoid duplication of a considerable amount of effort.

12.  It seems to me to be a matter for the taxing master rather than for this court to determine to what extent, if any, work done relating to, as well as any negotiations between the parties leading to, the release of seized materials other than those submitted to court for adjudication should be allowed as part of the costs.

13.  The argument that the defendants seized an unnecessary large number of documents - which may be thought to be supported by the number of documents apparently returned voluntarily to the plaintiff - is counterbalanced, in my judgment, by the fact that the defendants had no means of inspecting documents at the time of seizure and thus determining just which documents should or should not be seized. The plaintiff’s stance that every item was protected by LPP was patently indiscriminate and unjustified on any basis.

14.  In the circumstances, subject to the previous ruling of costs in relation to the surrendered materials, the plaintiff is to pay the defendants’ costs including the cost of the appearances on 18 July, 30 September and 20 and 28 October 2011 and of the submissions on costs, such costs to be taxed if not agreed.