PACIFIC HARBOR ADVISORS PTE LTD AND ANOTHER v. WINSON FEDERAL LTD AND OTHERS

HCA 1257/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1257 OF 2013

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DECISION ON COSTS

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Costs

1.  By my judgment dated 19 November 2015 in respect of the 2^nd Summary Judgment Summons (“the Substantive Judgment”), I invited the parties to make brief written submissions insofar as they wished to challenge the costs orders nisi I had made or make submissions as to the balance of the costs on the 2^nd Summary Judgment Summons.

2.  The following written submissions were filed:

a.  on behalf of P: submissions dated 3 December 2015 by Oldham, Li & Nie (“OLN”) (“Ps’ Submissions”);

b.  on behalf of D3: submissions dated 3 December 2015 by Mr Deng and Mr Au (counsel who appeared on the substantive hearing of the 2^nd Summary Judgment Summons) (“D3’s Submissions”);

c.  on behalf of Ps: submissions dated 17 December 2015 by Ms Jenny Ngai (counsel who did not appear on the substantive hearing of the 2^nd Summary Judgment Summons) (“Ps’ Submissions in Answer”);

d.  on behalf of D3: submissions dated 17 December 2015 by Mr Deng and Mr Au (“D3’s Submissions in Answer”).

3.  As to the costs order nisi made in paras 63(2) and (3) of the Substantive Judgment against D4 and D6, Ps have requested variations so that D4 and D6 are liable for the costs of the claims against them until 10 March 2015, with D3 to be liable for all costs of the 2^nd Summary Judgment Application after 10 March 2015 on an indemnity basis (save for the costs in respect of the LOU claims), with such costs to be payable forthwith.  D3 resisted the variation insofar as it impacted on D3.  I vary my orders nisi so that D4 and D6 are liable to Ps for the costs of the action against them including the summary judgment application until 27 August 2015, with certificate for two counsel for the hearing on 11 November 2015, payable forthwith:

a.  27 August 2015 is the date of the letters addressed to the Court stating they did not object to summary judgment against them, as mentioned in para 13 of the Substantive Judgment.

b.  Ps have suggested there were similar letters from D4 and D6 dated 10 March 2015, but:

i.   those were not the letters put before me at the hearing of the 2^nd Summary Judgment Application; and

ii.  it is clear from the order of Master Ho dated 24 March 2015 that he heard counsel for D3, D4 and D6 and made directions for the determination of the summary judgment application on the basis that D4 and D6 were contesting the summary judgment application at that time.  Ps have made submissions in respect of the representation of D4 and D6 which I will address below.

4.  Ps have by their written submissions dated 3 December 2015 set out at length allegations that the solicitors (Tsang, Chan & Woo (“TCW”)) claiming to act for D4 and D6 after 10 March 2015 were acting without the authority of D4 and D6, and on the instructions of D3 (“the TCW authority issue”).  It is suggested by Ps that the Court should order D3 to pay all the costs of the O14 application against D4 and D6 after 10 March 2015 on an indemnity basis; alternatively, that if D3 was not responsible for causing TCW to act for D4 and D6, then to consider making a wasted costs order against TCW of its own motion.

5.  I note several points about those submissions:

a.  The costs in question are not costs associated with D3’s defence of the claims against D3.  To the extent that they are costs in respect of the defence of D4 and D6, then D3 is a third party to that claim.  A claim for such costs ought to be properly made (whether under s52A of the High Court Ordinance or otherwise) supported by evidence rather than assertion in written submissions.

b.  One would expect D4 and D6 might have an interest in such an application.  There is no evidence from, or submissions from, D4 and D6 in this regard.  It is not even clear whether they have been informed of such application.

c.  Although it is now asserted that two hearings on 16 and 24 March 2015 were necessitated to deal with the TCW authority issue, no mention was made of it at the hearing before me on 11 November 2015; nor was the present “third party” costs application suggested or canvased.

d.  Similarly, an application for indemnity costs or wasted costs based on conduct which would not be apparent to the court dealing with the costs of the hearing before it ought to be supported by evidence.

e.  Ps’ Submissions in Answer (18 pages long and not remotely fitting the description “brief”, nor “submissions in answer”) apparently:

i.   seek to escalate the TCW authority issue into a mini‑trial, with references to various orders and judgments whose relevance is unclear and which have not been provided to me;

ii.  asks me to take into account D3’s conduct in other court applications not heard by me nor provided to me at the Substantive Hearing.

f.  I would not consider a third party costs application (if properly made) to be suitable for determination on paper.  In any event, in light of my view that Ps’ present third party/indemnity and wasted costs applications are not properly made (particularly in the absence of supporting evidence), I have proceeded with a paper determination, and have clearly not acceded to Ps’ application.

g.  If Ps consider there is merit in a wasted costs order against TCW for reasons which are relevant to the 2^nd Summary Judgment application but which did not arise before me, it is a matter for them to consider making such an application.  So far as I am concerned, nothing came to my attention at the Substantive Hearing which would warrant me having any regard to the TCW authority issue and/or considering the wasted costs jurisdiction.

6.  I note that Ps’ Submissions in Answer (unacceptably) requested a further variation of the costs orders nisi, namely that there be no order as to costs in respect of Ps’ late amendment.  I decline to make such an order.  It is the usual price to pay for an amendment that the amender must pay the costs of and occasioned by it.  The fact that D3 took a sensible course in not opposing the amendment only served to limit the costs attributable to the amendment.

7.  I turn to the costs relating to Ps’ claim against D3 for specific performance of the IHAL Share Pledge Agreements.  D3 did not resist liability for such costs but sought an order that only 5% of the hearing time on 11 November 2015 be allotted to this issue.  Ps however sought an additional order that costs after 10 March 2015 be on an indemnity basis, apparently relying on the TCW authority issue mentioned at para 4 above.  D3 resisted such application.  Quite apart from my other comments on those allegations, I see no relevance of the TCW authority issue to the IHAL Share Pledge issue.  I order that D3 is liable to Ps for the costs of the action in respect of the IHAL Share Pledge Agreements including the summary judgment application save for the costs of the amendment (already ordered on 19 November 2015) and subject to the following apportionment of costs in respect of the 2^nd Summary Judgment Application, with certificate for two counsel for the hearing on 11 November 2015, payable forthwith.

8.  As to apportionment, in light of the majority of the evidence of D3 and Ps in respect of the IHAL and LOU claims being concerned with the issue of D3’s indebtedness (not pursued at the hearing), and the majority of time at the hearing of the 2^nd Summary Judgment Application being occupied with Ps’ unsuccessful application for judgment under the LOUs (with D4 and D6 playing no part), I direct that:

a.  50% of Ps’ costs of the 2^nd Summary Judgment Application against D3 excluding the costs of and incidental to the hearing on 11 November 2015 be attributed to the claim in respect of the IHAL Share Pledge Agreements;

b.  50% of Ps’ costs of the 2^nd Summary Judgment Application against D3 excluding the costs of and incidental to the hearing on 11 November 2015 be attributed to the claim in respect of the LOUs;

c.  20% of the costs of and incidental to the hearing on 11 November 2015 be attributed to the claim in respect of the IHAL Share Pledge Agreements;

d.  80% of the costs of and incidental to the hearing on 11 November 2015 be attributed to the claim in respect of the LOUs.

9.  As to D3’s costs of opposing the summary judgment application in respect of the claim against D3 under the LOUs, I order that the costs be to D3 in any event, payable forthwith, with certificate for two counsel for the hearing on 11 November 2015, subject to the apportionment made at para 8 above:

a.  The O14 application was not made until after D3 had filed his amended defence which expressly pleaded discharge of the LOUs.  On the basis that I have found there to be an arguable defence to Ps’ claim under the LOUs based on discharge from liability under the LOUs, then the O14 application should not have been made in respect of the LOUs.

b.  Leave to defend was ordered, rather than dismissal of the O14 summons, only because of the inter‑connection of the claims, where summary judgment was obtained in respect of the other claims.

c.  Although D3’s evidence disputed summary judgment on grounds other than the discharge of guarantee argument, which other grounds were not ultimately maintained or successful, the successful party should not be deprived of costs simply because he raised issues or made allegations on which he failed: HKCP 2016 para 62/3/3; Commissioner of Inland Revenue v HIT Finance (No 2)[2014] 4 HKLRD 412 at para 7.

10.  As to the costs incurred in respect of making written costs submissions pursuant to para 64(3) of the Substantive Judgment, there be no order as to costs, save that I order Ps to pay D3’s costs of D3’s Submissions in Answer, necessitated by Ps’ allegations in respect of the TCW authority issue.