LI YUHONG v. oOo SECURITIES (HK) GROUP LTD (formerly known as ORIENTIERT XYZ SECURITIES LTD) (formerly known as AMTD Global Markets Ltd) (formerly known as AMTD Asset Management Ltd)

HCA 475/2020

[2026] HKCFI 4972

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 475 OF 2020

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BETWEEN

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DECISION

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INTRODUCTION

1.  On 24 December 2025, I handed down the judgment in this action (“Judgment”). At §276 of the Judgment, I ordered judgment be entered against the defendant (“D”), and granted relief sought by the plaintiff (“P”) as stated in §214 therein. At §275 of the Judgment, I ordered “costs of the action (including all reserved costs) to be paid by D to P, to be taxed if not agreed, with certificate for 2 counsel” (“the Costs Order”).

2.  By a summons dated 6 January 2026 (“the Summons”), P applies for variation of the Costs Order such that:-

(1) Costs incurred after 6 December 2024 in these proceedings be paid by D to P on an indemnity basis, to be taxed if not agreed, with certificate for two counsel; and

(2) Costs of the real-time transcription service for trial (“Live Note Service”) be part of the trial costs, payable by D to P.

3.  By a consent order dated 19 January 2026, the parties agreed and the court granted an order that the Summons be determined on paper.

DISCUSSION

(A) Costs on indemnity basis

Relevant Legal Principles

4.  As pointed out by Ms Eva Leung for P in P’s written submissions, it is trite that the court has wide discretion to make any order as to costs pursuant to Order 62 rule 3 of the Rules of the High Court (Cap. 4A) (“RHC”), with special matters to be taken into account in exercising discretion set out in Order 62 rule 5 of the RHC, including but not limited to:-

(1) The underlying objectives set out in Order 1A, rule 1 (see Order 62 rule 5(1)(aa));

(2) Any written offer which is expressed to be “without prejudice save as to costs” and which relates to any issue in the proceedings (see Order 62 rule 5(1)(d));

(3) The conduct of all the parties, relevantly including (Order 62 rules 5(1)(e) and 5(2)):-

(a) Whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(b) The manner in which a party has pursued or defended his case or a particular allegation or issue; and

(c) Conduct before, as well as during, the proceedings.

5.  In relation to a Calderbank offer (Order 62 rules 5(1)(d)), as Anthony Chan J (as he then was) held in Bright Gold Ltd v Mega Well Development Ltd [2019] 3 HKLRD 868 at §§13 and 15:-

“13. It is reasonably well established that the failure to beat a favourable settlement offer can attract an award of indemnity costs …

15. It is consonant with the underlying objectives enshrined in O. 1A r. 1 for the court to encourage dispute settlement and therefore failure to respond constructively to a reasonable Calderbank offer, coupled with the subsequent failure to beat the offer, should weigh heavily against the offeree on costs.”

6.  Furthermore, where the proceedings should never have been defended or unreasonably and unjustifiably persisted by the defendant, the court would also consider imposing a higher scale of costs: see Huge Dragon Corporation Ltd v The Incorporated Owners of Lung Man Oasis (IO) [2014] 3 HKLRD 286 at §13; see also, for instance, Grant David Vincent Williams v Jefferies Hong Kong Ltd, unrep., HCA 320/2011 (12 July 2013).

P’s Submissions

7.  As set out in 4^th affidavit of Leung Tiffany Hoi Ying filed on 6 January 2026 (“P’s Affidavit”) at §§9-20, P relies on 2 grounds in varying the Costs Order to be taxed on an indemnity basis, namely:-

(1) D’s unreasonable refusal of P’s reasonable offer to settle as set out in the without prejudice save as to costs letter dated 6 December 2024 (“WPSATC Offer”); and

(2) The D’s poor litigation conduct in this action.

8.  On 6 December 2024, following completion of the evidentiary stage of the trial and prior to any further costs being incurred for written and oral closing submissions, P made the WPSATC Offer and invited D to agree to settle. At that time, P says that it was already obvious that the evidence presented by D at the trial lacked the necessary credibility and substance, and in the same letter, P clearly stated that “[k]ey documents and witness testimonies from D were either missing or fail to provide credible support for its position”: see P’s Affidavit at §§9-10 and exhibit LTHY-6.

9.  D never responded to the WPSATC Offer at all. Therefore, on 10 December 2024, the parties filed their respective first round of written closing submissions.

10.  On 13 December 2024, as D still did not respond to P’s WPSATC Offer, the parties filed their respective written reply submissions. On 17 December 2024, the parties attended the oral closing hearing.

11.  In D’s affirmation in opposition filed on 16 February 2026 (exhibiting a draft of the 2^nd affirmation of He Chuan which was eventually filed on 23 March 2026), D’s explanations of ignoring P’s WPSATC Offer are as follows:-

(1) P’s WPSATC Offer came at a very late stage and preparation for written closing submissions was already underway. Any costs savings arising from a settlement would have been insubstantial; and

(2) P’s WPSATC Offer did not in fact involve any concession on her part.

D’s Submissions

12.  Mr Danny Tang for D in his written submissions stated that, generally speaking, merely pursuing a weak claim (or here, a defence) would not justify indemnity costs. It is justified where one knows, or ought to know, that the claim is doomed to fail on the facts and on the law. Ultimately what the receiving party must demonstrate is something in the conduct of the action or other circumstances of the case that “takes it out of the norm”: see Li Man Wai v Ngan Suet Fong Bonnie [2021] HKCFI 931 §56(3)-(4) (DHCJ MK Liu).

13.  A finding that a witness was incredible does not necessarily mean that an indemnity costs order should be made. In every case where there is a material dispute of fact, the court is bound to prefer one party’s account. Such a finding, without more, is not a special or unusual feature making indemnity costs appropriate: see Kishin Samtani v Chandersen Tikamdas Samtani [2025] HKCFI 4526 §60 (H Au-Yeung J); Kao, Lee Yip (a firm) v Midland Realty International Ltd (HCA 2153/2007, 31.3.2010) §18 (DHCJ Lisa Wong SC, as she then was).

14.  It will be a rare case where the refusal of a settlement offer will or should, by itself, attract an award of indemnity costs: see Ma King Huen v The Sincere Co Ltd (No 2) [2024] 3 HKLRD 217 §17 (DHCJ Burns SC).

15.  First, D denies that just because a witness is found to have given unrealistic evidence, indemnity costs would follow in respect of the subsequent steps in the litigation.

16.  Second, D says that just because there were imperfections in D’s principal witness Yuen’s evidence and adverse findings had been drawn by the court against D, this does not amount to a “poor litigation conduct” or “special or unusual feature” which warrants an indemnity costs order.

17.  Third, despite of the court’s dim view of Mr Yuen’s evidence, D submits that the parties devoted considerable time and efforts in debating a wide range of legal issues which did not turn on the witnesses’ evidence at all. They include, for example, pleading requirement concerning (i) an agent’s authority to make representations on behalf of the principal (Judgment §§134-144) and (ii) causation (Judgment §§259-267) and whether liability in misrepresentation is precluded by the terms in the Placing Letter; and whether the Control of Exemption Clauses Ordinance (Cap.71) and the Unconscionable Contracts Ordinance (Cap.458) are applicable (Judgment §§197-200).

18.  Mr Tang submits that once it is accepted that D’s litigation conduct does not warrant costs on indemnity basis, the WPSATC Offer adds nothing. P cannot put D in a worse position by inviting D to accept defeat at a belated stage when D’s conduct would not otherwise have led to costs on indemnity basis.

19.  Mr Tang further submits that the following matters would mitigate against attaching any weight to the WPSATC Offer:-

(1) The net effect of P’s submissions is to invite the court to promulgate a practice or principle where a party could make a late invitation for concession upon sight of other party’s underperformance at trial, after which indemnity costs would follow in respect of the subsequent steps in the litigation if no concession was eventually made. D says that this is not only contrary to the established principles but would also create perverse and distortionary incentives.

(2) The fact that D made no concession at all in the WPSATC Offer is a relevant consideration in the court’s exercise of discretion. D says that given that it was not a case where D had no prospects of success particularly in view of the availability of arguments and findings of the court which did not depend on the factual finding, it was proper for D to reject an offer which, in substance, required it to accept complete defeat.

(3) It is unclear whether meaningful costs savings the WPSATC Offer could ever have produced, given that P has never disclosed the precise quantum or composition of the costs she would have incurred if the matter were to proceed to closing, or had in fact incurred since the WPSATC Offer.

The Court’s Findings

20.  I do not find D’s above arguments convincing for the following reasons.

21.  First and foremost, I think it is important to bear in mind that P is not asking for the entire costs of the trial to be taxed on an indemnity basis, but only the costs incurred after 6 December 2024 be so taxed. The scope therefore was only limited to the costs of preparing the written closing submissions, the written reply submissions and attending the oral hearing.

22.  By 6 December 2024, substantial part of P’s written closing submissions had not been prepared yet, and certainly the preparation work for written reply submissions had not been conducted at all because P could only do so after receiving D’s first round of written closing. The oral hearing was also not conducted yet: see also P’s Reply Affidavit at §12. As 3 counsel were instructed by both parties respectively, the costs incurred to prepare 2 rounds of written submissions and to attend the oral closing cannot be said to be “insubstantial” after 6 December 2024. By the WPSATC Offer, P only seeks to recover costs on party and party basis with certificate for 2 counsel, which was rather reasonable and was exactly what the court had ordered under the Judgment.

23.  Second, in my judgment, D’s “no concession” argument is also untenable. I agree with Ms Leung that the test is not whether P has made any concession in any settlement offer, but whether D has unreasonably rejected or ignored the settlement offer. D certainly did not obtain better result than P’s WPSATC Offer, because P ultimately won on all substantive aspects on liability with the exact costs order proposed in the WPSATC Offer. In my view, had D reasonably accepted P’s offer, it would not be necessary for the parties to file 2 rounds of written submissions (on 10 and 13 December 2024) and to attend the oral closing hearing (on 17 December 2024). It would also save the court considerable amount of time and resources in writing and handing down the Judgment on 24 December 2025.

24.  Third, in my judgment, D’s poor litigation conduct also adds weight to P’s application for costs on indemnity basis. This includes the following matters stated in P’s Affidavit at §§13-19:-

(1) Unmeritorious defence with no credible evidence in support. For example, the evidence given by Yuen, D’s only factual witness, was severely criticised by the court in the Judgment. Yuen in fact has no personal knowledge of any of the material matters in dispute, and gave oral evidence that was internally inconsistent: see e.g. Judgment at §§77(7); 84-86.

(2) Worse still, Yuen’s witness statement was apparently prepared originally for another individual, namely Carlson Liao. Yuen disowned certain paragraphs of his witness statement and admitted that “they were not [his] evidence”: see Judgment at §80. This exceptional feature of his witness statement demonstrates how poor D’s evidence has been prepared, and it was indeed a waste of the court’s and P’s time to deal with evidence tendered by such a puppet witness, who did not personally know anything about the material matters of the case but only signed a witness statement originally drafted for someone else, without even carefully considered the content of the filed version of his own statement. In my view, this kind of litigation conduct, coupled with the unreasonable rejection of the WPSATC Offer, should be discouraged.

(3) Moreover, Yuen on behalf of D also admitted that he did not even attempt to check the emails of Ariel Liu, who was the key staff of D dealing with P’s investment at that time, in D’s email server: see Judgment at §§36, 77(9). This further shows how reckless and indifferent D was when conducting this litigation. After cross-examination (during which Yuen made the abovementioned admissions and concessions), D should really have reasonably accepted P’s WPSTAC Offer in order to save any further costs from being incurred by all parties.

(4) As mentioned in Grant David Vincent Williams (supra) at §9, if a person conducted himself on a wholly false basis, the true state of affairs being within that person’s knowledge, or at least capable of ascertainment if properly investigated, and the proceedings were thereby significantly prolonged and the costs commensurately increased the court was entitled to order that the person so adversely affected by that conduct should receive its costs on an indemnity basis (see also Grant David Vincent Williams (supra) at §11).

(B) Costs of Live Note Service

25.  By a joint letter dated 30 October 2024, the parties jointly applied prior to the commencement of the trial, for leave to engage real-time transcription service provider at the trial. The parties agreed that “costs of the Service shall be borne initially by the parties in equal shares…, but without prejudice to the decision of this Court to treat those costs as part of the costs of the Trial being recoverable and as to which party shall ultimately bear those costs and in what amount” [emphasis added].

26.  Leave was granted on 6 November 2024 “as per request stated in parties’ joint letter dated 30 October 2024”.

27.  In my view, judging from the above, it is clear that the parties indisputably agreed that this court retains wide discretion to decide the ultimate costs allocation.

28.  D’s ground of opposition in its affirmation appears to be that the Live Note Service “was engaged to facilitate the effective conduct of the trial” and “such service has proven to be of benefit to the Court and both parties” (He’s Affirmation at §15), and therefore D argues that it should not bear the entirety of such costs.

29.  I agree with Ms Leung that while P does not dispute that the Live Note Service was helpful to the court and both parties, it does not mean that the costs thereof should not be part of the trial costs, just like how the costs of trial bundles (printed, collated and compiled by P), which were also prepared to facilitate the effective conduct of the trial, are included as part of the trial costs in the cause: see also P’s Reply Affidavit at §16.

30.  Accordingly, in the circumstances of the present case, I am of the view that the expenses of the Live Note Service should be included in the costs of the trial, as they were in the case of Eric Edward Hotung v Ho Yuen Ki, HCA 857/2011, 7 September 2016 at §71.

CONCLUSION

31.  In the aforestated premises, I will grant an order in terms of the Summons as set out in §2 above.

32.  I further order that the costs of this application be paid by D to P, to be taxed if not agreed.