NEW ART HOLDINGS CO., LTD. AND OTHERS v. EST-OUEST AUCTIONS CO., LTD AND OTHERS

HCA 325/2024

[2025] HKCFI 1774

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 325 OF 2024

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D E C I S I O N

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I.  INTRODUCTION

1.  Before me are:-

(1)  The 1^st and 2^nd Defendant’s Summons filed on 9 July 2024 (the “D1-2’s Summons”) for:-

(a)  an order of stay of the Plaintiff’s claim on forum non conveniens in favour of Tokyo District Court and/or multiplicity of proceedings with those in Tokyo District court already commenced by the Plaintiff; or

(b)  alternatively, an order for striking out; or

(c)  alternatively, an order for security for costs;

(2)  The 3^rd Defendant’s Summons filed on 25 July 2024 for a similar order;

(3)  The 4^th Defendant’s Summons filed on 16 December 2024 for a similar order; and

(4)  The Plaintiffs’ Summons for Order 14 judgment.

2.  For convenience, I shall refer to the Defendants’ Summonses mentioned in subparagraph (1) – (3) above as the “Defendants’ Summonses” and the Plaintiff’s Summons mentioned in subparagraph (4) above as the “Plaintiff’s Order 14 Summons”.

3.  On 14 April 2025, the Plaintiffs filed and served on the Defendants at about 4:45pm an Amended Writ of Summons and an Amended Statement of Claim. By Order 65 rule 7, the service is counted as service on 15 April 2025. The Defendants agree that the amendment would effectively remove the parts of the Plaintiffs’ claim which the Defendants apply to stay on forum non convenience and multiplicity of proceedings. This has left only the claim on passing-off extant. To this passing-off claim, the Plaintiffs substantively amended by adding particulars of acts of passing-off, but whether with the substantive amendment or not, the Defendants no longer pursue their application to stay. However, the Defendants take the stance that in the first place, the amendment should not be allowed because of an interim stay order (a matter I shall detail later) and/or that the amendment in any event came too late, just 3 clear days before the hearing and just the day before the Defendants would have to file and serve their skeleton submissions.

II.  BACKGROUND

4.  I should set out the background briefly insofar as relevant to the present purposes.

5.  On 11 July 2023, the 1^st and 2^nd Defendants commenced Intellectual Property Proceedings No 45 of 2023 (“HCIP Action”) against the 4^th Plaintiff.

6.  On 23 February 2024, the Plaintiffs commenced the present action. The present action and HCIP Action are related. On 19 April 2024, the parties in the present action and in HCIP Action gave an undertaking (the “Undertaking”) that they all would be bound by the upcoming judgment upon trial in HCIP Action (the “HCIP Judgment”).

7.  On 9 July 2024, the 1^st and 2^nd Defendant filed the D1-2’s Summons, returnable on 2 August 2024 before the Registrar. Since the HCIP Judgment to be handed down would have impact on the Plaintiffs’ claim and thus on the D1-2’s Summons, at that hearing, the parties came to an agreement whereupon the learned Registrar made the following order (the “Interim Stay Order”):-

“1. By agreement by all parties in this Action, there be an interim stay of all proceedings in this Action pending the handing down of Judgment in the related HCIP 45/2023 with liberty to parties to apply to uplift the stay by serving at least 14 days prior written notice to the other parties;

2. All pending applications made by the Defendants in this Action be adjourned to be fixed for a second call-over hearing upon lifting of the stay…”

8.  On 29-31 July, 1-2, 5-6 & 14 August 2024, the trial of HCIP 45/2023 took place before Lok J. On 30 September 2024, his Lordship handed down the Judgment therein (the “HCIP Judgment”).

9.  About 5 months later, on 3 March 2025, the Plaintiffs filed an affirmation deposing that the Plaintiffs would withdraw the claims which are the subject challenge of the Defendants’ Summonses. However, the Plaintiffs provided no draft Amended Statement of Claim until 15 April 2025 as explained above.

III.  DISPOSAL OF THE DEFENDANTS’ APPLICATION TO STAY ON FORUM NON CONVENIENS AND MULTIPLICITY OF PROCEEDINGS UPON PLAINTIFFS’ AMENDMENT

10.  The parties dispute over whether the Interim Stay Order was automatically uplifted upon the handing down of the HCIP Judgment. The Plaintiffs argue in the affirmative, while the Defendants argue that it is not and that an application would be required for uplifting the Interim Stay Order. In principle, the difference between the two is that if the Interim Stay Order was automatically uplifted, then the Plaintiffs are entitled to rely on Order 20 rules 1 and 3 to make the amendments without the leave of the Court, and if the Interim Stay Order is not automatically uplifted, then the Plaintiffs are not entitled and thus the Defendants are entitled to proceed with the Defendants’ Summonses for an order of stay on forum non conveniens and multiplicity of proceedings in Japan.

11.  Assuming, for the sake of argument, that the Interim Stay is still extant, I would still lift the Interim Stay Order on my own motion for allowing the amendment in. The reason is simple: there would simply be no reason for the Defendants to insist on some claims the Plaintiffs would by the amendment abandon against the Defendants, and the Defendants not only would not suffer any prejudice by the abandonment, but would benefit from it. The Court would also benefit from the narrowing down of the Plaintiffs’ claim.

12.  For the above reasons, the Defendants’ application for stay has been rendered nugatory by the Plaintiffs’ late amendment. Therefore, I make no order on the Defendants’ application for stay.

13.  In any event, as the parties have made submissions on whether the Interim Stay was automatically uplifted, I express my view below briefly:-

(1)  The Interim Stay Order was clearly for the purpose of imposing a moratorium to save time and costs because the HCIP Judgment to be handed down would have impact on the scope of D1-2’s Summons, as explained above.

(2)  Therefore, the Interim Stay Order would no longer be necessary upon the handing down of the HCIP Judgment.

(3)  Paragraph 2 of the Interim Stay Order envisaged that the parties would then take out a summons for a call-over hearing for the Summonses. It is not that there would be a summons first for lifting up the Interim Stay Order and then for the call-over.

(4)  Thus viewed, the Interim Stay Order was meant to be uplifted automatically upon the handing down.

(5)  The phrase “with liberty to apply to uplift the stay by serving at least 14 days prior written notice” is in my view for a situation where the HCIP Judgment was not yet handed down but for some reasons, there was a need to lift up the Interim Stay.

(6)  If this phrase is to qualify the “handing down of the HCIP Judgment” rather than a phrase of its own, then “pending handing down of the HCIP Judgment” would be redundant. The parties could have simply agreed to that the stay could be lifted by serving 14 days prior written notice.

(7)  Therefore, whether by purposive construction ((1) – (4) above)) or literal construction ((5) – (6) above), the Interim Stay was automatically uplifted upon the handing down of the HCIP Judgment.

(8)  The Defendants’ reliance on Rofa Sport Management AG v DHL International (UK) Ltd [1989] 1 WLR 902 at 911B-C and Cmbicdha W Investments Ltd v Li Lei [2023] 2 HKLRD 939 at §15 does not assist them at all. The wording of the stay order in Rofa Sport Management AG v DHL International (UK) Ltd, supra at 905E did not contain the such phrase as “pending [an event]” as in the Interim Stay Order here. Rather, the stay order there was a general stay. In respect of Cmbicdha W Investments Ltd v Li Lei, supra, the issue was whether time still ran for an unless order during the interim stay pending the determination of the application for security for costs. DHCJ Le Pichon’s dicat there at §15 that an application to uplift a stay was necessary was said in the context of whether the time still ran for an unless order during this interim stay. The parties there did not take issue that the stay was automatically uplifted upon the determination of the application for security for costs and the payment of the security for costs into Court. They simply did not mount any argument that time would still not run upon the payment of the security for costs because of lack of an application to uplift the stay.

14.  In my view, the practical difference between the parties is about costs. In this regard, I would take a broad-brush approach.

15.  First, in terms of time, the temporal difference is more theoretical than real in the present case, because the Plaintiffs only served the Amended Writ and Amended Statement of Claim as late as just 3 clear days before the hearing and just the day before the Defendants would have to file and serve their skeleton submissions. In my view, the Plaintiffs’ affirmation filed on 3 March 2025 foretelling that the subject claims would be abandoned was insufficient – without any proper amended pleadings, the Defendants were unable to know exactly what were abandoned and were therefore legitimate to proceed with their Summonses as they were. By 15 April 2025, the Defendants’ legal representatives including Counsel would of course have been instructed and briefed to attend the hearing to argue the Defendants’ Summonses without the amendments (then not in existence yet) in any event.

16.  Second, in terms of the merits of the application for stay, there is no dispute that when the present Writ was issued, those parts (except for the claim of passing-off) the Defendants sought to stay were subject matters of existing Japanese proceedings. The Plaintiffs contend that it was the Defendants who commenced action in Japan against the Plaintiffs so that the Plaintiffs had to raise those subject matters as defence and/or presenting the whole picture to the Court in Japan. They may be right, but given that there were already parallel proceedings in Japan and the Plaintiffs, rightly or wrongly, chose to raise those subject matters in the Japanese proceedings, even if I assume that that was essential to the Plaintiffs’ defence therein, it does not mean that the Plaintiffs could commence and continue the present action on the same subject matters. I agree with Mr Colin Wright, counsel for the Plaintiffs, that commencing parallel Japanese proceedings itself may not be sufficient to ground an order for stay. However, in those Japanese proceedings, the parties have been pursuing the matters substantively and substantially to trial, judgement and even appeal. The Defendants have a strong case for a stay in this light.

17.  There is also no dispute that some other matters the Defendants sought to stay were subject matters of the HCIP Action. The Defendants, similarly, raise that that was commenced by the Plaintiffs and that the present action was initially intended as a counterclaim to the HCIP Action. For the same reason, this does not constitute any valid reason for the Plaintiffs to commence the present action.

18.  The parties have also made submissions on whether the Defendants have submitted themselves to jurisdiction in Hong Kong. Whether the Defendants have submitted to jurisdiction is a matter of fact to be found upon an objective assessment of the relevant circumstances. The Plaintiffs argue that they have, by virtue of the Defendants giving the Undertaking that they would be bound by the HCIP Judgment, the Defendants’ current application to strike out and their current application for security for costs up until the first case management conference. However, for the applications to strike out and for security for costs, they are applications alternative to the application to stay. Such alternative applications cannot be taken as submissions to jurisdiction. As regards the Undertaking, while giving an undertaking is an indicia of submission to jurisdiction, one has to understand that the undertaking was given in the context described §5 above in order for the Court to reach a judgment in the HCIP Action on some of the matters common to both actions. In other words, the giving of the Undertaking here cannot be any indication that the Defendants would submit themselves to jurisdiction in the present case. The Undertaking can be regarded as an undertaking that the Defendants would be bound by the HCIP Judgment if the present action would proceed further. Considering the above, I do not think that the Defendants submitted to jurisdiction.

19.  All in all, having considered the above, for these abandoned parts, the Defendants should in the first place not have pursued in Hong Kong and opposed an application to stay on forum non conveniens and multiplicity of proceedings.

20.  The remaining claim on passing-off in the present action is a claim or a related claim which Lok J’s ruling in the HCIP Judgment will advance in favour of the 2^nd Plaintiff, because in the HCIP Judgment, Lok J resolved a factual dispute on the ownership of the relevant goodwill by finding that it is owned by the 2^nd Plaintiff herein. The Defendants’ application to stay was initially for a stay of the whole proceedings including this passing-off claim. Upon the Amended Statement of Claim, in which the only claim is the passing-off claim, the Defendants no longer pursue any stay. In this regard, I agree with Mr Wong Hok Yan, counsel for the 1^st and 2^nd Defendants, whose submissions Mr Terrence Cheng, counsel for the 3^rd Defendant and Mr Samuelson Choi, counsel for the 4^th Defendant adopt, that in the original Statement of Claim, the various allegations were so intertwined that it was practically infeasible to hive off the passing-off claim out of the order of the stay, and thus the Defendants’ application to stay would be meritorious even in respect of the passing-off claim, which they now agree not to seek to stay upon the Amended Statement of Claim making the passing-off the only extant claim.

21.  In the circumstances, it is my view that the Plaintiffs should pay the Defendants costs of the application for stay.

22.  It remains for me to say that besides the stay application, the Defendants also applied for striking out relief 7, 8, 11 and 12, which have been removed in the Amended Statement of Claim. I do not see any reason to depart from the general costs rule that the party who withdraws a claim should pay the costs. Therefore, the Plaintiffs should also pay the Defendants cost of the application to strike out.

23.  The parties agree that the costs order I am to make should be an order nisi, on the basis that there may be materials that would be brought to my attention in determining costs. I therefore make a costs order nisi that the Plaintiffs do pay the Defendants costs of the application to stay and to strike out. Upon the costs order nisi becoming absolute, each of the Defendants having already lodged and served a statement of costs of the application to stay and strike out, the Plaintiffs shall lodge and serve a list of objection within. I shall dispose of the summary assessment on paper within 14 days thereafter.

IV.  PLAINTIFFS’ ORDER 14 SUMMONS

24.  Before I deal with the application for security for costs, logically, I should deal with the Plaintiff’s Order 14 Summons, because if I enter summary judgment, the application for security for costs would be unnecessary.

25.  Relevant to the present circumstances are the following legal principles I summarise based on Hong Kong Civil Procedure 2025 Vol 1 §§14/1/6 and 14/1/7:-

(1)  Where there is technical defect in the Statement of Claim, an amendment should be effected as soon as possible.

(2)  The Order 14 summons should be amended to refer to the Amended Statement of Claim, unless the amendment is immaterial.

(3)  If the amendment is more than clerical, it is unlikely that the Court will exercise its discretion to grant an abridgement of time for service of verifying affirmation which should be done 10 clear days prior to the return day pursuant to Order 14 rule 2(3).

(4)  In exceptional circumstances, the Court may be prepared to abridge time provided that the affidavit verifying the amendment has been served sufficiently long in advance to enable the defendant to appreciate the nature of the plaintiff’s claim and meet it with appropriate evidence.

(5)  The requirement of an affidavit to verify the Statement of Claim upon which judgment is sought is mandatory and cannot be dispensed with.

(6)  An adjournment for the plaintiff to prepare and file verifying affirmation should be long enough to enable the defendant to prepare evidence to answer the verifying evidence.

26.  In the present case, after the amendments to the Statement of Claim, the Plaintiff’s Order 14 Summons can only be on the Plaintiffs’ passing-off claim only. As mentioned above, the Plaintiffs only filed and served the Amended Statement of Claim on 15 April 2025. Substantive amendments to the goodwill claim are made, namely, additional particulars are added for the act of passing-off. There is, however, no affirmation to verify the Amended Statement of Claim, and so the Defendants have not had any chance to respond to the additional particulars. Nor, equally fundamentally, is there any amended summons for the Order 14 application. In fact, the first time the Plaintiffs indicated that it would pursue the current, unamended Plaintiffs’ Order 14 Summons on the Amended Statement of Claim was made in the Plaintiffs’ Skeleton Submissions filed on 16 April 2025.

27.  Despite all these, Mr Wright, for the Plaintiffs, pressed ahead during the hearing. He submits that the evidence in support of the particulars has already been in the filed affirmation. In particular, during the hearing, he drew my attention to §9 of the 3^rd Affidavit of Lee filed as a reply affidavit for the Plaintiffs’ Order 14 Summons on the original Statement of Claim. This reply affidavit was filed on 3 March 2025, while the Amended Statement of Claim was only served on 15 April 2025. Therefore, not only that the reply affidavit cannot be a verifying affidavit for the original Statement of Claim, it certainly cannot be for verifying the Amended Statement of Claim which was simply not yet in existence at the time. The absence of a verifying affirmation is not a purely technical matter, but it substantively goes to whether the Defendants would be afforded a fair opportunity to respond in such summary proceedings without trial. This is why it is a mandatory requirement for a verifying affidavit under Order 14 rule 2, which provides that an Order 14 application “must be made by summons supported by an affidavit verifying the facts on which the claim… to which the application relates is based…” (emphasis added)

28.  Mr Wright, for the Plaintiffs, submits that §9 of the 3^rd Affidavit of Lee is evidence from the Defendants themselves, and thus such evidence cannot be realistically disputed by the Defendants. This may or may not be the case, but it is unsafe for me to reach such a conclusion without affording a chance for the Defendants to respond before the Court would enter a summary judgment. In any event, for §27(6A)(v) of the Amended Statement of Claim, the evidence the Plaintiffs rely on is, as clarified during the exchange between Mr Wright and me, evidence from the Plaintiffs but not the Defendants, being photos of snapshots of certain moments which the Plaintiffs say are evidence of use in the sense of passing-off. For such evidence from the Plaintiffs, Mr Wright’s submission that the Defendants cannot realistically dispute is even weaker.

29.  It remains for me to say I cannot accept Mr Wright’s submissions that the evidence has been adduced for quite some time and if the Defendants would like to respond, they would have done so for a long time. While the evidence may have been adduced for quite some time, not until the service of the Amended Statement of Claim if not until the Plaintiffs’ Skeleton Submissions, could the Defendant know that the Plaintiffs would apply for Order 14 judgment on the Amended Statement of Claim. All the more, not until the hearing when Mr Wright drew my attention to §9 of the 3^rd Affidavit of Lee could the Defendants really know which evidence the Plaintiffs rely upon for the added particulars (except for §27(6A)(v) of the Amended Statement of Claim for which Mr Wright could not point to any evidence). I should also add that during the hearing, Mr Wright took quite some time to pinpoint the evidence for me upon my query which he submits would verify the added particulars. This only shows that the Defendants would find it more difficult to know what evidence the Plaintiffs would like to rely upon.

30.  In addition to the lack of verifying affirmation, the constitution of the Plaintiffs’ claim appear problematic at least for the 1^st, 3^rd and 4^th Plaintiffs. By the HCIP Judgment, it was found that the 2^nd Plaintiff is the owner of the goodwill. In the present action, the Plaintiffs do not say otherwise (and apparently they cannot by virtue of the undertaking). As a matter of law, in general, only the owner of the goodwill has the legal standing to sue: see Wadlow on the Law of Passing-off (6^th ed), §§5-40 – 5-41. Mr Wright, for the Plaintiff, explains that the 1^st, 3^rd and 4^th Plaintiffs joined the action because they had causes of action in the original Statement of Claim. This explains why they were in the original Statement of Claim, but does not explain why in the Amended Writ and Amended Statement of Claim, they remain the parties.

31.  The Plaintiffs’ passing-off claim, or more accurately, the 2^nd Plaintiff’s passing-off claim, against the 2^nd, 3^rd and 4^th Defendants are equally problematic. Upon the lack of any plea of common design or joint tortfeasors, Mr Wright submits that the passing-off claim against these Defendants is that they themselves passed off the Plaintiffs’ business. However, Mr Wright is unable to point to any plea that any of these Defendants did so.

32.  Faced with all these problems, Mr Wright urge me that if I am not to enter summary judgment, I should not dismiss but should adjourn the Plaintiffs’ Order 14 Summons so that the Plaintiffs could put the matter in proper order.

33.  Having considered the above, I refuse to enter summary judgment. Further, given the substantive amendment to and the substantial abandonment in the Statement of Claim, and despite the substantive and substantial amendment, there are still at least quite arguably the problems identified above, I think the proper course to take is to dismiss the Plaintiffs’ Order 14 Summons, without prejudice to the Plaintiffs or the 2^nd Plaintiff to make an Order 14 application on the Amended Statement of Claim (or if the Plaintiffs think fit, any further amended Statement of Claim). I so order.

34.  For those abandoned claims, I reached a conclusion that they should not have been pursued in the present action in the first place. It follows that the Plaintiffs’ Order 14 Summons on these claims should not have been pursued. For the remaining passing-off claim, I have dismissed it for the reason explained above. I see no reason why costs should not follow the event. I therefore make a costs order nisi that the Plaintiffs should pay the Defendants costs of the Plaintiffs’ Order 14 Summons. Upon the costs order nisi becoming absolute, each of the Defendants having already lodged and served a Statement of Costs of the Plaintiffs’ Order 14 Summons, the Plaintiffs shall lodge and serve a list of objection within 3 days. I shall dispose of the summary assessment on paper within 14 days thereafter.

V.  SECURITY FOR COSTS

35.  I agree with the Defendants’ submissions that if I would dismiss the Plaintiffs’ Order 14 Summons (as I have now), I should consider the Defendants’ application for security for costs because the dismissal would mean that there is no Order 14 application, the existence of which usually would be a reason for adjourning an application for security for costs together therewith.

36.  At the hearing, Mr Cheng, for the 3^rd Defendant, informed the Court that he no longer pursues security for costs against the 1^st, 3^rd and 4^th Plaintiffs, while the other Defendants still pursue security for costs against all the Plaintiffs.

37.  Since the Amended Statement of Claim was only served on 15 April 2025, there is of course no defence filed in response to it and no evidence to respond to the amendments. What is clear is that all the Defendants now take the point that the 1^st, 3^rd and 4^th Plaintiffs are not the owners of the goodwill and so these three Plaintiffs do not have the legal standing to pursue the amended claim. This point was understandably not taken against the original Statement of Claim because as Mr Wright, for the Plaintiffs, explain (as I mentioned above), these three Plaintiffs had causes of action in the original Statement of Claim. Now with the late amendments, the Defendants simply have had no proper chance to amend their respective Defences to reflect this point.

38.  Given that the 2^nd Plaintiff’s position is different from the 1^st, 3^rd and 4^th Plaintiffs’, there may be a scenario (as Mr Wong, for the 1^st Defendant, submits) where costs would be awarded in favour of the Defendants against the 1^st, 3^rd and 4^th Plaintiffs while costs would be awarded in favour of the 2^nd Plaintiff against the Defendants. As between the 1^st, 3^rd and 4^th Plaintiffs, if none of them has any cause of action in the Amended Statement of Claim, any costs order against them would be several rather than joint and several, as they cannot claim that they would jointly and severally be liable for a non-existent cause of action. In any event, for the present purpose of security for costs, I think it is appropriate to treat them separately especially upon Mr Wright’s submissions that a foreign plaintiff can join any friendly party within jurisdiction as a co-plaintiff to avoid security for costs, by making use of the legal principle summarised in §23/3/5 of the Hong Kong Civil Procedure 2025 Vol 1:-

“In general the practice may be summarised as follows: there is a well settled rule that orders for security for costs will not be made against a foreign plaintiff if there are one or more co-plaintiffs resident in the jurisdiction; but the court has a wide discretion and the principles on which it is exercised are more important than the semantic analysis of particular cases; arguments for and against security have to focus on the circumstances and justice of the particular case, viewed in the light of the wording of O.23 r.1 and the basic principle that it is prima facie unjust to allow a foreign plaintiff to proceed without making funds available in the jurisdiction to cover any order for costs made against him…

the rule may have become one of the many factors that the court should consider when exercising its general discretion as to whether security for costs should be granted, so that even if a co- plaintiff is ordinarily resident in Hong Kong this does not by itself mean that security should not be granted.” (emphasis added)

39.  Such submissions seem to suggest that there is indeed risk that the 3^rd and 4^th Plaintiffs would remain as co-plaintiffs as a way to avoid security for costs against the 1^st and 2^nd Plaintiffs using the 3^rd and 4^th Plaintiffs being resident in Hong Kong.

40.  The rationale for this rule is, in my view, that co-plaintiffs would be jointly and severally liable to pay costs and thus, a foreign plaintiff should not be ordered to pay security for costs so long as the co-plaintiff would be able to make good the costs order. This rationale does not apply here as between the 2^nd Plaintiff and the 1^st, 3^rd and 4^th Plaintiffs. In any event, as the quote passage explains, this rule is not an inflexible rule but the Court has a discretion considering all the relevant factors. In the light of the risk that the 3^rd and 4^th Plaintiffs may simply remain to help the 1^st Plaintiff to avoid security for costs while they apparently do not have any cause of action and thus may be dropped at any stage, I should treat the Plaintiffs separately in terms of security for costs.

41.  The 1^st Plaintiff is a Japanese limited company resident out of Hong Kong. In relation to its assets within jurisdiction, they are the shares in the 3^rd and 4^th Defendants. However, the value of such assets are difficult to ascertain and such assets are difficult to realise: see Re Charter View Developments Ltd, HCCW 45/2006, 21 December 2006 at §26 Kwan J (as she then was). Therefore, in my view, it is appropriate to order security for costs against the 1^st Plaintiff. However, realistically, given that the 1^st Plaintiff (apparently) does not have any cause of action, the costs incurred by the Defendants against the 1^st Plaintiff should not be substantial up until the first Case Management Conference. I assess it to be HK$100,000 only for each of the 1^st – 2^nd Defendants (as one group) and the 4^th Defendant (as another group).

42.  The 2^nd Plaintiff is also a Japanese limited company resident out of Hong Kong. Its only assets within jurisdiction are also the shares in the 3^rd and 4^th Defendants. For the same reason, there should be security for costs against the 2^nd Plaintiff. The costs in respect of the 2^nd Plaintiff’s claim are more substantial, given that it is the 2^nd Plaintiff who is the owner of the goodwill. While the 2^nd, 3^rd and 4^th Defendants have an additional defence that they are not the joint tortfeasors, I think adopting a broad-brush approach, the costs for each of the Defendants should be the same. I assess it to be HK$400,000 for each of the 1^st – 2^nd Defendants, the 3^rd Defendant and the 4^th Defendant.

43.  For the 3^rd and 4^th Plaintiffs, by virtue of section 905 of the Companies Ordinance (Cap 622), the burden lies upon the Defendants to adduce credible evidence that there is reason to believe that they will be unable to pay the Defendants’ costs: see Lancom Ltd v Capxon International Electronic Co Ltd [2022] HKCFI 381 at §§25-26. The only evidence the Defendants rely upon is their belief that the 3^rd and 4^th Plaintiffs do not have assets within jurisdiction and the Plaintiffs’ response so such evidence of belief that the 3^rd and 4^th Plaintiffs own a company or a business in Hong Kong the value of which is unknown. One may draw adverse inference from the Plaintiffs’ evidence if the Defendants have in the first place adduced some prima facie evidence for the Court to say that the 3^rd and 4^th Plaintiffs would be unable to pay. However, evidence of a mere “belief”, without stating the basis, that the 3^rd and 4^th Plaintiffs would be unable to pay does not constitute such prima facie evidence. In the circumstances, I find that the Defendants fail to discharge their burden under section 905, and therefore dismiss their application against the 3^rd and 4^th Plaintiffs.

44.  I therefore make an order along the lines of §§5-6 of D1-2’s Summons, §§5-6 of D3’s Summons and §§4-5 of D4’s Summons with appropriate amendments to reflect the separate treatment to the Plaintiffs and the assessments mentioned above.

45.  For costs of the applications for security for costs, the 1^st – 2^nd Defendants and the 4^th Defendant succeeded against the 1^st and 2^nd Plaintiff. The 3^rd Defendant succeeded against the 2^nd Plaintiff. The 3^rd Defendant’s withdrawal of the application against the 1^st, 3^rd and 4^th Plaintiffs only during the hearing did not save much costs, if any. The 3^rd and 4^th Plaintiff succeeded in resisting the application. Adopting a broad-brush approach, I make a costs order nisi that there be no order as to costs.

VI.  CONCLUSION

46.  In summary, I have made various orders in §§12, 23, 33, 34, 44 and 45 above.

47.  It remains for me to thank counsel for their assistance.