XIE LI XIN v. LAW KA YAN, THOMPSON AND OTHERS

HCA 1476/2017

[2022] HKCFI 3604

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1476 OF 2017

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D E C I S I O N  O N  C O S T S

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A.  INTRODUCTION

1.  This application relates to part of the costs of the plaintiff’s application by way of Summons filed on 23 May 2022 (the “Application”), and in relation to the Order of this court dated 2 June 2022 (the “Order”).

2.  The Application was taken out so that the plaintiff would be allowed to disclose and/or make use of information contained in Schedule 1 to the Order for the purpose of, inter alia, protecting his interests in certain legal actions brought by or against the 1^st defendant and his family members/entities (the “D1 Entities”).  Costs insofar as they relate to the documents referred to at paragraph 2 of the said Schedule 1 (the “D1 Affirmations”) were, pursuant to paragraph 4 of the Order, ordered to be determined on paper after “the result of the Charging Order Absolute applications in (1) HCA 1506/2020; (2) HCA 1770/2020; (3) HCA 1771/2020; (4) DCCJ 4644/2020; (5) DCCJ 4678/2020; and (6) DCCJ 4707/2020 are known”.  These will be referred to in this Decision as the “HC Actions”, “HC Applications”, “DC Actions”, and “DC Applications”.

3.  By way of background, the plaintiff succeeded in this action and obtained Judgment against, inter alios, the 1^st defendant on 30 May 2022 (the “Judgment”).  The 1^st defendant’s family members and family companies (the “D1 Family Plaintiffs”) had commenced the HC Actions and the DC Actions (and also other legal actions) against the 1^st defendant and the D1 Entities allegedly for the repayment of debt, and the 1^st defendant and the D1 Entities allowed judgment on all those claims to be entered by default, resulting in the HC Applications and DC Applications being made against the 1^st defendant and the D1 Entities, so that the D1 Family Plaintiffs may obtain charging orders absolute over the 1^st defendant’s assets and “unjustified priority over [the plaintiff]” (see §181(3) of the Judgment).

4.  By the Order, this court granted leave to the plaintiff to make use of the D1 Affirmations for the above purpose.  The plaintiff wished to obtain leave to do so because these affirmations would demonstrate the fact that the 1^st defendant is in fact insolvent, and hence the HC Applications and DC Applications should not be granted.

B.  OUTCOME OF HC APPLICATIONS AND DC APPLICATIONS

5.  The Order was granted on 2 June 2022, and on 7 June 2022 the plaintiff took out summonses in the HC Actions for leave to adduce the D1 Affirmations (the “Evidence Summonses”), and they were served on the D1 Family Plaintiffs’ solicitors on the same day.

6.  By letter dated 8 June 2022, the D1 Family Plaintiffs’ solicitors confirmed that “in light of [the 1^st defendant’s] insolvency”, the D1 Family Plaintiffs would not be pursuing the charging order application in HCA 1506/2020, one of the three HC Applications, which was made against the 1^st defendant personally.  The D1 Family Plaintiffs accepted that charging orders should not be made against the 1^st defendant in light of his indisputable insolvency, but took the view that the other two HC Applications were against a company of which the 1^st defendant is a shareholder/director, and the 1^st defendant’s insolvency was irrelevant in respect of those HC Applications.

7.  At the hearing of the HC Applications on 15 June 2022, Master Kent Yee dismissed all three HC Applications, and granted leave to the plaintiff to file the D1 Affirmations in the form as annexed to the Evidence Summonses, with costs to the plaintiff.  Master Kent Yee remarked that he had serious doubts about the genuineness of the claims in the HC Actions, and found that the insolvency of the 1^st defendant was, on its own, a sufficient basis to dismiss all the HC Applications.

8.  Immediately after the above hearing, the plaintiff’s solicitors wrote to invite the D1 Family Plaintiffs to enter into consent summonses to dismiss the DC Applications (as the 1^st defendant was the defendant to all the DC Actions/DC Applications, and there was no chance for the D1 Family Plaintiffs to succeed in the DC Applications after the outcome of the HC Applications).  The relevant D1 Family Plaintiffs agreed and consent summonses were entered into for the DC Applications to be dismissed with costs to the plaintiff.  Orders in term were made by Deputy District Judge Joseph Vaughan on 27 June 2022.

C.  DECISION ON COSTS

9.  The plaintiff submits that he is entitled to the costs of the Application, on an indemnity basis, against the 1^st defendant.

10.  This court had wished to consider the outcome of the HC Applications and DC Applications before deciding on the question of costs.  Now that the plaintiff has resoundingly and unquestionably succeeded, I agree there is no reason why costs of the Application should not follow the event.

11.  As regards the basis of costs assessment:

(1)  This court had ordered the 1^st defendant (and other defendants) to bear the plaintiff’s costs of this action on the indemnity basis, given that the 1^st defendant (and other defendants “closely connected if not controlled by [the 1^st defendant]”) had “conducted this action in an unattractive way”, wasting “considerable time and costs” (§§217-221 of the Judgment).

(2)  It is the plaintiff’s case that the D1 Family Plaintiffs were acting in concert with the 1^st defendant and the D1 Entities in taking out the HC Applications and DC Applications - that they are but a scheme for the 1^st defendant to render himself judgment-proof.  The plaintiff has every reason to believe that the 1^st defendant was trying to abuse the court process to circumvent the injunction order he is subject to.  At the hearing before Master Kent Yee, the learned Master agreed that he had serious doubts about the genuineness of the claims in the HC Actions.

(3)  I accept that the HC Applications and DC Applications are really just another part of the 1^st defendant’s fraud and (to put it very mildly) “unattractive” conduct of this litigation designed to waste time and costs - the plaintiff has indeed incurred significant costs in intervening in the HC Applications and DC Applications.

12.  For all the above reasons, I agree that the plaintiff, who has successfully intervened in the HC Applications and DC Applications, by reason of, inter alia, the information he was able to deploy by virtue of the Order, should be entitled to indemnity costs against the 1^st defendant, who had not only defrauded the plaintiff in the first place, but also subsequently concocted the plan to defeat the plaintiff’s attempts to go after him for his assets through the HC Applications and DC Applications so as to allow his own family to obtain “unjustified priority” over the plaintiff.

13.  The Statement of Costs lodged by the plaintiff states all of the plaintiff’s costs incurred in relation to the Application.  As this court only decided to allow the costs in relation to one out of two categories of items sought to be disclosed through the Application (as per paragraph 2 of the Order), this court will treat HK$118,503.00 (ie, 50% of the total costs in the Statement of Costs) as the total amount of the costs claimed by the plaintiff under paragraph 3 of the Order.  Taking a necessarily broad-brush approach, I would summarily assess such costs at HK$110,000.00.