GEODESIC TECHNOLOGY SOLUTIONS LTD v. AXIS BANK LTD

HCMP 2287/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2287 OF 2013

____________

____________

____________

___________________________

DECISION ON COSTS

___________________________

Introduction

1.  In a decision handed down on 20 December 2013 (“the said decision”), I dismissed the originating summons dated 7 September 2013 with costs to the defendant.  As a result of the defendant’s invitation, I also indicated that this may be a case for considering those costs to be assessed other than on a party-and-party basis: para 39, the said decision.  This decision on costs deals with that issue (after having considered the parties’ respective written submissions).

Background

2.  The background leading to this decision on costs can be found in the said decision (which is the origin of the abbreviated terms used below).  For ease of reference, in short:

(a)   the defendant was the plaintiff’s creditor seeking to obtain satisfaction of the debts owed to it;

(b)   the defendant and the said receivers, appointed in April 2013, managed to locate a significant asset in the form of the credit balance of a bank account in Singapore (“BSI account”);

(c)   court proceeding was commenced by the said receivers in Singapore for the purpose of obtaining debt satisfaction from the BSI account, resulting in the deposit bank in Singapore making an interpleader application there;

(d)   the said application in Singapore was “suspended” because of a dispute raised by the plaintiff regarding the validity of the appointment of the said receivers (which later became of the subject of this action, and was resolved by the said decision).

Present dispute

3.  The present dispute is whether the said costs should be assessed on indemnity basis (as the defendant contends) or on the ordinary basis (as the plaintiff contends).

4.  The relevant legal principles are undisputed. They are various described in the parties’ respective written submissions.

5.  According to the plaintiff, indemnity costs are only appropriate where the case has some “special or unusual feature”, or it was a case “without foundation in law or fact”, or are proceedings conducted in a manner which constitutes an abuse of process or which causes “a proper sense of indignation” or where there has been “deception or underhanded conduct” or brought with an ulterior motive or for an improper purpose or in bad faith or in an improper or oppressive manner (para 3 to 7, plaintiff’s written submissions).

6.  The defendant accepts indemnity costs should be awarded where the proceedings were “scandalous or vexatious”, or had been conducted maliciously, or for an ulterior motive or in an oppressive manner, or where the action was utterly devoid of merit, was doomed to fail and should never have been instituted (para 6 to 7, defendant’s written submissions).

7.  On merits, I already concluded that none of the plaintiff’s arguments has substance (especially para 18, 23 and 24 and 27 to 33, the said decision).  Further, in relation to merits, I observed that:

“… I am inclined to find that the plaintiff’s case is so devoid of merit it may well be [an action commenced with ill motive and nothing more than a delay tactic]” (para 39, the said decision).

8.  Having considered the parties’ respective written submissions, in particular the background leading to this action (see below), I find that this action was probably commenced with ill motive (and was intended to serve as a delay tactic in the sense set out below).

9.  The background referred to above is as follows:

(1)   it should be obvious the March 2011 debenture and the executed May 2012 letter (and the other bank loan documents during the period) formed the records of the parties’ on-going banking relationship at the time.  It is therefore quite contrived to say that the executed May 2012 letter was somehow a self-standing agreement which in effect should “prevail” over that banking relationship;

(2)   that the plaintiff, through its management, has “worked with” the said receivers (albeit apparently not to the defendant’s entire satisfaction: para 9(3), defendant’s written submissions) from about April to September 2013 (time of this action) is strong evidence of the defendant’s recognition of the said on-going banking relationship before late August/early September 2013;

(3)   the relative timing of the Singapore recovery action (August 2013), the Singapore interpleader application (August 2013) (and its hearing (27 August)) and this action (7 September 2013), when considered with sub-para (1) and (2) above, entitles one to infer that this action was intended to obstruct the Singapore interpleader application (if not also the Singapore action).

10.  The plaintiff denies ulterior motive in this action, and argues that, because the BSI account is secured, it would serve no sensible purpose to obstruct the Singapore interpleader application.

11.  The argument only has superficial attraction. Taking into account the amount of the outstanding debt (about US$36 million), and the value of the BSI account (about US$82 million), this action could well be the plaintiff’s opportunistic attempt to challenge the said receivers’ appointment (which would very likely also involve a finding summarized in para 10 of the said decision (which may be of importance to the plaintiff as well)).

Conclusion

12.  The costs awarded on 20 December 2013 should be assessed on indemnity basis.

Costs order

13.  The usual rule that costs should follow the event should also apply to this dispute.  There will accordingly be a costs order that those are to be paid by the plaintiff to the defendant (and to be assessed if not agreed on party-and-party basis.  For this purpose, directions similar to para 40 of the said decision are given (except as regards the basis of assessment)).