AIG INSURANCE HONG KONG LTD v. LYNN MCCULLOUGH AND ANOTHER

HCMP 2216/2018

[2019] HKCFI 2040

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2216 OF 2018

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DECISION ON COSTS

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1.  I gave my decision on the applications in this matter on 3 July 2019. AIG succeeded, and the McCulloughs failed, on substantially all points. On a nisi basis, I held that AIG is entitled to its costs (§105).

2.  On 17 July 2019, the McCulloughs applied for an order that AIG pay its costs on an indemnity basis.  I gave the parties the opportunity to state their respective positions, the latest of which was received on 12 August 2019.  I am grateful to them for their submissions.

3.  It is contended on behalf of the McCulloughs that a costs ordershould be made in their favour because (1) the court in effect discharged andre-granted on a narrower basis the injunction granted on an ex parte basis on 18 December 2018 and the McCulloughs needed to come to court to obtain such discharge, and (2) of the oppressive and unreasonable behaviour of AIG in failing to provide a transcript of the ex parte hearing.

4.  As to (1), the position is that the McCulloughs were seeking the discharge of the injunction altogether—they did not contend for the variation of the injunction.  The terms of the injunction were varied, limiting it to the coverage issue, but the injunction was not discharged, as stated in §97 of the decision.

5.  As to (2), it is clear from the transcript of the call over hearing before Madam Justice Au-Yeung on 4 January 2019 that she felt that AIG should have provided a transcript of the ex parte hearing. Despite the explanation given by AIG, I see no reason to differ from the learned judge in this respect, but while regrettable, this failure subsequently remedied cannot support an application for AIG to pay the costs of the entire matter to date. 

6.  It is evident in the circumstances that the McCulloughs’ claim for their costs cannot succeed.  Nor do I think it correct (as is submitted in the alternative) to order that costs should be in the cause of the appeal (there is an application pending for leave to appeal). 

7.  As the McCulloughs point out, Order 62 stipulates that in relation to interlocutory applications, the principle that costs should normally follow the event is no longer the prescribed usual order but just an option.  I have considered carefully whether to make some reduction to reflect the fact that the terms of the order have been varied by limiting them.  However, I do not think that this would be right—the substance of this dispute is the McCullough’s intent to have the coverage issue determined in Miami without regard to the Hong Kong arbitration clause in the insurance policy.  The matter has been decided against them, and AIG is entitled to its costs.

8.  There should however be no order as to the costs of the call over hearing on 4 January 2019 to mark the court’s disapproval of the failure to provide the transcript of the ex parte hearing on request.