PEKING UNIVERSITY RESOURCES (HOLDINGS) COMPANY LTD v. PEKING UNIVERSITY RESOURCES GROUP CO., LTD AND OTHERS

HCA 1470/2022

[2025] HKCFI 3799

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1470 of 2022

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DECISION ON COSTS

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1.  On 23 June 2025, I dismissed the Plaintiff’s appeal against the decision of Master MK Liu dated 14 August 2024, where the learned Master (i)  ordered that the leave to issue the concurrent amended writ of summons herein out of jurisdiction against the 1^st, 2^nd and 4^th Defendants be set aside; and (ii)  declared that the court in Hong Kong has no jurisdiction over the 1^st, 2^nd and 4^th Defendants.

2.  For the reasons set out in my Decision dated 23 June 2025 (see [2025] HKCFI 2642)[1], I held that:-

(1)  The Plaintiff failed to raise a serious issue to be tried (see paragraphs 26 to 60);

(2)  None of the gateways under Order 11, rule 1 was available (see paragraphs 61 to 88);

(3)  Hong Kong was not the natural forum for resolving the disputes between the parties, and Beijing No 1 Intermediate People’s Court was distinctly the more appropriate forum (see paragraphs 89 to 119); and

(4)  The Plaintiff was guilty of material non-disclosure (see paragraphs 120 to 133). 

3.  In paragraph 148 of my Decision, I made a costs order nisi that the Plaintiff should pay the 1^st, 2^nd and 4^th Defendants’ costs in respect of the appeal to be taxed if not agreed on a party-to-party basis (with certificate for 2 counsel). 

4.  By summons dated 7 July 2025, the 1^st, 2^nd and 4^th Defendants applied to vary my costs order nisi.  They contended that costs should be taxed on an indemnity basis as the Plaintiff conducted these proceedings in an improper, abusive and irrational manner.  

5.  Pursuant to my directions on 18 July 2025, Mr Norman Nip SC and Mr Clark Wang (for the 1^st, 2^nd and 4^th Defendants)  and Mr Ernest Ng (for the Plaintiff)  have respectively filed written submissions, which I have considered.

6.  It is trite that the court has an unfettered discretion to order indemnity costs when some special or unusual features are present.  The legal principles are set out in Town Planning Board v Society for Protection of the Harbour Ltd (No 2) (2004)  7 HKCFAR 114.  In paragraph 15, Li CJ, referring to Overseas Trust Bank v Copper & Lybrand (a firm)  & Ors [1991] 1 HKLR 177 at p.182J; and Sun Foo Kee Ltd v Pak Lik Co (a firm) [1996] 3 HKC 570 at p.575C-D, pointed out that:-

“…the successful party should show, in order to obtain an order for costs on an indemnity basis, that the case has some ‘special or unusual feature’…” (emphasis added)

7.  For the reasons set out in my Decision, I am of the view that the factual background of the present case was complicated, and the Plaintiff’s case was weak.  However, whilst I did not accept the contentions advanced by the Plaintiff’s legal representatives,  I am not inclined to the view that these contentions were so unmeritorious and outrageous that they constituted an abuse of the court’s process.  It appears to me that in light of the factual and legal complexity involved, the Plaintiff simply failed to come up with the correct analysis.  This is not uncommon in civil litigations.  I am also not of the view that the Plaintiff’s claims in these proceedings were pursued with some malicious or ulterior motive.   

8.  I also disagree with the 1^st, 2^nd and 4^th Defendants’ suggestion that the Plaintiff conducted these proceedings in an oppressive manner, such that an order for indemnity costs is warranted on such a basis.  In this connection:-

(1)  The Plaintiff sought to amend its statement of claim at a late stage of the proceedings.  It appears to me that the proposed amendments were an attempt to persuade the court that the Plaintiff would be in a position to ameliorate its case when the proceedings develop further.  For the reasons explained in paragraphs 137 and 138 of my Decision, I was of the view that the proposed amendments were incapable of (i)  changing the goalposts; and (ii)  remedying the defects in the Plaintiff’s case. However, I am not of the view that the Plaintiff’s conduct was entirely irrational and/or abusive, and I do see the strategic purpose that the Plaintiff tried to achieve.  

(2)  A few workdays prior to the hearing on 14 August 2024 before the Master, the Plaintiff made an application for adducing new expert evidence.  This was obviously undesirable and the learned Master, in exercising his case-management powers, dismissed the application with costs.  In my view, this matter had been dealt with by the learned Master already, and he duly took into account the Plaintiff’s conduct when he exercised his discretion as to costs. 

9.  I now address the 1^st, 2^nd and 4^th Defendants’ contention based on the Plaintiff’s material non-disclosure:-

(1)  The Plaintiff failed to discharge the duty to make full and frank disclosure, in that it failed to address Master Leung as to (i)  the application of the rule against reflective loss; (ii)  the fact that the statement of claim does not identify any wrongdoings on the part of the Defendants in relation to the Boya Plaza Project Claim; and (iii)  the central role played by the Administrators in the Corporate Restructure: see paragraphs 123 to 130 of my Decision.  

(2)  Based on the materials available, I am unable to conclude whether the Plaintiff and/or its legal representatives sought to mislead Master Leung deliberately.  Bearing in mind the technical nature of the subject matters and the factual and legal complexity involved, I cannot rule out the possibility that the Plaintiff and/or its legal representatives simply failed to take adequate steps to consider, analyze and understand their case and the defects thereof[2].  

(3)  Be that as it may, whilst the material non-disclosure might or might not be deliberate, it was still inexcusable and egregious.  As pointed out in paragraph 120 of my Decision, the duty to make full and frank disclosure is one of utmost or highest good faith: see Fong Chak Kwan v Ascentic Ltd [2020] HKCFI 679 at para 59 (per Marlene Ng J).  

(4)  In the premises, it is important for litigants and their legal representatives to honour and discharge such a duty seriously and they should carefully consider the viability of their case.  In particular, in a complicated case (like the present one), the court relies on the party making the ex parte application when the opposing party has no opportunity to be heard. In my view, the latitude on the part of the Plaintiff was plainly inexcusable.

10.  Whilst the 1^st, 2^nd and 4^th Defendants also succeeded on the points on serious issues to be tried, gateways and forum conveniens, I would have anyhow set aside the leave granted by Master Leung on the ground of material non-disclosure alone (and I would not have re-granted leave in favour of the Plaintiff given the seriousness of the breach of duty on its part).

11.  However, I take into account that the contentions advanced by the Plaintiff in relation to the issues on serious issues to be tried, gateways and forum conveniens were not so unreasonable and unmeritorious that the Plaintiff should be sanctioned on such basis.

12.  Having considered all the circumstances, including (i)  the nature and seriousness of the breach of duty on the part of the Plaintiff; (ii)  the importance of discharging the duty of making full and frank disclosure with circumspection; and (iii)  the general conduct of the Plaintiff in this litigation, in the round, I am of the view that it would be fair to order the Plaintiff to pay the 1^st, 2^nd and 4^th Defendants’ costs in respect of the appeal on a common fund basis.

13.  In the premises, I vary my costs order nisi and make a costs order absolute that the Plaintiff do pay the 1^st, 2^nd and 4^th Defendants’ costs in respect of the appeal to be taxed on a common fund basis if not agreed (with certificate for 2 counsel). This costs order reflects the court’s disapproval of the Plaintiff’s litigation conduct at the ex parte stage (for which counsel who were involved in these proceedings were not responsible).

14.  As regards the costs of the present application, I make a costs order nisi that costs be to the 1^st, 2^nd and 4^th Defendants to be taxed on a common fund basis if not agreed (with certificate for 1 counsel).

15.  I thank Mr Norman Nip SC, Mr Clark Wang and Mr Ernest Ng for their helpful assistance.