GIANT HARVEST LTD v. NAN HAI CORPORATION LTD AND ANOTHER

HCA 2072/2018, HCA 2560/2018 & HCA 2632/2018

[2026] HKCFI 3597

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2072 OF 2018

ACTION NO. 2560 OF 2018 &

ACTION NO. 2632 OF 2018

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DECISION ON COSTS

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Introduction

1.  This court handed down its Judgment after trial on 27 April 2026.  

2.  There were 5 major issues for trial. In summary, this court concluded as follows.

(a)     On Issue 1, the Plaintiff is entitled against the Nan Hai Parties jointly and severally to the sum of US$37,434,469 as calculated under clause 6.5(b) of the SPA together with contractual interest at 0.02% per day from 26 July 2018 until judgment.

(b)     On Issue 2, the Plaintiff is entitled against the Nan Hai Parties jointly and severally to the sum of RMB3,010,000 being the Yabao Settlement Sum together with interest at the prevailing HSBC prime rate plus 1% from 20 April 2018 until payment on 26 March 2025.

(c)     On Issues 3 and 4, True Vision is entitled against the OSGH Parties jointly and severally to the sum of RMB294,500,000, being the Compensation Amount minus RMB85,500,000 ie the agreed commercial value of the Shanghai Xinghui Cinema together with interest at the prevailing HSBC prime rate plus 1% from 11 October 2018 until judgment.

(d)     True Vision is entitled to set off the sum of RMB294,500,000 together with interest as claimed against the sum of US$37,434,469 together with interest as claimed.

(e)     On Issue 5, True Vision is not entitled to any part of the Damages Amount for failing to prove the Plaintiff was in breach of any of the warranties, representations and/or undertakings pursuant to clauses 7.1(b) and (d) as well as clause 10.1 of the SPA.

3.  It can be seen from the Judgment that each side has partially succeeded or failed, as the case may be, which is not unusual in a complex commercial case like this.

4.  At paragraph 283, this court directed that in the absence of agreement within 14 days, the parties shall exchange and lodge with the court their written submissions on costs of the Actions (not exceeding 3 pages) for the court’s consideration. Unless otherwise directed, costs will be disposed of on paper.

Deliberation

5.  In the OSGH Parties’ cost submissions, the proper costs order for the Actions (including all reserved costs) should be for the Nan Hai Parties to pay them 60% of their costs of the Actions with certificate for 3 counsel.

6.  In the Nan Hai Parties’ submissions, the proper costs order for the Actions (including all reserved costs) should be for the OSGH Parties to pay them 75% of the costs of the Actions, with certificate for 2 counsel.

7.  Normally it is needless to say this, but somehow part of it is omitted in one set of costs submissions or the other, all costs should be taxed if not agreed, and paid forthwith.

8.  The first point to make is that at the end of the day, after the parties had done their arithmetic calculations and after the set-off between what each side is entitled to, True Vision is entitled to a judgment sum of over RMB30 million against the OSGH Parties (and naturally be paid that judgment sum).

9.  The second point to make is that costs should follow the event, except where it appears to the Court that some other order should be made: RHC O 62 r 3. RHC O 62 r 5 sets out certain special matters that the Court shall take into account when exercising its discretion as to costs.

10.  The relevant legal principles were set out in this court’s Judgment in Sunni International Ltd v Kao Wai Ho Francis [2025] HKCFI 5526 at [16]-[19] cited by the OSGH Parties and should not be controversial. For the present purpose, the OSGH Parties have highlighted the following points in their submissions:

(a)     After the CJR, the Courts are more ready to depart from the traditional starting point of costs following the event.  All relevant circumstances including inter alia the underlying objectives, the parties’ conduct, the relative success or failure of the parties should be taken into account.

(b)     Relevant conduct may include (i) the reasonableness and manner in which a party raises, pursues or contests an issue (ii) whether a party succeeds on a claim in whole or in part or has exaggerated his claim (iii) conduct before and during proceedings.

(c)     A successful party may nevertheless be deprived of the whole or part of its costs.  It is not necessary to show it has acted unreasonably or improperly in raising an issue. That the failed allegation has caused an increase in length or costs of proceedings (i.e. an increase that is more than a trifling proportion of the total costs) may suffice.  Even if there is no such increase, the successful party may be deprived of costs where some claims failed due to lack of evidential support as naturally little time and costs would be spent on such hopeless claims.

(d)     The corollary of the above is that the issue-based approach should not be narrowly interpreted (i.e. only if an issue is so distinct and separate in itself that the decision of it constitutes an event). 

11.  The third point to make is that, given each side partially succeeded/ failed, instead of making cross-orders with separate assessments of costs attributable to the claims and counterclaims, the Court may make a single overall order of costs in favour of the overall successful party, subject to a percentage deduction. For this purpose, the court will take a broad brush approach: Ho Lai King v Kwok Fung Ying [2020] HKCA 763 at [14] - [15] and [21]. That case is cited by the Nan Hai Parties to justify, on the facts of this case, there should only be a small percentage deduction of the costs to be awarded to them.

12.  The parties’ analysis and what this court considered to be critical submissions have been set out in:

(a)     Paras 3 to 8 of the OSGH Parties’ submissions on their contentions that (i) the Plaintiff had succeeded on Issues 1, 2, and 5, as well as Issue 4 regarding the Shanghai Xinghui Cinema; (ii) the Nan Hai Parties’ stance on Issues 2 and 5 were wholly devoid of merit and that time and costs were unnecessarily wasted both before and during the trial.

(b)     Paras 8 to 15 of the Nan Hai Parties’ submissions in which their main contention is that the central battleground in this case concerned (i) the MIXC Compensation and the Substitute Cinemas regime ie whether the non-renewal of the MIXC Lease triggered the liability for the Compensation Amount; whether the OSGH Parties could rely on the alleged Substitute Cinemas to reduce the Compensation Amount – in other words, whether the Beijing Great Wall Cinema, the Shenzhen Xinghui and the Shanghai Xinghui Cinemas qualified as such; and if so, what set-off followed.  On that central battleground, the Nan Hai Parties succeeded in substance in several key areas under Issues 3 and 4.

13.  Those submissions have been considered in full and need not be repeated here verbatim. The relevant pleadings and evidence, as well as the submissions below and the court’s own notes, have also been reviewed.

14.  Taking a broadbrush approach, in this court’s view, while every issue in this case, factual or legal, consumes time, this court agrees that the most time-consuming parts of these Actions concern Issues 3 and 4. Nevertheless, Issues 1 and 2, which the Plaintiff succeeds, also unnecessarily consumes the Court’s time and the parties’ costs.   This court will assess costs of the Actions accordingly.

Disposition and costs

15.  There shall be an Order that the OSGH Parties do jointly and severally pay the Nan Hai Parties 60% of the costs of the Actions (including all costs reserved), with certificate for 2 Counsel, to be taxed if not agreed and paid forthwith.

16.  Costs of the submissions on costs themselves are to be paid by the OSGH Parties to the Nan Hai Parties, on the basis that costs should follow the event. This is nisi. If any party wishes to vary it, it should follow the normal legal procedure with the usual costs consequences.