SECURITIES AND FUTURES COMMISSION v. ANDREW LIU AND OTHERS

HCMP 2653/2016

[2018] HKCFI 1105

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2653 OF 2016

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D E C I S I O N

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1.  On 9 November 2017, I heard an application by the 8^th respondent, Mr Roger Best, for an order to strike out the petition seeking his disqualification as a director pursuant to section 214(2)(d) of the Securities and Futures Ordinance, Cap 571. On the following day 10 November 2017 I delivered my decision dismissing that application. In [51] of the decision I made an order nisi that Mr Best pays the Securities and Futures Commission’s (“SFC”) costs of the summons with a certificate for two counsel. Mr Best seeks to vary that costs order and asks it to be replaced with an order that the costs of the strike-out application should be costs in the cause of the petition.

2.  The established principles which apply to the award of costs in interlocutory applications post–Civil Justice Reform I do not understand to be in dispute.  A consideration of them is contained in the judgment of To J in Waxman v Li Fei Yu [2013] 6 HKC 424.  After a consideration of the new rules and various authorities, the Judge summarises the position in [20] as follows:

“As for the onus of proof, I think it is the same post-CJR as it was pre-CJR. It must be the successful party’s burden to satisfy the court as to the type of costs order it is entitled. To begin with, the successful party is assisted by the general rule of costs to follow the event. By the mere fact of being successful, the successful party has discharged the evidential burden of showing it is entitled to costs. Thus, effectively, the evidential burden is on the unsuccessful party to adduce sufficient evidence or argument that some other or lesser order is appropriate, such as no order as to costs, costs be to the successful party’s costs in the cause or costs to the unsuccessful party. In the absence of evidence or convincing argument to the contrary, the successful party would also have discharged the legal burden. Costs to follow the event would be the appropriate order to make. If the unsuccessful party is able to discharge that evidential burden, it will be the legal burden of the successful party to show that he is entitled to the costs order which he seeks. In reality, having heard the interlocutory application, it would be quite obvious to the court what costs order would best serve the justice between the parties without relying on the burden of proof.”

3.  Mr Kwan, who appeared for Mr Best, accepted that having failed in his application, Mr Best was prima facie liable to pay the SFC’s costs.  The basis upon which a variation of the costsorder nisi is sought is that Mr Best suggests that it was reasonable for the application to be made.

4.  Mr Kwan accepted that the relevant criteria that he was advancing for departing from what in practice is the normal order in the circumstances could be formulated as follows: whether or not the application was made reasonably is to be assessed by considering whether or not the decision to make it was within the bounds of advice that adequately instructed lawyers, applying established principles, might correctly give.  Mr Kwan argued that if that is the correct approach it is satisfied in the present case.

5.  I do not accept that that is the correct approach.  An assessment of whether or not it was reasonable for the application to be made would seem to me to necessitate of itself an independent assessment of the strength of an application or opposition to an application, and would simply be an invitation for parties to embark on peripheral applications which would only add time and expense to legal proceedings.  It seems to me that generally where an interlocutory application has been clearly determined in one party’s favour, then almost invariably the successful party will be entitled to its costs, and that it will only be in unusual circumstances that there will be reason for the court to order differently and for there to be any justification in a party inviting the court to undertake a review of the application and the circumstances in which it came to be made.  Parties should be advised that this is the basis on which costs will be ordered and assess whether or not to instruct an application to be made or opposed on this basis.

6.  I therefore will not vary my original costs order.

7.  Mr Ambrose Ho SC, who appeared with Mr Jeff Chan for the SFC, has asked for the costs of this application to be ordered on an indemnity basis.  I will not make that order.  I will simply order that Mr Best pays the SFC’s costs with a certificate for one counsel forthwith.  I would however note, that it does not seem to me that there is much, if any, substance in this application, and that if a further application is to be made in these or other proceedings on the same, in my view, misconceived basis, I might be more inclined to order indemnity costs.