LI LI HONG v. CHEN DI AND ANOTHER

HCA 2091/2024

[2026] HKCFI 2367

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2091 OF 2024

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DECISION

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1.  This is the application of the plaintiff (“P”)  to vary the costs order nisi made by me in the decision in respect of P’s Summons dated 22 November 2024 (“O.14 Summons”)  which was handed down on 29 August 2025 (“the Decision”).

2.  In the Decision, I granted unconditional leave to Ds to defend the action: Decision §170.

3.  The costs order nisi provided that P is to pay (1)  70% of the 1^st defendant’s (“D1”)  costs and (2)  90% of the 2^nd defendant’s (“D2”)  costs of the O.14 Summons (the 1^st and 2^nd defendants collectively referred to as “Ds”), to be taxed if not agreed, with certificate for 2 counsel: Decision §§226-229.

P’s submissions

4.  P seeks to vary this order nisi such that costs of the O.14 Summons would be made in the cause, with certificate for two counsel.

5.  P submits that where such an order is made, the normal costs is for costs to be in the cause: Greater China Capital Inc v GBtimes Ltd [2018] 1 HKLRD 210 at §§12.1-12.2 per Lam VP.

6.  While costs are very much at the discretion of the court, P submits that there is no reason to depart from the normal costs order in the present case.

7.  Mr David Chen for P submits, firstly, that there is and can be no dispute that the preliminary requirements set out in Order 14 rules 1-2 of the Rules of the High Court (“RHC”)  have been satisfied, and P’s application for summary judgment falls within O.14 of RHC.

8.  Second, P submits that P did not know of D’s defences to P’s claims when P issued the O.14 Summons. 

9.  The following timeline of the case has been highlighted by Mr Chen in his written submissions:-

(1)  the writ was issued on 18 October 2024;

(2)  the statement of claim was filed on 4 November 2024;

(3)  the O.14 Summons was issued on 22 November 2024;

(4)  after multiple time extensions, Ds eventually filed their respective affirmations in opposition of the O.14 Summons on 10 February 2025, which was almost 3 months after the O.14 Summons was issued; and

(5)  Ds’ defences were revealed for the first time in their evidence in opposition.

10.  Third, P submits that the costs incurred with the O.14 Summons will not be wasted.  In particular, Mr Chen submits that Ds’ evidence in opposition could be used by Ds’ legal team to prepare their respective (1)  defences; (2)  list of documents; and (3)  witness statements.  In other words, P submits that the time and costs arising from Ds’ legal teams taking instructions from Ds, reviewing the relevant underlying documents, drafting the defences, preparing the list of documents and drafting witness statements will be saved because the work has already been done when the legal teams prepared Ds’ comprehensive evidence in opposition of the O.14 Summons.  Mr Chen says that Ds’ costs have been “front-loaded”, not wasted.  

D1’s submissions

11.  Ms Astina Au for D1 submits that as the length and detailed analysis in the Decision makes clear, this is not a straightforward dispute amongst the parties – especially bearing in mind the history of dealing dating back to 2018 (Decision §10)  and the significant amount claimed (Decision §38),

12.  In those circumstances, Ms Au submits that even D1 only filed his affirmation in opposition in February 2025 to particularise his defence, P ought to have appreciated that there were likely to be factual disputes between the parties and that this would not be a suitable case for summary judgment with its high threshold. This was ultimately what the court found in the Decision, in dismissing the O.14 Summons and granting unconditional leave to defend.

13.  In Fairmile Consultants Ltd v Esquel Enterprises Ltd [2020] HKCFI 253 (where a defendant was also granted unconditional leave to defend after an unsuccessful summary judgment application), DHCJ Le Pichon noted at §§8-9 that where at least after the evidence in opposition was filed the plaintiff was “left in no doubt of the factual dispute of the parties giving rise to triable issues”, absent good reason for continuing with the application the plaintiff should be ordered to bear costs incurred by the defendant thereafter. After all:-

“… a plaintiff who starts O.14 proceedings believing that the defendant has no defence should be advised, as soon as a credible defence is shown, to give up trying to obtain summary judgment: to do so otherwise is simply to waste time and money.”

14.  Yet, P in this case continued pressing on despite having seen D1’s evidence in opposition. Ms Au submits that even if the court were to give some leeway to P (in that P was not fully cognizant of all the triable issues until Ds filed their evidence in opposition), that has already been reflected in the court’s discount on the costs awarded. In the premises, Ms Au submits that D1 is entitled to his costs as the clear winner on the O.14 Summons, having demonstrated various triable issues and factual disputes that make clear P’s approach was misplaced.

15.  Further, D1 submits that P’s proposal for costs in the cause is effectively trying to kick matters down the road, especially when he seeks to argue that costs have been “front-loaded” but not wasted. In this regard, §§10-11 of Fairmile (supra) quoting from The Liquidator of Wing Fai Construction Company Ltd (compulsory liquidation)  v Yip Kwong Robert (No. 2) [2012] 15 HKCFAR 454, where Ribeiro PJ stated that costs in the cause might lead to “procedural laxity and a damaging proliferation of interlocutory or satellite litigation”, given that the lack of immediacy of orders to pay costs weakens costs as a sanction against unwarranted applications.

16.  In the aforestated premises, D1 submits that the costs order nisi in D1’s favour was an appropriate outcome given the shape of D1’s case as set out in the evidence, striking a balance between the court’s rejection of one particular defence raised by D1 whilst at the same time reflecting P’s unwarranted application for summary judgment (which was fought till the bitter end without good reason): Decision §§227-228.

D2’s submissions

17.  Mr Au Lut Chi for D2 submits that the court is perfectly entitled to exercise its direction to depart from the “normal” costs order, having regard to the weaknesses in P’s application for O.14 and the manner in which it was pursued.

18.  The court is not bound to make the standard order in every case where it grants unconditional leave to defend. In an appropriate case, the court may depart from the standard order. Obviously, whether it ought to do so would depend on the facts of the particular case. The exercise of that discretion in particularly highly fact-sensitive and other decisions involving different sets of facts are seldom of assistance: see the decision of DHCJ Le Pichon in Fairmile (supra), where forthwith costs order was made post-opposition filing where persistence lacked good reason.

19.  Mr Au further submits that the Decision highlights the inherent weaknesses in P’s case, justifying the costs order nisi and militating against variation.  In particular, on the objective construction of the Guarantee, it must be apparent to P before the issue of the O.14 Summons that the maximum guaranteed amount from the Guarantee was “limited to Party A’s (ie P’s)  share of the investment returns as specified in the Guarantee”: Decision §107.   Further, on the discharge of guarantee, P’s unilateral actions (e.g. premature share transfers to Kilmorey, failing due diligence and delaying enforcement)  arguably prejudiced D2 as guarantor, potentially discharging liability (Decision §§157-169), were evident from the transaction history, yet P persisted in the O.14 Summons.

20.  Even in P claims ignorance until Ds’ affirmations on 10 February 2025, P unreasonably persisted thereafter. The affirmations revealed the triable issues in detail, yet P pressed on to a contested hearing on 22 and 23 April 2025.

21.  Further, contrary to P’s submissions, Mr Au submits that the costs incurred are not merely “front-loaded” and reusable without waste. While some evidence may inform defences or witness statements, the O.14 process involved extensive affidavits, skeletons, and a two-day hearing focused on summary disposal, not trial preparation. D2 submits that persisting with a weak application caused unnecessary expenditure in this case.

The Court’s findings

22.  First, having considered the parties’ submissions, I agree with Ms Au for D1 that P ought to have appreciated that given the long history of the dealings between the parties and the significant amount claimed, this might not be a suitable case to apply for summary judgment in the first place.  Further, as highlighted by Mr Au for D2, the findings of the court in the Decision show up the inherent weaknesses in P’s case, casting serious doubt as to whether P should have applied for summary judgment under the O.14 Summons.

23.  In any event, in my judgment, after Ds filed their evidence in opposition on 10 February 2025 (with the extensions agreed by P), it must have been apparent to P that Ds’ defences are eminently arguable.  In my view, P should have, after considering their evidence, stopped proceeding with the O.14 Summons as soon as possible: see Fairmile Consultants Ltd, supra.  I consider that a reasonable period to make an informed decision after receiving Ds’ evidence in this case should be no more than 2 weeks, ie on or before 24 February 2025.

24.  In my judgment, had P done that, it would have saved the costs of P in filing his reply evidence on 31 March 2025 and for Ds to consider the reply.  It would also have saved the costs for all three parties to instruct leading and junior counsel to prepare and to argue the case over two days on 22 and 23 April 2025 before me.  It is apparent to me that the bulk of the costs for the O.14 Summons have been incurred after the filing of Ds’ evidence on 10 February 2025. 

25.  Second, I do not agree with P’s submission that the bulk of the costs associated with the O.14 Summons is merely “front-loaded” and “reusable”.  In this regard, I agree with Mr Au for D2 that while some evidence may inform defences or witness statements, most of the other costs incurred, including the affidavits filed, skeleton submissions lodged and the two-day hearing focused on the summary disposal, are time and money wasted. Further, I consider that to allow the costs in the cause for the entire O.14 Summons is effectively “kick matters down the road”, something that the court should not approve: see The Liquidator of Wing Fai Construction Company Ltd (compulsory liquidation), supra.   

26.  Third, while recognizing the normal costs order when the court granting unconditional leave to a defendant to defend the action in an O.14 application is for costs to be in the cause, in my view, there exists very strong reasons to depart from the standard order in this case.  

Conclusion

27.  In the aforestated premises, while I am of the view that the costs order nisi in the Decision properly reflects the weaknesses in P’s case and the impropriety of pursuing O.14, instead of using a percentage formula as I had under the costs order nisi at the end of the Decision (Decision §§226-229), I am prepared to vary it to the extend that P should bear the costs of the O.14 Summons after 24 February 2025, with the rest being in the cause.  

28.  Thus, P’s application to vary the costs order nisi to an order that the costs of the O.14 Summons be in the cause with certificate for two counsel is hereby dismissed.  Instead, I will make an order that P should bear the costs of D1 and D2 after 24 February 2025, with the rest being in the cause, such costs to be taxed if not agreed with certificate for two counsel.  

29.  For the costs of this application, I will award costs in favour of Ds, to be summarily assessed.

30.  Since D2 has already lodged his statement of costs with his submissions, D1 is directed to lodge his statement of costs within 14 days from the date of this decision for the court’s summary assessment.