CHENG KA YAN AND OTHERS v. GRAND XI INVESTMENTS PTE. LTD AND OTHERS

HCA 1607/2022

[2024] HKCFI 1577

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1607 OF 2022

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DECISION

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Introduction

1.  By summons dated 8 May 2024 (“the Summons”), the 2^nd, 3^nd, 4^th, 5^th and 7^th Defendants (collectively “Ds”) apply for a variation of the costs order nisi made by this court in the Decision dated 30 April 2024 (“the Striking Out Decision”) whereby this court granted Ds’ application to strike out the claim of the 1^st, 2^nd and 3^rd Plaintiffs (collectively “Ps”) and to dismiss their action with costs, to be taxed if not agreed. Simply put, Ds now want their costs to be taxed on indemnity basis.

2.  Unless otherwise stated, in this Decision, this court shall adopt the abbreviations used in the Striking Out Decision.

3.  By a Consent Order dated 28 May 2024, the Summons is directed to be determined by paper disposal. It is further directed that Ds should file and serve their skeleton arguments in support of the Summons and then Ps should file and serve their skeleton arguments in opposition within 7 days thereafter. It is expressly provided that there be no further submissions without leave and there be liberty to apply.

4.  After Ps have filed their skeleton arguments on 7 June 2024, by a letter dated 18 June 2024, Ds made an application for leave to file their skeleton arguments in reply dated 17 June 2024. Ps’ solicitors immediately indicated their objection by a letter of the same date.

5.  I have read the reply skeleton of Ds. It genuinely serves as a reply submission, which an applicant is normally entitled to make. I grant leave for Ds to file and serve their skeleton arguments in reply accordingly.

Relevant legal principles

6.  The law relating to indemnity costs is well-settled and both Mr Law SC for Ds and Mr Kok for Ps refer to Town Planning Board v Society for Protection of Harbour Ltd (No.2) (2004) 7 HKCFAR 114. The following guidance given by Li CJ at §§15-18 is instructive:

(1)  The courts in this jurisdiction have repeatedly emphasised 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”, see also Libertarian Investments Limited v Thomas Alexej Hall, FACV 14/2012, unreported, 11.3.2014 (§15);

(2)  The courts have rejected the proposition that an award of indemnity costs will only be made where a case has been brought with an ulterior motive or for an improper purpose or where there is some deception or underhand conduct on the part of the losing party (§16);

(3)  Courts have emphasised the undesirability of attempting to define the circumstances in which orders for indemnity costs are to be made. It has been said that

“…the discretion is not to be fettered or circumscribed beyond the requirement that taxation on an indemnity basis must be ‘appropriate’.”

(Macmillan v. Bishopsgate Investment Trust Ltd, per Millett J; Sung Foo Kee Ltd v. Pak Lik Co. (A Firm) at 575E-576F, per Godfrey JA; see also Choy Yee Chun v. Bond Star Development Ltd at 1334G-1335I, per Stock J) (§17).

(4)  In relation to the award of costs generally, it has been accepted, as Chu J pointed out, that while

“…the grounds [upon which costs are awarded] must be connected with the case. This may extend to any matter relating to the litigation and the parties’ conduct in it, and also to the circumstances leading to the litigation, but no further.” (emphasis supplied)

(Scherer v. Counting Instruments Ltd [1986] 1 WLR 615 at 621F, per Buckley LJ). There is no reason why this statement does not apply with equal force to the exercise of the discretion to award indemnity costs (§18).

7.  Mr Law advances three main grounds for Ds’ application. First, he submits that Ps’ claims and defences to counterclaim were rejected by this court as not only hopeless but also absurd. This court said that they were wholly devoid of merits.

8.  Secondly, Mr Law points out that Ps saw fit to re-run their arguments after they were repeatedly rejected by DHCJ Le Pichon. This alone justifies indemnity costs: Yifung Properties Ltd v Manchester Securities Corp. HCA 1341 and 1359/2014, unreported, 17.11.2014 at §41 per Au Yeung, J.

9.  Thirdly, Mr Law submits that Ps’ resistance to the summons of Ds is desperate and completely misconceived, their reliance on the transcripts is the prime example.

10.  I do not find any merit in the first ground. The strong feeling about the Ps’ case that I expressed in the Striking Out Decision only explained my conclusion that the high threshold of a striking out order was met and nothing more. I find no special or unusual feature in the conduct of Ps or their case that may be suggestive of indemnity costs.

11.  An order for indemnity costs is not necessarily concomitant of a striking out order: Kao, Lee & Yip (a firm) v Midland Realty International Ltd (HCA 2153/2007, unreported, 31.3.2010) per DHCJ Lisa Wong SC (as she then was).

12.  The second ground is stronger. Indeed, Ps ran very similar, if not identical, arguments in the present application which had been empathetically rejected by DHCJ Le Pichon in a previous interlocutory application. This court indeed made extensive references to and derived considerable assistance from the decision of DHCJ Le Pichon in my disposal of Ps’ arguments.

13.  It must be accepted that mere re-arguments are not enough to justify an indemnity costs order: Golden Sand Marble Ltd v Hsin Chong Construction Co Ltd [2005] 1 HKLRD 598. Though Golden Sand involved an appeal from an arbitration award, the observations made by Recorder Fok SC (as he then was) should be of general application. Here, Ps failed to resist Ds’ application for an interlocutory injunction application before DHCJ Le Pichon. In dealing with the striking out application, which would be determinative of the fate of their claim summarily, it is understandable that Ps would try again with their old arguments when the test was different and the threshold was much higher. They did nothing disgraceful or contemptuous. Nor can it be said that their resistance was an abuse of the process of the court.

14.  Furthermore, in the present application, Ps adduced evidence to the effect that RC had orally promised to assist them by way of testifying for them at trial. I did not reject this assertion. I merely found the oral promise of RC alone could not help Ps. However, given the alleged promise of RC, Ps might have a valid reason to resist the striking out application in the hope that there would be a trial subsequently and RC would keep his promise to testify for Ps on their case of an oral collateral contract rejected by DHCJ Le Pichon.

15.  I agree with the submission of Mr Kok that Yifung involved a very different situation. There, Au Yeung J concluded that the defendants should have indemnity costs because (1) the plaintiffs had made a desperate re-run of the arguments which had been dismissed by her Ladyship in an interlocutory injunction application and (2) the plaintiffs had revived abandoned points: see §§38 and 41 of Yifung. The three main points were rejected on legal grounds and were found to be even unable to raise a serious question to be tried for the purpose of the plaintiffs’ application for interlocutory injunctions. There was nothing the plaintiffs could do to improve their position in the subsequent application for striking out their claim.

16.  The facts of the present case are a far cry from that of Yifung. At least, Ps sought to rely on an oral promise of RC additionally to make their case of a collateral contract appear to be more plausible and credible.

17.  The third ground has no merits. I do not find there was any special or unusual in Ps’ unsuccessful resistance to Ds’ striking out applications. Their arguments were hopeless on the evidence and their reliance on the Transcripts was misplaced. These conclusions, without more, led to my grant of the striking out order only. I did not find anything untoward in the conduct of Ps which would prompt me to consider indemnity costs.

18.  I have considered all other matters in the skeleton arguments of Mr Law. I do not think that those matters, singularly or cumulatively, could justify an indemnity costs order.

Conclusion and order

19.  For the reasons given, I do not think that I have good grounds to exercise my discretion to order indemnity costs. The Summons should be dismissed and I so order.

20.  There is no reason why costs should not follow the event. Ds should pay Ps’ costs of the Summons including all the costs reserved, to be taxed if not agreed.

21.  It remains for me to thank Mr Law and Mr Kok for their helpful assistance in this matter.