WADDINGTON LTD v. CHAN CHUN HOO THOMAS AND OTHERS

HCA 3291/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 3291 OF 2003

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DECISION

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INTRODUCTION

1.  I have before me the 5^th defendant’s summons filed on 5 December 2014 (“the Summons”) seeking (i) leave to appeal to the Court of Appeal against an order made by Mr Recorder P Fung SC on 26 November 2014 (“the November Order”), and (ii) a stay of execution of the November Order pending the determination of the 5^th defendant’s proposed appeal.  The 5^th defendant’s proposed grounds of appeal are set out in a draft Notice of Appeal annexed to the Summons.  References hereinafter to “Grounds” are references to those in the draft Notice of Appeal.

Background facts

2.  The present action is a multiple derivative action brought by Waddington Limited (the plaintiff), a minority shareholder of Playmates Holdings Limited formerly known as Playmates Interactive Entertainment Limited (the 3^rd defendant), for wrongs allegedly done to and damage suffered by Profit Point Limited (the 5^th defendant). The 5^th defendant is an indirect wholly-owned subsidiary of the 3^rd defendant via Playmates International Limited (the 4^th defendant).  The main protagonists in this action are two brothers, Mr Albert Chan (the person in control of the plaintiff) and Mr Thomas Chan (the 1^st defendant).

3.  After a contested trial lasting some 12 days, the learned Recorder handed down a judgment on 18 December 2013 (“the Judgment”) in favour of the 5^th defendant against the 1^st defendant in the sum of HK$33,511,220.32.  The learned Recorder also directed the parties to file written submissions on (inter alia) the issues of interest and costs which, as indicated at paragraph 136 of the Judgment, were to be dealt with on paper without any hearing.

4.  On 15 January 2014, the 1^st defendant filed a Notice of Appeal in CACV 10/2014 (“the Main Appeal”) against the Judgment.  The plaintiff filed a Respondent’s Notice and a Respondent’s Supplementary Notice on 5 February 2014 and 3 June 2014 respectively.

5.  In the meantime, on 10 March 2014, the learned Recorder, following consideration of written submissions from the plaintiff and the 5^th defendant, delivered a written ruling on interest and costs (“the March Ruling”) and made the following order (“the March Order”):-

(1)   the 1^st defendant do pay to the 5^th defendant simple interest at the rate of 2.5% per annum on the judgment sum of HK$33,511,220.32 from 28 September 2000 until the date of judgment (ie 18 December 2013);

(2)   the 1^st defendant do pay into court the judgment sum together with interest thereon within 21 days from the date of the March Order;

(3)   the 1^st defendant do pay to the plaintiff the costs of this action to be taxed on the common fund basis, if not agreed;

(4)   there be certificate for three counsel;

(5)   the 5^th defendant do indemnify the plaintiff in respect of any costs incurred by the plaintiff which it will not have been able to recover from the 1^st defendant (“the Shortfall”);

(6)   the parties have liberty to apply to a Judge of the Court of First Instance for further directions in respect of the working out of the order, if necessary.

6.  On 21 March 2014, the 1^st defendant, in compliance with the March Order, paid the sum of HK$44,597,466.49 (comprising the principal sum of HK$33,511,220.32 and interest thereon) into court.

7.  On 22 August 2014, the plaintiff issued a summons (“the August Summons”) seeking, inter alia, the following relief:-

(1)   an interim payment to the plaintiff “pursuant to the Order for indemnity in favour of the Plaintiff against the 5^th Defendant made by Recorder P. Fung SC dated 10^th March 2014…, which Interim Payment shall be paid out from the sum paid into Court by the 1^st Defendant on 21^st March 2014 in respect of the judgment sum and interest thereon in favour of the 5^th Defendant”;

(2)   the interim payment be in the sum of HK$30,913,708.39, or such other amount as the court may deem just; and

(3)   the 5^th defendant do further indemnify the plaintiff in respect of any costs incurred by the plaintiff in the Main Appeal with liberty to the plaintiff to apply for further payment out of the sum paid into court by the 1^st defendant in respect of such indemnity.

8.  The August Summons came before the learned Recorder on 13 November 2014, who handed down his written decision on 26 November 2014 (“the November Decision”) and made, inter alia, the following order (ie, the November Order) upon the undertaking of the plaintiff and Mr Albert Chan that they and each of them will account to the 5^th defendant and pay back into court such amount of costs as actually recovered by the plaintiff from the 1^st defendant following actual payment by the 1^st defendant of the costs ordered to be paid under the March Order:-

(1)   there be an order for interim payment to the plaintiff in the sum of HK$23,000,000 out of the sum paid into court by the 1^st defendant on 21 March 2014 in respect of the judgment sum and interest thereon in favour of the 5^th defendant; and

(2)   the 5^th defendant do indemnity the plaintiff in relation to the costs of the Main Appeal (“the Appeal Indemnity”).

9.  The 5^th defendant now seeks leave to appeal against the November Order, and a stay of execution of the November Order pending the determination of its proposed appeal.

Applicable principles for leave to appeal

10.  The principles governing an application for leave to appeal against an interlocutory judgment or order of the Court of First Instance to the Court of Appeal are well settled.  Leave to appeal shall not be granted unless the court hearing the application for leave is satisfied that (a) the appeal has a reasonable prospect of success; or (b) there is some other reason in the interests of justice why the appeal shall be heard.  Further, as explained by the Court of Appeal in SMSE v KL [2009] 4 HKLRD 127, at paragraph 17 per Le Pichon JA (with whom the other member of the Court of Appeal agreed), a “reasonable” prospect of success for this purpose means a prospect which is more than “fanciful” but without having to be “probable”.

Proposed appeal in respect of the order for interim payment

11.  Grounds 1 to 3 relate to the order for interim payment.  The following points are raised by the 5^th defendants in those grounds:-

(1)   The November Order, in so far as it relates to the interim payment, is in effect a variation of the March Order.  However, the March Order had been duly sealed prior to the making of the November Order and thus the learned Recorder was functus officio and had no jurisdiction to make the November Order.

(2)   The learned Recorder had no jurisdiction, alternatively erred in principle, in ordering an interim payment of HK$23,000,000 when, at this stage, it is impossible to ascertain whether this sum would exceed the amount of the Shortfall.

(3)   Further or alternatively, having regard to the indemnity provision in the March Order and the very substantial amount of costs claimed by the plaintiff relative to the judgment sum, the learned Recorder erred in principle, or acted unreasonably, or had failed to take into account relevant considerations, in ordering an interim payment of HK$23,000,000 when, at this stage, it is impossible to ascertain whether such sum would exceed the amount of the Shortfall.

(i)    Preliminary observations

12.  Under the March Order, the 5^th defendant’s obligation to indemnify the plaintiff is in respect of the Shortfall only.  The November Order, on the other hand, goes further than the March Order in that it requires, or enables, payment of the plaintiff’s costs to be made out of funds belonging to the 5^th defendant, at a time when the amount of the Shortfall has not yet been ascertained.  As pointed out by Mr Johnny Mok SC (for the 5^th defendant), it is by no means clear on the evidence that the amount of the Shortfall would come to HK$23,000,000.

13.  Hence, if the November Order is to be regarded as having being made “pursuant to” the indemnity provision in the March Order, there would be force in Mr Mok’s argument that the November Order was in effect a variation of the March Order and that the learned Recorder had no jurisdiction to vary the same in view of the fact that by the time of the making of the November Order the March Order had already been drawn up and sealed: see Wong Hung Kar Kee Mimi v Severn Villa Ltd [2014] 1 HKLRD 1088, at paragraphs 16 to 17 and 32 per Queenie Au-Yeung J, applying the following principle stated by Keith JA in Andayani v Chan Oi Ling [2000] 4 HKC 233, at 237C-D:-

“There must, of course, come a time in any proceedings when the court must be regarded as having completed its task. When that time is reached, the court is said to be functus officio. Once that stage has arrived, the court has no further jurisdiction over the case. But when does that stage arrive? The answer given by the common law is when the judge's order has been drawn up, entered or otherwise perfected.”

14.  There is some support for the view that the November Order was indeed an order made pursuant to the indemnity provision in the March Order having regard to the way in which paragraph 1 of the August Summons was framed, namely, “there be an interim payment to the Plaintiff pursuant to the Order for indemnity in favour of the Plaintiff against the 5^th Defendant made by Recorder P. Fung SC dated 10^th March 2014 …”.

15.  However, as explained by Mr Benjamin Yu SC (for the plaintiff) and as appears from paragraphs 14 and 15 of the November Decision, the application for interim payment was advanced “on a wider basis than just paragraph 5 of the March Order” and was so dealt with by the learned Recorder, such “wider basis” being a reference to (according to the plaintiff) the general equitable jurisdiction of the court to grant an indemnity in respect of the plaintiff’s costs and make an order for interim payment of those costs.

16.  In what follows, I shall proceed on the basis that the learned Recorder did approach the August Summons as an exercise under the general equitable jurisdiction of the court and not as an application “pursuant to” the indemnity provision in the March Order.

(ii)   Ground 1

17.  On behalf of the 5^th defendant, Mr Mok argues that the court’s jurisdiction to order a company to indemnify a minority shareholder in respect of his costs incurred or to be incurred in a derivative action brought by that shareholder for the benefit of the company is a statutory jurisdiction based on section 52A(1) of the High Court Ordinance (Cap 4), which provides as follows:-

“Subject to the provisions of rules of court, the costs of and incidental to all proceedings in the Court of Appeal in its civil jurisdiction and in the Court of First Instance, including the administration of estates and trusts, shall be in the discretion of the Court, and the Court shall have full power to determine by whom and to what extent the costs are to be paid.”

18.  On the other hand, Mr Yu contends that the court’s jurisdiction is not based on statute, but on its general equitable jurisdiction.

19.  In support of his argument, Mr Mok has referred me to the judgment of Buckley LJ in Wallersteiner v Moir (No 2) at 403F-G where it was pointed out that while the right of a trustee or agent to seek an indemnity costs order has been treated as founded in contract, it would be difficult to imply a contract of indemnity between a company and one of its members in relation to the latter’s costs incurred or to be incurred in a derivative action.  There is, however, nothing in that judgment or in the judgments of Lord Denning MR or Scarman LJ in the same case which suggests that the court’s jurisdiction to make an indemnity costs order in favour of a minority shareholder in a derivative action is based on statute, as opposed to the court’s general equitable jurisdiction.

20.  On the other hand, Mr Yu has referred me to the following passages in Wallersteiner v Moir (No 2)which explain the basis of the court’s jurisdiction to make such indemnity costs order:-

(1) Lord Denning MR at 391G-H:

“… the minority shareholder, being an agent acting on behalf of the company, is entitled to be indemnified by the company against all costs and expenses reasonably incurred by him in the course of the agency. This indemnity does not arise out of a contract express or implied, but it arises on the plainest principles of equity. It is analogous to the indemnity to which a trustee is entitled from his cestui que trust who is sui juris”.

(2) Buckley LJ at 403E-404B:

“But there are circumstances in which a party can embark on litigation with a confident expectation that he will be indemnified in some measure against costs. A trustee who properly and reasonably prosecutes or defends an action relating to his trust property or the execution of the trusts is entitled to be indemnified out of the trust property. An agent is entitled to be indemnified by his principal against costs incurred in consequence of carrying out the principal's instructions: Broom v. Hall (1859) 7 C.B. N.S. 503; Pettman v. Keble (1850) 9 C.B. 701 and Williams v. Lister & Co. [1913] W.N. 295. The next friend of an infant plaintiff is prima facie entitled to be indemnified against costs out of the infant's estate: Steeden v. Walden [1910] 2 Ch. 393. It seems to me that in a minority shareholder's action, properly and reasonably brought and prosecuted, it would normally be right that the company should be ordered to pay the plaintiff's costs so far as he does not recover them from any other party. In all the instances mentioned the right of the party seeking indemnity to be indemnified must depend on whether he has acted reasonably in bringing or defending the action, as the case may be: see, for example, as regards a trustee, In re Beddoe, Downes v. Cottam [1893] 1 Ch. 557. It is true that this right of a trustee, as well as that of an agent, has been treated as founded in contract. It would, I think, be difficult to imply a contract of indemnity between a company and one of its members. Nevertheless, where a shareholder has in good faith and on reasonable grounds sued as plaintiff in a minority shareholder's action, the benefit of which, if successful, will accrue to the company and only indirectly to the plaintiff as a member of the company, and which it would have been reasonable for an independent board of directors to bring in the company's name, it would, I think, clearly be a proper exercise of judicial discretion to order the company to pay the plaintiff's costs.”

(3) Scarman LJ at 407A-B:

“I agree that it is open to the court in a stockholder's derivative action to order that the company indemnify the plaintiff against the costs incurred in the action. I think that the principle is the same as that which the court applied in In re Beddoe; Downes v. Cottam [1893] 1 Ch. 547, which concerned the costs incurred by a trustee in an action respecting the trust estate. The indemnity is a right distinct from the right of a successful litigant to his costs at the discretion of the trial judge; it is a right which springs from a combination of factors - the interest of the company and its shareholders, the relationship between the shareholder and the company, and the court's sanction (a better word would be ‘permission’) for the action to be brought at the company’s expense.”

21.  Mr Yu also relies on the judgment of Lindley LJ in Re Beddoe [1898] 1 Ch 547 at 553-555 to show that costs incurred by a trustee which the court allows to be paid out of the trust estate is not to be regarded as “costs” falling within the discretion of the court but ought properly to be regarded as charges and expenses incurred in the execution of the trust:

“ The summons was heard by Mr. Justice Kekewich, and he authorized the payment of the costs of the action and of the summons out of the trust estate. From this order Mr. Cottam has appealed.

   The first question which arises is whether any appeal lies from that order, and for reasons which I will give presently I am of opinion that an appeal does lie. The important sections and rules which we have to consider are the 49th section of the Judicature Act, 1873, and the Order LXV., rule 1. The 49th section of the Act of 1873 runs thus: ‘No order made by the High Court of Justice or any Judge thereof, by the consent of parties, or as to costs only, which by law are left to the discretion of the Court, shall be subject to any appeal, except by leave of the Court or Judge making such order.’ Therefore, we have to ascertain what costs only are by law left to the discretion of the Court. That is found by turning to Order LXV., rule 1… Now, in the first place, it will be observed that neither in the Act nor in the rule is there a word said about charges and expenses, either of mortgagees or trustees. The 49th section relates to ‘costs only’ which by law are left to the discretion of the Judge… Then what costs are there referred to? ‘Subject to the provisions of the Act and these rules, costs of and incident to all proceedings in the Supreme Court shall be in the discretion of the Court or Judge.’ What Court or Judge? I apprehend the meaning of the rule is quite obvious, that in every proceeding in the Court the costs of that proceeding are in the discretion of the Judge who has to deal with it - who has to try it. He knows the facts of the case, he knows the conduct of the parties and the nature of the controversy, and the costs of every proceeding are, therefore, placed in the discretion of the Judge who tries the proceeding. It does not mean that the costs in a proceeding are to be in the discretion of the Court or Judge before whom these costs may incidentally come, upon an application to have them borne by some fund or some person not before the Court in the proceedings in which they have been incurred - that is not the meaning of the rule. Although costs are costs when they are incurred, the moment you come to ask that they shall be borne as expenses by a particular fund, or by persons not parties to the proceedings in which they were incurred, they become, not costs, but charges and expenses, and when once you get them into the category of charges and expenses this rule and this enactment do not apply to them.”

22.  Mr Yu argues that the same analysis is applicable to an indemnity costs order made by the court under the principles established in Wallersteiner v Moir (No 2).

23.  To counter these views, Mr Mok has referred me to the judgment of the English Court of Appeal in McDonald v Horn [1995] 1 All ER 961 which related to an application for a pre-emptive costs order in the context of an action brought by members of an occupational pension scheme against (inter alia) the pension fund trustees. The claimants alleged breaches of trust and abuse of fiduciary powers on the part of the trustees and brought the action to compel them to account to the fund.  One of the issues raised in that case was whether the court had jurisdiction to make the pre-emptive costs order sought.  Hoffmann LJ (as he then was) considered that there was a compelling analogy between a minority shareholder’s action for damages on behalf of a company and an action by a member of a pension fund to compel trustees or others to account to the fund, and thus the principles established in Wallersteiner v Moir (No 2) should be extended to the latter situation.  On the question of the court’s jurisdiction to make such order, Hoffmann LJ considered that it was to be found in section 51 of the Supreme Court Act 1981 (which is equivalent to section 52A(1) of the High Court Ordinance).

24.  The last authority which I need to refer to is the decision of the Court of Final Appeal in Financial Secretary v Wong (2003) 6 HKCFAR 476, in particular the judgment of Litton NPJ at paragraphs 103 to 110:-

“ 103. One starts with the proposition that, historically, at common law, the court had no power to award costs.

…

105. In the Court of Chancery, the position was different - see the observations of Lord Hatherley in Garnett v. Bradley at 957 – the Court of Chancery always having had a wide discretion as to the measure and extent as to costs: see also Andrews v. Barnes (1888) 39 Ch.D. 133 at 138.

106. Then came the Judicature Act 1875, mingling the jurisdictions of the courts of common law and equity. By Order LV (incorporated as part of the Act in the schedule) judges of the High Court were given a general discretion as to costs. Order LV is in these terms:

‘Subject to the provisions of the Act, the costs of an incident to all proceedings in the High Court shall be in the discretion of the Court; but nothing herein contained shall deprive a trustee, mortgagee, or other person, of any right to costs out of a particular estate or fund to which he would be entitled according to the rule hitherto acted upon in Courts of Equity: Provided, that where any action or issue is tried by a jury, the costs shall follow the event, unless upon application made at the trial, for good cause shewn, the Judge, before whom such action or issue is tried, or the Court shall otherwise order.’

107. Plainly, the intention of the legislature was to sweep all the powers of the judges of the High Court as regards costs under one roof: categorized by Lord Hatherley in Garnett v. Bradley at 955 as the judge’s ‘absolute discretion (meaning of course his judicial discretion) to determine this question of costs’.

108. Ever since that time, the jurisdiction in England to award costs has been entirely statutory…

109. In Hong Kong the Supreme Court of Judicature was first established in 1844 by Ordinance No. 15 of that year. In essence the law of England was introduced into Hong Kong, except where local conditions rendered them inapplicable or where they had been modified by laws passed by the local legislature. The Supreme Court Ordinance of 1873 established the model for the modern Supreme Court which existed (with many modification) until the resumption of sovereignty in 1997. Throughout this period the jurisdiction and the practice relating to the award of costs in Hong Kong followed that of England: To the extent that the current s.52A(1) of the High Court Ordinance is in terms virtually identical to s.51(1) of the Supreme Court Act 1981.

110. It follows from what is said above that in Hong Kong, as in England, the jurisdiction of the High Court to award costs is statutory.”

25.  The above judgment of Litton NPJ would tend to suggest that the equitable jurisdiction of the court to order the costs of a trustee, mortgagee, or other person to be paid out of a particular estate or fund should now be regarded as being statutorily based.  If that be the right view to take, it would be difficult to see why the court’s jurisdiction to make an indemnity costs order in favour of a minority shareholder in a derivative action should stand on a different footing.

26.  While the matter is not free from doubt, on the basis of the existing authorities, I consider the better view to be that the court’s jurisdiction to make an indemnity costs order in favour of a minority shareholder in a derivative action should, strictly speaking, be regarded as being based on section 52A(1) of the High Court Ordinance, but equitable principles would continue to govern the exercise of such jurisdiction by the court.  I do not, however, need to come to a final conclusion on this issue for the purpose of the present application.  All that I need to be satisfied is that the proposed appeal has a “reasonable prospect of success” as explained by the Court of Appeal in SMSE v KL.  This threshold can, in my view, plainly be satisfied in relation to the proposition that the court’s jurisdiction to make an indemnity costs order in such a situation is based on section 52A(1) of the High Court Ordinance.

27.  I have dealt with the issue of the basis of the court’s jurisdiction to make an indemnity costs order in favour of a minority shareholder in a derivative action at some length out of deference to the detailed submissions made by leading counsel on this issue.  For reasons explained below, I have reservation on whether the resolution of this nice legal issue would be decisive of the question raised by Ground 1.

28.  The indemnity provision in the March Order (ie paragraph 5 thereof) was, as accepted by Mr Yu, itself an exercise of the court’s discretion under the principles established in Wallersteiner v Moir (No 2).  However, the indemnity granted by the learned Recorder on that occasion was restricted to the Shortfall only.  As I see it, it was open to the plaintiff to seek a wider costs indemnity and/or interim payment in conjunction with the indemnity at that time (ie in the written submissions filed pursuant to the directions contained in paragraph 136 of the Judgment).  It may be that the plaintiff did not see any need to do so at that stage.  Whatever may be the reason(s) for the plaintiff’s initial decision not to ask for a wider costs indemnity and/or interim payment in conjunction with the indemnity, there is, it seems to me, a serious question susceptible to reasonable debate on whether it was open to the plaintiff to subsequently seek a further or different order from the court against the same party and in respect of the same costs.  This question arises irrespective of the true basis of the court’s jurisdiction to make an indemnity costs order in favour of a minority shareholder in a derivative action.  In this regard, I consider that the decision of the Court of Final Appeal in The Liberty Container (2007) 10 HKCFAR 256 relied on by Mr Yu is, arguably, distinguishable in that the two costs orders made in that case were against two different parties.

29.  Since I am satisfied that the 5^th defendant’s proposed appeal under Ground 1 has a “reasonable prospect of success”, I shall grant leave to the 5^th defendant to appeal on that ground.

30.  In passing, I should mention that I am of the view, if the learned Recorder had jurisdiction to make a wider indemnity costs order in favour of the plaintiff against the 5^th defendant, he would also have jurisdiction to make the order for interim payment, such jurisdiction being supplemental or incidental to the jurisdiction to make the wider indemnity costs order, in much the same way that the court has jurisdiction to order interim payment of fees and disbursements incurred by liquidators or provisional liquidators on behalf of the company of which they have been appointed as liquidators or provisional liquidators: see Re MF Global HK Ltd (No 2) [2012] 3 HKLRD 56; Re Lehman Brothers Securities Asia Ltd (No 1) [2010] 1 HKLRD 43.

(iii) Grounds 2 and 3

31.  Grounds 2 and 3 are both premised on the assumption that the order for interim payment in the November Order was linked to the indemnity provision in the March Order and was intended to cover the Shortfall.  However, it is clear from the November Decision that the application for interim payment was advanced by the plaintiff, and dealt with by the learned Recorder, on the basis of the court’s “wider jurisdiction” under the principles as established in Wallersteiner v Moir (No 2).  I do not consider Grounds 2 and 3 to be arguable and I am not prepared to grant leave to appeal in respect of those grounds.

Proposed appeal in respect of the Appeal Indemnity

32.  Grounds 4 to 5 relate to the order for the Appeal Indemnity.  Two points are raised:-

(1)   The learned Recorder had no jurisdiction, alternatively erred in principle, in ordering the 5^th defendant to indemnify the plaintiff in relation to the costs of the Main Appeal.

(2)   Further or alternatively, having regard to the relatively modest terms of the indemnity provision in the March Order and the very substantial amount of costs of the action already claimed by the plaintiff relative to the judgment sum, the learned Recorder erred in principle, or acted unreasonably, or had failed to take into account relevant considerations, in ordering the 5^th defendant to provide a full indemnity to the plaintiff in relation to the costs of the Main Appeal, when a fairer and more reasonable order in all the circumstances would have been to order the 5^th defendant to indemnify the plaintiff only in respect of any costs incurred by it which it will not have been able to recover from the 1^st defendant in the Main Appeal, or some other order short of a full indemnity.

33.  On the question of jurisdiction, Mr Mok argues that only the Court of Appeal, but not the learned Recorder (or any first instance judge) has the power to order the 5^th defendant to indemnify the plaintiff in relation to the costs of the Main Appeal.  This does not seem to me to be the correct legal position.  In relation to an application by a trustee for a Beddoe order in respect of the costs of an appeal or possible appeal to the Court of Appeal, it seems clear that the application can be made to a first instance judge: see Re Mong Man Wai William, CACV 34/2012 (20 December 2012), at paragraphs 27 and 68; see also Kimball Wong v Cynthia Fok Shin Yee, CACV 143/1987 (23 December 1987) in relation to a prospective appeal to the Privy Council from the Court of Appeal prior to 1997.  I see no reason why the practice should be any different in relation to a similar application by a minority shareholder under the principles established in Wallersteiner v Moir (No 2).

34.  The wording of section 52A(1) of the High Court Ordinance does not compel a contrary conclusion. There seems to me no good reason to read section 52A(1) narrowly to exclude the Court of First Instance from having the jurisdiction to make an indemnity costs order in favour of a party in respect of the costs which he may incur in the Court of Appeal: see Laws v National Grid Plc [1998] Pens LR 205, at paragraphs 45 to 47 per Laddie J.  Whether the Court of Instance should exercise such jurisdiction in any given case is a matter of discretion which can be reviewed by the Court of Appeal in accordance with the well established principles governing an appeal against an exercise of discretion by a first instance judge.

35.  The scope or extent of the indemnity to be granted also seems to me to be a matter of discretion for the learned Recorder.  In Wallersteiner v Moir (No 2) [1975] 1 QB 373 at 407A-D, Scarman LJ expressed the view that the indemnity to the minority shareholder is a “full indemnity” such as an agent has who incurs expense in the authorised business of the principal.  The learned Recorder’s decision to order a full indemnity in respect of the costs incurred or to be incurred by the plaintiff in the Main Appeal is consistent with this view.  I can see no valid basis to challenge the exercise of discretion by the learned Recorder on this point.

Disposition

36.  In all, I grant to the 5^th defendant leave to appeal under Ground 1.  In lieu of any stay of execution, I have been told by Mr Yu that the plaintiff is prepared to give the same undertaking referred to in paragraph 12 of my earlier decision dated 5 December 2014 pending the determination by the Court of Appeal of the 5^th defendant’s appeal.  I therefore made no order on the 5^th defendant’s stay application upon the plaintiff’s aforesaid undertaking.

37.  I also make an order nisi that the costs of this application, as well as the costs reserved on 5 December 2014, with certificate for two counsel, be in the cause of the 5^th defendant’s appeal.

38.  Lastly, it remains for me to thank counsel for the assistance that they have rendered to the court.