BARCO INVESTMENTS LTD v. WONG YAN HO (also known as GEOFFREY WONG YAN HO) AND OTHERS

HCA 1184/2022

[2023] HKCFI 2341

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1184 OF 2022

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D E C I S I O N

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1.  On 23 June 2023, I handed down a decision in these proceedings (“the June Decision”)[1], in which I ordered that, inter alia, (a) summary judgment be entered in P’s favour and against D6 to D8 to a limited extent, and (b) there be a costs order nisi that 30% of the costs of the Amended SJ Summons be paid by D6 to D8 to P forthwith, with a certificate for 3 counsel, and the remaining costs of the Amended SJ Summons be in the cause of the trial, with a certificate for 3 counsel (“the Costs Order Nisi”).

2.  By a summons dated 7 July 2023 (“the Variation Summons”), D6 to D8 seeks an that that the Costs Order Nisi be varied as follows:

(1)  15% of the costs of the Amended SJ Summons be paid by D6 to D8 to P forthwith; and

(2)  there be a certificate for 2 counsel.

3.  I have directed that the Variation Summons be determined on paper without an oral hearing.  I have duly considered the written submissions provided by the parties.  This is my decision on the Variation Summons.  For ease of reference, the abbreviations used in the June Decision are adopted herein.

Costs to P – 30% or 15%?

4.  Mr Bryan Lee for D6 to D8 submits that for the purpose of defending the Amended SJ Summons, D6 to D8 were held to be successful in establishing their factual cases in every single aspect including:

(1)  D6 to D8 took no part in the fraudulent scheme devised by D1.

(2)  The veracity of the “finders’ fees arrangement” which underpins D6 to D8 “bona fide purchaser” defence.

(3)  D6 to D8 did not knowingly misrepresent the price of StockX shares.

(4)  There were no breach of fiduciary duties and negligence on the part of D6 and D7.

(5)  Even in respect of the knowing receipt claims against D6 to D8, no constructive knowledge can be affixed in the circumstances.

5.  Mr Lee also argues that:

(1)  Though D6 to D8 failed to rely upon the “bona fide purchaser” defence against P’s proprietary claim in respect of D6 Sum, D7 Sum and D8 Sum, the defence was rejected by the court only on the basis that the services rendered by D6 to D8 was not under a valid contract.  The principal reason was that this court was not receptive to the technical suggestion raised by D6 to D8 that the “Engagement Agreements” can be “resuscitated”.

(2)  The June Decision contains 100 paragraphs, in which only a few paragraphs are ruling against D6 to D8.

(3)  Only around 10%-15% of the time at the hearing was actually spent on arguments on D6 Sum, D7 Sum and D8 Sum.  The issue of the validity of the Engagement Agreements only took up an extremely small part of P’s counsel’s written and oral submissions.

6.  Mr Lee submits that in view of the above, P’s entitled to costs of the Amended SJ Summons should be reduced to 15%.

7.  Before moving to the arguments put forward by Mr Zenith Chan for P, for the purpose of avoiding any doubt, in respect of the dispute between P on the one hand and D6 to D8 on the other hand, what I said in the June Decision is that some factual matters raised by D6 to D8 would need to be further investigated in the trial.  I have not made any final ruling on those factual matters.

8.  Mr Chan submits that:

(1)  The apportionment of costs is a broad-brush exercise.  It is wrong in principle for D6 to D8 to turn the exercise into a mathematical one by counting the minutes on arguing the winning issue, ie the “airtime”, at the hearing.

(2)  The amount of preparation work required to deal with a particular issue is not necessarily reflected in (indeed it often would not correlate to) the airtime spent on arguing that issue.

(3)  P’s costs in proving the underlying fraud were not attributable to D1 exclusively.  Only when the underlying fraud is proved, P can make the proprietary claim against D6 to D8.  Thus, the costs in proving the fraud should be partly attributable to D6 to D8.

9.  I agree with Mr Chan and accept his submissions.  I would further add the following:

(1)  As submitted by Mr Chan, the “airtime” on a particular issue in a hearing does not necessarily reflect the preparation time spent on that issue. While detailed written submissions on an issue have been provided to the court, it would not be necessarily to make lengthy oral submissions on the same issue in the hearing.

(2)  Mr Chan is also right in submitting that part of the costs incurred for the purpose of proving the underlying fraud should be attributable to D6 to D8.

(3)  In the June Decision, the part concerning the ruling against D6 to D8 does not only contain a few paragraphs.  Many other parts in the June Decision, for example, background facts, the relevant principles, and the underlying fraud, are also relevant to the ruling against D6 to D8.

10.  Taking a broad-brush approach, with the matters set out in [8] and [9] above in mind, I am of the view that the apportionment provided in the Costs Order Nisi is appropriate.  I refuse to accept the reduction suggested by D6 to D8.

Certificate for 3 counsel

11.  There is no dispute that awarding costs for 3 counsel is “exceptional”.[2] As to whether the hearing is “exceptional” and hence a certificate for 3 counsel is justified, the matter is within the discretion of the judge handling the hearing, who is “most familiar with the conduct of the case and the issues canvassed at the hearings”.[3]

12.  In my view, the hearing before me on 8 June 2023 is exceptional, and a certificate for 3 counsel is justified.  In that hearing, the evidence before the court is voluminous.  The factual and the legal issues involved are complex.  Although the parties are represented by eminent senior counsel in that hearing and detailed written submissions have been provided to the court well before the hearing, I would still need to have a whole-day hearing (and indeed I sat until about 5 pm on that day) in order to fully understand the submissions made by the parties.  In my judgment, in view of the complexity involved, it is appropriate to grant a certificate for 3 counsel.

13.  I refuse to accede to D6 to D8’s request to change the certificate for 3 counsel to a certificate for 2 counsel.

Disposition

14.  I dismiss the Variation Summons.

15.  The Costs Order Nisi is now made absolute.  Regarding the summary assessment of the costs provided in that costs order, P has annexed a bill of costs to P’s written submissions dated 31 August 2023.  There be leave to D6 to D8 to file and serve a written reply to the said bill within 7 days.

16.  Costs of the Variation Summons should follow the event and be paid to P by D6 to D8 forthwith.  Those costs be summarily assessed on paper.  P has already annexed a bill of costs for summary assessments to P’s supplemental written submissions dated 6 September 2023.  There be leave to D6 to D8 to file and serve a written reply to that bill within 7 days. 

17.  I thank all counsel for the assistance provided to the court.