HONG KONG LIFE INSURANCE LTD AND OTHERS v. FUNG SIU CHEUNG MICHAEL

HCA 1164/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1164 OF 2012

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RULING ON COSTS
(12^th Defendant)

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Introduction

1. This is an application by the plaintiff (“P”) for the 12^th defendant (“D12”) to pay its costs arising from and in connection with D12’s application to vary a Mareva injunction, initially made ex-parte but later ordered to continue at the inter-partes hearing.

2. By a summons dated 12 November 2013 (“D12’s Summons”), D12 applied for a variation of the Mareva injunction to allow him to withdraw:

(a) HK$353,000 from his bank accounts for the purpose of legal costs of a connected criminal case;

(b) A lump sum of HK$100,000 for his application

3. There was another summons by the 9^th Defendant which was fixed for hearing at the same time as D12’s Summons, as both defendants were represented by same firm of solicitors and same Counsel.

4. Shortly after the hearing and the opening submissions of Mr Chan, D12’s Counsel, this court adjourned the hearing to enable D12 to make a proposal to P.  Following this adjournment, P and D12 were able to agree to a draft consent order, with costs reserved.

5. Essentially, the terms of the consent order were instead of allowing D12 to withdraw sums from his bank account, he was allowed to deal with a property (“Bank Building Property”) by way of mortgage to secure a loan of HK$353,000 for his costs of the criminal matter.

6. The hearing then proceeded with the 9^th defendant’s application, and this court later handed down a judgment in relation thereto on 21 February 2014.

7. P then lodged submissions and sought costs against D12 in relation to D12’s Summons.

Grounds for seeking costs

8. P’s grounds for seeking costs against D12 were based mainly on the following:

(i) D12’s Summons referred to withdrawal of funds from his bank accounts only;

(ii) There was no reference to the Bank Building Property in D12’s Summons;

(iii) There was no suggestion in any of D12’s affirmations that he could raise funds under the Bank Building Property;

(iv) In his affirmations, D12 suggested that he was a mere trustee holding the Bank Building Property upon trust for his mother, and that he had no other assets but to resort to the proceeds of the bank accounts.

(v) The initiation of raising funds through the Bank Building Property came from this court.

(vi) In view of the above, D12 changed his stance at the hearing and abandoned his original application.

Discussion and Conclusion

9. Costs are in the unfettered discretion of the court, and generally costs should follow the event except when it appears to the court that in the circumstances of the case some other order should be made as to the whole or any part of the costs[1].

10. D12 submitted that he had no choice but to apply to the court for a variation of the Mareva Injunction since all his assets had been restrained.  Further, it was his submission that the wordings of D12’s Summons were not important since this court had a discretion to vary the Mareva Injunction upon terms or conditions irrespective of the wordings of the summons.

11. P disagreed that the wordings of D12’s Summons were not important and pointed out that it was D12 who never suggested or accepted that the Bank Building Property was his asset.

12. Whether D12 accepted the Bank Building Property was his asset or not, I accept D12’s submission that since the Bank Building Property was subject to the Mareva Injunction, D12 had no alternative and he had to issue a summons to vary the Mareva Injunction. Although the terms of the consent order differed from the terms of D12’s Summons, D12 in a way had achieved the purpose of his application.

13. D12 submitted that if P were to succeed with his claim against D12 at the end of the trial, P would be entitled to have its costs of this whole action against D12 including the costs of and occasioned by D12’s Summons.  Alternatively, if D12 were to be successful in resisting P’s claim against him at the end of the trial, he would be entitled to have costs of D12’s Summons as well, and thus it would be premature and unjust to determine the question of costs at this stage.

14. Having considered D12’s submission, I accept the same. I therefore order that costs of D12’s Summons should be costs in the cause.