ANDES NATURAL RESOURCES GROUP LTD AND OTHERS v. LAI FELIX AND OTHERS

HCA 1376/2021

[2022] HKCFI 1483

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1376 OF 2021

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D E C I S I O N

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Continuation of injunction

1.  The Plaintiffs seek a continuation of the injunction against all three Defendants. The 1st Defendant agrees to the injunction being continued until trial.  The 2nd and 3rd Defendant do not appear today to oppose the continuation or the application for costs against them.

2.  I therefore make an order to continue the injunction against all three Defendants until trial or further order, and that as between the 2nd Defendant, 3rd Defendant and the Plaintiffs, the costs of the application for the injunction against each of the 2nd and 3rd Defendants be paid by the 2nd Defendant and the 3rd Defendant to the Plaintiffs, to be taxed if not agreed.

3.  The only issue remaining is therefore the issue of costs as between the Plaintiffs and the 1st Defendant.

Principles

4.  There is no hard and fast rule that the costs of an interlocutory injunction should be costs in the cause.  The court is entitled to, and should, look at the merits of the injunction itself as at the time of the application, to decide what should be the proper costs order for that application in all the circumstances, which do not necessarily depend on the outcome of the trial: Mendlowitz & Associates Inc v Winner International Group Ltd & anor, unreported, HCA 574/2009, 14th May 2010, per Au J (as he then was) at [28] to [30], cited with approval in China Medical Technologies Inc (in liquidation) and others v Samson Tsang Tak Yung and others [2022] HKCA 421.

5.  Where the plaintiff shows a strong case on the merits, it may be appropriate to award him the costs of the application for an injunction.

The present case

6.  In the present case, my view is that the appropriate order as against the 1st Defendant should be for costs to be in the cause.  There are two aspects to consider: the parties’ conduct, and the merits.

Conduct

7.  The 1st Defendant (and the 3rd Defendant) offered an undertaking by letter of 8th October 2021 which was fairly soon after the interim-interim injunction ordered on 17th September 2021 by DHCJ Leung and before the deadline of 15th October 2021 for the 1st Defendant to file evidence; the Plaintiffs rejected this by a without prejudice letter of 11th October 2021, asking for (1) payment of costs and (2) entry of judgment in respect of the defamation and trespass claims, with damages to be assessed.  The Plaintiffs sent a further (open) letter on 12th October 2021 complaining that the proposed undertaking did not go far enough to prevent the Defendants’ wrongdoings.

8.  I note that:

8.1  the undertaking was offered at a relatively early stage, albeit only after the interim-interim injunction had been granted (but that itself had been obtained at short notice), and before the deadline for the filing of the 1st Defendant’s evidence;

8.2  the undertaking was offered in the full terms of the injunction sought;

8.3  yet the Plaintiffs turned round and said it was not good enough, (1) asking for judgment on liability (in the without prejudice letter) and (2) complaining that the undertaking was not enough (in the open letter).  But both of these requests go further than what had been sought in the Plaintiffs’ summons for an injunction, and it could not be said that it was unreasonable for the Defendant not to accede to these requests in the context of that summons.

Merit

9.  In terms of merit, I would first of all note that an undertaking may be offered by a defendant as a means to avoid the costs of litigating the application for an injunction.  It does not amount to an admission on merits.

10.  Counsel for the 1st Defendant, Mr Alvin Cheng, says that the merits of the claim against the 1st Defendant are by no means strong.

10.1    The newspaper advertisement complained of was not, on the Plaintiffs’ own case, published by the 1st Defendant (but by the 2nd Defendant and the 3rd Defendant: see paragraph 17 of the Affirmation of Cheng Pak Wai).

10.2  As to the incident of breaking into the company’s premises, it is said that although the incident was videotaped, the Plaintiffs have not put forward any extract which shows the 1st Defendant’s participation.

10.3  As to the defamatory email, it is said that this was sent from the 1st Plaintiff’s domain name and given that the 1st Defendant had already transferred his shares to the 2nd Defendant by the time of the email, it is for the Plaintiffs to prove the true identity of the sender.  Whether or not the contents are defamatory also remain to be tried.

10.4  As to the false website, it is said that there is no evidence to show the 1st Defendant’s involvement in its creation.  Mr Chan says that the 1st Defendant has circulated substantially the same contents via email to third parties.  Nevertheless, this does not amount to strong evidence to show the 1st Defendant’s involvement in the creation of the website.

10.5   As to the fraudulent notices to remove the 2nd Plaintiff from office, it is said that there is again no evidence to show the 1st Defendant’s involvement in their creation.

10.6  As to the fraudulent ND2A form filed at the Companies Registry purporting to report P2’s resignation as director and appointing the 1st Defendant, the 2nd Defendant and the 3rd Defendant as directors, it is pointed out that whilst the 1st Defendant’s name and address is printed as the “presentor’s reference”, the 1st Defendant did not sign the form signifying his consent to act as director, which would be somewhat difficult to understand if the 1st Defendant had presented the form seeking to act as director.  Mr Chan asks who would have filed the form, but in my view this remains a matter to be resolved on the facts.

10.7  As to the CCTV screen captures which are said to show the 1st Defendant at the company premises copying data, it is said that there are questions as to whether he was in fact authorised to enter and as to what he was doing.

11.  In terms of conduct and merit, therefore, I do not agree that the Plaintiffs have made out a case for seeking costs.  I will therefore order that costs between the Plaintiffs and 1st Defendant be in the cause.