SHANDONG CHENMING PAPER HOLDINGS LTD v. ARJOWIGGINS HKK 2 LTD

HCMP 3060/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 3060 OF 2016

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D E C I S I O N

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1.  On 7 July 2017 I handed down my reasons for dismissing the originating summons and made a costs order nisi that Shandong Chenming Paper Holdings Limited (“Company”) pay the defendant’s costs on an indemnity basis for the reasons explained in my decision. The plaintiff issued a summons on 18 July 2017 seeking an order that the costs order nisi be changed to an order that the defendant’s costs shall be paid by the plaintiff and assessed on a party-and-party basis.

2.  The proper approach to an assessment of whether or not to order costs on an indemnity basis is explained in para 6 of Mr Justice Ribeiro PJ’s decision in Libertarian Investments Ltd v Thomas Alexej Hall: [1]

“As this Court made clear in Town Planning Board v Society for Protection of the Harbour Ltd (No 2),² the usual order for costs in favour of a successful party is an award on a party and party basis. An order for costs on an indemnity basis is only considered where the case has some ‘special or unusual feature’. The Court’s discretion may be exercised in relation to (but is not limited to) cases ‘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’. However, such improper conduct generally relates to the conduct of the litigation rather than conduct which constituted the cause or matter giving rise to the litigation.³ Thus, even in contempt cases, there is no general rule that indemnity costs should be awarded against the contemnor, the appropriateness of such an order depending on all the circumstances of the case.⁴ It may be important to consider whether the contemnor’s conduct has resulted in a separate penalty which sufficiently expresses the court’s disapproval; in which case, indemnity costs as an additional penalty may not be justified.⁵ ”

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² (2004) 7 HKCFAR 114 at §§13-15.

³ Ibid at §15-18.

⁴ Koo Hoi Yan v Kao, Lee & Yip (2009) 12 HKCFAR 904 at §12.

⁵   Ibid, §5.

Ms Cheng, who appears for the plaintiff, has argued before me that it is apparent from the matters explained in para 6 of Ribeiro PJ’s decision that the focus in considering whether or not to award costs on an indemnity basis is generally the conduct of the litigation rather than the motives behind the party who is liable to pay costs.  

3.  It is not necessary for me to explain in any detail the possible application and qualifications to the approach described by Ribeiro PJ because it seems to me that there is a simpler justification for changing the costs order. 

4.  As is apparent from my reasons, a very significant part of the argument before me and the time spent in court, namely, three days, arose from various arguments advanced by the defendant which I thought were misconceived and in some instances clearly so.  Ms Cheng whilst reminding me of the principles explained in cases like Re Elgindata Ltd (No 2) [2] has not invited me to apportion the costs.  But it does seem to me that as any costs order largely goes to financial matters and the financial impact of litigation, the way in which the hearing developed and the matters attributable to the length of this hearing and the preparation required for it are relevant in determining whether or not costs should be ordered on an indemnity basis or the more conventional party-and-party basis.  On balance it seems to me that in the circumstances whatever concerns I may harbour about the approach of the plaintiff to this matter, the appropriate order, I am satisfied, is that the defendant’s costs should be paid by the plaintiff with a certificate for two counsel and assessed on a party-and-party basis.

5.  So far as the costs of this summons are concerned, Ms Cheng has unsurprisingly asked for an order that the defendant pay the costs with a certificate for one counsel.  It does, however, seem to me that as the costs order nisi was my initiative and therefore an application to vary it had to be made in any event, and also having regard to the broad approach that I have suggested earlier in this decision is appropriate when determining costs in this particular case, I will make no order as to the costs of the summons dated 18 July 2017.