VASILY TRUBNIKOV v. EVGENY VOLOSOV AND OTHERS

HCA 139/2024

[2025] HKCFI 3051

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 139 OF 2024

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D E C I S I O N

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Introduction and Background

1.  By a Decision dated 22 April 2025 ([2025] HKCFI 1576), I dismissed the Plaintiff’s application for interlocutory proprietary injunction and ancillary disclosure order against the 2^nd Defendant (“the Decision”).  The abbreviations and definitions in the Decision are adopted herein.

2.  In the Decision at §73, I made a costs order nisi that P should pay to Ds the costs of the Summons, on a party to party basis, with certificate for two counsel, to be taxed if not agreed (“the Costs Order Nisi”).

3.  By Summons dated 6 May 2025 (“Variation Summons”), P applied to vary the Costs Order Nisi to an order that P do pay Ds 20% of the costs of and occasioned by the Summons, on a party to party basis, with certificate for two counsel, to be taxed if not agreed.

4.  D1 proposed for the Variation Summons be dealt with on paper, which I agreed was appropriate.  Directions were then given for the lodging of written submissions.

5.  I have now received all the submissions from the parties.  Ds opposed the Variation Summons.  They further submitted that P should pay D2 and D3 the full costs of and occasioned by the Summons to be summarily assessed (i.e. not to be taxed).

Applicable Principles

6.  The applicable principles are well-established:

(1)  Costs are in the discretion of the court;

(2)  They should generally follow the event;

(3)  The general rule does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or cost of the proceedings he may be deprived of the whole or part of his costs;

(4)  Where the successful party raises or makes allegations improperly or unnecessarily, the court may not only deprive him of his costs but may order him to pay the whole or part of the unsuccessful party’s costs;

(5)  A party seeking to displace the general rule that costs follow the event bears the burden of showing that the circumstances justify the exceptional course of such displacement;

(6)  The court has a discretion to exercise whether to deprive a party of all or part of his costs in respect of those issues which he has failed.  The court has to exercise its discretion to achieve a just result having regard to the circumstances of the case;

(7)  This discretion exists for the purpose of avoiding the rigour of too inflexible an application of the rule that costs generally follow the event.  However, it is to be approached with due circumspection so as not to undermine the utility of that general rule.  Too ready a departure from the general rule encourages unnecessary arguments which will itself increase costs;

(8)  Where the party who has been successful overall has failed on one or more issues, particularly where such issues have occupied a significant amount of hearing time or led to the incurring of significant expense, the court may in its discretion order a reduction in the award of the costs to him.  An issue for this purpose must be something so distinct and separate in itself that the decision of it constitutes an “event”;

(9)  Whilst the court may order a successful party to pay the costs of the issues or allegations which were made improperly or unnecessarily and such issues have caused a significant increase in the length or costs of the proceedings, those issues have to be discrete and isolated: and

(10)  It is not the case that the lack of success in any specific argument of itself attracts a costs sanction.  It is only if it is possible to isolate an issue in the case in that it can properly be said it is unnecessarily pursued as having no bearing on the real question in the suit that it would be proper to deprive the successful party of all costs of that issue, otherwise a more general assessment should be made.  So unless discrete points can safely be isolated and can be shown to have led to a wastage of time and costs, the practice of the court is not engage in any “filleting” of cases according to the success or failure of the disparate issues which, when taken cumulatively, constitutes the dispute to be judged.

See e.g.: Re Elgindata Ltd (No 2) [1992] 1 WLR 1207 at 1214; Mariner International Hotels Ltd v Atlas Ltd (No 2) (2007) 10 HKCFAR 246 at §18; Re Moulin Global Eyecare Holdings Limited (unrep) HCCW 470/2005, 17 October 2008, §7 and 10; Commissioner of Inland Revenue v HIT Finance Ltd (No 2) [2014] 4 HKLRD 412, §7 and Pony HK World Limited v Vand Petro-Chemicals (BVI) Co Ltd (unrep) FACV 4/2013, 18 March 2014.

7.  The above principles did not appear to be disputed by the parties.  However, Mr Leung, counsel for P, emphasized that post-CJR:

(1)  While the “follow the event principle” will still play a significant role in Hong Kong, it will nonetheless only be a starting point from which the court can depart: see Wong Kam Tong v Tin Shing Court, Yuen Long (IO) (No 2) [2012] 2 HKLRD 1128, §§11-13;

(2)  The courts are more ready to depart from the general rule that costs follow the event: see Chan Yan Cheong v Research Grants Council of University Grants Committee (No 2) [2023] 2 HKLRD 640 (CA), §11; and Chan Shun Kei v Hong Kong Construction (Hong Kong) Ltd (unrep) CACV 192/2014, 7 March 2016,§24; and

(3)  There should not be a narrow interpretation of the issue-based approach espoused by Re Elgindata (No 2).  Order 62, rule 5(2)(a) and (b) of the Rules of the High Court particularly directs the court to consider the conduct of the parties including whether it was reasonable for him to raise, pursue or contest a particular allegation or issue, and the manner in which a particular allegation or issue was pursued: see Chau Shun Kei at §25.

8.  The parties are also agreed that this court should take an overall view of the justice of the case to arrive at a suitable costs order.

Discussion

9.  With the above principles in mind, I turn to consider whether Mr Leung has demonstrated circumstances which justify the displacement of the general rule.  I bear in mind that post-CJR, the court have been more prepared to do so in appropriate circumstances.

10.  Firstly, Mr Leung submitted that Ds spent a considerable portion of their evidence and submissions disputing the existence of a serious issue to be tried but failed.  Of course failing on an issue is not on its own sufficient to deprive Ds of their costs.  Thus Mr Leung pointed to the 19 pages in D1’s skeleton submissions devoted to demonstrate that there was no serious issue to be tried, the numerous authorities cited on the legal requirements of a partnership, dissection of P’s evidence in considerable detail to contend that P’s case is factually unsupportable as well as the bulk of D1’s 85 page long affidavit (accompanied by over 1300 pages of exhibits) which he submitted were not warranted or relevant. 

11.  However, whether there was a serious issue to be tried was necessarily an issue to be canvassed.  The mere length of the submissions and number of cases cited on whether P has a viable partnership claim (in law) do not demonstrate, and I do not so regard, that the contest of no serious issue to be tried was improper and unnecessary such as to significantly increased the length or costs of the proceedings.

12.  Although a view can be taken that given the high threshold to show that there is no serious issue to be tried (as it would be necessary to demonstrate that the claim should be struck out), and this could have been done primarily by looking at the pleadings without going into the evidence filed, given P canvassed extensive material in support of the Summons and made very serious allegations against Ds therein, it was not improper or unreasonable for Ds to file full responsive evidence.  I have not overlooked that it has been held that in interlocutory application, the court is not required and will not be able to making finding of facts on the disputes before it and thus it is unhelpful to have excessive amount of application (see e.g. Chinaplus Wines Limited v Berry Bros & Rudd Limited & Ors (unrep) HCA 1818/2012, 13 December 2012, §§53-55), whilst indeed extensive, I do not consider in the present case that the evidence filed by Ds were excessive or irrelevant.  Notwithstanding the extensive evidence filed by both P and D1, ultimately little time was taken up at the Hearing by reference to the evidence filed by the parties. 

13.  Furthermore, it is not correct for Mr Leung to submit that Ds devoted considerable time and effort at the Hearing to argue that it was abusive for P to claim in these proceedings that the monies in D2’s bank accounts belonged to the Partnership because of the inconsistent stance with HCMP 523.  Although this was addressed in D1’s written submissions, no oral submissions were made on this by Ms Lam SC and I took it that it was not a point that she seriously pursued.  Rather, her focus was on the legal basis of the Partnership claim.  It was Mr Wong SC, counsel for D2 and D3, who orally addressed this point at the Hearing on the inconsistent stance of P and how this negated any serious issue to be tried: see Decision, §§33-45.  I do not consider that this allegation was improperly raised and not reasonably arguable even though ultimately, I did not find in favour of D2 and D3’s submissions.  Besides, it only warranted a comparison of P’s pleadings filed in these proceedings and HCMP 523, and did not require any examination of the evidence.  I do not agree that these arguments significantly inflated the costs of the proceedings.

14.  Secondly, Mr Leung submitted that D2 and D3’s arguments on the injustice and inconvenience of granting the proprietary injunction failed which also contributed significantly to the increased costs of these proceedings.  He submitted that D2 and D3 canvassed extensive submissions on P’s alleged deliberate misrepresentation of the Undertaking and the proceedings before K Yeung J to the Mozambique authorities framing it as an abuse of process and contempt of court which I rejected.  Although the “unclean hands” argument was not developed orally, he submitted that costs were incurred in the preparation of the evidence and written submissions in relation to that argument.

15.  Even though I did not find the high threshold of abuse of process and contempt had been made out, I did find that plainly, the statement in the Complaint Letter was untrue and there was never any seizure. As for the allegation of the misuse of Inforcom Lda, although I did not find that the issue has been resolved beyond reasonable doubt, it is not disputed that P had been criminally indicated in Mozambique in relation to the matter.  Thus it is not entirely baseless for all these issues to have been raised.  Furthermore, it is a requirement for the grant of proprietary injunction to have regard to whether it was just and convenient to grant the injunction sought, and the court can have regard to very broad matters including the conduct of the parties.   I do not regard the raising of alleged abuse of process, contempt or lack of clean hands were discrete or isolated issues warranting depriving Ds of the costs of these matters which they raised but they failed on.

16.  As to the other matters raised by Ds to argue that it was not just and convenient to grant the injunction such as that P had failed to present his case fairly to the court, had commenced vexatious actions worldwide, delayed in commencing these proceedings, similarly, I do not consider they were raised improperly or unnecessarily.  They were again part and parcel of the question that I had to determine.  Besides, it cannot be said that the raising of those issues caused a significant increase in the length or costs of the Hearing.

17.  Thirdly, Mr Leung submitted that Ds only succeed on the balance of convenience and yet Ds only briefly addressed this issue in comparison to the other issues which they had failed.  However, I fail to see why parties should be penalized for addressing winning issues succinctly.

18.  Stepping back and taking an overall view of the justice of the case, Ds are plainly the overall winner.  Having regard to all of the submissions made, in all, I am not satisfied in all the circumstances of this case I should depart from the general rule that costs should follow the event.

19.  I accept that it is now a norm for the court to make summary assessment of costs for interlocutory application unless there are special reasons not to so order: see Midland Business Management Limited v Lo Man Kui (No 2) [2011] 2 HKLRD 667 at §9-12.  However, it seems to me there are some good reasons not to do so in the present case.  Firstly, Mr Leung has shown substantial grounds for P to dispute the sums claimed for costs (which given the involvement of senior counsel will no doubt be substantial).  Mr Leung has submitted inter alia that: (a) a swathe of materials in the present application originated from HCMP 523 which Ds have already considered; (b) there was an earlier interim-interim hearing which costs were incurred by Ds advancing arguments that would be untenable in light of the Decision; and (c) D1 had instructed an entirely different counsel team from the interim-interim hearing.  Secondly, although ultimately P failed, I would not consider the injunction application was unnecessary and disproportionate.  Thirdly, there is no evidence or submissions that Ds will suffer significant prejudice if an immediate costs order is not made against P.  At the Hearing, counsel for Ds never intimated that they would be seeking summary assessment or any immediate taxation of costs.  Although the application for injunction can be considered severable and self-contained from the rest of the action, notwithstanding I can see some materials deployed in the Summons may be used again at trial, balancing all the circumstances of the case, I am of the view that it is more appropriate for costs of the Summons to be taxed if not agreed.

Disposition and Orders

20.  Accordingly, the Variation Summons is dismissed.  I hereby make a costs order absolute that P should pay to Ds the costs of the Summons, on a party to party basis, with certificate for two counsel, to be taxed, if not agreed.

21.  As for the costs of the Variation Summons, this should follow the event.  P should pay to Ds the cost of the Variation Summons to be summarily assessed, if not agreed.

22.  I hereby direct that in the event costs of the Variation Summons are not agreed:

(1)  D2 and D3[1] are to lodge and serve within 14 days of the handing down of this decision, a Statement of Costs on their Variation Summons;

(2)  P is to lodge any objections to Ds’ Statements of Costs within 7 days thereafter; and

(3)  There will be summary assessment of Ds’ costs by me on paper thereafter.