ALL OVERSEAS LTD AND OTHERS v. BEST CODES NOMINEES LTD AND OTHERS

HCA4515/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.4515 OF 2002

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REASONS  FOR  DECISION

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1. At the conclusion of this hearing I dismissed the plaintiffs’ appeal with costs.  These are my brief reasons.

2. This is an appeal against a master’s costs order following an unsuccessful application by the defendants for a further order for security for costs.

3. In February 2005, the plaintiffs had, by consent, paid in a sum of money as security (they being foreign plaintiffs) for costs up to the determination of their Order 14 application but without prejudice to the defendants’ rights to claim further security for costs as a result of the case being proceeded further.  The sum paid was $220,000.

4. After the Order 14 application, which the plaintiffs lost, the defendants made a further application primarily because significant further costs had been incurred well in excess of the sum paid in by consent in February 2005 arising out of other interlocutory matters which had come before the court in the intervening period.  The further sum claimed was $491,000.

5. The master’s order on the application before him was to make no order.  As for costs he ruled that the defendants’ costs be costs in the plaintiffs’ cause.  He further ruled that his order was without prejudice to the defendants’ rights to make a further application for security at a future date.

6. Thus the plaintiffs were not awarded their costs of the application but were ordered the next best thing namely “costs in the plaintiffs’ cause”.

7. The issue on appeal is solely whether the master, in exercising his discretion on costs, did so unreasonably and erroneously.  Courts are reluctant, on appeal, to interfere with the exercise of a lower court’s discretion.  Where the discretion has been in relation to a costs order the reluctance is even more so.

8. In this case Mr Benjamin Chain, for the plaintiffs, in a concise and succinct submission, was unable to persuade this court that the master had acted unreasonably or plainly erroneously when exercising the discretion in the way he did.

9. The cumulative effect of the following matters satisfied me that the costs order was unappealable :

(a)   The master did not “dismiss” the defendants’ application.  He made “no order” in relation to it.  I was told by Mr Albert Tsang, who appeared for the defendants on this appeal, that the master said at the time (although he did not give written reasons) that the defendants were justified in taking out the summons but that he was not prepared (at that stage) to top up the amount of security.

(b)   There was merit in the defendants’ application because they had incurred substantial costs between the consent order and the conclusion of the plaintiffs’ unsuccessful Order 14  proceedings.  It is perfectly proper to make an application for security for costs already incurred rather than future costs.

(c)   According to the earlier consent order the conclusion of the Order 14 application was the earliest time that a further application by the defendants would be entertained.  Any earlier application ran the risk of being dismissed.

(d)   The plaintiffs on an overall view, were not 100% successful in opposing the defendants’ application.  Mr Tsang described it as a “neutral” outcome.

10. If the above factors contributed to the master’s reasoning in exercising his discretion in the way he did, his order on costs cannot be criticised.  His ruling on the application was short of being a total victory for the plaintiffs.  His costs order too was one step short of being the complete order in the plaintiffs’ favour.  It reflected the merits of the application and as such was a proper exercise of his discretion.