GREATER CHINA CAPITAL INC (a company incorporated in British Virgin Islands) v. GBTIMES LTD (formerly known as GLOBAL BROADCASTING MEDIA MANAGEMENT LTD) (a company incorporated in Finland)

CAMP 40/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 40 OF 2017

(ON AN INTENDED APPEAL FROM HCA NO 1455 OF 2015)

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JUDGMENT

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Hon Lam VP (giving the Judgment of the Court):

1.  This is an application for leave to appeal against the decision of Deputy High Court Judge Cooney on costs in an Order 14 application. The judge, reversing the decision of the master, dismissed the Order 14 application, granted unconditional leave to defend and, after hearing submissions ordered that costs of the application be in the cause (reversing his initial costs order nisi that the plaintiff shall pay the costs of the application). The defendant sought leave to appeal against that costs decision. Leave to appeal was refused by the judge on 29 September 2017.

2.  The defendant renewed the application for leave before us.

3.  At the outset, it has to be reiterated that costs is very much at the discretion of the judge hearing the application and this Court has repeatedly emphasized that the scope of intervention by the Court of Appeal is very circumscribed: see Ho Shu Kwong v Chiang Chun Yuan [2002] 3 HKLRD 419, Hung Fung Enterprises Holdings Ltd v Agricultural Bank of China [2012] 3 HKLRD 679, Chan Shun Kei v Hong Kong Construction (Hong Kong) Limited CACV 192 of 2014, 7 March 2016 and Poon Ching Man v Lam Hoi Pun [2016] 3 HKLRD 815.

4.  Further, in respect of the assessment of arguability of a case on a point of fact in an Order 14 context, this Court will also be slow to intervene, so much so that it has been said that it would be surprising that a court of appeal would differ from the judge in such assessment, see Lloyd’s Bank Ltd v Ellis-Fewster [1983] 1 WLR 559 per Sir John Donaldson MR, cited with approval by Hunter JA in Worldcap Investment Ltd v Bosswell Estates Ltd   CACV 108/1988, 20 October 1988.

5.  Hence, there is a high threshold for a party seeking to appeal against the grant of leave to defend, see Treewell Development v Tsang Chun Wah [2003] 4 HKC 401; Xpoly Recycling Ltd v Gold Leader Enterprises Ltd [2011] 4 HKLRD 230; Sham Oi Yun v Ma Ching Wah HCMP 1491/2015, 30 July 2015.

6.  In our view, the same approach is applicable in respect of the judge’s assessment on whether a plaintiff should have known that an application has no prospect of success due to the merits of a defence.

7.  In the present case, the judge formed the view that the plaintiff did not misuse the Order 14 procedure notwithstanding a defence had been filed before the issue of the Order 14 summons, see [7] to [8] of the Decision on Costs of 29 August 2017.

8.  Having read Mr Kwok’s submissions on behalf of the defendant and the draft Notice of Appeal, we cannot discern any reasonably arguable ground meeting the high threshold for disturbing this assessment by the judge.  The mere fact that a line of defence was known to a plaintiff does not mean that he should have known that it was not appropriate to proceed by way of application for summary judgment.  Much depends on the available evidence and the assessment on the probity of proceeding by way of Order 14 is very often a matter of judgment.  A wrong judgment in this respect does not necessarily call for sanction in the same manner as an abuse of the procedure.

9.  Mr Kwok laid much emphasis on the judge’s dismissal of the application in his judgment of 24 March 2017. 

10.1.   In the present case, the Deputy Judge ordered both:

(a) that the Order 14 summons be dismissed; and

(b) that there be unconditional leave to defend.

10.2.   This Court (Fuad VP and Hunter JA) has said that making both these orders at the same time is “confusing” (Worldcap Investment Ltd v Bosswell Estates Ltd CACV 108/1988, 20 October 1988, unreported, p 6) and judges should avoid doing so to prevent misunderstanding by the parties and their legal advisers. 

11.1.   In respect of (a), an order to dismiss should be made where the case is not within the Order or where the plaintiff knew, before the issue of the summons, that the defendant was relying on an arguable defence: Order 14 rule 7(1) RHC and §§14/7/1, 14/7/2 and 14/7/3, Hong Kong Civil Procedure 2018. 

11.2.   Accordingly, on dismissal of the summons, it would be normal for the court to order the plaintiff to pay the costs in any event or forthwith: §14/7/4. 

11.3.   Practice Form 42 shows the standard order when an Order 14 summons is dismissed: FM-PF42, Hong Kong Civil Procedure 2018 Court Forms, p 216.

12.1.   In respect of (b), an order that there be unconditional leave to defend should be made where the defendant shows he has a good defence on the merits, or a triable dispute on the facts, etc: §14/4/2. 

12.2.   When such an order is made, the normal costs order is for costs to be in the cause: §14/7/13. 

12.3.   Practice Form 35 shows the standard order when unconditional leave to defend is given: FM-PF35, p 202. 

12.4.   There may however be situations where the court in the exercise of its discretion may order the plaintiff to bear part of the costs: §14/7/13, eg a failure to communicate in Alviero Martini SPA v Bubble Retail Management Ltd HCA 1937/2008, 2 October 2009, unreported.

13.  In the present case, by both ordering that the Order 14 application be dismissed and that the defendant be given unconditional leave to defend, the Deputy Judge might have made it difficult for the parties to understand his costs order nisi. However, whatever may have been the original position, he made his position clear in his Decision on Costs when he expressed the view that the Order had not been misused.

14.  As the judge has subsequently explained in the Decision on Costs, he did not find any misuse of the Order 14 procedure by the plaintiff.  In such circumstances, it must be well within his power to make the costs of the application costs in the cause as he did.

15.  The intended appeal does not have a reasonable prospect of success.  Nor do we see any other reason in the interest of justice for leave to be granted.

16.  We therefore dismiss the summons of 12 October 2017 and order the defendant to pay the costs of the plaintiff in the summons.  Though Mr Alder asked for costs on indemnity basis, we are content with ordering costs on the usual party and party basis.  Having regard to the statement of costs of the plaintiff of 26 October 2017 (asking for $84,845 of which $18,000 is counsel’s fee), we fix such costs by way of gross sum assessment at $45,000.