NEW ART HOLDINGS CO., LTD. AND OTHERS v. T&T ART CO., LTD (Formerly known as EST-OUEST AUCTIONS CO., LTD AND OTHERS

HCA 325/2024

[2025] HKCFI 2646

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 325 OF 2024

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DECISION

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I. INTRODUCTION

1.  Before me is the Plaintiffs’ application to vary my various costs orders nisi made in my Decision handed down on 7 May 2025 ([2025] HKCFI 1774)  (the “Decision”).  In the Decision, I ordered that:-

(1)  On the Defendants’ Summonses, the Plaintiffs shall pay the Defendants costs; and

(2)  On the Plaintiffs’ Order 14 Summons, the Plaintiffs shall pay the Defendants costs.

2.  The Plaintiffs apply to vary the costs orders to be no order as to costs.

3.  There are various grounds advanced by the Plaintiffs in support of the application.  I shall deal with them one by one.

II.  DEFENDANTS SHOULD HAVE INFORMED PLAINTIFFS EARLIER

4.  The first ground is concerning costs on the Defendants’ Summonses.  In this ground, the Plaintiffs contend that after receiving the draft Amended Statement of Claim on 15 April 2025, the Defendants should have informed the Plaintiffs earlier that the Defendants would not pursue the stay application so that a considerable amount of costs and time would have been saved.

5.  I reject such contention because:-

(1)  After receipt of the draft Amended Statement of Claim, it was reasonable for the Defendants to take time to consider the latest development and to take advice from their legal advisers.  This could not be expected to be a matter of hours. 

(2)  Further, from the receipt of the draft Amended Statement of Claim on 15 April 2025 until the hearing on 23 April 2025, 18 and 21 April 2025 were public holidays and 19 and 20 April 2025 were Saturday and Sunday.  Even taking the Plaintiffs’ suggestion to the effect that lawyers in Hong Kong are hardworking during holidays, it does not follow that in the present circumstances, it would be unreasonable for the Defendants to make their stance known only during the hearing.

(3)  Therefore, I think it was not late at all for the Defendants to confirm their stance not to pursue the stay application at the start of the hearing.

(4)  Lastly, I should say that I do not understand why the Plaintiffs would complain about this.  The Plaintiffs, having indicated that they would abandon their claim in their Affirmation filed on 3 March 2025, sat on it for more than a month until 15 April 2025 to come up with the Amended Statement of Claim, and it would be unreasonable for the Plaintiffs then to expect the Defendants to revert within one or two days.

6.  It remains for me to say that the Plaintiffs submit that briefs to counsel were not yet issued on 15 April 2025 (just the day before skeleton submissions would have to be filed and served).  However, the Plaintiffs are not proposing that certificate for counsel should not have been granted, and if they would so propose, I would rightly reject such proposal.  Irrespective of whether counsel were briefed on 15 April 2025 or after that, it is clear to me that counsel would have to be involved in the hearing before me.  Therefore, the Plaintiffs’ such submissions do not take them anywhere.

III.  DEFENDANTS WOULD HAVE PURSUED STAY APPLICATION IN ANY EVENT

7.  The second ground is also concerning the Defendants’ Summonses.  In this ground, the Plaintiffs submit that despite the amendment, the Defendants’ primary position remained that the amendment should not be allowed in the absence of any proper application by the Plaintiffs to lift the Interim Stay. I think there is some truth in it.  Even during the oral submissions, the Defendants’ counsel, though not taking too much time, still advanced the submissions that there should have been an application to uplift the Interim Stay first before there would be any amendment.  Time was indeed spent on this point, and the Defendants lost on this point.  This point was a self-contained point, going only to the proper construction of the Interim Stay Order.  In my view, it is appropriate to apportion 20% of the costs to this issue, and the Defendants should bear this 20% because they lost on this point.

8.  The 3^rd and 4^th Defendants submit that they took less time on this issue.  That may be true in terms of time spent by the 3^rd and 4^th Defendants, but their position was not that it would take totally different reasons for their stance.  It is fair to say that all the Defendants adopted each other’s submissions in this aspect.  The Plaintiffs would still have to spend the same amount of time on this issue jointly raised by all the Defendants.  So, I do not agree with the 3^rd and 4^th Defendants’ submissions that they took less time and so the apportionment for them should be more favourable to them.

IV.  PLAINTIFFS’ WITHOUT PREJUDICE OFFER

9.  The third ground is that by letter dated 8 April 2025, the Plaintiffs made a without prejudice offer to the Defendants that the matter shall be settled by way of a Tomlin Order with no order as to costs, the agreement being that each of the Defendants should undertake to refrain from passing off.

10.  This without prejudice offer did not deal with the Defendants’ Summonses, and insofar as it is suggested that this offer concerned the Plaintiff’s Order 14 Summons, I dismissed the Plaintiffs’ Order 14 Summons.  This means that the Plaintiffs are nowhere doing better than the without prejudice offer.  Further, as I pointed out in §30 of my Decision, the 1^st, 3^rd and 4^th Plaintiffs do not have any locus in the passing-off claim, which has become the only claim after the Plaintiffs’ amendment.  In the circumstances, I do not see why rejecting such offer would be unreasonable.

11.  All in all, I do not see how this without prejudice offer and how the Defendants replied to it would have impact on the costs of the Defendants’ Summonses and the Plaintiffs’ Order 14 Summons.

V.  NO DUPLICATION OF JAPANESE PROCEEDINGS AND HONG KONG PROCEEDINGS?

12.  The fourth ground is concerning the Defendants’ Summonses.  The Plaintiffs take the view that I was wrong in paragraph 16 of the Decision to say that “those parts (except for the claim of passing-off)  the Defendants sought to stay were subject matters of [the] existing Japanese proceedings”. The Plaintiffs explain in the following terms in §29 of their Skeleton Submissions:-

“i. Ps in the present action argue that D2 and D4 owed fiduciary duties to P2, and to P1. They further argue that D2 and D4 acted in breach of their fiduciary duties by remitting the sum of JPY 36,488,200 to D1, and that D1 is liable to account to P2 as constructive trustee.

ii. These arguments are not the subject of any proceedings in Japan. Ps did not know the facts underlying these allegations when the proceedings in Japan were filed.

v. It appears from para 16 of the Decision that (1)  this Honourable Court took the view that the entirety of the proceedings in HCA 325/2024 were justified as these were identical to the subject matters litigated in Japanese courts, and (2)  the Ds were therefore likely to be granted their application for stay.

vi. Yet, regarding point (1), as explained above, there remain substantive issues in Ps’ SOC which are not the subjects of any proceedings in Japan and which must be litigated in Hong Jong – thus making it at least partially, if not entirely, justified for Ps to pursue their arguments in Hong Kong in the present action. Any stay of the proceedings will and should not affect the part of the proceedings referred to above which are unique and specific to Hong Kong.” (emphasis added)

13.  First, I already explained in §20 of the Decision that it was impossible to stay only parts but not others of the claim because in the original Statement of Claim, the allegations were so intertwined that such a partial stay would not be feasible.

14.  Second and in any event, the JPY 36,488,200 clearly was a subject matter of the Second Japanese Proceedings.  In §15 of the 4^th Affidavit of Robert Osborne Lee filed on behalf of the Plaintiffs in opposition to the Defendants Summonses, it was said that:-

“Second, the Second Japanese Writ dated 8^th September 2022 concerned the 2^nd Plaintiffs claim for ¥36,488,200 against the 2^nd and 4^th Defendants, in respect of misappropriation by them in Japan of funds of the 2^nd Plaintiff, which they controlled because they were still directors at the time.”

15.  The Plaintiffs’ contention that there was no duplication is based upon there being different causes of action and there being not the identical parties (except the 2^nd Plaintiff, and the 2^nd and 4^th Defendants)  in the two sets of proceedings.  However, the JPY 36,488,200 was clearly the same subject matter, and three of the parties were identical.  That one pursues the same subject matter, though on different causes of action in proceedings commenced in different jurisdictions against some but not all of the parties, should still be regarded as duplication.   It is a matter of extent.  For example, a finding in the Japanese Proceedings that there was no misappropriation at all would definitely have a material effect on the present action.  Duplication to this extent, coupled with the fact that the Japanese Proceedings had been pursued substantively and substantially (see §16 of the Decision), justified an application to stay.

16.  Therefore, I do not see how this no-duplication ground would advance the Plaintiffs’ present application.

VI.  CONCLUSION

17.  In conclusion, I do not see any ground to vary my costs order nisi on the Plaintiffs’ Order 14 Summons, namely, the Plaintiffs should pay the Defendants costs of the Plaintiffs’ Order 14 Summons, to be summarily assessed.  I accordingly make it absolute.

18.  As regards the Defendants’ Summonses, for reason explained in §7 above, the Defendants should be liable to pay the Plaintiffs 20% of the costs of the Defendants’ Summonses, and the Plaintiffs to the Defendants 80%.  Taking a broad-brush approach, after setting off, the Plaintiffs should pay the Defendants 60% of the costs of the Defendants’ Summonses, to be summarily assessed.  And so I make a costs order absolute accordingly.

19.  As regards the costs of the present application, the Plaintiffs have only partially succeeded, limited to the variation set out in the preceding paragraph.  I order that the Plaintiffs shall pay the Defendants 75% of the costs of the present application, to be summarily assessed.

20.  It remains for me to thank counsel for their assistance.