LUCKY SUN DEVELOPMENT LTD AND ANOTHER v. GAINSMATE INTERNATIONAL LTD AND OTHERS

HCCT 12/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO. 12 OF 2007

__________________

__________________

__________________

D E C I S I O N

__________________

1.  There are three applications relating to costs.  The first application is by the plaintiffs for several variations of a costs order nisi that I made when discharging an ex parte injunction.

2.  On 2 October 2007 I discharged an ex parte injunction on the basis of material non-disclosure.  The non-disclosure related to a number of important matters.  I made a costs order nisi that the plaintiffs do pay the defendants the costs of the plaintiffs’ ex parte application and of the defendants’ application to discharge.  The plaintiffs applied to have this order varied in three aspects.

3.  The first aspect is on the costs of the ex parte hearing on 12 February 2007.  Before the ex parte application was made, the plaintiffs had given notice to the defendants’ former solicitors of their intention to apply.  The defendants’ former solicitors went to court at the appointed time, but they did not assume any position at the bar table, they just sat at the public gallery for the purpose of a watching brief.  Thus the defendants did not appear on that occasion.

4.  My costs order nisi covered the costs of the ex parte application.  However, since the defendants had not appeared at the application despite the plaintiffs’ invitation, I do not think they should be entitled to any costs for that appearance.  I therefore vary my order nisi to the extent that there be no order as to costs for the ex parte application on 12 February 2007.

5.  The second aspect of the plaintiffs’ application is on the costs for the hearing on 16 February 2007.  That was a hearing of the defendants’ first application for discharge.  It was limited to an attack of the plaintiffs’ undertaking of damages.  The defendants had not filed any affidavit yet.  That application was unsuccessful and Deputy Judge D Pang reserved the costs.  My order nisi did not expressly refer to these costs.  However, if these costs were not covered by my order nisi, I would also deal with them now.

6.  Mr Chan for the defendants says that they have now succeeded in the discharge after having filed evidence, they should therefore have the costs for that day.  Alternatively, there should be no order as to costs.  Though the defendants have succeeded after full argument and after having filed evidence, their first application for discharge was still unsuccessful.  If the defendants had not prepared their case sufficiently, they should not have made the application for the discharge.

7.  Mr Chan also mentioned that the ex parte order did not have a returnable day.  But I do not think it necessary for leading counsel to go to court to seek such a date.  It was merely an incidental matter that counsel also dealt with at the hearing.

8.  In the circumstances, I do not see any reason not to follow the usual rule.  I make a second variation of the costs order nisi to the extent that the defendants do pay the plaintiffs the costs of the application for discharge on 16 February 2007.

9.  The last part of the first application is on the costs for the substantive argument for discharge which took place on 14 to 17 May 2007.  The plaintiffs lost the battle and hence my order nisi that they should pay the costs to the defendants.  However, I re-granted a small part of the ex parte order against the 1st and 2nd defendants without making any costs order for the re-grant.  The plaintiffs now suggest that the costs of the hearing of discharge and the costs of the re-grant should be in the costs of the arbitration proceedings because the injunction was applied for in aid of those proceedings and for preservation purpose.  Alternatively, they ask for the costs for the application for discharge be the 1st and 2nd defendants’ costs in the cause of the arbitration proceedings and the costs of the re-grant be the plaintiffs’ costs in the cause of those proceedings. 

10.  The fact that the injunction was applied for in aid of arbitration proceedings is no different from any injunction applied for in aid of an action pending in this court.  The fact that the injunction was for preservation purpose also does not amount to a distinction.  If the plaintiffs have lost the argument, they should pay the costs for it.

11.  I also consider the costs for the re-grant.  The argument for the re-grant took very little time.  Though the issue was mentioned a number of times, there were not too many points raised by the plaintiffs in support of it. 

12.  The re-grant does not affect the 3rd defendant, there will thus be no costs of re-grant against it.  I make no further variation of the costs order nisi in relation to the 3rd defendant.

13.  Since very little time had been taken up for arguing the re-grant, I further vary my costs order nisi to the extent that the plaintiffs do pay the 1st and 2nd defendants 85 per cent of the costs of the application for discharge and of the application for re-grant which were heard on 14 to 17 May 2007.

14.  I now come to the defendants’ application to vary my costs order nisi given on 9 October 2007 upon my dismissal of the defendants’ application to stay the re-granted order.  I dismissed the application because I was not convinced that there was reasonable prospect of success on the appeal.  I also made the costs order nisi against the defendants.

15.  The defendants applied for stay again before Yuen JA, on 15 November 2007.  The learned judge took a contrary view and stayed the execution of the re-granted order.  Before Yuen JA, stayed the order, the defendants had already applied on 23 October 2007 to vary the costs order nisi to costs of the application for stay be in the cause of the defendants’ appeal.

16.  Mr Chan asks me to take the decision of Yuen JA into consideration and vary the costs order nisi.  I do not think it right to do so.  I should not make a decision by contemplating what the Court of Appeal may do.  However, the 1st and 2nd defendants have indeed launched an appeal against the re-granted order.  I refer to paragraph 59/13/8 of Hong Kong Civil Procedure 2008, Volume 1.  I think the correct order of costs should be in the cause of their appeal in Civil Appeal No. 341/2007.  I therefore vary the costs order nisi given on 9 October 2007 to these terms.

17.  I now deal with the defendants’ application for interim payment of costs under O. 62 r. 9A.  The defendants made this application on the assumption that they would obtain favourable costs order(s).  They turn out to be right.  O. 62 r. 9A(1) reads:

“	(1)	If a party makes or resists an application at any stage of proceedings before the Court, the Court may-
		(a)	if the Court considers the application or resistance to the application, as the case may be, to be frivolous or vexatious; or
		(b)	for any other reason that the Court in the circumstances of the case considers just,
		when ordering costs against that party in respect of the application, order that party to pay forthwith to any other party to the application an amount which in the opinion of the Court approximates the costs that would be allowed on taxation.”

18.  The defendants are relying on limb (b).  This is not the same as frivolous or vexatious conduct on the part of the other party.  The defendants say that the plaintiffs are BVI companies and there is no evidence of any of their assets within this court’s jurisdiction.  They also say that this litigation is expensive and, bearing in mind the very contentious attitude of the parties, taxation is going to take long.  The defendants’ solicitors also undertake that they would keep the interim payment if ordered until the issue of an allocator.  This undertaking is to allay the fears of the plaintiffs that if interim payment should be ordered and turn out to be excessive, the plaintiffs may not be able to recoup the excessive part from the defendants.

19.  I am referred to the decision of Stone J in Dallah Albaraka (Ireland) Ltd v Symphony Gems N V and Others (2) [2005] 4 HKLRD 2006 at paragraphs 30 to 37.  The learned judge made an order of interim payment because:

“	the plaintiff has put these defendants to the necessity of such expenditure in the regrettable manner which has occurred.”

20.  Each application depends on its own facts.  I also refer to the statement of Mr Recorder Paul Shieh, SC, in Newmark Capital Corp. Ltd. and Others v Coffee Partners Limited and Another, HCA1271/2006 at paragraph 13:

“	After all, the matter is one of discretion and the court’s assessment of what is just.”

21.  Though the plaintiffs are BVI companies, rule 9A does not provide for a remedy for the omission to apply for security for costs.  I have considered the defendants’ other arguments as referred to above as well.  I do not think these several arguments when put together would make this case an exception of the ordinary contentious proceedings.  I dismiss the defendants’ summons for interim payment.  The defendants will have to proceed to taxation for their costs in the usual manner.

22.  I now hear arguments on the costs of these applications.

(Discussions re costs)

23.  Since the plaintiffs have lost more in their summons of 16 October 2007 to vary my order nisi, I order that they pay the defendants 70 per cent of the costs of that summons.

24.  For the defendants’ summons dated 23 October 2007, the 1st and 2nd defendants have succeeded, I order the plaintiffs to pay them the costs of this summons.

25.  For the defendants’ summons dated 12 December 2007 for interim payment, they have lost it and they have to pay the plaintiffs the costs of this summons.  However, I disallow the costs of the fourth affirmation of Xu Huijun filed on 23 January 2007 because that evidence is irrelevant for the consideration of the defendants’ summons.

26.  For the hearing on 21 December 2007, the plaintiffs were wrong in fixing a 30-minute hearing for a lengthy matter.  The defendants were also wrong to put in two more summonses for the same hearing.  The plaintiffs’ action to remedy the situation came too late.  They should have taken efforts to rearrange the hearing back in the middle of October 2007 when they were given the 30-minute hearing as it was obviously insufficient.  But they waited until 18 or 19 December before making any enquiry on whether the court would be able to give them more time for their summons.  At that time the defendants had also fixed their two summonses in the same 30-minute slot.

27.  All parties were at fault which resulted in the waste of that hearing.  I therefore make no order as to costs for the hearing on 21 December 2007.