COMPANY A AND OTHERS v. COMPANY D AND OTHERS

HCCT 31/2018

[2019] HKCFI 941

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS
NO 31 OF 2018

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DECISION ON COSTS

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1.  In my Decision dated 15 February 2019 (“the Decision”), I discharged the ex parte injunction previously obtained by Ps, and made an order nisi that (1) the costs of and occasioned by D1 – D2’s Summons dated 6 August 2018 (including all reserved costs) be paid by Ps to D1 – D2 to be taxed if not agreed, with a certificate for two counsel and (2) the costs of and occasioned by D3’s Summons dated 30 July 2018 (including all reserved costs) be paid by Ps to D3 to be taxed if not agreed, with a certificate for two counsel.

2.  By two separate summonses dated 1 March 2019 (“the Variation Summonses”):

(1)   D1 – D2 sought to vary my costs order nisi to read as follows:  

“ the costs of and occasioned by the 1^st and 2^ndDefendants’ Summons dated 6 August 2018 (including the costs of the hearing on 11 May 2018 and 18 May 2018 and other reserved costs) be paid forthwith by the Plaintiffs to the 1^st and 2^ndDefendants on an indemnity basis, to be taxed if not agreed, with a certificate for two counsel”;

(2)   D3 sought to vary my costs order nisi to contend that (a) the costs of and occasioned by D3’s Summons dated 30 July 2018 (including all reserved costs) be paid forthwith by Ps to D3 on an indemnity basis, to be taxed if not agreed, with certificate for two counsel and (b) the costs of and occasioned by its variation application be to D3 payable forthwith on an indemnity basis.

3.  The parties have agreed that the Court should deal with the Variation Summonses on paper and written submissions have now been filed by the parties, which have been considered by the Court.

4.  All three defendants contend that (1) costs should be ordered against the plaintiffs on an indemnity basis because the ex parte injunction was discharged on the ground of serious and deliberate material non-disclosures and (2) costs should be paid by the plaintiffs forthwith.

5.  By a letter dated 27 March 2019, Ps’ solicitors wrote to the Court and stated Ps’ position as follows:

“ The Plaintiffs position in relation to both Applications [i.e. the Variation Summonses] is that without admissions as to the basis upon which the Applications are made, the Plaintiffs will not oppose, but do not consent to the Applications. In the interests of saving costs and the court’s time, the Plaintiffs intend not to file any further written submissions in relation to the Applications and would be grateful if the court would determine the Applications as it see fit.”

6.  I am satisfied that the plaintiffs should bear the costs of all three defendants’ costs in their respective substantive discharge application on an indemnity basis: 

(1)   In S Gee QC, Commercial Injunctions (6^th ed, 2016), the learned author at §24-044 stated:

“ Although material non-disclosure on the ex parte application is a breach of the claimant’s duty to the court, there is no general practice of the court that where there has been non-disclosure, and costs are to be awarded against the claimant, they ought to be on an indemnity basis. However, the fact that there has been material non-disclosure is plainly a relevant factor to be taken into account on the question of costs and is capable of justifying an award on this basis, and such an order will usually be made if the non-disclosure was deliberate or seriously culpable.”

See also Velatel Global Communications Inc v Chinacomm Ltd(unreported, HCA 1978/2011, 8 March 2013) §6 (Au-Yeung J).

(2)   In the Decision, I found that (a) two of the three non-disclosures to be material, serious and deliberate, (b) there was no real risk of dissipation of assets and (c) it was neither just nor convenient to continue the injunction.

(3)   In these circumstances, I consider it appropriate to order costs on a higher basis against the plaintiffs.

7.  I am also satisfied that the costs to be borne by the plaintiffs should be paid forthwith: 

(1)   The courts are now more astute to the impact of costs on legal proceedings.  An order for immediate payment of costs will be made more readily in pursuing or resisting unmeritorious or unwarranted interlocutory applications.  In deciding whether or not to make an order for immediate taxation, the court must exercise its discretion having regard to all relevant circumstances and the underlying objectives set out in Order 1A, rule 1 of the Rules of the High Court, including butnot limited to (a) the extent to which the proceedings are from a taxation point of view severable and self-contained from the rest of the action, (b) the justice of making such an order having regard to the effect on the cash flow of the respective parties, (c) whether the amount at stake on the taxation was sufficient to justify putting the parties to the expense of having a separate taxation for it rather than bringing it on the final taxation, and (d) the possibility that there may be no trial.  See Midland Business Management Ltd v Lo Man Kui (No 2) [2011] 2 HKLRD 667 at §§7 – 12 (Lam J (as he then was)); Wing Fai Construction Co Ltd v Yip Kwong Robert (No 2) (2012) 15 HKCFAR 454 at §§4 – 8 (Ribeiro PJ).

(2)   In the present case, I consider that the following matters are relevant to the exercise of my discretion:

   (a)   The costs involved in the discharge applications initiated by the three defendants are likely to be fairly substantial to justify having a separate taxation.

   (b)   The only substantial relief sought against the defendants in the plaintiffs’ originating summons in these proceedings isthe continuation of the ex parte injunction (which has now been discharged) pending the full determination of theforeign arbitral proceedings.In view of the conclusions inthe Decision from which there is no appeal, it is unlikely that there will be a substantive trial in these proceedings.

   (c)   There is nothing before me to suggest that the making of an immediate taxation order will have any effect on the cash flow of any parties.

(3)   In these circumstances, I consider it just and appropriate to make an order for immediate taxation.

8.  Finally, D1 – D2 have asked the costs order to expressly include the costs of the hearing before G Lam J on 11 May 2018 and the hearing before L Chan J on 18 May 2018, which were reserved.  The two hearings were necessitated by the plaintiffs’ application for the ex parte injunction which has now been discharged, and it seems just to me that the costs of the two hearings should also be paid by the plaintiffs to the defendants forthwith on an indemnity basis.

9.  For the above reasons, I allow the Variation Summonses and make the following orders:

(1)   Paragraph 92(2) of the Decision is varied to read: “An order that the costs of and occasioned by D1 – D2’s Summons dated 6 August 2018 (including the costs of the hearings on 11 and 18 May 2018 and all other reserved costs) be paid by Ps to D1 – D2 forthwith on an indemnity basis, to be taxed if not agreed, with a certificate for two counsel.”

(2)   Paragraph 92(3) of the Decision is varied to read: “An order that the costs of and occasioned by D3’s Summons dated 30 July 2018 (including the costs of the hearings on 11 and 18 May 2018 and all other reserved costs) be paid by Ps to D3 forthwith on an indemnity basis, to be taxed if not agreed, with a certificate for two counsel.”

(3)   The costs of and occasioned by the Variation Summonses be paid by the plaintiffs to the defendants forthwith on an indemnity basis, to be taxed if not agreed, with a certificate for one counsel.