PETER CHEUNG & CO, SOLICITORS (a firm) v. PERFECT DIRECT LTD AND ANOTHER

HCMP 2493/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2493 OF 2012

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HCA 115/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 115 OF 2013

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DECISION ON COSTS

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1.  On 14 March 2016, a hearing took place before me in respect of two applications, one being the originating summons (“Interpleader Summons”) taken out by Peter Cheung & Co, (“Applicant”) solicitors as interpleader in HCMP 2493/2012 (“HCMP Action”) and another being the summons of Perfect Direct Limited (“PDL”), the 1^st claimant in the HCMP Action and of New Heaven Investments Limited and Rondo Development Limited, the 1^st and 2^nd plaintiffs (“Plaintiffs”) in HCA 115/2013 (“HCA Action”) for the consolidation of the HCMP Action and the HCA Action (“Consolidation Summons”). On 15 March 2016, I gave judgment dismissing the Consolidation Summons and in respect of the Interpleader Summons, I ordered the release of the convertible bonds to Yu Guolin (“Yu”) held by the Applicant.

2.  Directions were given for the question of costs to be dealt with on paper.  Written submissions have been received from Ms Li, as counsel for Yu in the Interpleader Summons, Mr Ah-weng, as counsel for Yu in the Consolidation Summons and Mr Sio, as counsel for PDL and the Plaintiffs in the two sets of proceedings. 

3.  Ms Li seeks an order that the costs of the Interpleader Summons be awarded to Yu on an indemnity basis to be taxed if not agreed, with certificate for counsel.  Mr Ah-weng seeks an order that the costs of the Consolidation Summons be awarded to Yu on an indemnity basis to be taxed if not agreed, with certificate for counsel.  As for Mr Sio, he takes the view that the costs between PDL and Yu for the Interpleader Summons should be awarded on party and party basis with certificate for counsel, while the costs for the Consolidation Summons in the HCMP Action should be awarded to Yu on party and party basis with counsel certificate, but the costs for the Consolidation Summons in the HCA Action should be awarded to Yu on a party and party basis without counsel certificate.

4.  The disputes between the parties therefore are (i) whether costs for both the Interpleader Summons and the Consolidation Summons should be awarded to Yu on party and party or indemnity basis, and (ii) whether counsel certificate for the Consolidation Summons should be granted in both the HCMP Action and the HCA Action or only in HCMP Action.  Of course the discretion of the court is unfettered and I may order costs to be awarded on some other basis.

Background of the HCMP Action and the HCA Action

5.  The background of the HCMP Action set out below is adopted from para 4 of the skeleton submissions of Ms Li prepared for the hearing of 14 March 2016, which Mr Sio did not dispute.

(a)   PDL is an investment holding company holding a large amount of convertible notes of Bright International Group Ltd. (“the Company”).  Yu is a businessman and was at the material time the legal owner of $83,000,000 convertible notes ($83,000,000 CB”).

(b)   On 28 June 2010, Yu converted the $83,000,000 CB into 138,333,333 converted shares in the Company.

(c)   On 13 July 2010, Yu, PDL and one Mr Deng Chongyun entered into an agreement (“the Guarantee Agreement”) under which PDL guaranteed that the said 138,333,333 converted shares would at least be worth a market value of HK$150,000,000 (“the Guaranteed Market Value”) upon the expiry of 10 months.  PDL further agreed to charge two convertible notes at a face value of HK$150,000,000 (“the Bonds”) held by it as security to guarantee the aforesaid Guaranteed Market Value.  The Bonds are the subject matter of the interpleader proceedings.

(d)   On 20 July 2010, PDL and Yu as principals and the Applicant as stakeholder entered into a Stakeholder Agreement whereby the Applicant agreed to hold the Bonds and ancillary transfer documents as stakeholder.

(e)   The Stakeholder Agreement provides that if PDL fails to discharge its duties and obligations under the Guarantee Agreement, the Applicant upon the notice of Yu should immediately release the Bonds and all transfer documents to Yu so as to compensate Yu’s losses and damages arising from PDLs’ breach of the Guarantee Agreement.

(f)   At the expiry of 10 months, market value of the said 138,333,333 converted shares was below the aforesaid Guaranteed Market Value.

(g)   Pursuant to the Guarantee Agreement and the Stakeholder Agreement, Yu requested the Applicant to release the Bonds and the transfer documents, but PDL instructed the Applicant not to release the said items.

(h)   By an Originating Summons filed on 5 November 2012, the Applicant took out the present proceedings for interpleader reliefs.

(i)   Section 7 of the Guarantee Agreement requires the parties to resolve their disputes arising out of or in connection with the Guarantee Agreement through arbitration. Therefore, on 8 January 2013, by a consent summons, the Applicant, PDL and Yu agreed to stay the interpleader proceedings with liberty to restore for PDL and Yu to refer their disputes to CIETAC Shanghai Sub-committee for arbitration.

(j)   An arbitration tribunal in Shanghai was duly constituted (“Mainland Tribunal”) and the arbitration was duly commenced.

(k)   On 28 November 2013, the Mainland Tribunal issued an arbitral award (“Mainland Award”) in favour of Yu including inter alia that Yu is entitled to the ownership of the Bonds with the first prioritized right of compensation upon its appropriation.

(l)   Nonetheless, PDL failed to comply with any of the orders for damages or costs in the Mainland Award.  PDL also did not take out an application to set aside or appeal the Mainland Award in the PRC.

(m)   By a summons filed on 14 May 2014, Yu applied for ex parte leave in HCCT 24/2014 to enforce the Mainland Award in Hong Kong pursuant to Order 73, rule 10 of the Rules of the High Court (Cap 4A) and section 92 of the Arbitration Ordinance (Cap 609)(“AO”).

(n)   On 10 June 2014 (later amended on 24 June 2014), Yu obtained an Enforcement Order granted by Hon Madam Justice Mimmie Chan against PDL granting leave to enforce the Mainland Award in Hong Kong.

(o)   The Enforcement Order was served on PDL on 18 November 2014.

(p)   According to para 2 of the Enforcement Order, PDL may apply to set aside the Enforcement Order within 14 days after the service of the order. Until this date, there is no such application taken out by PDL.

(q)   Pursuant to the Enforcement Order, on 30 March 2015 and 10 April 2015, Yu requested the Applicant for the immediate release of the Bonds and the transfer documents.  The Applicant refused to release the said items but proposed the matter be dealt with in the present interpleader application.

(r)   Therefore, Yu applied and obtained leave to restore the present Originating Summons by the Order granted by Master M Wong on 23 September 2015 pursuant to a consent summons.

6.  According to the summary in the skeleton submissions of Mr Sio, in the HCA Action, the Plaintiffs seek reliefs against Yu including the transfer of convertible notes which they say the $83,000,000 CB forms part.  It is the Plaintiffs’ case that on 8 June 2010, they entered into an oral contract with Yu for the purpose of contracting Yu as a selling agent to sell convertible notes in the principal amounts of HK$53,000,000 and HK$27,000,000 respectively (“Convertible Notes”), the gist of which is for Yu to endeavour to sell the Convertible Notes at a total price of not less than HK$64,000,000 whereupon Yu would be allowed to retain any excess as consideration. 

7.  The Plaintiffs allege that the Convertible Notes were held by Yu in trust on their behalf. The Plaintiffs also claim that Yu had not paid for them, but had transferred part of the Convertible Notes to other parties without the knowledge of the Plaintiffs.

8.  Yu’s pleaded case is that Yu acquired the $83,000,000 CB, including the Convertible Notes, through 3 agreements from March to May 2010 which relate to investments regarding the injection of various mines and companies as assets into a Hong Kong listed company.  The trail of the Convertible Notes then follows that in the HCMP Action; that is, they were converted into shares of the Company pursuant to the Guarantee Agreement and the Bonds provided as security were held by the Applicant pursuant to the Stakeholder Agreement.

9.  Certain features in the procedural history of the matters are also relevant.  There had already been three case management conferences in the HCA Action.  At the hearing on 14 March 2016, Mr Sio submitted that consolidation was suggested to the parties by the Master at the latest case management conference held on 19 January 2016.  Mr Ah-weng has also brought up this matter about the case management conferences which he himself had attended.  According to him, Mr Registrar Lung and Master A Ho had on 11 November 2015 and 19 January 2016 respectively asked parties to consider whether consolidation was required. 

10.  The date of 14 March 2016 for hearing of the Interpleader Summons was fixed back on 9 October 2015. The Consolidation Summons was taken out on 4 March 2016, five clear working days before the hearing on 14 March 2016, but filed only in the HCMP Action and not in the HCA Action.  The supporting affirmation was filed only on 8 March 2016, three clear working days before the hearing.  Skeleton submissions of PDL were received by the solicitors of Yu at about 5pm on Friday, 11 March 2016.  No skeleton submission had been filed on behalf of the Plaintiffs.  Further, no pleadings or witness statements of the HCA Action have been filed by PDL or the Plaintiffs to substantiate their case that there are common issues to be tried.

Basis for award of costs

11.  Separate sets of written submissions were submitted on behalf of Yu on the costs order to be made for the Interpleader Summons and the Consolidation Summons.  In respect of the basis of the costs order, some of the grounds relied on and the facts considered relevant by the two counsel are similar.  For convenience purpose, I will refer to them as a whole as submissions made by counsel of Yu.

12.  In support for a costs order in favour of Yu on indemnity basis, counsel of Yu referred me to the general principles in the award of indemnity costs stated in the case of Town Planning Board v Society for Protection of the Harbour Ltd (no 2) [2004] 2 HKLRD 94. That is, apart from cases which have been brought with an ulterior motive or for an improper purpose, the court may take into account other factors which render the award of indemnity costs “appropriate”.

13.  In the context of the enforcement of an arbitral award, counsel of Yu referred to the commentary in para 73/10/6 of the Hong Kong Civil Procedure 2016 which states that “…where a party is unsuccessful in setting aside or resisting enforcement of the arbitral award, the court will normally order costs on an indemnity basis”.  The following reasons given by Reyes J in the case of A v R [2010] 3 HKC 67 at p79 and referred to by Hon Tang VP (as he then was) in the case of Gao Haiyan v Keeneye Holdings Ltd (No 2) [2012] 1 HKC 491 have been set out in the written submissions of counsel of Yu:

“67. Parties should comply with arbitration awards. A person who obtains an award in his favour pursuant to an arbitration agreement should be entitled to expect that the Court will enforce the award as a matter of course.

68. Applications by a party to appeal against or set aside an award or for an Order refusing enforcement should be exceptional events. Where a party unsuccessfully makes such application, he should in principle expect to have to pay costs on a higher basis. This is because a party seeking to enforce an award should not have had to contend with such type of challenge.

69. Further, given the recent introduction of Civil Justice Reform (CJR), the Court ought not normally to be troubled by such type of application. A party unmeritoriously seeking to challenge an award would not be complying with its obligation to the Court under Order 1A Rule 3 to further the underlying objectives of CJR, in particular the duty to assist the Court in the just, cost-effective and efficient resolution of a dispute.

70. If the losing party is only made to pay costs on a conventional party-and-party basis, the winning party would in effect by subsidizing the losing party’s abortive attempt to frustrate enforcement of a valid award. The winning party would only be able to recover about two-thirds of its costs of the challenge and would be out of pocket as to one-third. This is despite the winning party already having successfully gone through an arbitration and obtained an award in its favour. The losing party, in contrast, would not be bearing the full consequences of its abortive application.

71. Such a state of affairs would only encourage the bringing of unmeritorious challenges to an award. It would turn what should be an exceptional and high-risk strategy into something which was potentially ‘worth a go’. That cannot be conducive to CJR and its underlying objectives.

72. Accordingly, in the absence of special circumstances, when an award is unsuccessfully challenged, the court will henceforth normally consider awarding costs against a losing party on an indemnity basis.  The respondent will here pay the applicant’s costs on an indemnity basis.”

14.  The above passages were referred to by Hon Tang VP in the Gao Haiyan case when he considered the principles applicable to the award of costs in connection with proceedings arising out of or in connection with arbitral proceedings since the advent of the Civil Justice Reform.  As pointed out by counsel of Yu, the practice is followed subsequently in cases like Wing Hong Construction Ltd v Tin Wo Engineering Co Ltd, unreported, HCCT 13 of 2010, 3 June 2010 and Grand Pacific Holdings Ltd v Pacific China Holdings Ltd (No 2) [2012] 4 HKLRD 569.

15.  In their reply written submissions, counsel of Yu stressed that the Gao Haiyan case expressly refers to the award of indemnity costs in connection with proceedings arising out of in connection with arbitral proceedings.  The case of Chimbusco International Petroleum (Singapore) Pte Ltd and Fully Best Trading Ltd [2016] 1 HKLRD 582 was cited to show that indemnity costs had been awarded where there was an unmeritorious challenge to an arbitration agreement.  In the Chimbusco case, Mimmie Chan J commented that, at para 15:

“The observations made by Reyes J and the Court of Appeal as to the need to further the objectives of the CJR are equally applicable, as justification for awarding costs on an indemnity basis where there are challenges to an arbitration agreement. Unmeritorious challenges to an arbitration agreement, and the use of court proceedings when the parties have agreed to have their rights and disputes resolved by arbitration cannot be conducive to the underlying objectives of the CJR, bearing in mind the duties of the parties, and their lawyers, to assist the court in the cost-effective and efficient resolution of a dispute, and to ensure the fair distribution of the resources of the court.”

16.   Counsel of Yu pointed to the resistance put up by PDL to the enforcement of the Enforcement Order by Mimmie Chan J and the Mainland Award although both are final and conclusive on it.  They regarded the attempted attack by PDL of the Mainland Award as being devoid of merits.  They characterized the circumstances of the case as a display of the worst kind of abortive attempt to frustrate the enforcement of a valid award.

17.  Such circumstances include the neutral stance of the Applicant, the application of res judicata principle given that all the arguments raised by PDL had already been dealt with and rejected by the Mainland Tribunal while the allegation that PDL was under duress when it entered into the Stakeholder Agreement only surfaced after it had lost the arbitration in the Mainland Tribunal, the failure of PDL to take any action to challenge the Mainland Award for over two years and three months or to set aside or seek leave to appeal the Enforcement Order for over one year and nine months, the absence of any rational explanation for such inaction, PDL’s instruction to the Applicant not to release the Bonds and transfer documents and that the purported reliance on section 95 of the Arbitration Ordinance was not backed by any PRC legal opinion or details in the supporting affirmation filed.

18.  According to counsel of Yu, also significant among the features of the state of affairs is the manner in which the Consolidation Summons was taken out.  Whilst the hearing date of 14 March 2016 was fixed,back on 9 October 2015, for the Interpleader Summons, the Consolidation Summons was only issued on 4 March 2016, with the Consolidation Summons filed in the HCMP Action only and not the HCA Action.  The affirmation in support was only filed and served on 8 March 2016, three clear working days before the hearing, while the skeleton submissions of PDL were only served on Yu’s solicitors at about 5pm on 11 March 2016.  It is also notable, in the opinion of counsel of Yu, that such skeleton submissions only dealt with the Consolidation Summons but not the substantive issues of the Interpleader Summons, nor were any pleadings or witness statements of the HCA Action filed with the affirmation or included in the hearing bundles.

19.  It is Yu’s case that PDL never seriously sought to set aside the Enforcement Order, but it was exploiting every means available to it so that it could deploy minimum amount of its resources to delay the enforcement of the Enforcement Order and the Mainland Award.  Counsel of Yu put it to me that the belated filing of the Consolidation Summons and affirmation and the omission to file any pleadings or witness statements of the HCA Action are clearly tactical, to sidetrack the real and substantive issues in the HCMP Action so as to further delay enforcement where PDL had no ground to resist on any substantive ground.

20.  Counsel of Yu were critical of the Plaintiffs’ failure to file any documents relating to the HCA Action in support of their case that there were common issues of fact and law with the HCMP Action.  It is their case that once those documents were considered, the court could readily see that there were never any common issues of fact or law.

21.  Mr Sio argued that the Interpleader Summons is not an application to resist enforcement of the arbitral award, acknowledging that the proper forum for setting aside the award should be an application in the Construction and Arbitration List.  Nonetheless it is his contention that the Bonds should be continued to be held by the Applicant and should only be released pending the result of the HCA Action to protect the interests of both claimants, without causing significant prejudice to Yu.  It is PDL’s case that whilst there may have been delay on its part in taking substantive legal steps for setting aside the arbitral award, its resistance of the Interpleader Summons should not be treated as resistance of the enforcement of the arbitral award.

22.  There is no dispute by Mr Sio as to the chronology of events leading up to the hearing of the Interpleader Summons and the Consolidation Summons.  He however stressed that the late exchange of skeleton submissions by counsel was immaterial and should neither constitute improper or oppressive manner in litigation nor an abuse of process of the court.

23.  I do not accept Mr Sio’s argument that there is only delay on the part of PDL, which does not warrant the treating of the resistance in the Interpleader Summons as resistance of the enforcement of the arbitral award.  The order for the stay of the Interpleader Summons was made pursuant to a Consent Summons signed by all parties.  The terms of the order clearly record the stay of the proceedings pending determination of the arbitration to be conducted by the Mainland Tribunal.  Upon the issue of the Mainland Award, an order for the restoration of the Interpleader Summons was made also pursuant to a Consent Summons.  Not only was there no reason for there being no appeal against the Enforcement Order made by Madam Justice Mimmie Chan, there has also been no explanation as to why it has taken PDL so long after it agreed to the restoration of the Interpleader Summons in September 2015 to apply for consolidation if, as suggested by Mr Sio, PDL’s position has all along been that the Bonds should continue to be held by the Applicant pending the result of HCA Action.

24.  I agree with counsel of Yu that the timing of the taking out of the Consolidation Summons and the late filing of the supporting affirmation and skeleton submissions by PDL should also be viewed in such light.  Although the Consolidation Summons is not an appeal against or an application to set aside the Enforcement Order, it is clearly an attempt to delay the enforcement of an arbitral award.  The reasons given by Reyes J in the A v R case, supra equally apply in the present case.  To rule otherwise would be to encourage the bringing of unmeritorious challenges to an arbitral award, albeit not by way of an appeal or an application to set aside, and would send the wrong message that such strategy is potentially “worth a go”.  The attempt of PDL and the Plaintiffs to delay the enforcement of the arbitral award is unmeritorious and contrary to the objectives of the CJR. They should therefore meet with a costs order on indemnity basis.

25.  Even putting aside the principle of awarding indemnity costs where there is an unsuccessful challenge to an arbitral award, I find that there has been improper or oppressive manner on the part of PDL.  The omission of PDL and the Plaintiffs in filing any documents of the HC Action despite the fact that they carry the burden of proving that there are common issues is, as put by Mr Ah-weng, extraordinary. 

26.  The circumstances under which the Consolidation Summons was taken out have been outlined above.  PDL has not bothered with the giving of any reason for not filing any appeal or application to set aside the Mainland Award and/or the Enforcement Order, the belated filing of the Consolidation Summons, the supporting affirmation and the skeleton submissions.  The constraints imposed on Yu to make a proper response have been strongly protested by counsel of Yu.  I cannot see how Mr Sio can simply brush aside the requirements set out in the Practice Direction regarding the timing of the filing of skeleton submissions by the parties to say that the late exchange of skeleton submissions by counsel was immaterial.  There is therefore an added reason that indemnity costs should be awarded in both the Interpleader Summons and the Consolidation Summons.

Counsel certificate

27.  Mr Sio objects to Yu being represented by two counsel at the hearing on 14 March 2016 when Yu was represented by the same firm of solicitors, which caused submissions to overlap.  The passage in para 62/App/28 of the Hong Kong Civil Procedure 2016 is relied on by Mr Sio, which reads:

“No costs shall be allowed in respect of counsel appearing before a master in chambers or of more counsel than one appearing before a judge in chambers, unless the master or judge, as the case may be, has certified the attendance as being proper in the circumstances of the case.”

28.  Relying on the same paragraph in Hong Kong Civil Procedure 2016, Mr Sio suggests that the test for counsel fee is “necessary or proper”.  He also refers to the principles set forth in Order 62 rule 38A on the factors to be taken into account in considering whether certificates for two or more counsel are to be granted in a particular case. 

29.  In the opinion of Mr Sio, the Consolidation Summons involved only simple and straightforward matters and there were no complex or difficult facts or legal issues.  It is therefore difficult to justify a litigant retaining the same firm of solicitors to instruct two counsel with more than five years seniority to represent himself in a simple consolidation summons which is usually fixed for not more than 30 minutes. Furthermore, Mr Sio submits that there is no justification to instruct two counsel as they both made substantially similar submissions on the ground that there were no common questions of fact or law.

30.  Ms Li refers to her being briefed long before the taking out of the Consolidation Summons and the involvement of Mr Ah-weng all along in the HCA Action, as well as the much more complicated nature of the case.  Given that Ms Li has no involvement in the HCA Action case and because of the belated filing of the Consolidation Summons and affirmation, as well as the omission of the filing of any pleadings or witness statement of the HCA Action, Mr Ah-weng had to be briefed to effectively deal with the Consolidation Summons and to assist the court.

31.  Mr Ah-weng takes issue with the application of para 62/App/28 of Hong Kong Civil Procedure 2016 which according to him, applies only to taxation on party and party basis.  In his view, the tests are those set out in para 2(3) and (5) of Part II of the First Schedule of Order 62; that is, the quantum of counsel fess is discretionary for the taxing master having regard to all relevant circumstances and in particular to the matters set out in para 1(2) of that schedule and whether the attendance of counsel has been certified as being proper in the circumstances of the case.

32.  Pointing to the late filing of the Consolidation Summons, the even later filing of the supporting affirmation, the omission in filing any documents of the HCA Action, and the lack of merits in the attempted consolidation, Mr Ah-weng stresses that the only reason for his appearing for Yu at the hearing of the Consolidation Summons was to save costs, as otherwise the hearing would have to be adjourned or re-fixed.  Mr Ah-weng takes the view that had due process been followed, Yu could have filed affirmation in reply and have sufficient time to instruct one counsel only.  It is therefore his submission that it was proper in the circumstances of the case for himself to be instructed, with substantial costs being saved by the assistance rendered to the court by him.

33.  Mr Ah-weng and Ms Li consider the reliance of Mr Sio on Order 62 rule 38A to have been misplaced, since the rule only deals with the legal principles and consideration for propriety in engaging leading counsel and junior counsel and certification for two counsel.  Mr Ah-weng also remarks on there being no objection taken by PDL at the hearing for him to be heard and the unusual nature of the present case, where the question is not simply whether one counsel instead of two could have handled all of the issues under the Consolidation Summons.

34.  One further point made by Mr Ah-weng is that the overlap in the submissions made by him and Ms Li was incidental because both addressed the court on the unreasonableness of PDL in opposing the enforcement of the Mainland Award.  However, in his opinion, his submissions were very different in their assistance to the court.  In particular, the submissions made by Mr Ah-weng contrasted PDL’s opposition to enforcement in the HCMP Action against the actual factual and/or legal issues in the HCA Action and there had been extensive references to the papers and pleadings of the HCA Action and what transpired at the CMCs in the HCA Action which Mr Ah-weng attended personally.

35.  I shall first deal with the application of Order 62 rule 38A.  The discussions in that rule do appear to be dealing with the situation where leading and junior counsel are instructed.  Although some of the factors mentioned in that rule are generally applicable even when only one counsel is involved, such as the complexity of the issues involved and the skill required for the case, I do not find the present case to be one falling within the situations envisaged by the rule.

36.  The manner in which a party has pursued its case is one of the matters that the court would take into account in considering how to exercise the discretion as to costs.  In the present case, I cannot accept Mr Sio’s suggestion that Yu would not be prejudiced by his late filing of the Consolidation Summons, the supporting affirmation and the exchange of skeleton submissions.  Yu had no opportunity to put in an affirmation in opposition and the need for adjournment was a real one had the court not been assisted by Mr Ah-weng, who was not only all along been involved in the HCA Action but who also personally attended the CMCs that Mr Sio made reference to. The need for Mr Ah-weng to appear at the hearing was therefore the result of PDL’s and the Plaintiffs’ own making and is justified for costs-saving purpose.

37.  The part in para 62/App/28 of Hong Kong Civil Procedure 2016 relied on by Mr Sio in support of his submission that the test of “necessary or proper” is applicable seems to have come from sub-para (5).  The discussions there clearly relate to taxation on party and party basis, and I do not accept that the position stated is applicable in the present case. 

38.  For indemnity costs, Order 62 rule 28(4A) of RHC and para 62/App/11 of Hong Kong Civil Procedure 2016 specify that “all costs are to be allowed except insofar as they are of an unreasonable amount or have been unreasonably incurred and any doubts which the taxing master may have as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved in favour of the receiving party”.

39.  As regards the complaint of Mr Sio about the seniority of the counsel retained by Yu for a simple consolidation summons which is usually fixed for not more than 30 minutes, the issue should be left to be dealt with by the taxing master.  Even with a costs order awarding indemnity costs with certificate for counsel, the claim for counsel fees will, if taxation is commenced, be subject to assessment by the taxing master on whether the amount claimed is to be allowed on the basis of the test specified in Order 62 rule 28 (4A) of RHC and para 62/App/11 of Hong Kong Civil Procedure 2016.

40.  The possibility of overlap in the submissions made by the two counsel cannot be ruled out.  This is again something the taxing master will take care of in a taxation proceeding, when applying the test appropriate to costs awarded on indemnity basis.

41.  For the reasons stated above, Counsel certificate is granted for the Consolidation Summons in respect of the HCA Action and the HCMP Action.

Costs of the Applicant in HCMP 2493/2012

42.  The Applicant has throughout maintained a neutral position.  Originally, attendance of the Applicant at the hearing of the Interpleader Summons on 14 March 2016 was excused.  As the Consolidation Summons was subsequently taken out, counsel was briefed to attend the hearing on behalf of the Applicant.  At the hearing, I awarded costs of the hearing to the Applicant, without counsel certificate, reserving decision on the party to bear such costs.

43.  Clause 7 of the Stakeholder Agreement requires the party in breach to indemnify the Applicant for any loss, damage, costs, expenses incurred by the Applicant.  Hence, I order PDL to pay the costs of the Applicant in relation to the interpleader proceedings on indemnity basis, to be taxed if not agreed.