XU LIU CHUN v. WU CHANG JIANG AND ANOTHER

HCMP 3166/2014

[2019] HKCFI 2179

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 3166 OF 2014

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R U L I N G

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Introduction

1.  This is the application of the Petitioner to vary the costs order nisi contained in the Judgment by this court on 13 July 2018[1] by which the costs of the trial on the issue of liability is reserved pending the decision on quantum.  The facts of the case are as stated in my judgment and I am not going to repeat those here. 

2.  After the Judgment, there was an appeal by the Petitioner and a cross-appeal by the 1^st Respondent, both of which have been dismissed by the Court of Appeal on 18 April 2019[2].

3.  I note also that by a judgment dated 23 April 2019, Deputy High Court Judge Patrick Fung SC granted the Petitioner’s application for interim payment by the 1^st Respondent in the sum of US$1.2 million and that judgment is under appeal. 

4.  In the Petitioner’s summons for the present application, it asks that:

“The costs order nisi … be varied to the effect that the 1^st Respondent do pay the Petitioner costs on liability … to be taxed if not agreed; or alternatively, such other costs order as this Honourable Court may think just;”

There is nothing in the Summons or in the Skeleton Argument filed on behalf of the Petitioner to indicate that the Petitioner is seeking costs on liability “forthwith”.  It would make a difference here as to when the taxation of the costs order that the Petitioner is now seeking, if granted, could take place.  Upon being asked by the Court, Mr Suen said the Petitioner is in fact seeking costs on liability “forthwith”.  Mr Wong, counsel for the 1^st Respondent, understandably was taken aback by this recent revelation.  Nevertheless, the hearing of the application was proceeded with without objection. 

Discussion

5.  I have regard to the written submissions filed by the parties and their oral submissions in court, for all of which I am indebted. 

6.  With respect to the most detailed and meticulous submissions of Mr Suen (and with him, Ms Tinny Chan), in my humble view the most important question for the present purpose is whether costs of the trial on liability should be decided now.  If this question were to be decided against the Petitioner, then there would be no need to consider the matter further as per Nourse LJ’s judgment in Re Elgindata (No 2) [3].  In this regard, I accept the submission of Mr Wong, counsel for the 1^st Respondent, that:

(1)     when to deal with costs is basically a matter of discretion, depending on the context of each case: see O62 r4(1);

(2)     that the winning party may in the event be able to obtain only nominal damages is just one of the scenarios when a reserved costs order would be appropriate: see Shepherds Investments Limited v Andrew Walters & Ors [4] and Weill v Mean Fiddler Holdings Limited [5]; and

(3)     there is nothing wrong with the costs order nisi in the present case which does not deprive the Petitioner of any costs; and

7.  In my humble view, it would be premature to decide the costs of the liability trial and it is more prudent to decide on the matter pending the outcome of the quantum trial so that the court may get the whole picture and see what, if any, the shares of the company would be worth. In this regard, I note that at paragraph 99 of the Judgment, the finding is only that:

“R is unable to prove that this US$4.4 million consisted wholly of the “Special Fee” and his own money.” 

There is, however, no positive finding by this court as to how much of those US$4.4 million actually belonged to the Company.  I note also that there was a 2½ month time gap between the appropriation of the US$4.4 million from the Company and the evaluation date of the shares (which is the date of the petition).  I am unwilling to speculate, in the absence of any evidence as to the accounts of the Company, whether it had any liability as at the evaluation date and if so, what its size was.  I am also of the view that there is a “real possibility”, and I put no higher than that, that the outcome of the quantum trial may affect the parties’ entitlement to the costs of the liability trial. 

8.  In the circumstances, the present application by the Petitioner is dismissed and the costs order nisi is now made absolute.

9.  I now proceed to hear the parties on the costs of the present application.