GAO HAI YIN AND ANOTHER v. KEENEYE HOLDINGS LTD AND OTHERS

HCA 1315/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1315 OF 2009

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BETWEEN

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DECISION  ON  COSTS

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INTRODUCTION

1.  This is the decision on costs, consequent upon the Decision handed down on 23 July 2009.

2.  In short, the plaintiffs’ application to continue the ex parte orders respectively to appoint the interim receiver of the 5^th defendant, Bai Jun Tian Cheng Ltd. (“Bai Jun”), and to extend the powers of the Bai Jun interim receiver was dismissed on 23 July. Further, the two ex parte orders were discharged without a re-grant.

THE COSTS APPLICATION

3.  A costs order nisi was made in the 23 July Decision. The parties now seek a variation of that costs order.

4.  The defendants (except Bai Jun) (“the defendants”) argue that the costs should be awarded in their favour to be taxed on an indemnity basis.

5.  The plaintiffs submit that no order as to costs ought to be made. Alternatively, they submit that any costs awarded in the defendants’ favour ought to be taxed on party-and-party basis.

EXERCISING THE DISCRETION

6.  It is common ground costs are within the court’s discretion: RHC Ord. 62 rr. 3(2A) and 5(1)(aa) to 5(1)(g); para. 8, defendants’ skeleton arguments; para. 2, plaintiffs’ written submissions.

(a) Indemnity Costs

7.  The defendants’ main ground for seeking indemnity costs is that a finding of (1) material non-disclosure and (2) misleading the court has been made in the 23 July Decision: see para. 30 to 33 thereof. Reliance is placed by them on cases such as Richcombe Investment Ltd. v. Tin Fung, HCA 18283/1999 (27 February 2001), para. 22; Dallah Albaraka (Ireland) Ltd. v. Symphony Gems and Others, HCA 2555/2003 (21 January 2005), para. 16 to 23; Kwok Kwok Yu v. Wu Nga Mui, HCA 867/2003 (9 July 2003), para. 15; RACP Pharmaceutical Holdings Ltd. v. Li Xiaobo and Others, HCA 490/2007 (14 April 2008), para. 65 to 67; K.B. Chau & Co. v. China Finance Trust and Investment Corporation [1995] 2 HKLR 567, 575, 577-8.

8.  On the other hand, the plaintiffs complain that:-

(a) the defendants only indicated their willingness to pay for the shares they contracted to purchase from the plaintiffs shortly before the hearing for the continuation of the ex parte orders (“the inter partes hearing”);

(b) the defendants failed to act in strict compliance with the terms of the share transfer agreement, despite having relied upon the validity of that agreement during the inter partes hearing;

(c) the above are the means by which the defendants are dissipating the assets underlying the value of the Bai Jun shares.

9.  I agree with the defendants that the plaintiffs’ above complaints are invalid. They did not form part of the plaintiffs’ case during the inter partes hearing. It is inappropriate to permit them to be raised now for two reasons. One, a litigant ought not be permitted to in effect re-argue his case (whether based on the original case or a different case) when the question of costs falls to be considered. Two, to permit a litigant to do so may be unfair to the other party. This is because the successful party’s case or evidence may not have anticipated this.

10.  Further, I agree with the defendants’ argument summarized in para. 7 above.

11.  Accordingly, I find this to be an appropriate case for awarding indemnity costs in the defendants’ favour.

(b) Certificate for Two Counsel

12.  Both parties agree this is a suitable case for two counsel to be briefed.

13.  A few words ought to be spent on the certificate sought in view of some of the observations made in the parties’ written submissions.

14.  The plaintiffs say this:-

“The Plaintiffs do not dispute that the proceedings warranted the service of two counsel, except in relation to the present issue of costs (where the traditional rule is for junior counsel to make submissions)” (emphasis supplied) (para. 6, plaintiffs’ written submissions).

The defendants’ reply is as follows:-

“… It is submitted that there is no such traditional rule. There is only a practice that at a hearing where a leading Counsel appearing with a junior Counsel, the junior Counsel will make submissions on the issue of certificate for two Counsel … ” (para. 10, defendants’ reply submissions);

“As conceded by the Plaintiffs, a certificate for two Counsel is appropriate for these proceedings. In the circumstances, there is no reason why when the Defendants argue for costs, they should be deprived of the representation of … leading Counsel … ” (emphasis supplied) (para. 11, defendants’ reply submissions).

15.  The purpose of certifying the appearance of two counsel should be made clear. As I understand, the certificate is related to Ord. 62 r. 32(1):-

“Subject to the foregoing rules and the following provisions of this rule, the scale of costs contained in the First Schedule of this Order, together with the notes and general provisions contained in that Schedule, shall apply to the taxation of all costs incurred in relation to contentious business done … ”.

The taxing master can only depart from the above in a taxation where the case falls within Ord. 62 r. 29 or r. 31(2) (which are irrelevant for present purpose) or “in other special cases”: Ord. 62 r. 32(2).

16.  The provision in Part II, the First Schedule which is relevant to this aspect of the application is para. 2(3) (under the sub-heading “ Fees to counsel”):-

“No costs shall be allowed in respect of … more counsel than one appearing before … a judge …, unless the … judge … has certified the attendance as being proper in the circumstances of the case” (emphasis supplied).

Thus, the certificate is permissive in nature; it is only given in respect of counsels’ attendance before the court.

17.  Insofar as the passages quoted from the parties’ written submissions (see para. 14 above) should mean that the certificate sought ought to cover the whole proceedings (concerning the continuation of the ex parte orders), they go beyond the ambit of para. 2(3), Part II, First Schedule.

18.  The correct legal position is in fact that quoted by the defendants from Hong Kong Civil Procedure 2009, Vol. 1:-

“In the absence of a court order whether to allow two counsel on taxation is a matter of the taxing master’s discretion … ” (para. 62/App/48, quoting from Xin Juan Trading Co. Ltd. v. NPH Petrochemical Ltd., HCA 18159/1998 and CACV 276/1998).

19.  In the circumstances of this application, it is appropriate to certify the attendance of two counsel at the hearing on 20 July 2009 and I so certify.

COSTS OF THIS APPLICATION

20.  These costs are to be treated as part of the costs awarded in the 23 July Decision.