YINGGAO RESOURCES LTD v. ECO METAL (HONG KONG) LTD AND ANOTHER

HCA 964/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 964 OF 2012

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D E C I S I O N

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Decision on costs

1. By a decision dated 16 March 2016, this court allowed in part the plaintiff’s appeal against the Master’s decision refusing the plaintiff leave to amend its pleadings.

2. The background to this matter is set out in the said decision and I will not repeat the same here.

3. In allowing the plaintiff’s appeal, I made an order nisi that 50 per cent of the costs of and occasioned by the appeal and in the application to the Master below be paid forthwith by the 2nd defendant to the plaintiff, with certificate for two counsel, to be taxed if not agreed.

4. Neither party was content with this order nisi and hence today’s hearing.

5. Mr Tong for the plaintiff submits, in short, that the 2nd defendant should pay his client two-thirds of the costs of the appeal and the costs of the application below. 

6. He puts this on the basis that there were four issues of amendment: (fraud, misrepresentation, negligence and reliance on Section 3 of the Misrepresentation Ordinance), that although the plaintiff succeeded on two issues (misrepresentation and negligence) and failed on fraud and the Section 3 issue, there was little moment or importance in respect of the Section 3 issue and that the plaintiff had realistically succeeded on two out of three issues and should correspondingly get two-thirds of its costs.

7. For the 2nd defendant bank, Mr Eugene Fung, SC, whilst accepting the order nisi in relation to the appeal, says that the costs of and occasioned by the amendments, excluding the costs of the appeal, are to be paid to the bank, in any event.

8. Mr Tong has sensibly accepted that this is correct.

9. I agree with Mr Fung’s submission in this regard and order accordingly.

10. However, as to the costs of the hearing before the Master, Mr Fung submits all the claims, in the way they were presented to the Master, were bound to fail and, accordingly, those costs should be paid by the plaintiff to the 2nd defendant bank.

11. Both parties have referred me to the Court of Appeal decision in Swiss Singapore Overseas Enterprises Pte Ltd v China Citic Bank Corporation Ltd (Xiamen Branch), CACV 197/2013.  In that decision, Hon Kwan JA at paragraph 19 said this:

“We do not think the court should simply reduce costs with regard to the number of issues raised and lost and the time taken by those unsuccessful issues. There is clearly a discretionary element in making a proportional reduction. And an important matter that may be taken into consideration is the reasonableness in advancing the unsuccessful arguments.”

12. Mr Tong’s able argument can be dealt with shortly.  There was, in my view, no substance to either the plaintiff’s plea of fraud nor the Section 3 misrepresentation plea.

13. In paragraph 26 of my decision dated 16 March 2016, I held that the particulars provided did not in any way support a case of fraud against the bank; furthermore, that the allegation of fraud was unarguable and bound to fail.  In respect of the Section 3 Misrepresentation Ordinance point, I held at paragraph 31 of that decision that reliance upon Section 3 was misconceived.  Both these pleas were plainly untenable and, in my view, it was unreasonable to advance the same.

14. Although the Section 3 argument took little time, it was never abandoned and Mr Fung was forced to deal with it.

15. Bearing in mind the conduct of the plaintiff in this regard, I am unable to accept Mr Tong’s two-third costs submission and maintain that a proper proportional reduction is 50 per cent.

16. Mr Fung’s submission that the plaintiff was bound to fail before the Master is based upon conjecture, albeit ably presented conjecture. 

17. I am not persuaded that the changes in the plaintiff’s pleading between the pleas presented to the Master and those now before this court are of fundamental significance.   In my view, the matters raised in the pleading before the Master was sufficient to support both the plea in misrepresentation and in negligence, and the pleas in the later version simply further particularised the primary claims made in the original pleading.

18. In the event, I maintain the order that the 2nd defendant pay to the plaintiff 50 per cent of the costs in the application to the Master below.

Order

19. I make the following orders:

(1) Leave be granted to the 2nd Defendant to amend the Summons dated 29 March 2016 in the manner as shown in red as per the Amended Summons annexed to the 2nd Defendant’s Summons filed herein on 22 September 2016 and to file the Amended Summons with 3 days from the date hereof;

(2) Service of the Amended Summons be dispensed with;

(3) Costs of the 2nd Defendant’s Summons filed herein on 22 September 2016 be paid by the 2nd Defendant to the Plaintiff, to be taxed if not agreed;

(4) The plaintiff is to pay the costs of and occasioned by the amendment of the statement of claim (excluding the costs of this appeal) to the 1st and 2nd Defendant in any event;

(5) The 2nd Defendant is to pay to the plaintiff 50% of the costs of and occasioned by this appeal, and in the application to the Master below forthwith, with certificate for two counsel, to be taxed if not agreed; and

(6) Costs of today’s hearing be costs in the cause.