ZHANG RUI KANG AND OTHERS v. TUNGHSU GROUP CO LTD AND OTHERS

HCA 1359/2021 and HCA 1391/2021

(Heard Together)

[2023] HKCFI 2106

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1359 OF 2021

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BETWEEN

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And

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1391 OF 2021

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BETWEEN

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(Heard Together)

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DECISION ON COSTS

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1.  This is the decision on costs of the Company’s Summons in HCA 1391/2021 and costs of Ds’ Summons in HCA 1359/2021. This decision should be read together with my decision handed down on 21 July 2023 (“the Main Decision”), in which I dismissed the Company’s Summons and allowed the application as per Ds’ Summons. For ease of reference, the abbreviations used in the Main Decision are adopted herein. Pursuant to the directions given in [91] of the Main Decision, the parties have lodged their respective written submissions on costs, and I have considered the same.

Company’s Summons in HCA 1391/2021

2.  The parties are in agreement that costs of the Company’s Summons should follow the event, and those costs should be paid by the Company to Z&L with a certificate for 3 counsel, to be taxed if not agreed. I am prepared to make an order in accordance with this agreement.

Ds’ Summons in HCA 1359/2021

3.  The parties’ respective positions are as follows.

4.  Ps’ position is that notwithstanding Ds’ success in this application, Ds should at most have 50% of the costs of the Ds’ Summons only, with a certificate for 3 counsel, to be taxed if not agreed.

5.  Ds’ position is that costs of Ds’ Summons should be paid by Ps to Ds on an indemnity basis with a certificate for 3 counsel, to be taxed if not agreed.

6.  In considering the respective arguments put forward by the parties, everything must be based upon my rulings made in the Main Decision. What has been said in the Main Decision cannot be treated as not having been said. At the same time, what has not been said in the Main Decision cannot be treated as having been said.

7.  Ps submit that in the Main Decision, I have refrained from making any findings on various issues put forward by Ds. Since Ds did not succeed on these issues and considerable time has been spent on these issues, Ds’ entitlement to costs should be significantly reduced, and Ds should be awarded of no more than 50% of the costs of their summons.

8.  With respect, I am unable to agree with Ps. In [89] of the Main Decision, I have expressly said that my analysis on the issues set out in the Main Decision would be sufficient for the disposal of Ds’ Summons, and for this reason, it would not be necessary for me to go into the other matters argued by the parties. It is incorrect for Ps to say that Ds are unsuccessful on those issues in respect of which I have refrained from making a ruling thereon. It is misconceived for Ps to say that Ds’ entitlement to costs should be reduced because Ds are unsuccessful on some issues. There is no ruling in the Main Decision saying that Ds are unsuccessful on any issue relating to Ds’ Summons.

9.  Ds submit that Ps should be required to pay indemnity costs, for the material non-disclosures as found by this court are deliberate and not mere innocent oversight.

10.  With respect, I am also unable to accept Ds’ arguments. Mere failure to disclose material facts ex parte does not automatically justify indemnity costs if the non-disclosure may be an innocent oversight and not intended to gain an unfair advantage. The court may order indemnity costs if there was an element of deliberation about the failure to disclose material facts. See Hong Kong Civil Procedure 2023, Volume 1, §11/4/36. The findings concerning material non-disclosure against Ps are in [85] to [87] of the Main Decision. I did not make a finding that there was an element of deliberation in those non-disclosures. In the circumstances, no indemnity costs would be ordered against Ps.

11.  In my view, costs of Ds’ Summons in HCA 1359/2021 should be paid by Ps to Ds with a certificate of 3 counsel, to be taxed if not agreed.

Disposition

12.  In view of the outcome as stated in the above, in respect of the costs of this paper disposal exercise, I am of the view that the fair order should be no order as to costs, I so order.

13.  Subject to [12] above, I make the orders as set out in [2] and [11] above. All costs are to be paid forthwith.

14.  The Company’s Summons and Ds’ Summons have been heard together at the same time in the same hearing. Further, evidence filed in relation to one summons has been deemed as evidence in relation to the other summons. See [4] of the Main Decision. In the circumstances, to facilitate taxation, taking a broad-brush approach, I direct that the time spent on the Company’s Summons and the time spent on Ds’ Summons be apportioned in the ratio of 25% and 75%.

15.  Lastly, I thank all counsel for the assistance provided to the court.