PERPETUAL WEALTH (HONG KONG) LTD v. BE SOLUTIONS COMPANY LTD AND OTHERS

HCCT 42/2021

[2023] HKCFI 2989

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS NO 42 OF 2021

________________________

________________________

________________________

DECISION ON COSTS

________________________

1.  I refer to my Judgment handed down on 29 September 2023 (the “Judgment”). For the reasons set out therein, and in particular those in §§13(e)(ii) and 16 thereof, I on the first day of the trial dismissed P’s claim against D2 and D3. Upon the dismissal, D2 and D3 sought indemnity costs against P. As the trial between P and D1 was ongoing at that stage, I directed that their application for indemnity costs be adjourned till the end of the trial.

2.  By letter of 11 October 2023, D2 and D3 renewed their application for indemnity costs against P.  For that purpose, their solicitors have lodged submissions in support and reply.  Solicitors for P have also lodged submissions in opposition (“P’s Submissions”).  I have considered them.

3.  There is no dispute that P should pay D2 and D3’s costs.  The only dispute is whether the costs should be assessed on an indemnity basis.

4.  On the principles and considerations relevant to the award of indemnity costs, I have been cited a number of authorities, which include Choy Yee Chun (The Representative of the estate of Chan Pui Yiu) v Bond Star Development Ltd [1997] HKLRD 1327, Jackson Xu Zhao Ze & anor v Tsai Tim Yuen & & anor (HCA 902/2011, 30 August 2013), New Century Credit Services Co Ltd v Yeung Hung[2020] HKCFI 2651, and Commissioner of Inland Revenu v Poon Cho Ming John (2020) 23 HKCFAR 74.  Of those authorities, the most important one is Poon Cho Ming, wherein Bokhary NPJ at §4 summarised the applicable propositions as follows:

“With particular reference to indemnity costs but relevantly also to common fund costs, the following propositions emerge from this Court’s judgment in Town Planning Board v Society for Protection of the Harbour Ltd (No 2) (2004) 7 HKCFAR 114 at paras 14-18:-

(a) In certain circumstances, costs may be awarded on a more generous than usual basis of taxation so as to achieve a fairer result.

(b) It is for the receiving party to show that the case has some special or unusual feature.

(c) Such features are not confined to an ulterior motive, an improper purpose, deception or underhand conduct on the part of the paying party.

(d) Neither the attributes of the parties nor the character of the proceedings are irrelevant to the question of whether a more generous than usual basis of taxation should be ordered.

(e) The discretion to order a more generous than usual basis of taxation is not to be fettered or circumscribed beyond the requirement that such taxation be ordered only when it is appropriate to do so.

(f)  As to that, the grounds on which a more generous than usual basis of taxation is to be ordered must be connected with the case.  That extends to – but no further than to – any matter relating to the litigation and the parties’ conduct in it, and also to the circumstances leading to the litigation.”

5.  When first issued, the writ named only D1 as the sole defendant.

6.  It was only by re-amendments in October 2019 when D2 and D3 were added, and the allegation of conspiracy levied against them.

7.  As I have recorded at §13(e)(ii) of the Judgment, upon this Court’s request for assistance, counsel for P acknowledged the inherent weakness of that cause of action, and soon afterwards upon instruction withdrew the same.

8.  At §20 of P’s Submissions, it is suggested that:

“The case against Ds is not obviously unarguable in its entirety. It is not in dispute that there are imperfections (i.e. dark spots) in the Marbles and the claim of quality is not completely groundless. P might have a weak case against Ds, but that is not a justification for indemnity costs …”

9.  Those submissions miss the point entirely.  P’s case against D2 and D3 is based not just on any imperfections in the Marbles.  It is based on a conspiracy which P said could be inferred from those imperfections.

10.  In my view, even putting aside all the problems P faced as exposed during the trial, the pleaded case and the evidence on papers did not support any inference of conspiracy against D2 and D3.

11.  I have in the Judgment explained the multiple problems and defects in P’s case.  I highlight the serious inconsistencies amongst the evidence, and the failure on P’s part to put forward any expert evidence. They reinforce my view on the inherent weaknesses in P’s case against D2 and D3. 

12.  In my view, the claim against D2 and D3 ought not to have been brought.

13.  This conclusion alone constitutes a special and unusual feature which in my view amply justifies indemnity costs.

14.  In my view, this is an appropriate case to order indemnity costs against P in so far as D2 and D3 are concerned.

15.  If necessary, I would be prepared to find further, based upon P’s decision to make a groundless case of conspiracy against D2 and D3, that the decision to add that case against D2 and D3 was driven by the ulterior motive of trying to get D2 and D3 personally liable beyond D1’s potential corporate liability, despite the lack of merits in the claim.

16.  For the above reason, I order that P shall pay D2 and D3’s costs of and occasioned by their defence of and in the action, including for the avoidance of doubt the costs of this application, on an indemnity basis, to be taxed if not agreed.