FIRST LASER LTD v. FUJIAN ENTERPRISES (HOLDINGS) CO LTD AND ANOTHER

HCA 4414/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 4414 OF 2001

__________________

__________________

______________

D E C I S I O N
______________

Introduction

1.  On 28 January 2016, I handed down decision (the “Decision”) in respect of the Plaintiff’s application for directions for the trial and the Defendants’ applications for interlocutory relief.  Against that Decision, the Defendants seek leave to appeal to the Court of Appeal.  By a separate summons, the Defendants also seek vary the costs orders I made in my Decision as if those were orders nisi.

2.  The background of this litigation can be found in the Court of Final Appeal’s judgment in First Laser v Fujian Enterprises[1] and in paragraphs 2 to 13 of my Decision.  It will not be repeated in here.  The circumstances leading to the present leave application are as follows.

3.  The Plaintiff commenced legal action against the Defendants in 2001 which took its full course to the Court of Final Appeal.  On 6 July 2012, the Court of Final Appeal remitted the case back to this court for determination of the issue of restitution under Mainland law. A directions hearing was scheduled to be held on 25 September 2015 for the purpose of giving directions for the further conduct of the litigation and payment out of money in court.  One of the directions sought by the Plaintiff was to file an additional expert opinion on Mainland law relating to a new judicial interpretation which came into force on 16 August 2010.  The Defendants also took out a summons on 16 June 2015 seeking an unless order, undertaking as to damages and fortification, and security for costs against the Plaintiff.  That summons was also set down to be heard on 25 September 2015 at the directions hearing.  The parties filed full skeleton submissions and affirmations in support of the various applications.  The following applications were before the court:

(1) the Plaintiff’s application for directions, including leave for filing expert evidence and exchanging witness statements (the “directions application”);

(2) the Defendants’ application for an order that unless the Plaintiff pays all outstanding costs and interests awarded against him within a specified time its statement of claims shall be struck out and dismissed (the “unless order application”);

(3) the Defendants’ application for an order that the Plaintiff gives an undertaking as to damages and fortification (the “fortification application”);

(4) the Defendants’ application for an order that the Plaintiff gives security for the Defendants’ costs in the trial of the remitted issue (the “security for costs application”); and

(5) the Defendants’ payment out application.

4.  At the hearing, despite there was sufficient time to deal with all the applications, after arguing on the directions application, counsel sought to have the hearing of the other four applications adjourned to a date to be fixed in consultation with counsel’s diary.  The adjourned hearing was subsequently fixed to be held on 24 May 2016, eight months later.

5.  In the course of my deliberation on the directions application, I somehow overlooked the fact that the other four applications had been adjourned for hearing and decided those applications on the basis of the affirmations filed by the parties and the counsel’s full written submissions.  On 28 January 2016, I handed down my Decision on all the five applications.  The Defendants now seek leave to appeal against all my orders made in respect of the first four applications.

The applicable legal principles

6.  Under section 14AA of the High Court Ordinance and Order 59, rule 2B(1) of the Rules of the High Court, any party intending to appeal against an interlocutory decision of the court has to apply for leave to the judge against whose judgment or order leave to appeal is sought.  The burden is on the applicant seeking leave to show that he has reasonable prospect of success or that there is some other reasons in the interests of justice why the appeal should be heard.  For the purpose of section 14AA, “reasonable prospects of success” involves the notion that the prospects of success must be more than “fanciful”, without having to be “probable”: see SMSE v KL[2]. The applicant has to show more than just an arguable case, but an appeal that has merits and ought to be heard, although he does not have to demonstrate that the appeal will probably succeed: see Wynn Resorts (Macau) SA v Mong Henry[3].

7.  Appeals against the exercise of discretion, of which case management decision is a species, are subject to a much higher threshold: see Hong Kong Civil Procedure[4].  Even before the Civil Justice Reform (“CJR”), the threshold was deliberately set very high.  The test is that the order sought to be appealed against was “plainly wrong” or “really perverse” before the appellate court will interfere with the exercise of case management discretion of the court below.  In Carrian Investments v Price Waterhouse & Ors[5], Mortimer JA held that where a judge’s discretion in case management is challenged, the appellate court should approach the matter with special caution and the test he adopted was that the point challenged was plainly wrong.  He said at paragraph 12:

The only question this Court has to consider is whether the judge’s decision on the point challenged is plainly wrong (see Ashmore and others v Corporation of Lloyds [1992]1 WLR 446). Where a judge’s ruling on case management is challenged (and this is such a ruling) this Court should approach the matter with special caution. The judge assigned will nearly always be in a better position to decide matters of case management than this Court. So it is with this judge. He had a number of applications including a 5-day hearing to amend the pleading. His judgment demonstrates that he balanced the various considerations in giving this direction. He was fully aware of its advantages and disadvantages. For my part, I think it is quite impossible to say that he was plainly wrong in making this direction and I would dismiss this appeal without hesitation.”

(My emphasis underlined)

Sears, J emphasised the judge’s duty as case manager is to ensure that litigation is conducted speedily without undue cost and that the appellate court should support him in the exercise of his case management discretion, unless the decision is perverse.  He said at paragraph 15:

“The modern role of a Judge trying complex civil litigation is to be a Case Manager. His duty is not only to decide the issues, but also to ensure that the litigation is conducted speedily and without undue cost. Keith J. is the designated judge and the Case Manager for this long and difficult trial and he made the order appealed from as part of his duty to keep the case within acceptable bounds. This Court should support him unless it can be shown that his order is really perverse. He approached his decision with care and with the knowledge that it is he who will ultimately have the personal burden of trying the case. Such a burden is heavy and sometimes not recognised either by the parties, or the public, as such.”

(My emphasis underlined)

The same sentiment was expressed by Penlington, J.A at paragraph 17 where he said:

“I have seen the judgment of Mortimer J.A. in draft. I agree with it for the reasons he gives and am satisfied that this appeal should be dismissed. This Court is reluctant to interfere with a judge’s exercise of a discretion. That should be even more so where it is a discretion as to the management of a trial with which the judge is seized.”

(My emphasis underlined)

8.  The rationale for this very cautious approach towards appeal against a judge’s case management discretion was explained by Rogers VP in Lee Tak Yee v Chen Park Kuen & Ors[6] as follows:

“When a matter of case management comes before the Court of Appeal, it is a very high hurdle for those seeking to challenge an order made by a judge below to succeed on an appeal. The Court of Appeal is not the court which will be hearing the case; it is the judge below who will be hearing the case. It is the responsibility of the judge below to order affairs and to order the way in which the case is going to be conducted in the manner which appears best suited to the judge to come to a proper and fair judgment in the matter. The judge below cannot carry out that task if the Court of Appeal is going to direct this, that and the other as to how issues are going to be decided, what issues should be decided first and in what order matters are going to be taken. Those were essentially matters for the judge to decide. Only if the judge has gone clearly wrong and made orders which will clearly involve either an injustice or an inability for the trial court to carry out its task will the Court of Appeal interfere in matters of case management of this sort. In my view, this appeal simply must fail from the beginning.”

(My emphasis underlined)

The Court of Appeal made it very clear that case management decisions are matters for the judge to decide and that same judge will have the further conduct of the case.  Hence, the judge’s exercise of discretion in case management will be carefully guarded.  In respect of appeal against case management discretions, the test is elevated from reasonable prospect of success to the judge having gone clearly wrong and made orders which will clearly involve either an injustice or an inability for the trial court to carry out its task. Clearly wrong or really perverse as the judge’s order may be, the appellate court will not interfere unless it will involve either an injustice or an inability for the trial court to carry out its task.  This is the law applicable to an appeal against a judge’s case management discretion.

9.  Post-CJR, in furthering the underlying objectives of the Rules of the High Court, the judge’s interlocutory orders and case management discretions are guarded with greater caution. The requirement of leave to appeal was introduced to address satellite litigations on interlocutory matters which unnecessarily cause delay and additional costs.  The intending appellant has to apply to the trial judge for leave to appeal his decision.  The trial judge sits as if he were in an appellate court hearing an appeal against the decision of a lower court.  In respect of interlocutory appeals generally, even if reasonable prospect of success is shown, the court has discretion to refuse leave in the interest of procedural economy and proportionality.  In Wong Kar Gee Mimi v Severn Villa Ltd[7], Kwan JA said:

“29. The principles on granting leave to appeal are well established. Leave can be granted if the court is satisfied that: (a) the appeal has a reasonable prospect of success; or (b) there is some other reason in the interests of justice why the appeal should be heard¹². Reasonable prospects of success involve the notion that the prospects of succeeding must be ‘reasonable’ and therefore more than ‘fanciful’, without having to be ‘probable’¹³. As the leave requirement was introduced largely to address satellite litigation on interlocutory issues which almost invariably gives rise to major delay and expense, so for the court to be satisfied that the appeal does have ‘reasonable prospects of success’, merely showing that the appeal is ‘arguable’ and ‘not fanciful’ would not be sufficient¹⁴.

30. Even if the threshold test of reasonable prospect of success is satisfied, the court still retains a discretion whether to grant leave, although the fact there is, ex hypothesi, a reasonable prospect of success would heavily influence the court’s exercise of discretion¹⁵. The court may refuse leave to appeal in the interests of procedural economy and proportionality¹⁶.

_______________________

¹²  Section 14AA(4) of the High Court Ordinance (Cap.4)

¹³ SMSE v KL [2009] 4 HKLRD 125 at 129, para.17

¹⁴  Ho Yuen Ki Winnie v Ho Hung Sun Stanley (unrep., HCMP 1009/2009, [2009] HKEC 1364), para.16

¹⁵  Ho Yuen Ki Winnie v Ho Hung Sun Stanley (unrep., HCA 391/2006, [2009] HKEC 885), para.3

¹⁶  Ibid., para.8 (concerning leave to appeal an order on specific discovery); and on renewed application to the Court of Appeal, Ho Yuen Ki Winnie v Ho Hung Sun Stanley (unrep., HCMP 1009/2009, [2009] HKEC 1364), para.22 ”

(My emphasis underlined)

10.  The judge’s case management discretion is guarded with even greater sanctity.  The same test applicable in the hearing of the appeal is also applicable to an application for leave to appeal.  In Wong Kar Gee Mimi v Severn Villa Ltd[8], Kwan JA adopted the test stated by Rogers VP in Lee Tak Yee v Chen Park Kuen & Ors and emphasised the very high hurdle which an applicant for leave to appeal has to overcome.  She said:

“31. ... Case management decisions are only subject to appeal in rare circumstances. The appellant faces a ‘very high hurdle’ and must show that the Judge ‘has gone clearly wrong and made orders which will clearly involve an injustice or an inability for the trial court to carry out its task’¹⁷, or if the judge ‘erred in principle or the order was irrational having regard to the issues that had to be resolved’¹⁸. It need hardly be emphasised that generally, an appellate court will not interfere with a judge’s exercise of discretion unless the Judge has misunderstood the law or the evidence or the exercise of his discretion was plainly wrong such that it was outside the generous ambit within which a reasonable disagreement is possible¹⁹.

^{______________________________}

¹⁷ Lee Tak Yee v Chen Park Kuen [2001] 1 HKLRD 401, 403E to H

¹⁸ Kan Miu Wah v Aeroflot Russian International Airlines, (unrep., CACV 142/2006, [2006] HKEC 1658), para.11; Chan Wing Cheung v Ho Shu Yee (unrep., CACV 393/2004, [2005] HKEC 41), para.8

¹⁹  Cheung Kam Wah v Cheung Hon Wah [2005] 1 HKC 136, 142F‑G, para.17; Carlos Manuel Kwong v Lo Kam Wing (unrep., CACV 128/2005, [2005] HKEC 1764), para.28 (concerning an order on specific discovery) ”

(My emphasis underlined)

11.  Summing up, the law is that in respect of application for leave to appeal against an interlocutory order generally, the test is reasonable prospect of success, but the court has discretion to refuse leave in the interest of procedural economy and proportionality.  Case management is the tool to give effect to the underlying objectives of the Rules of the High Court.  Case management discretions are treated with great sanctity.  To obtain leave to appeal against the court’s exercise of case management discretion, an applicant has to overcome a higher hurdle.  He has to show that the judge has gone clearly wrong and made orders which will clearly involve either an injustice or an inability for the trial court to carry out its task.  While the judge has discretion to refuse leave in the interest of procedural economy and proportionality, the occasion when this discretion could be exercised if this threshold is achieved must be very rare.

12.  A specific ground relied on by the Defendants in their application for leave to appeal my orders made in respect of the unless order, fortification and security for costs applications is that those orders were made without the court hearing oral submissions from the Defendants.  This irregularity is not disputed.  Mr Shieh, leading counsel for the Defendants, also relies on the natural justice principle that justice has to be seen to be done such that the court should, before adjudicating the Defendants’ applications, give the Defendants a fair chance to make out their case orally. He submits that the right to have a fair and public hearing is entrenched under article 10 of the Basic Law (I presume he meant article 10 of the Hong Kong Bill of Rights Ordinance because article 10 of the Basic Law is about the national flag and emblem).  Article 10 of the Hong Kong Bill of Rights Ordinance provides that “all persons shall be equal before the courts and tribunals” and “in the determination of any criminal charge against him, or of his rights and obligations in a suit at law, everyone shall be entitled to a fair and public hearing by a competent, independent and impartial tribunal established by law”.  Mr Shieh also quotes the Court of Final Appeal decision in Chow Shun Yung v Wei Pih & Anr[9] and submits that in relation to first instance hearings, the right generally entails an entitlement to an oral hearing held in public unless there are exceptional circumstances that justified dispensing with this right.  Based on these principles, Mr Shieh submits that breach of this right to an oral hearing per se entitles a party to have the order made against him set aside without the need for the applicant to prove a reasonable prospect of success.

13.  I can see the force of that argument in the case of an appeal against a final order in which the parties’ rights and obligations are at issue.  However, in the case of an appeal against an interlocutory order, particularly one which is the exercise of case management discretion, the considerations, as I have explained, are wholly different.  An applicant for leave to appeal has to show that the judge is plainly wrong and his order is really perverse which clearly involves an injustice or an inability for the trial court to carry out its task.  In an appeal against a case management order, to have the order set aside is not the end of the matter.  The matter has to be remitted back to the same judge whose order is being appealed against.  The judge will go through the motion of conducting an oral hearing. If previously he had considered all facts and arguments advanced, he will reach the same decision as he did before.  The net result is a complete waste of time and costs.  The progress of the litigation will be delayed and justice will also be delayed.  This is precisely the type of case where even if the applicant is able to show a good chance of success, leave to appeal should not be granted in the interest of procedural economy and proportionality so that the proceedings could progress forward.  Thus, the irregularity of making a decision without an oral hearing only serves to show, at the highest, that the judge is plainly wrong or his order is really perverse.  But that is only the starting point to consider leave.  Unless it can also be shown that his order clearly involves an injustice or an inability for the trial court to carry out its task, the applicant is not entitled to leave.  To discharge that burden, the applicant has to show that the order was made without the judge having considered all the facts and submissions which the parties could have presented to the court had an oral hearing been held which involved injustice or that as result of the order the trial court cannot carry out its task.  The corollary is that if the judge had in mind those facts and submissions when making the order, there is no question of injustice.  If the applicant relies on inability in the trial court carrying out its task, he has to show how the order could have that effect.

14.  That the orders were made without an oral hearing is not disputed.  The real question is whether the order thus made involves injustice or inability of the trial court to carry out its task.  Here, in anticipation of a full hearing, the parties filed affirmations and skeleton submissions.  The Defendants filed 38 pages of supporting affirmations with 250 pages of exhibits and a written skeleton submission of 13 pages.  All arguments which could have been advanced by the Defendants have been advanced.  All facts in support of those arguments which the Defendants wished to rely on have been presented to the court.  The court had fully considered the skeleton submissions and facts and referred to them in the Decision.  This is not a case where a final decision affecting a party’s right was made without giving that party any opportunity to present his case at all.  Though no oral hearing was held, the Defendants had been heard in the sense that the facts and arguments which they sought to rely on were all placed before the court and were considered by the court.  In effect, the Defendants had been heard.  What was missing was an oral “top up”, which could not have been anything not contained in the written skeleton submissions as Mr Shieh indicated that he only needed five to ten minutes[10].  Mr Shieh has not advanced any argument how the orders would involve an inability in the trial court carrying out its task.  Thus, in respect of the application for leave to appeal these three orders, the question boils down to:

(1) what would have been that oral “top up” which the Defendants could have made but were deprived of the chance of making;

(2) in the light of that oral “top up”, whether the orders would involve injustice and inability of the trial court to carry out its tasks; and

(3) if the answer to (2) is in the affirmative, whether leave to appeal should be refused in the interest of procedural economy and proportionality.

The directions application

15.  The Plaintiff seeks leave to file an expert report on Mainland law in respect of a judicial interpretation which was issued on 17 May 2010 and took effect on 16 August 2010 during the course of the hearing of the appeal against the first instance judgment in this action.  The Defendants raised a number of objections, including “expert shopping” and delay.  I had dealt with all those objections and dismissed them.  However, I accepted Mr Shieh’s fallback position that before leave to adduce this expert report may be granted, the Plaintiff has to put his pleading in order first by raising this new aspect of foreign law. 

16.  The sentiment impressed on me by Mr Shieh at the previous hearing was that if the court considers this new aspect of Mainland law relevant, the Plaintiff must amend his pleading to raise this issue of foreign law; and if the pleading is properly amended, the Defendants would have no objection to the directions sought.  It was with that sentiment, I made no order other than a costs order that the costs of the application be in the Plaintiff’s costs in the cause.  I said in paragraph 36 of the Decision:

“... I trust the parties, having regard to the decision of this court, would in the interest of saving costs agree to amendment of pleadings, directions for filing of expert reports and exchange of witness statements.  Therefore, in respect of this application, I make no order other than that costs of the application be in the Plaintiff’s costs in the cause.”

I was anticipating that the parties would in the spirit of the underlying objectives dispose of all these matters by consent and quickly set the case down for trial.

17. Now, Mr Shieh says that the Defendants’ only position is that I should have dismissed the Plaintiff’s application instead of accepting and proceeding on the basis of their fallback position by making no order.  The grounds of appeal relied on by the Defendants are “expert shopping” and delay which had been advanced by Mr Shieh at the previous hearing.  I had considered those grounds in some length and dismissed them: see paragraphs 20‑23 and 30‑32 of my Decision.

18. Except for reiterating his arguments advanced on the previous occasion, Mr Shieh has advanced no new arguments before me today. In relation to “expert shopping”, he argues that it is unfairness to allow a party to switch to a new expert after having seen the evidence of his earlier expert rejected the court.  He submits that a party has to live with his expert for better or for worse.  The issue which the Plaintiff seeks to raise is a new issue on which the Plaintiff’s former expert had not given any opinion.  The Plaintiff has no idea what opinion that expert would give.  This is not a case of picking and choosing an expert who would give an opinion favourable to the Plaintiff’s case and dropping the earlier expert who has given an adverse opinion.  While the Plaintiff’s choice of a bad expert, one who was disbelieved by the court, may have forensic consequence on the Plaintiff’s case, I do not agree with Mr Shieh that on a separate issue such as this and to be argued for the first time (not re-argued) after eight years, a party should be bound to his expert for better or for worse.  With respect, such argument is absurd.  If an expert has been so severely criticised by the court as biased and unreliable, it defies common sense that the court should still seek his assistance, hear from him in respect of new issues, warn itself against his credibility, and possibly reject his evidence altogether.  What the court needs is assistance on Mainland law.  It needs a balanced and not one-sided opinion of the law. What justice requires is resolution of the parties’ dispute according to their merits and not according to tactical advantage.  I have dealt with Mr Shieh’s arguments in paragraphs 21 and 22 of my Decision.

19. Mr Shieh also argues that in view the long lapse of time, it is possible that the Plaintiff has been seeing ten experts and Professor Wang Li Ming or Professor Yin was the tenth and only ones who would support his case.  I find this purely speculative.  This is a question of credibility which should be left to be determined at trial.  Mr Shieh may test the credibility of this new expert by the evidence of the Defendants’ expert and his cross-examination.  His speculation is not a reason for refusing the Plaintiff leave to adduce the opinion of any expert witness if such opinion becomes a relevant issue with the amendment of the pleading.

20. In conclusion, I am not satisfied that Mr Shieh has demonstrated any reasonable prospect of success on appeal in respect of my order on the directions application.  This is a case management decision aimed at finding out where merit lies.  This leave application lies on the critical path of this action.  The case is approaching its fifteenth anniversary. Another round of appeal to the Court of Final Appeal will mean another two or possibly three years’ delay before this court can even begin to hear expert evidence. Even if there is any reasonable prospect of success, leave should be refused in the interest of procedural economy and proportionality alone.

The unless order application

21.  The Defendants sought an order that unless the Plaintiff pays the taxed costs and interest awarded against him his claim shall be struck out and dismissed.  I made the unless order in those terms except that the costs and interest are to be paid into court instead of to the Defendants.  While the Plaintiff has an indisputable liability to pay taxed costs, he has a substantial claim of US$60 million in restitution against the Defendants.  On the other hand, the Defendants have no assets in Hong Kong and have a record of swiftly removing assets out of the jurisdiction.  I considered there is a real risk that the costs if paid to the Defendants will be removed out of Hong Kong leaving the Plaintiff with an empty judgment in the event that the Plaintiff succeeds in the restitution claim.  Thus, while granting the Defendants the relief sought, I ordered the payment to be made into court.  In my view, with the order I made the interests of both parties are nicely balanced.

22.  Mr Shieh submits that by making the order without giving the Defendants a chance to make oral submissions, the Defendants were deprived of the chance of allaying the court’s concern and persuading the court to order payment to the Defendants.  At the previous hearing, Mr Shieh suggested that he would need five to ten minutes to make oral submissions in respect of all three applications.  Presumably, he had little to “top up” on his already comprehensive written skeleton submissions.  Today, he relies on three new grounds.  But they are nothing new which I have not taken into account in paragraph 39 of my Decision.  First, Mr Shieh argues that the US$9.6 million paid into court could be applied to satisfy judgment, if obtained by the Plaintiff.  Those funds would be part of the US$60 million which the Plaintiff would be entitled if his claim in restitution is successful.  It could offer no comfort as to the balance of US$50.4 million plus interest for sixteen years.  This is just the opposite scenario of what I mentioned in paragraph 39 of the Decision in relation to a similar argument raised by Mr Chan.  Although Mr Shieh had not raised this argument in his previous skeleton submissions, as I have dismissed Mr Chan’s similar argument, I must also have dismissed Mr Shieh’s, had he the opportunity to raised it in an oral hearing.  With respect, that argument simply has no merits at all.  Second, Mr Shieh argues that Plaintiff has in his hands the FCO shares and the dividends received from FCO which should be returned to the Defendants if his restitution claim is successful.  As I have said in my Decision, the value of those shares and dividends are subject to serious dispute, which could not be resolved on affidavit evidence.  Third, Mr Shieh raises some objections to Mr Chan’s submission that the Plaintiff’s claim in restitution was good security for the taxed costs which the Plaintiff was ordered to pay.  I had dismissed Mr Chan’s argument in the first two sentences of paragraph 39 without having heard Mr Shieh’s argument today.  Nothing of what Mr Shieh submits today could have the effect of improving on his written skeleton submissions before the court on the last occasion.  In the affirmations filed by the Defendants there is not the slightest assurance that there will be funds available to meet any judgment made against them.  In my view, no submission by counsel, however brilliant and capable, could change the fact that the Defendants had removed assets out of Hong Kong and in particular after service on them of the court’s injunction order.  No submission by counsel, however brilliant and persuading could change the court’s perception that money paid to the Defendants will be removed out of the jurisdiction rendering any judgment to be obtained against them partially empty.  Thus, nothing of what Mr Shieh advanced today could have the effect of allaying the court’s concern.  Oral hearing or not, the result would still be the same.

23.  On the above analysis, even if the order was plainly wrong and really perverse in that it was made without hearing the oral submissions of the Defendants, it involved no injustice.  There is nothing which counsel could have said in the two to three minutes oral submissions that had not been considered by me.  Even if the order is set aside on appeal and the Defendants heard orally, the new order to be made would still be the same. Besides, this is only an interlocutory order.  It is provisional.  The Defendants have liberty to apply if there are changes in circumstances.  The irregularity was unfortunate.  The Defendants were deprived of a five to ten minutes oral “top up” (ie two to three minutes for each application).  Counsel asked for an adjournment to save those five to ten minutes’ time.  Had I known the adjournment would have taken eight months to accommodate counsel’s diary, I would have refused the adjournment or made an order that those three applications be dealt with on paper without an oral hearing.  Even if there was an oral hearing, the outcome would still be the same.  There is no injustice. Mr Shieh has made no submission that by reason of this order, the court is rendered incapable of performing its task.  Irregular, though, the order may be, it cannot be described as plainly wrong or really perverse.  Even if it were, I would still exercise my discretion to refuse leave in the interest of procedural economy and proportionality.  What turned out precisely demonstrates procedural economy in that the hearing saved has now been gainfully used in dealing with the Defendants’ application for leave to appeal the directions application.  The parties are spared of an eight months’ delay.

The security for costs application

24.  The Defendants seek security in the sum of $4.3 million.  I made an order requiring the Plaintiff to pay security in the sum of $2.5 million.  The Defendants’ costs have consistently been taxed down by about 50%.  The amount ordered is about 58% of the bill of costs tendered by the Defendants and is better off than the rate taxed down by the taxing master. The amount ordered accords with my assessment of what would be reasonable.  Today, Mr Shieh argues that the Defendants’ previous estimate was based on three days hearing with no new evidence but more costs are likely to be incurred because of the new issue to be pleaded.  However, no new bill of costs had been presented at the previous hearing or today.  The security should be assessed on the basis of the nature and complexity of the pleaded case.  On the basis of the pleadings as they now stand, I consider the amount ordered very generous for a three days hearing.  Interlocutory orders are provisional.  If more costs are likely to be incurred based on the amended pleading incorporating the new judicial interpretation issue, the Defendants have liberty to apply.  Mr Shieh’s argument is premature just as was Mr Chan’s argument for leave to file expert opinion.  On these facts, even if the Defendants were given the opportunity to make an oral submission, the result would still be the same.  Mr Shieh has not made any submission why this order would render the court incapable of carrying out its task.  Again, I ask rhetorically, “what is the injustice?” I repeat my views as expressed in paragraph 23 above.  For the same reasons, leave to appeal should be refused.

The fortification issue

25.  The Defendants sought an undertaking in damages and fortification from the Plaintiff.  I ordered an undertaking but no fortification.  The reason for refusing fortification is simply because of the Defendants’ failure to produce credible evidence of likely loss.  The loss alleged is speculative and based on hindsight.  If the Defendants wish to convert the money paid into court into any other form of currency or be placed in long term deposit, they are at liberty to agree with the Plaintiff or to seek the court’s direction.  Besides, the Defendants seemingly have no dispute that they have a liability to return HK$20 million plus interest to the Plaintiff.  That sum together with interest over the past twenty years would be adequate to meet the Defendants’ claim of loss of HK$38 million.  Today, Mr Shieh argues that because a new issue is going to be introduced, the case would take longer time to come to conclusion and the Defendants would be deprived of their funds in court for an unknown period and the court should hear oral submissions before making the order. Rightly or wrongly, the order has been made.  In the absence of supporting evidence, no oral submissions could change the court’s perception that the loss alleged is speculative, unreal and based on hindsight; and the fact that there is a sum of HK$20 million plus interest over a period of twenty years Plaintiff’s money in the Defendants’ pocket.  Again, even if the order is set aside and the Defendants given a chance to make oral submissions, the outcome would still be the same.  The order does not involve any injustice or inability of the court to carry out its task.  Leave to appeal is therefore refused.

Application to vary the costs orders nisi

26.  The various orders I made at the previous hearing were all intended to be final costs orders.  The word “nisi” was not used.  However, the Defendants treated those orders as orders nisi and apply for variation.  I have no jurisdiction to vary those orders.  Mr Shieh argues that I should treat the application as if it is an application for leave to appeal and grant the Defendants leave.  Those orders were carefully made in the exercise of my discretion and after duly considering merits and all the circumstances.  I am not convinced that any of those orders were made contrary to any established legal principles.  There is no reason to grant leave to appeal just for the sake of allowing the Defendants a chance to seek a second determination.  Accordingly, I refuse to treat the application to vary my costs orders as application for leave to appeal and dismiss the application with costs to the Plaintiff.  I state briefly hereunder the reasons for those costs orders.

27.  In respect of the directions application, I made an order that costs of the application be the Plaintiff’s costs in the cause. Mr Shieh argues that the Plaintiff is seeking a huge indulgence and costs should have been awarded to the Defendants.  I would agree with Mr Shieh if this is truly a case of indulgence, but it is not.  The application was made, although prematurely, as a result of a change in Mainland law which occurred during the course of the appeal, long after the statement of claim was filed. The application was late, but was not occasioned by fault or neglect of the Plaintiff and should not be treated as a case of indulgence.  As Mr Shieh rightly pointed out, the application was premature.  The Plaintiff should have amended his pleading to raise the issue of Mainland law first.  However, Mr Shieh chose to take as his primary position to object to the filing of the expert report and the pleading point as his fallback position.  He raised numerous arguments which, with respect, should be raised at the time of hearing the Plaintiff’s application to amend the statement of claim or when directions are sought for filing of expert reports and exchange of witness statements.  Those arguments were unnecessary and were all dismissed as frivolous and unmeritorious.  Accordingly, I consider it appropriate that the Plaintiff should have costs, but only if he succeeds in the cause. 

28.  I awarded costs to the Defendants in respect of the unless order application, in respect of which Mr Shieh could have no complaint.

29.  I made no order as to costs in respect of the fortification application for the simple reason that both parties have something to gain and something to lose.

30.  As for the security for costs application, usually a foreign plaintiff is liable to give security; but if he succeeds, the security need not have been given in the first place.  Costs in the defendant’s cause is the usual and only reasonable costs order to make.

31.  All these applications were simple applications which could have been handled by one counsel.  I did not find it necessary to give certificate for two counsel.  Cost liability was very obvious.  I did not find it necessary to invite submission on costs.

Conclusion

32.  For the above reasons, the Defendants’ application for leave to appeal and application to vary my costs orders are all dismissed.  These applications involve some novel legal arguments.  Both sides are represented by two counsel.  It would be appropriate to issue certificate for two counsel.  Accordingly, I make a costs order nisi that costs shall be taxed with certificate for two counsel, if not agreed.