AKAI HOLDINGS LTD (IN COMPULSORY LIQUIDATION) v. DOMINE KO CHEONG WING AND OTHERS

HCCL 20/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO. 20 OF 2005

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JUDGMENT  ON  COSTS

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The application

1. This is an application, by summons of the 2^nd defendant dated 4 January 2007, to vary an order nisi as to costs.

2. Such order nisi was made at the conclusion of a judgment handed down by this court on 23 November 2006.  That judgment speaks for itself.

3. In summary, the court ordered that the plaintiff liquidators do have leave to file and serve a replacement Amended Points of Claim, together with necessary consequential directions. 

4. Whilst couched as an application so to amend, in light of the 2^nd defendant’s resistance, this effectively was a strike out in reverse, the 2^nd defendant having succeeded upon an initial strike out application by virtue of an earlier judgment of this court dated 9 June 2006.

5. At paragraph 67 of the judgment dated 23 November 2006, the costs’ order nisi was that the costs of the amendment application be plaintiff’s costs in the cause, such costs to be taxed if not agreed.

6. The 2^nd defendant now asks that this order nisi be revisited.

The argument

7. Mr Barlow, who appears for the 2^nd defendant as he did on the earlier applications, suggests that the court has erred in its provisional conclusion as to costs.

8. He rehearsed the sequence of events leading up to, and during the plaintiff’s re-amendment application, and concluded that the court had overlooked that at the outset of the hearing of the application on 16 October 2006, that leading counsel for the plaintiff then had moved an additional oral amendment (which was not opposed in terms, and was granted), thereby helpfully obviating the necessity for argument on a particular void/voidability issue.

9. Mr Barlow did not, I think, suggest that the reserved costs order on the earlier directions hearing (which took place on 6 September 2006) should be otherwise than costs in the application, but he did maintain that the correct order as to costs on the substantive hearing of argument should be no order.  He further made the point that, in accordance with usual principle, there formally should be an order that the costs of and occasioned by the actual amendment should be to his client.

10. Mr Yuen SC, who appeared for the plaintiff on this hearing as he had done previously, did not disagree with the latter submission, but he did take firm issue with the contention that there should be no order on the substantive argument.  His position was that, whilst he did not seek to disturb it, the order nisi already had erred too far in favour of the 2^nd defendant.

Decision

11. At the end of the day the real bone of contention between the parties is as to the costs of the hearing of the argument on 16 October 2006; all else appears to be relatively common ground.

12. Having reflected on the position, I do not think that Mr Barlow is right in his submission that the correct order on this hearing on 16 October 2006 should be no order as to costs.

13. There can be no doubt but that on the argument as mounted that rightly or wrongly (and I understand the issue presently is the subject of appeal) that the plaintiff was substantially successful in its submission that leave to reamend should be granted; the corollary of this is that the 2^nd defendant’s argument to the effect that leave should not thus be given failed although – and this effectively is the hook upon which Mr Barlow now relies – it is indeed true that at the outset of argument Mr Yuen SC orally moved further to amend, which action, it is said by Mr Barlow, “vindicated” the 2^nd defendant’s stance, and justified opposition to the amended replacement pleading as originally drawn.

14. The answer to this, it seems to me, is that this argument is well and good as far as it goes, but that it does not get Mr Barlow home and justify the making of no order as to costs, as he contended should be the case.

15. As Mr Yuen pointed out, the judgment of 23 November 2006 made it clear (at paragraph 21) that whilst Mr Yuen’s concession at the outset served to narrow the scope of the argument, it certainly did not remove the necessity for such; to the contrary, the substance of the judgment deals with the conclusions of the court on the “three main contentions” (at paragraph 28 et seq) upon which Mr Barlow unsuccessfully relied in order to oppose the application to file and serve the amended replacement pleading.

16. I agree with this submission.

17. It seems to me that the only room for debate now is the extent to which the further belated oral amendment by Mr Yuen, which had the effect of removing the necessity for one element of the 2^nd defendant’s argument in opposition, should be recognized in terms of costs.  I suspect, although I now cannot recall, that this was the basis upon which the existing costs’ order nisi originally was couched.

18. Be that as it may. After having the benefit of argument, and having had the opportunity further to reflect on the position, I have concluded that the appropriate orders for costs should be as follows, and I make an order in these terms :

(i) The reserved costs of the directions hearing which took place at 9.30am on 6 September 2006 are to be costs in the application;

(ii) The costs of and occasioned by the amended replacement Statement of Claim are to be to the 2^nd defendant, to be taxed if not agreed;

(iii) Save as aforesaid, the plaintiff is to have 80% of the costs of the hearing on 16 October 2006 in any event, such costs to be taxed if not agreed;

(iv) As to the costs of the hearing on 12 January 2007, there is to be no order as to costs.

19. As to (iv) above, in the circumstances I consider this to be the fairest order, not least because both parties succeeded in part in terms of submissions advanced, and also because this hearing, although duly attended by counsel, perhaps could and should have been avoided had the plaintiff’s solicitors received the 2^nd defendant’s letter of 22 December 2006, which then may well have enabled the court to decide this issue on the papers without the need for attendance for oral argument.

20. I anticipate that this costs’ order will be engrossed in the immediate future, and that all orders consequent on this application, as duly engrossed, thus will be before the court on the forthcoming appeal.