QANTEX CAPITAL MARKETS LTD v. DIMITRI PHILIPPIDES

HCA 752/2018,
753/2018,
755/2018,
756/2018, and
757/2018
(dealt with together)
[2019] HKCFI 880

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 752 OF 2018

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____________

AND

HCA 753/2018

ACTION NO 753 OF 2018

____________

____________

AND

HCA 755/2018

ACTION NO 755 OF 2018

____________

____________

AND

HCA 756/2018

ACTION NO 756 OF 2018

____________

____________

AND

HCA 757/2018

ACTION NO 757 OF 2018

____________

____________

(dealt with together)

_______________________

D E C I S I O N

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1.  On 17 January 2019, this Court handed down its decision (“Decision”) on the application made by QC, the plaintiff, for determination of points of law under Order 14A and for summary judgment under Order 14 RHC.  That application was dismissed, and an order nisi was made under Order 42 rule 5B that the costs of the dismissal of the application were to be paid by the plaintiff to the defendants, with certificate for Counsel. 

2.  The abbreviations referred to in my Decision are adopted.

3.  On 20 February 2019, the Employees as defendants applied for the costs order to be varied, seeking costs to be summarily assessed to be paid forthwith, for certificate for two counsel, and for the Employees’ costs incurred after 25 July 2018 to be assessed on indemnity basis. 

4.  On 28 March 2019, I ordered that the application be dealt with on the papers filed.

5.  QC submits that when an application for summary judgment is dismissed, the usual costs order is for costs to be paid on the usual party and party basis, recognizing that the powers conferred on the court under Order 14 rules 7 are salutary.  It is also indisputable that costs are generally in the discretion of the Court, to be ordered after taking into consideration matters such as the CJR objectives, the conduct of the parties, whether it appears to the Court that the plaintiff knew that the defendant relied on a contention which would entitle him to unconditional leave to defend (the consideration expressed in Order 14 rule 7 (1)), whether the application made was an abuse of the Court’s process, and the general need to discourage the misuse of Order 14 proceedings.

6.  In this case, as I have made clear in the Decision, in view of the matters raised in the affirmations and draft defence, there are clearly triable issues raised, and the construction of the relevant provisions of the Contracts depends on the resolution of factual issues in dispute between the parties – such as how the bonus pool was calculated and distributed, how the parties regarded the payment of the so-called bonuses, whether the payments made to the Employees were formulaic incentive payments, or truly discretionary bonuses payable only at the discretion of QC as employer.  The questions of law of construction are intertwined with the factual questions in dispute, to make neither Order 14A nor Order 14 applicable.

7.  The triable issues and factual matters in dispute were raised and made clear after the Employees’ affirmations were filed in opposition to QC’s Summons, on 30 July 2018, a short while after the draft defence was served on QC.  The factual issues in dispute were highlighted by QC’s affirmations filed in reply on 3 October 2018, less than a month before the hearing on 1 November 2018.

8.  As those acting for the Employees have emphasized, the attempts made on behalf of QC to formulate further questions of law for determination under the Order 14A application on 1 November 2018, and their last minute concessions (to abandon parts of the claims on the basis of the 2017 Q1 and Q2 “bonuses”, and their acceptance of the Employees’ possible set-off for annual leave payments) demonstrate QC’s appreciation that summary judgment as sought in the Summons was not possible or suitable, in the light of the evidence filed and issues raised.

9.  In my view, QC’s decision to continue with the application made by the Summons after the Employees’ evidence was filed in opposition was close to “reckless”, and was a deliberate decision made to take the risks of pursuing the application for summary judgment and determination, despite the triable issues raised.  A party who decides to assume the risks of litigation, in order to exert pressure on its opponent or to suit its own strategy, must bear all such risks.  These must inevitably include the risks of an order made on the unsuccessful application, that costs be paid on an indemnity basis, which risks legal advisers must have explained to their lay clients, who must have considered them to be a risk worth taking.

10.  Bearing in mind the overall objectives of the CJR, it is the duty of litigants and their legal advisers to bear in mind that there is public interest in ensuring that resources of the Court are distributed fairly, that practice and procedure in legal proceedings should increase cost effectiveness, and that a case should be dealt with as expeditiously as is reasonably practicable.  These objectives cannot be achieved if litigants take unnecessary steps which delay the trial of the real issues in dispute in the action, exploit legal procedure, and take up valuable Court time without seriously considering the reasonable necessity of the applications they make to the Court.  Order 14 and Order 14A applications are not the usual course of proceeding with a case which is disputed on facts and law, and should not be exploited for reasons of exerting pressure, creating inconvenience, or demonstrating aggression.   A plaintiff may feel aggrieved, but as the Court pointed out in Global Marketing Enterprise (GME) Ltd v Blue Box International Limited HCA 1053/2015, unreported, 4 November 2016 (at paragraph 20), such grievance could and should be ventilated and resolved at trial, and is not a sufficient reason to warrant the making (or continuance) of an unwarranted summary judgment application.

11.  In the circumstances of this case, I consider that it would be appropriate to vary the costs order nisi, and to rule that the costs of the Summons incurred by the Employees after 30 July 2018 (the date of filing and service of the Employees’ affirmations in opposition to the Summons) be paid by QC on an indemnity basis.

12.  I do not regard the issues raised in this case to be so complex as to necessitate the engagement of both a Senior Counsel and Junior Counsel for preparations for the hearing on 1 November 2018 to be manageable.  I will not vary the order for certificate for one counsel.

13.  In accordance with the guidelines and preferred approach as set out in Midland Business Management Ltd v Lo Man Kui (No 2) [2011] 2 HKLRD 667, I will further order that the Employees’ costs, including the costs of the application for variation, are to be summarily assessed on paper. 

14.  QC not filed any statement of objection to the employees’ Joint Statement of Costs dated 20 February 2019 (“Joint Statement”). I direct the Employees to file and serve within 7 days of the handing down of this Decision their Statement of Costs for the application for variation (“Further Statement”), and give QC liberty to file and serve their Statement of Objection, if any, to the Joint Statement and the Further Statement within 7 days of the service of the Further Statement.