ZHAO ZHI QIANG v. ZHAO ZHIGUANG AND ANOTHER

HCA 1614/2019

[2021] HKCFI 248

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1614 OF 2019

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DECISION

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1.  There are two summonses before me:

(1)  D1’s summons filed on 11 December 2020 (“the Leave Summons”) for leave to appeal from my decision dated 27 November 2020 (“the Main Decision”)[1]; and

(2)  D1’s summons filed on 16 December 2020 (“the Costs Summons”) for leave to allow D1 to make an application to vary the costs order nisi made by me in the Main Decision out of time (“the Costs Order Nisi”), and an order varying the Costs Order Nisi.

2.  By the Main Decision, I have allowed P’s application as per the Continuation Summons and dismissed the Discharge Summons.  I have also made a costs order nisi that costs of those 2 summonses be paid by D1 to P forthwith and be summarily assessed, with a certificate for 2 counsel.  This decision should be read together with the Main Decision.  For ease of reference, the abbreviations used in the Main Decision are adopted herein.

The Leave Summons

3.  Leave to appeal would only be granted if the appeal has a reasonable prospect of success (which means that the prospect of success is reasonable and more than fanciful, without having to be probable), or there is some other reason in the interests of justice why the appeal should be heard^[2].

4.  Interlocutory injunctions are discretionary relief. Upon an appeal from a judge’s continuation or discharge of such injunction, the appellate court is “not to exercise an independent discretion of its own”. It must “defer to the judge’s exercise of his discretion and must not interfere with it merely upon the ground that the members of the appellate court would have exercised the discretion differently”[3].  The judge’s discretion is only to be interfered with if he made an error of law or principle, took into account irrelevant matters, or exercised his discretion in a manner outside the generous ambit within which reasonable disagreement is possible[4].

5.  Having read the Draft Notice of Appeal annexed to the Leave Summons and D1’s written submissions, D1 is relying upon the “reasonable prospect of success” limb to seek leave to appeal.  In essence, D1 is saying that I erred in making the following findings in the Main Decision:

(1)  there was no material disclosure by P at the ex-parte stage;

(2)  the wording of the Injunction Order is not too wide;

(3)  there is a serious issue to be tried.

6.  With respect, D1 is merely rerunning the arguments previously placed before this court.  I have dealt with those arguments in the Main Decision.  For the reasons given in the Main Decision, I am not persuaded that D1 has a reasonable prospect of success in the appeal by relying upon these arguments.

(1)  As to D1’s complaint based upon material non-disclosure, I have dealt with the same in [50] to [64] of the Main Decision.  I am not persuaded that I erred in finding that there has not been any material non-disclosure by P as alleged by D1.  In particular, I have said in [63] of the Main Decision that even if I were wrong and D1 had in fact made out a case of material non-disclosure against P, I would be prepared to exercise my discretion against the discharge of the Injunction Order for the reasons given in that paragraph.  It has not been shown in what way I have erred in principle in the exercise of my discretion and therefore my discretion should be interfered with by the Court of Appeal.

(2)  As to whether the scope of the Injunction Order is too wide, I have dealt with the same in [65] to [68] of the Main Decision.  It has not been shown in what way I have erred in the analysis as set out in [67] of the Main Decision.  With respect, I am of the view that there is no merit in this challenge.

(3)  As to whether there is a serious issue to be tried, I have dealt with the same in [40] to [49] of the Main Decision.  I am not persuaded that I erred in finding that there is a serious issue to be tried.

7.  In my view, D1 has not shown a reasonable prospect of success in his proposed appeal against the Main Decision.  Leave to appeal must be refused.  I would dismiss the Leave Summons.

The Costs Summons

8.  D1 suggests that the Costs Order Nisi should be varied so that the costs of the Continuation Summons and the Discharge Summons should be P’s costs in the cause, without a certificate for 2 counsel.

9.  D1 admits that in accordance with the timetable set out in Order 42 rule 5B(6), he should have taken out an application for an order to vary the Costs Order Nisi by 11 December 2020.  However, this has not been done.  The Costs Summons was only filed on 16 December 2020.  D1 submits that the delay is just a short one.  D1 explains that after the Main Decision was handed down on 27 November 2020, time was taken to review the Main Decision and to hold conferences to discuss the way forward.  Resources were pulled to prepare the Leave Summons. Due to the limited resources caused by Covid-19 (including reduced manpower of D1’s solicitors), the Costs Summons was not filed in time but was only filed a few days after the deadline.

10.  As to whether a court has jurisdiction to extend time for varying a costs order nisi after it has become absolute by the operation of Order 42 rule 5B(6), as observed by Lam VP in [42] of Poon Ching Man v Lam Hoi Pun[5], there are different authorities suggesting different answers to this question. Even if the court has jurisdiction to do so, the considerations in Order 2 rule 5 may well be relevant.

11.  However, it would not be necessary for me to resolve the jurisdiction issue and to consider Order 2 rule 5 in this decision.  For the reasons set out below, I am of the view that there is no merit in D1’s application for varying the Costs Order Nisi.  Even if the application were made in time, the application would still be dismissed.  That being the case, even if I have jurisdiction to allow D1 to make the application out of time, I would decline to do so.

12.  In considering the application for varying the Costs Order Nisi, everything must be based upon my rulings made in the Main Decision.  The application is not an opportunity for D1 to reargue the matters which have already been determined by me in the Main Decision.  I am not prepared and indeed I am not allowed to revisit those matters^[6].

13.  D1 refers me to Melvin Waxman v Li Fei Yu[7] and submits that in respect of the costs of the Continuation Summons and the Discharge Summons, both costs following the event and costs being P’s costs in the cause are options before the court.  I have no quarrel with these.  After all, costs are in the discretion of the court.

14.  D1 submits that costs of the Continuation Summons and the Discharge Summons should be P’s costs in the cause.  P should not be immediately awarded these costs and should only be allowed to get those costs if P eventually succeeds at the trial.  D1 submits that:

(1)  Whether the Injunction Order should have been granted and continued largely depends on which party has been telling the truth, and the truth can only be found out in the trial.

(2)  D1 and indeed the operation of ATL have been heavily restricted by the Injunction Order since around November 2019, such that D1 had no choice but to apply for the discharge or variation of the Injunction Order.

(3)  P has failed to discharge the duty of making full and frank disclosure at the ex parte application for the Injunction Order.

15.  With respect, there is no merit in these submissions.

(1)  It is plainly wrong in saying that whether an interlocutory injunction should be granted depends on which party is telling the truth.  Time and again, the courts have said that what is necessary to be shown by the applicant seeking an interlocutory injunction is a serious issue to be tried.  D1 has challenged that there is no serious issue to be tried, and that challenge failed.

(2)  No challenge based upon balance of convenience has been made by D1 against the Injunction Order.  The allegation that “D1 and indeed the operation of ATL have been heavily restricted by the Injunction Order since around November 2019” is not proved by evidence and is not a finding made by this court in the Main Decision.

(3)  I have dismissed D1’s complaint concerning material non-disclosure in the Main Decision.  D1 is not allowed to rely upon that complaint to support his application for varying the Costs Order Nisi.

16.  It would be wrong to say that as a matter of principle, the costs of an interlocutory injunction should be in the cause unless there is justification for departure therefrom.  Rather, the court should look at the merits of the injunction application as at the time of the application, which do not necessarily depend on the outcome of trial[8].  There are numerous post-CJR cases in which the court ordered continuation of the interlocutory injunction and ordered that costs be to the plaintiff[9].

17.  At said in [78] of the Main Decision, D1 has vigorously opposed the Continuation Summons and tried to seek an order in terms of the Discharge Summons, but D1 failed in all these.  Based upon the rulings made by me in the Main Decision, I am of the view that costs should follow the event, with a certificate for 2 counsel.  In my judgment, D1 has not put forward any argument showing that I have erred in principle in exercising my discretion.  There is no merit in D1’s application for varying the Costs Order Nisi.

18.  For the reasons above, the Costs Summons must be dismissed.

Disposition

19.  I dismiss both the Leave Summons and the Costs Summons.

20.  Costs should follow the event.  As I said in [78] of the Main Decision, the documents relating to the Continuation Summons and the Discharge Summons are voluminous and various issues have been argued in relation to whether the Injunction Order should be continued.  For the purpose of meeting D1’s applications as per the Leave Summons and the Costs Summons, P’s counsel would have to read those documents and to consider those issues again.  I would grant a certificate for 2 counsel in relation to the Leave Summons and the Costs Summons.

21.  There be a costs order nisi that costs of the Leave Summons and the Costs Summons be paid by D1 to P forthwith with a certificate for 2 counsel, and those costs be summarily assessed.  There be leave to P to file and serve a bill of costs for summary assessment within 7 days after the costs order nisi becoming absolute, and leave to D1 to file and serve a written reply to the said bill within 7 days thereafter.

22.  I thank counsel for the helpful assistance rendered to the court.