SIR ELLY KADOORIE & SONS LTD (FOR AND ON BEHALF OF ITSELF, ITS CURRENT AND FORMER OFFICERS, EMPLOYEES AND AGENTS, INCLUDING ITS LEGAL REPRESENTATIVES, MESSRS SIMMONS & SIMMONS) v. SAMANTHA JANE BRADLEY

HCA 518/2022

[2023] HKCFI 2197

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 518 OF 2022

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DECISION

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INTRODUCTION

1.  By Decision dated 31 May 2023 (“the Decision”), this Court ordered that SEKSL[1]’s claims against the defendant be dismissed.

2.  It was also ordered on a nisi basis that SEKSL shall bear the defendant’s costs of the action (including the costs of the First Summons and the Second Summons), such costs shall be taxed if not agreed, with certificate for two counsel (“the Order Nisi”).

3.  Pursuant to paragraph 114 of the Decision, the defendant, by letter dated 14 June 2023 (“the Application Letter”), applied to vary the Order Nisi, such that:

(1)  The defendant’s costs incurred as a result of the application of SEKSL made by way of an inter parte summons filed on 6 May 2022 (“the Injunction Summons”) be expressly included in the cost order[2];

(2)  All of the defendant’s costs be assessed on indemnity basis; and

(3)  The defendant’s costs be summarily assessed and paid within 14 days.

(“the Variation Application”)

4.  As a matter of principle, SEKSL has no objection against the orders sought under sub-paragraphs (1) and (3) above. The only substantive matter in dispute is whether the defendant’s costs should be assessed on indemnity basis.

LEGAL PRINCIPLES ON INDEMNITY COSTS

5.  In Commissioner of Inland Revenue v Poon Cho Ming, John (2020) 23 HKCFAR 74 [2020] HKCFA 2, Bokhary NPJ summarised the principles which are applicable to an application for indemnity costs at [4] as follows:

“(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.”

6.  There are some other legal principles which are applicable to the specific grounds relied on by the defendant. They will be referred to when those grounds are dealt with below.

THE DEFENDANT’S GROUNDS

7.  On the basis of the aforesaid legal principles, the defendant has put forward four factors which are said to support the making of an indemnity costs order, namely:

(1)  SEKSL’s litigation conduct;

(2)  SEKSL’s refusal to accept the defendant’s without prejudice offer;

(3)  SEKSL’s reliance on “disingenuous and hopeless” points;

(4)  The present action was vexatious, frivolous, oppressive and an abuse of the Court’s process.

DELIBERATION

SEKSL’s litigation conduct

8.  There are two parts under this factor.

9.  The first part relates to the Injunction Summons. It was said that (a) SEKSL’s insistence (but failed attempt) to impose oppressive restraints on the defendant’s ability to represent herself as litigant in person; and (b) SEKSL’s refusal to accept the defendant’s proposed undertaking, justify the making of an indemnity costs order in relation to the reserved costs of the Injunction Summons.

10.  The background of this part of the factor relied on by the defendant may be summarised as follows[3]:

(1)  On 6 May 2022, the defendant wrote an email to Mr Eric Chan of S&S and indicated that there was “nothing further to communicate about at present”;

(2)  Notwithstanding the aforesaid email, SEKSL took out the Injunction Summons on the same day, with the call-over hearing fixed for 13 May 2022;

(3)  By its skeleton submissions dated 10 May 2022, SEKSL indicated that it would apply for an interim-interim injunction against the defendant;

(4)  By letter dated 11 May 2022, the defendant’s solicitors informed SEKSL that the defendant was prepared to offer an undertaking pending the substantive hearing of the Injunction Summons;

(5)  On the following day, the defendant proposed the following terms of undertaking to be given by her to the Court and SEKSL:

(a)  She will “not send any direct communication to the Plaintiff (including its current or former directors, officers, or employees of who she is aware) on the subjects set out in Clauses 1 to 3 of the draft Order attached to the summons dated 6 May 2022 (the ‘Subjects’)”;

(b)  She will “not send any communications to S&S on the Subjects, except for the purpose of exercising her right to defend herself in this action and/or bringing any claims against the Plaintiff (and/or its current or former directors, officers, or employees) whether as a counterclaim in this action or as a separate action”;

(c)  She will “only communicate with S&S through her solicitors, except in the situation where she is a litigant in person”.

(6)  By letter dated 13 May 2022, SEKSL counter-proposed the terms of the undertakings. As far as the proposed terms under sub-paragraph (b) are concerned, SEKSL suggested to add a proviso as follows:

“provided that such communications are made through her solicitors (without prejudice to the Defendant’s right to apply to Court to vary this undertaking if she subsequently chooses to act in person and provided that at least 48 hours’ written notice is given to the Plaintiff before the Defendant makes any such application)”

(“SEKSL’s Litigant In Person Proviso”)

(7)  As the defendant could not accept SEKSL’s counter-proposal, the call-over hearing proceeded on 13 May 2022 as scheduled[4];

(8)  At the end of the day, SEKSL did not insist on the retention of the SEKSL’s Litigant In Person Proviso, which was not included in the order made by Cheng J on 16 May 2022 (“the May 2022 Undertaking to the Court”).

11.  On the basis of the above, the defendant submitted that:

“[…] SEKSL rejected Ms Bradley’s Proposed Undertaking offered at the outset of the injunction application and insisted on attempting to impose oppressive and unjustified restraints on Ms Bradley’s ability to represent herself as a litigant in person, as well as her choice of solicitors firms that could represent her. This resulted in a hearing before this Court that could have been entirely avoided. As such, it is submitted that Ms Bradley’s costs of the Injunction Summons should be awarded on an indemnity basis.”

12.  SEKSL denied that it had any intention to prevent the defendant from acting as a litigant in person. It was argued that the proviso proposed by SEKSL merely sought to prevent any misuse by the defendant of the litigant in person status as a loophole to undermine the effectiveness of the injunction.

13.  In my view, even if SEKSL did not have any intention to prevent the defendant from acting in person, the objective effect of SEKSL’s Litigant In Person Proviso, if included, as a matter of fact would impose a constraint on the defendant such that she could not elect to act as a litigant in person freely at any time she wished because she had to apply to the Court for variation of the undertaking before doing so. This may be seen from S&S’ letter dated 27 July 2022 in which it was stated, inter alia, that:

“The LIP Restraint, as defined in your letter, was neither the focus of the parties’ correspondence before the May hearings nor of the hearings themselves. As our client’s Counsel submitted to the Court on 13 May 2022, our client was not seeking to restrain your client’s ability to act in person. The form of undertaking that your client had proposed prior to the 13 May 2022 hearing in effect gave her the option to release herself from the undertaking at any time simply by terminating her retainer with your firm and acting as a litigant in person. Our client’s intention, as conveyed to the Court, was to put in safeguards in the undertaking to prevent abuse by your client. Your client’s intention, as was clear to us and to the Court, was to create ‘loopholes’ (or lacunae) in the undertaking, such that she might continue her harassment by acting in person […]” (emphasis added)

14.  Be that as it may, I do not think SEKSL’s initial proposal (or even “insistence” as described by the defendant) to include the SEKSL’s Litigant In Person Proviso should lead to an indemnity costs order. Putting the defendant’s case to the highest, I think what she might validly argue is that even if she had lost the action, she should be awarded with her costs of the Injunction Summons, because the call-over hearing of the Injunction Summons could have been vacated by agreement but for SEKSL’s insistence. However, I do not think there is adequate material for her to assert, for example, that SEKSL had an ulterior motive or improper purpose in its injunction application which justifies an indemnity costs order.

15.  Hence, I hold the view that the alleged “special or unusual feature” is not made out.

16.  The second part of the factor relates to the costs of the remainder of the action. It was argued that despite repeated warnings given by the defendant’s solicitors that SEKSL’s claim was misconceived, SEKSL had nonetheless proceeded with the action. This Court was therefore invited to draw the inference that SEKSL either did not take any steps to satisfy itself of the legal basis of its case or was otherwise indifferent as to the merits of its case.

17.  This argument can be dealt with quickly. Although this Court holds the view that this is a plain and obvious case for striking out, I do not think it can be said that SEKSL’s pursuance of this action is so unreasonable which warrants the imposition of an indemnity costs order. After all, the point raised by SEKSL was novel and the legal issue involved has so far only been considered by the Court of First Instance but none of the higher courts in Hong Kong. Hence, I do not think the Court should draw the inference as suggested. Neither do I consider it appropriate to make an indemnity costs order against SEKSL on this ground.

The defendant’s without prejudice offer

18.  In the Application Letter, as far as this ground is concerned, the defendant relied solely on her offer which was made by virtue of her solicitors’ “without prejudice save as to costs” letter dated 30 January 2023 (“the January 2023 Offer”). Such an offer proposed that:

(1)  She will provide a permanent undertaking in terms of the May 2022 Undertaking to the Court on a contractual basis, subject to her “inalienable right to make protected disclosures under English law”;

(2)  SEKSL pays the defendant’s costs incurred in the First Summons, the Second Summons and the original striking out summons filed on 15 June 2022; and

(3)  SEKSL withdraws the action with no order as to the costs of the main action or the Injunction Summons.

19.  It was submitted on behalf of the defendant that:

“Had SEKSL accepted Ms Bradley’s very reasonable without prejudice offer, SEKSL would not only be in a much better position that (sic) what it is in now as a result of the Decision, but a significant part of the costs incurred in this action by the parties could have been avoided, not to mention the Court’s time and resources.

In view of the above, Ms Bradley ought to be awarded her costs on an indemnity basis at least from 30 January 2023.”

20.  Pausing here, it is noted that the defendant, in her reply submissions, referred to another without prejudice offer which was made on an earlier date (16 September 2022) (“the September 2022 Offer”), and submitted that, in light of this earlier offer, she should be entitled to an indemnity costs order from 30 September 2022 (the day after SEKSL rejected this earlier offer). With greatest respect, it is quite improper for her to expand her application in such a way, because by the time this new matter was raised, SEKSL had already lodged its submission in opposition. This is so despite the fact that the September 2022 Offer was referred to by SEKSL itself in its submission, because this was done for a purpose other than treating it as a separate ground of variation of the Order Nisi.

21.  Coming back to the January 2023 Offer, the first ground of opposition made on behalf of SEKSL was that since this offer was not made in compliance with Order 22 of the Rules of the High Court (“RHC”), it does not have the consequences specified in the said Order unless the Court orders otherwise.

22.  With respect, this argument is misconceived. As the January 2023 Offer carried with it a condition of “no order as to costs”, this proposal could not have been made by way of a sanctioned offer in view of the effect of Order 22 rule 20(1) of the RHC: Leung Lai Kwan v Lo Kai Wing (HCMP 1554/2015, unreported, 20 August 2015) at [7] per Lam VP (as Lam PJ then was) and Ho Kwok Kei v AS Watson & Co Ltd (No.2) [2020] 1 HKLRD 568 at [3] – [4].

23.  This Court may therefore take the January 2023 Offer as a Calderbank offer into account when exercising its discretion on costs.

24.  In this regard, the Court should bear in mind that pursuant to Order 62 rule 5(1)(aa) of the RHC, in exercising its discretion as to costs, the Court shall, as may be appropriate in the circumstances, take into account the underlying objectives set out in Order 1A rule 1 of the RHC. Further, it has been held by the Court of Appeal in LLC v LMWA and Another [2019] 2 HKLRD 529, [2019] HKCA 347 that, since the CJR, all parties to litigation are under a duty to assist the court in the promotion of the said underlying objectives, including a duty to co-operate in a process facilitating settlement; the courts expect litigants to explore settlement in good faith; the conduct of a party in adopting an uncooperative stance can, and very often will, be taken into account under Order 62 rule 5(2) of the RHC; and there is a need to engage in constructive negotiations even in face of an unacceptable sanctioned offer (see [51] – [53]).

25.  SEKSL argued herein that the January 2023 Offer could not be accepted because:

(1)  The defendant offered to provide an undertaking on a contractual basis rather than to the Court;

(2)  The qualification to the defendant’s proposed undertaking – “inalienable right to make protected disclosures under English law” – is vague and unclear.

26.  The alleged concern under sub-paragraph (2) above seems to be SEKSL’s afterthought because it was not mentioned at all at the material time. In the reply letter dated 31 January 2023 (“SEKSL’s January 2023 Reply Letter”) sent by S&S on behalf of SEKSL, it was only stated that:

“We refer to your ‘without prejudice’ letter dated 30 January 2023.

Your letter repeats your client’s proposed terms of settlement which are contained in previous ‘without prejudice’ letters from you and which we had rejected as unacceptable to our client. In our letter dated 9 November 2022, we explained to you the assurances required by our client in order to consider any form of settlement with your client to be realistic. Your reply dated 14 November 2022 suggested that this was an attempt to extract unrealistic and unnecessary concessions from your client, and that your firm was instructed not to engage with us in further without prejudice communications.

There has been no change in circumstances and our client rejects your client’s latest ‘offer’.”

27.  If one turns to S&S’ letter dated 9 November 2022 (“SEKSL’s November 2022 Reply Letter”) which was mentioned in SEKSL’s January 2023 Reply Letter, it can be seen that in fact it was stated that:

“If your client has further so-called ‘protected disclosures’, which we understand to mean reports to regulators, we encourage her to make them now […]”

28.  From the other part of SEKSL’s November 2022 Reply Letter, it appears that the defendant had sent another “without prejudice” letter dated 28 October 2022 to the London office of S&S, and that the term “protected disclosure” was mentioned therein. That was what S&S was responding to by virtue of SEKSL’s November 2022 Reply Letter. For our purpose, it suffices to note that S&S had no difficulty to understand what the said term meant, or to say the least, S&S did not ask the defendant for clarification of its meaning.

29.  I therefore reject SEKSL’s argument in this regard.

30.  As far as the proposed contractual undertaking is concerned, it is noted that S&S did make it clear in SEKSL’s November 2022 Reply Letter that any undertaking must be given to the Court. For the present purpose, I would treat it as if this stance was repeated in SEKSL’s January 2023 Reply Letter.

31.  However, a special feature in this case is that SEKSL had imposed three “pre-conditions” (or “assurances”) which must be satisfied before any settlement offer would be agreeable to SEKSL. It was stated in SEKSL’s November 2022 Reply Letter that:

“Our client remains open to having settlement discussions with your client. However, to have any chance of success, three pre-conditions need to be fulfilled.

A. Your client needs to gain a realistic appreciation of how her behaviour has affected her former employer and colleagues and of the weakness of her legal position. We are confident of defeating her strike out application and going on to win at trial. Therefore, in demanding recompense for ‘damage’ done to her career and for non-existent consultancy services, she is at the wrong end of the spectrum. She has received HK$25 million under an agreement (the Separation Agreement) that she subsequently attacked and deliberately breached; she has harassed SEKSL and its officers/employees; she has made numerous spurious and malicious reports to regulators about SEKSL and its officers/employees. She ought to be thinking about how she might compensate for the damage she has caused others, rather than looking to further enrich herself.

B. She needs to convince our client that, unlike past agreements, she will this time honour the contractual promises she made. How she can provide that assurance is up to her, but at present, our client has no faith that Ms Bradley will deliver on the commitments she undertakes.

C. Your client needs to respect ‘without prejudice’ privilege. For so long as she believes it is her prerogative to unilaterally abrogate the privilege just because she takes the view that our client has not made a genuine offer of settlement; or because she believes it is a cover for ‘unambiguous impropriety’, there can be little progress in achieving a peaceable resolution. These are very narrow exceptions to the privilege and the way she has sought to invoke them has been misconceived. If her object has been to create the conditions for an amicable settlement, her disclaiming of the privilege whenever it suits her has been misguided and remains an impediment to potential future negotiations.

Our client does not consider any form of settlement to be realistic unless it has these assurances. At the moment, it does not believe any settlement with your client will be regarded by her as final. For so long as SEKSL retains that belief, it will continue to pursue resolution through the courts, no matter the cost. We strongly urge your client to properly evaluate the strength of her legal position and let us have a realistic offer for settlement if she wishes to continue settlement discussions with SEKSL.”

(the underlines were added by S&S; emphases in bold are mine)

32.  In reply, the defendant’s solicitors wrote on 14 November 2022:

“We note that your client remains open to having settlement discussions with our client. However, we (and our client) consider that there is little or nothing to be achieved from further without prejudice correspondence between our respective firms given that:

[…]

(4) the assurances that you request from our client as pre-conditions for continuing settlement discussions with our client appear to be attempts to extract unrealistic and unnecessary concessions from our client. In particular:

(i) We (and our client) are unable to accept that she has a weak legal position in HCA 518/2022 for two fundamental reasons. […]

(ii) Rather than imposing such a pre-condition on our client, we respectfully suggest that a more realistic pre-condition should be for both of our clients to acknowledge the uncertainties in the law pertaining to the tort of harassment and accept that the outcome of HCA518/2022, if it proceeds to trial, is far from predictable.

(iii) Our client has every intention of abiding by any settlement agreement that is reached and is not clear what sort of further ‘assurance’ you expect her to provide in this regard. In any event, your client has recourse to the courts in the event that she does not comply with any settlement agreement, the enforcement of which would be far quicker, less costly and more predicable than persisting with the misconceived representative action for harassment. Our client is also an Officer of the High Court of Hong Kong.” (emphasis added)

33.  This Court was not told that SEKSL had ever replied to the above letter, in particular, clarified on what sort of further “assurance” that the defendant was expected to provide.

34.  These required “assurances” were referred to in SEKSL’s January 2023 Reply Letter. However, SEKSL did not explain what it wanted as requested by the defendant’s solicitors. Worse still, SEKSL, through its solicitors, stated in SEKSL’s November 2022 Reply Letter that it did not believe any settlement with the defendant would be regarded by her as final, and that so long as it retained that belief, it would continue to pursue resolution through the courts, no matter the cost. That position was maintained on 31 January 2023 even though the defendant had initiated another round of negotiation despite her previous stance that she would not engage in further negotiation.

35.  The accumulative effect of the above is that SEKSL had imposed pre-conditions before it would agree to engage in further negotiations. Given the fact that it is entirely unclear as to how the defendant could give the “assurance” required and that SEKSL has failed to explain in more precise terms on what it wanted, in effect SEKSL has refused to negotiate further with the defendant. In my view, it is in breach of its duty to co-operate in a process facilitating settlement, to explore settlement in good faith and to engage in constructive negotiations (even in face of an unacceptable offer).

36.  Under such circumstances, it is appropriate to award costs of the action against SEKSL on indemnity basis.

37.  The defendant asked in the Application Letter that indemnity costs should be awarded from 30 January 2023. While SEKSL did not put forward any fall-back position as to the date from which indemnity costs should be granted in the event the Court accepts the defendant’s argument, I do not think that indemnity costs should be awarded as from 30 January 2023.

38.  As SEKSL has rejected the January 2023 Offer on 31 January 2023, the defendant should be entitled to indemnity costs from 1 February 2023.

SEKSL’s allegedly “disingenuous and hopeless” arguments

39.  The defendant argued that indemnity costs should also be granted because SEKSL had relied on “disingenuous and hopeless” points in its written and oral submissions.

40.  The defendant first of all seems to allege that SEKSL had mounted procedural challenge to her proposed amendment to her summons filed on 15 June 2022 (the original version of the First Summons)[5]. This allegation is totally without merit:

(1)  SEKSL’s solicitors, by letters dated 17 January 2023 and 20 January 2023, did not raise any procedural challenge as such, not to mention “hopeless” procedural challenge. All that S&S was asking for by virtue of those letters were:

(a)  the reason why the summons filed in June 2022 had to be amended after seven months (two months before the substantive hearing); and

(b)  a confirmation that the proposed amendment would not derail the upcoming substantive hearing.

(2)  Given the fact that the substantive hearing was to be held in two months’ time, these requests are entirely justified and reasonable.

(3)  At the end of the day, leave for the amendment had been given by consent.

(4)  In other words, the amendment was not in issue at the substantive hearing at all – see [2(1)] of the Decision.

41.  The defendant then complained that SEKSL had failed to draw this Court’s attention to the fact that Etacol (Hong Kong) Ltd v Sinomast Ltd [2006] 4 HKC 572 was expressly rejected by Anthony Chan J in Lau Tat Wai v Yip Lai Kuen Joey [2013] 2 HKLRD 1197. I do not agree that the learned Judge had “expressly rejected” Etacol as such. In any event, the authority of Lau Tat Wai had already been cited by the defendant’s counsel before SEKSL lodged its written submissions. The Court’s attention had been drawn to all the relevant paragraphs therein.

42.  The defendant also stated that SEKSL had failed to highlight to the Court the fact that Old Grovebury Manor Farm Ltd v W. Seymour Plant Sales & Hire Ltd & Another [1979] 1 WLR 263 could not support the proposition that a corporate entity could maintain a cause of action under the tort of harassment. This submission is not understood, because it was SEKSL’s argument at the substantive hearing that the case of Old Grovebury Manor Farm Ltd supported its case[6].

43.  It was then further alleged that SEKSL ought to have drawn the Court’s attention to the fact that the various UK cases which it sought to rely on were section 3A Protection from Harassment Act 1997 cases and hence inapplicable. With respect, the defendant should not forget that even her counsel sought to rely on cases under such a category in support of her submissions[7].

44.  The defendant also referred to some other arguments which were made by SEKSL at the substantive hearing in support of its stance that a corporate entity had standing to maintain a claim of tort of harassment, and submitted that those arguments were hopeless or disingenuous. I do not think it is necessary for me to refer to them one by one. It suffices for me to say that even though this Court did not accept those submissions, the making of those arguments should not attract indemnity costs at all.

45.  My attention has been drawn to the case of China Shanshui Cement Group Limited & Others v Tianrui (International) Holding Company Limited & Others [2021] HKCFI 2745 in which Keith J accepted that the pursuit of unarguable, weak or thin points, or points which are plainly wrong in law, can result in indemnity costs[8]. While I have no argument against such a proposition, in my view, the situation has to be assessed on a case by case basis. In the circumstances of the present case, I do not think the arguments made by SEKSL should attract indemnity costs.

Action which is vexatious, frivolous, oppressive and abuse of process

46.  The defendant argued that:

“B13. His Lordship held that ‘a corporate entity has no standing to make a claim under the common law tort of harassment in its own capacity’, that it is ‘inappropriate for SEKSL to commence a representative action on behalf of the Representees’ and that ‘it is plain and obvious that SEKSL’s claim against the defendant should be struck out’.

B14. SEKSL had ample opportunity to rectify its pleadings. SEKSL could simply have amended its pleadings and added one of the numerous officers, employees or agents of SEKSL who had purportedly been harassed as a party to the proceedings and allowed him / her to continue the action (by himself / herself or in a representative capacity). Since SEKSL did not adopt this rather obvious course of action to ‘cure’ the fundamental defects in its case, the likely inference must be that SEKSL itself did not believe its ‘representees’ had a legitimate cause of action under the tort of harassment and had an ulterior motive for continuing the action against Ms Bradley.

B14[9]. It is implicit from the above that the action was vexatious, frivolous, oppressive and an abuse of the court’s process and, accordingly, a costs order on an indemnity basis is warranted and appropriate on the present facts.”

47.  I am of the view that:

(1)  As aforesaid (see paragraphs 16 – 17 above), even though this is a plain and obvious case for striking out, I do not think it appropriate to order SEKSL to pay indemnity costs on that basis;

(2)  In effect, the defendant is arguing that SEKSL should have conceded early that (i) it did not have standing to bring a claim under the tort of harassment and (ii) it could not maintain a representative action herein, and its failure to do so amounts to an abuse of process of the court. With respect, I disagree. While at the end of the day, SEKSL fails to persuade this Court of its assertions, I do not think the circumstances of the case would justify an indemnity costs order;

(3)  For the sake of completeness, I should also add that I do not agree that it can be inferred by reason of the alleged failure that SEKSL did not believe that its representees had a legitimate cause of action or that it had any ulterior motive for continuing the action against the defendant.

48.  This ground is therefore rejected.

CONCLUSION ON THE INDEMNITY COSTS APPLICATION

49.  To conclude, I would only accept the “without prejudice offer” ground put forward by the defendant, and therefore SEKSL should be ordered to pay indemnity costs to the defendant in relation to the costs incurred from 1 February 2023.

SUMMARY ASSESSMENT ON COSTS

50.  As mentioned at the beginning of this Decision, parties agreed that the defendant’s costs of the whole action should be summarily assessed.

51.  The only matter which the parties could not agree on was whether SEKSL should be given 7 or 14 days to lodge and serve its statement of objections.

52.  Although the summary assessment concerns the defendant’s costs of the entire action (as opposed to an interlocutory application only), it should be borne in mind that this does not change the nature of the summary assessment. This is not a mini-taxation[10]. By agreeing to adopt the summary assessment procedure, it can be inferred that SEKSL does not anticipate that it will have substantial grounds for disputing the sum claimed for costs that cannot be dealt with summarily[11].

53.  I therefore take the view that 7 days should be enough for SEKSL to lodge and serve its statement of objections.

ORDER

54.  For reasons of the aforesaid, I order that the Order Nisi shall be replaced by the following orders:

(1)  SEKSL shall bear the defendant’s costs of the action (including the costs of the First Summons and the Second Summons (including all costs reserved) with certificate for two counsel and the reserved costs of the Injunction Summons filed on 6 May 2022), such costs to be summarily assessed in lieu of taxation.

(2)  The defendant’s costs up to and including 31 January 2023 shall be assessed on party and party basis.

(3)  The defendant’s costs from 1 February 2023 onwards shall be assessed on indemnity basis.

(4)  For the purpose of summary assessment:

(a)  the defendant shall lodge and serve her statement of costs within 7 days hereof (time shall run during court vacation);

(b)  SEKSL shall lodge and serve its statement of objections within 7 days thereafter.

(5)  Summary assessment of the defendant’s costs will be conducted on paper (no matter whether any statement of objections is lodged by SEKSL within time) thereafter.

(6)  The costs assessed shall be payable by SEKSL within 14 days after assessment.

COSTS OF THE VARIATION APPLICATION

55.  SEKSL submitted that the defendant should be ordered to pay its costs of the Variation Application because:

(1)  The defendant’s arguments were misleading and intentionally crafted to give the Court a misconception of the circumstances, speculative, interposed with numerous mischaracterisations of events and factual errors, and contained offensive allegations against SEKSL and its counsel team which clearly overstepped the mark, such that SEKSL had to spend considerable time and costs to address such fallacious misrepresentations in the defendant’s submissions;

(2)  While the defendant has made an offer to accept $1.3 million in full settlement of all costs that she had incurred in the action, she had refused to provide a breakdown of her alleged total costs (in the sum of $1,840,000) for SEKSL’s consideration despite request. SEKSL’s costs on the Variation Application could have been avoided if the defendant had substantiated her costs.

56.  For the sake of convenience, I will deal with the 2^nd argument first.

57.  In support of this limb of the argument, SEKSL has provided this Court with the following correspondence:

(1)  Letter dated 5 June 2023 by the defendant’s solicitors

The defendant’s solicitors informed S&S that upon a preliminary assessment, it was found that the defendant had incurred costs in the sum of approximately $1.84 million. In order to save time and costs, the defendant was prepared to accept $1.3 million as full settlement of all costs that she has incurred in the action. Failing agreement, the defendant would apply to the Court for an order of indemnity costs on the basis of, inter alia, the January 2023 Offer;

(2)  Letter dated 9 June 2023 by S&S

S&S requested the defendant’s solicitors to provide a bill of costs for consideration of the offer of $1.3 million;

(3)  Letter dated 9 June 2023 by the defendant’s solicitors

The defendant’s solicitors explained that the defendant’s offer was made with a view to avoiding the cost and time to make the Variation Application and the preparation of detailed bills of costs, which would require some time for a law costs draftsman to convert into a bill of costs format;

(4)  Letter dated 9 June 2023 by S&S

S&S explained that a bill of costs was requested so that there can be some clarity on the lump sum costs figures as presented in the letter dated 5 June 2023, and with the limited information available, SEKSL should not be expected to consider the offer of $1.3 million.

58.  On my part, I consider that the defendant’s solicitors cannot be blamed for not producing a bill of costs in support of the defendant’s offer of $1.3 million (or her alleged total costs of $1.84 million). As it has been explained by the defendant’s solicitors, the negotiation on the amount of costs payable was initiated in the hope that further costs on assessment/taxation could be saved. Such a purpose would be at least partly defeated if a law costs draftsman has to be engaged for the preparation of a bill of costs. It should also be borne in mind that, by the time S&S made the first request for a bill of costs on 9 June 2023 (which was a Friday), the deadline for anyone to make an application for variation of the Order Nisi was only three working days away (14 June 2023). It is at least highly doubtful whether three working days would be sufficient for a bill of costs to be prepared, not to mention that SEKSL would require time to consider the same, and the defendant’s legal team would also need time to prepare for a variation application in case one was needed.

59.  While S&S seems to suggest in its submissions that a bill of costs is not a must[12], this was not made clear in the aforesaid correspondence.

60.  I have not lost sight of the possible argument that the defendant’s solicitors could have offered on its own initiative to provide a breakdown of costs in a simpler format. However, putting SEKSL’s case to the highest, both parties should be blamed for not doing more for the purpose of the negotiation. Even in such circumstances, I do not think the defendant should be deprived of her costs of the Variation Application.

61.  I therefore reject the 2^nd argument made by SEKSL.

62.  I now move to consider the 1^st argument made by SEKSL.

63.  To reflect the fact that this Court has rejected some of the arguments raised by the defendant in support of the Variation Application, I agree that a discount should be applied to her costs of the Variation Application. However, taking into account the final result of the application, I do not consider that it is just to order the defendant to bear SEKSL’s costs. Indeed, it has been held that it is most unusual and rare for a successful party to be ordered to bear the costs of the unsuccessful party: Jiang Zhong v Yeung Chun Leung & Others [2018] 1 HKLRD 886 [2018] HKCA 48 at [6.21] per Cheung JA.

64.  Doing the best I can, I think it is appropriate to deprive the defendant 30% of her costs of the Variation Application.

65.  I should also mention that the Application Letter was issued under the firm’s name of the defendant’s solicitors. Presumably it was prepared by Mr Payne (solicitor advocated who acted for the defendant) only. However, apart from Mr Payne, Mr Kirpalani of counsel was also involved in the preparation of the defendant’s reply submissions on the Variation Application. For the avoidance of doubt, I do not think the complexity and nature of the matter would justify the engagement both a counsel and a solicitor advocate for such work. Hence, without disrespect, I would not allow the cost of counsel in relation to the defendant’s reply written submissions.

66.  The defendant’s costs of the Variation Application shall also be summarily assessed on indemnity basis in lieu of taxation. The defendant has already provided the Court and SEKSL with her statement of costs[13]. SEKSL is hereby directed to lodge its statement of objections at the same time when it lodges its statement of objections pursuant to paragraph 54(4)(b) above. The assessment on paper will then be conducted by the Court at one go. The assessed costs shall also be paid within 14 days after assessment.