ZHI, CHARLES v. LIM HOSOK AND OTHERS

HCA 1195/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1195 OF 2016

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D E C I S I O N   O N   C O S T S

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1.  The plaintiff started this action as a derivative action for the benefit of Siberian Mining Group Company Ltd (“SMG”), a company incorporated in the Cayman Islands and listed in Hong Kong. Since SMG is incorporated in the Cayman Islands, leave has to be obtained from the court of Cayman Islands before a derivative action can be instituted for it.

2.  The 1st, 6th and 7th defendants applied to strike out the action on the ground that no leave has been obtained from the Cayman Islands court for a derivative action to be started for SMG.  The plaintiff conceded to the application only on the day before the hearing.  He also agreed to pay costs to these defendants, but resisted the indemnity scale of scale taxation.

3.  The plaintiff only acceded to the defendants’ application on the day before the hearing of the application.  His excuse of the lateness is that he only read the defendants’ skeleton submissions on the day before the hearing and thus realized then that he had no case and the action ought to be struck out. 

4.  Lateness in conceding to the application to strike out in itself is not a ground for indemnity costs.  The concession can still save some costs and resources of the court and parties.  However, the plaintiff’s excuse of only learning about the requirement of leave to be granted by the Cayman Islands court on the day before the hearing is unacceptable. 

5.  The plaintiff has previously taken out two derivative actions in this court for the benefit of SMG.  They are HCA 2247 of 2014 and HCA1151 of 2014.  Some defendants in those actions applied to strike the actions on the ground of lack of leave from the Cayman Islands court and they succeeded.  Hence, the requirement of leave was already Made known to the plaintiff in those actions.

6.  This action is the third derivative action started by the plaintiff in this court.  He again has not obtained leave from the Cayman Island court to do so.  He thus has full knowledge that this action is doomed from the start.  He should not have started this action until after he has obtained leave to do so from the Cayman Islands court. 

7.  To institute this action without leave from the Cayman Islands court and doing it for the third time is indeed an abuse of the process of this court.  In the circumstances, I see no reason why the plaintiff should not pay costs to these defendants to be taxed on the indemnity scale.  I so order.

8.  I further order that the plaintiff do pay these defendants the costs of this argument over the scale of taxation and such costs also to be taxed on the indemnity scale.