RAMCHAND KODUMAL HEMNANI v. ASHOK KODUMAL HEMNANI AND OTHERS

HCMP 879/2018

[2018] HKCFI 1878

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 879 OF 2018

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DECISION

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1.  This is the substantive hearing of the plaintiff’s summons (“Summons”) dated 12 June 2018 for an interlocutory injunction against each of the three defendants. The parties have since reached consensus on the terms of the interlocutory relief. They however could not agree on the issue of costs. This is the only issue which this Court is concerned with today.

2.  The plaintiff (“P”) and the 1^st defendant (“D1”) are brothers.  D1 and the 2^nd defendant (“D2”) are husband and wife.  The 3^rd defendant (“D3”) is a family company holding certain assets, the most valuable of which are a landed property (the “Property”) and the corporate debenture at a marina club (the “Debenture”). 

3.  On 12 June 2018, P took out an Originating Summons against the Ds.  It is P’s case that without his consent, approval or knowledge (1) 56,250 shares in D3 (the “Shares”) which had until 17 February 2017 been registered in his name was on that day transferred to D1 (the “Transfer”); and (2) he had been removed as a director of D3 with D2 being appointed in his place.  He seeks thereby, inter alia, declaratory relief to the effect that the following documents are null and void, namely (1) the instrument of transfer effecting the Transfer and the corresponding share certificate issued to D1; and (2) certain Annual Return and Notification of Change of Secretary and Director of D3.

4.  Also on 12 June 2018, P took out the Summons.  He seeks thereby an interlocutory injunction until judgment or further order restraining (1) disposition of the Property and the Debenture; (2) transfer of the Shares; and (3) performance by D2 of any act as a director of D3 or any holding out by her as such.

5.  The Summons first came before Lisa Wong J on 14 June 2018, who gave directions on the filing of evidence.  The Summons was then adjourned to be heard with 3 hours reserved (subsequently set down to be heard before me on 2 August 2018).

6.  No evidence has been filed by Ds in respect of the Summons.

7.  On 6 July 2018, Messrs Oldham, Li & Nie (“OLN”), solicitors for Ds, wrote to Messrs Stephenson Harwood (“SH”), solicitors for P.  It was said on Ds’ behalf that they were prepared to consent to an order being made in terms of the Summons on the basis that no costs of and occasioned by the Summons should be ordered.  SH wrote back on 9 July 2018. Theysought costs in the sum of HK$50,000.  On the same day, OLN rejected therequest.  They made a counteroffer of Ds bearing the costs of the Summons(but to the exclusion of the costs for the preparation of the evidence in support, on the basis that the evidence was also prepared in support of the OriginatingSummons).  Further correspondence ensued.  SH on 19 July 2018 lowered the requested amount to HK$40,000.  OLN on 25 July 2018 reiterated that Ds consented to the terms of the Summons save that no costs should be ordered or alternatively, costs should be in the cause.  No agreement was ultimately reached.

8.  P is represented by Mr Chen this morning.  He seeks an order that the costs of the Summons (together with the supporting evidence) be to P, to be taxed and paid forthwith.  The bases of his submissions are (1) Ds have “conceded” P’s application; (2) Ds have previously in the course of another High Court Action ignored P’s request for an injunction in terms similar to that of the Summons; and (3) the “plain” merits of the Summons, in respect of which Ds have filed no evidence in opposition.

9.  Mr Chan of OLN appears for the defendants.  He reiterates Ds’ positon as summarized above. Relying on Desquenne et Giral UK Ltd v Richardson [2001] FSR 1, he submits that it is wrong in principle to award costs at an interlocutory stage when there was no successful or unsuccessful party in the grant of an injunction on the basis of balance of convenience to “hold the ring” until the dispute between the parties could be property decided at trial.  He submits further that reference by P to the earlier High Court Action was misconceived and wrong.  The parties in that case were different.  The application consent of which P sought was ultimately dismissed by Court.  In so far as the merits of the Originating Summons are concerned, he submits that the hearing will only be heard sometime in the future, and it is inappropriate to make any assessment of the substantive merits at this juncture.

10.  In respect of the approach to take on costs, I find the observations of Au J in Chiu Luen Public Light Bus Co Ltd v Persons unlawfully occupying or remaining on the public highway & Ors HCA 2086/2014 (unreported, 13 August 2015) enlightening.  His Lordship, having been cited and considered a number of cases, including Desquenne, observed at paragraph 9 that:

“ It cannot be disputed that costs is in the wide discretion of the court by taking into account all the circumstance of the case. In particular, post CJR, the court should also take into account the underlying objectives set out in Order 1A, rule 1 and the conductof the parties: see Order 62, rule 5(1). In the context of the wide discretion, in relation to costs in an interlocutory injunction, all the authorities, including Order 62, rules 3(2) and (2A), cited by the parties, show that in the exercise of that discretion, the court could take into account, among others, (a) the consideration thatthe inherent nature of an interlocutory injunction may make it fair to normally require the unsuccessful party only to bear the costs of the application if the successful party also succeeds in the substantive action; (b) any facts or factors, including the conduct of the parties and the reasonableness of resisting the application,which may render it just to require the unsuccessful part[y] to bear the costs without being dependent upon the final outcome of the action, and even on a forthwith basis. In so exercising its discretion, the court must as usual also take into account all the circumstances pertinent to that particular application, and the underlying objectives of CJR as set out in Order 1A, rule 1.”

11.  In the present case, the interlocutory injunction sought via the Summons is to preserve the status quo.  The relief sought is not even an interim form of any permanent injunction sought in the Originating Summons.  I agree that the main purpose of the interlocutory injunction is to hold the ring.  P initiated the application and got the interlocutory order he sought.  That is factually and technically correct.  But the substantive merits on the main issues, ie P’s entitlement to the declarations and rectification sought, have yet to be decided. 

12.  I have been informed by Mr Chan for Ds that no letter before application had been sent, and had one been sent, the application would havebeen unnecessary.  Mr Chen for P submits that letters under the earlier HighCourt Action had been sent, and P did not expect any different reaction from Ds.  I do not accept that that expectation was necessarily justified.  As indicated above, an application for injunctive relief was in fact made in the earlier action, but was dismissed as it was not supported by any substantive cause of action.  Had a request been sent in the context of a properly constituted case, the response might have been different.

13.  Ds’ approach in the conduct of the Summons has been reasonable.  They indicated their preparedness to consent to the Summons at a relatively early stage on 6 July 2018.  At a later stage, they even offeredto bear the costs of the Summons (to the exclusion of any costs on preparation of the evidence).  It is also relevant to note that under Order 1A, rule 1(e), one of the underlying objectives of the Rules of the High Court is “to facilitate the settlement of disputes”.

14.  In all the circumstances, I am of the view that the fair and just costs order in the circumstances of the present case should be that the costs of and occasioned by the Summons, including this hearing, be in the cause.  I have considered whether, given the offer that Ds have made, the costs for this hearing should be subject to a different order.  I have considered on the other hand that this is a dispute between family members.  Such disputes, experience tells, are unfortunately on most occasions pursued even more vehemently than as between strangers.  I factor this consideration in.  I also repeat the underlying objective under Order 1A, rule 1(e). In all, I remain of the view that the order I indicated earlier is the fair and just one to make.  I so order.