LEONG MA LI v. HIGH FASHION NEW MEDIA CORPORATION LIMITED (suing on behalf of itself and also in its capacity as the sole shareholder of LONGFORD INFORMATION AND TECHNOLOGY CO., LIMITED) (上海梁富信息科技有限公司)

FACV No 6 of 2025

[2026] HKCFA 31

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO 6 OF 2025 (CIVIL)

(ON APPEAL FROM CACV NO 341 OF 2022)

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DETERMINATION

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Mr Justice Lam PJ:

1.  This is my determination in respect of the defendant (“Leong”)’s application under paragraph 1 of the summons of 12 May 2026 to join Lam Foo Wah (“FW”), Lam Gee Yu Will (“Will”), Lam Din Yu Well (“Well”) (collectively, the “Lams”) and High Fashion Apparel Limited (“HFA”) to these proceedings as parties for the purpose of costs only. The ultimate purpose is set out in paragraph 2 of that summons, viz., to seek an order that the costs in this appeal and proceedings below be borne by these parties in place of the plaintiff High Fashion New Media Corporation Limited (“New Media”). As a single Permanent Judge of this court, I can only determine paragraph 1 and, if a joinder is made, paragraph 2 will have to be decided by the Full Court.

2.  As submitted by Mr Man SC, paragraph 1 of the summons is a filtering procedure and the joinder of a party does not necessarily mean that the Court is of the view that such party should be liable for the costs. I accept that at this stage, the Court should only refuse to join a party if it is plain and obvious that such party should not be joined^[1].

3.  I am also mindful that the process, as an adjunct to the proceedings for costs in the appeal, is a summary one primarily based on the evidence given and the facts found in the main proceedings and the assessment of the behaviour of those involved in the proceedings. To justify such summary procedure, the non-party involved must have had a close connection of some kind with the proceedings, see Deutsche Bank AG v Sebastian Holdings Inc[2].

4.  Hence, oral hearing should be an exception rather than the rule. Despite that and the written submissions of the parties on the application, I directed an oral hearing because there are novel features (as explained below) in the present case and more information is needed for the proper consideration of the matter by the Court in respect of paragraph 2 of the summons. I also bore in mind that as a matter of general practice, the Full Court will decide on issues regarding costs, including costs liability of “non-parties” without further oral hearing.

5.  A hearing took place on 27 July 2026 and I am grateful for the assistance of Mr Man SC^[3], Ms Lam SC^[4] and Mr Lam^[5]. After hearing them, it was quite plain that some essential information should be provided to the Court and the respective parties helpfully agreed to file affirmations accordingly. As a result, pursuant to the directions given on 27 July 2026, the following affirmations were filed:

(a)     The second affirmation of Leong of 14 August 2026 providing information as to the quantum of the legal costs she is seeking to recover. In short, the total figure, including the costs below, is HK$22 million-odd. She however did not divide between the costs incurred in the Court of Appeal and those incurred in the proceedings in this Court plus the costs of the applications for leave to appeal to this Court;

(b)     The affirmation of Cheuk Chui King of 17 August 2026 stating that HFA has a positive net asset value and its value as at 30 June 2026;

(c)     The affirmation of Wong Wang Sun of 17 August 2026 stating that New Media has a net asset value of HK$6 million-odd as at 30 June 2026. But she also mentioned that taking into account the financial position of its subsidiaries including Longford, the consolidated financial position of New Media and its subsidiaries is a net liability of HK$29-odd million.     

6.  The jurisdiction to order costs against parties who did not take part in the main proceedings stems from Section 52A of the High Court Ordinance, Cap 4. The courts have full power to determine by whom and to what extent costs are to be paid, such power includes the power to order costs against non-parties provided that the court is satisfied that it is in the interests of justice to make such order. The ultimate question is whether the discretion should be exercised in the interests of justice^[6]. Whilst useful guidance can be derived from authorities on the exercise of the discretion, over-citation of cases is unhelpful and may overcomplicate it^[7]. Further, the guidance given in earlier cases is not immutable and it could be developed and modified subsequently to reflect the different circumstances in a particular case^[8].

7.  It has been said that the making of such order is exceptional. But as observed by Lord Brown in Dymocks Franchise Systems (NSW) Pty Ltd v Todd (Associated Industrial Finance Pty Ltd, Third Party),the ultimate question is whether in all the circumstances it is just to make the order, and it is a fact-specific jurisdiction with different considerations in play in each case^[9].

8.  In cases where there is a real risk that a losing party would not be able to meet the costs liability towards the successful party, the exercise of the discretion could overcome the injustice occasioned by an order against a non-party who funded and controlled the conduct of the proceedings brought by the losing party for the former’s own benefit. In such cases, it would be just to treat such non-party as a real party to the proceedings and order costs against him accordingly.

9.  At the same time, the court should pay regard to the principle of separate liability of a corporation. A director of a corporate litigant, even if he provides funding to support its litigation, should not, without more, be ordered to pay the costs of the opponent simply because the corporation failed in the litigation. But there are occasions where it would be unjust to allow such director to hide behind an insolvent corporate identity and the court could properly regard him as a real party to the proceedings and make an order for costs against him. This issue was discussed by Coulson LJ in Goknur Gida Maddeleri Enerji Imalet Ithalat Ihracat Tiracet ve Sanayi AS v Aytacli^[10]. At [41], His Lordship stated the position as follows:

“… without being in any way prescriptive, the reality in practice is that, in order to persuade a court to make a non-party costs order against a controlling/funding director, the applicant will usually need to establish, either that the director was seeking to benefit personally from the company’s pursuit of or stance in the litigation, or that he or she was guilty of impropriety or bad faith…”

10.  In the present case, the latest information suggested that New Media may have difficulties to meet the entirety of the costs liability towards Leong. In addition, there is another aspect of injustice which Leong said she would suffer: in substance she would have to bear 35% of such liability if the costs order is made against New Media because of her indirect interest in New Media. Hence, unlike cases where a successful party sought a supplemental order to impose liability on a non-party to recover the shortfall after pursuing the losing party^[11], Leong seeks an order that the Lams and HFA shall pay her costs in place of New Media.

11.  If a costs order is made against New Media as well as one or more of the non-parties, there is nothing to stop such non-parties from seeking recourse against New Media as the costs liability would be joint and several. Thus, if Leong recovers her costs solely from one of the non-parties, such non-party could seek to be indemnified, at least partly, by New Media. It is reasonably arguable that the only way to avoid this is to make an order for costs against the non-party or non-parties in place of New Media. I am also of the view that it is reasonably arguable that Section 52A(1) is wide enough to allow this course to be taken notwithstanding that there are dicta to the effect that a costs order against non-parties only operates as a supplemental order to make up for any shortfall in the recovery of costs against the losing party^[12].

12.  The next question is whether these proposed non-parties controlled the conduct of the second contempt proceedings. Since FW and Will were directors of New Media and in control of the board of New Media, it is reasonably arguable that they exercised substantial control over the conduct of the proceedings. Further, since the shares in New Media was held by HFA and the action was brought to safeguard HFA’s investment in Longford by enforcing the Protocol^[13], it is reasonably arguable that HFA exercised control over those proceedings through FW and Will. It is also reasonably arguable that the second contempt proceedings were pursued to serve the interests of HFA.

13.  I would grant leave to join HFA as a party to these proceedings for the purpose of costs only.

14.  I have considered carefully whether FW, Will and Well should also be joined. Well was not a director of New Media. Notwithstanding the parts he played in the whole saga as highlighted by Mr Man at the hearing of 27 July 2026, I am not satisfied that it is reasonably arguable that Well exercised substantial control in the conduct of the proceedings. On the other hand, FW and Will could reasonably be said to be in control. However, I do not find any reasonable basis for suggesting that they went beyond securing the investment of HFA in Longford in causing the second set of contempt proceedings to be brought and prosecuted. Since whatever injustice (if any) that might be caused to Leong is adequately addressed by joining HFA which has enough assets to cover whatever costs liability stemming from these proceedings, and given my view above on the real interests being engaged, I do not think it is appropriate to join FW and Will in the present circumstances.

15.  I will also give the following directions regarding paragraph 2 of the summons:

(a)     Leong shall file written submissions on paragraph 2 of the summons vis-à-vis HFA by 21 September 2026;

(b)     HFA shall file written submissions in opposition by 5 October 2026;

(c)     Leong shall file written submissions in reply by 12 October 2026.

16.  Since Ms Lam indicated that New Media takes a neutral stance in the summons, I shall not direct the filing of written submissions by New Media. But the submissions filed pursuant to the above directions shall also be served on New Media.

17.  The costs of the hearing of 27 July 2026 shall be in the cause of the summons.