MOULIN GLOBAL EYECARE HOLDINGS LTD (IN LIQUIDATION) (formerly known as MOULIN INTERNATIONAL HOLDINGS LTD) v. OLIVIA LEE SIN MEI

FACV No 23 of 2013

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO 23 OF 2013 (CIVIL)

(ON APPEAL FROM CACV NOS 155 AND 161 of 2012)

_____________________

_____________________

________________________

JUDGMENT ON COSTS

________________________

Mr Justice Tang PJ, delivering the decision of the Court:

1.  The plaintiff company was ordered to be wound up on 5 June 2006.  This action was commenced by the liquidators on 29 January 2008 against the defendant, a former director.  The action has not proceeded beyond the pleadings stage.

2.  On 17 July 2014, we allowed the Plaintiff’s appeal against the striking out of certain of its claims against the defendant by the Court of Appeal. They were the converted notes loss claim and the share repurchase loss claim.  We also made an order nisi that there be no order as to the costs of the appeal.

3.  Now, the plaintiff contends that it should be awarded the costs of the appeal as well as the costs below.  Alternatively, its costs should be reduced by no more than 15%, taking an issue-based approach.

4.  The defendant is content with the order nisi.

5.  The reason why we departed from the usual order that costs should follow the event is that, as Mr Justice Gummow said in his judgment, with the concurrence of the other members of the Court:

“68. Each side has had a measure of success in this Court.”

6.  When leave to appeal to the court was granted, we certified 4 questions of great general or public importance.  The first question was whether the relevant claims were new claims under section 35 of the Limitation Ordinance.  If so, the second and third questions would have to be considered.  If not, they would not arise.

7.  The fourth question concerned the converted notes loss and it read:

“4. Does a company have any remedy against a director acting in breach of fiduciary duty (eg for the recovery of equitable compensation) for sums paid away to one creditor at the expense of the other creditors of the company at a time when the company is insolvent?”

8.  We decided the first question in favour of the plaintiff because we took the view that the relevant causes of action were mentioned in the endorsement on the writ.  But, little or no attention was paid to the significance of the terms of the endorsement on the writ by the plaintiff until the litigation reached this court. It is fair to say that the plaintiff succeeded on a new argument.

9.  As for the fourth question, in the course of his oral submissions, Mr Robin Dicker QC, formulated eight propositions of law which are said to be encapsulated in question 4.  We took the view that a case framed consistently with those propositions is reasonably arguable, should not be struck out and should be allowed to go to trial.[1]

10.  However, although the further amended statement of claim ran to 118 pages and scores of paragraphs concerned the claim in relation to the converted note loss, the pleading was not so drawn as to be sufficiently consistent with the eight propositions.[2]  Moreoverwe were of the view that the pleading of this claim was “embarrassing” within the meaning of O18 r19.  The decision of the Court of Appeal should be seen in the light of the fact that they did not have the benefit of the later formulated 8 propositions nor any suggestion that the pleading could be amended to plead an arguable case consistently with those propositions.

11.  Whether the plaintiff will be able to plead a proper claim will have to be determined in the Court of First Instance at the appropriate time.

12.  In the circumstances of the present appeal, we see no reason to depart from the order nisi which is now made absolute.