MEGA HONOUR HOLDINGS LTD v. LU HSIAO-HWA AND OTHERS

HCA 1131/2015

[2018] HKCFI 1631

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1131 OF 2015

________________________

_______________________

__________________________

D E C I S I O N
(Variation of Costs Order Nisi)

____________________________

Introduction

1.  This Court handed down a decision on 29 March 2018 (“Decision”) in relation to the plaintiff’s appeal against the decision of Mr Registrar Lung dismissing its application for specific discovery.  I will follow the same abbreviations in the Decision, unless otherwise stated.

2.  In the Decision, I made an order nisi for P to pay 90% of D’s costs, to be summarily assessed and paid within 21 days from date of assessment (“Order Nisi”).

3.  P applied for a variation of the Order Nisi, seeking either no order as to costs or costs be in the cause.

Documents obtained by P

4.  P sought 5 classes of documents in its Discovery Summons.  As set out in the Decision, the main dispute at the hearing was over the Class A Documents.

5.  For Class B Documents, essentially what was sought by P was all relevant documentations showing the chain of ownership of the Target Shares from 2011 to the date of issue of the Discovery Summons. After preliminary indications from this Court at the appeal hearing on 21 March 2018, Ds agreed to provide copies of the share certificates showing that the Target Shares were registered in the name of D4 after the execution of the 3 Stock Purchase Agreements and relevant documents to show that D4’s entire shareholding was held in trust for D3 at the date of the Agreement.

6.  As Ds had rightly pointed out at the appeal hearing, the range of the Class B documents originally sought in the Discovery Summons was too wide.  Further, Ds did disclose the Declaration of Trust which appeared to have slipped the attention of P.

7.  At the appeal hearing, P decided not to pursue Class C and D documents at the appeal hearing.  In any event, for the Class C Documents, they should be available on public records. 

8.  As for Class E Documents, the M&A of Arima EcoEnergy have been amended so that the “Business Items” stated therein would not fall within the restrictions imposed by the Taiwanese law on foreign/Mainland investors.  Ds were willing to provide a copy of the amended M&A and confirmation that it has not been changed since the amendment.  Again, the original range of documents sought by P was too wide.

9.  The Class A Documents were the only disputed item at the appeal hearing.  P did not succeed in obtaining all the audited financial statements accounts of Arima EcoEnery for the period of some 7 consecutive years as sought in the Discovery Summons, and only succeeded in obtaining the latest set of audited financial statements.

Exercise of discretion

10.  The matter of costs is in the unfettered discretion of the Court and costs normally follow the event.  There are also special matters set out in Order 62 rule 5 of RHC which the Court shall take into account to such extent if any as may be appropriate in the circumstances of the case.  In particular, whether there has been any written offer, the conduct of the parties and whether a party has succeeded on part of his case, even if he has not be wholly successful.

11.  Looking at the pre-application letters between the parties’ respective solicitors, in particular, the letter dated 27 April 2017 from P’s solicitors to Ds’ solicitors, P did set out that the purpose for seeking Class A Documents was in relation to whether Ds would be entitled to the counterclaim for the relief of specific performance.  Even though P had revised their scope a couple of times and that they had indicated that they were trying to resolve the matter amicably, the short responses from D on each occasion with no constructive proposals were unhelpful.

12.  Although I accept that the scope of some classes of the documents sought by P was wide, in the end P did obtain, whether by agreement or by order, some documents.  As I have said in the Decision, these documents are largely relevant to Ds’ counterclaim that the Agreement has not been validly terminated and further seeks specific performance thereof after some 7 years.

13.  Having considered the circumstances of this case and in light of D’s pre-application responses to this interlocutory application, and that P had to come to this Court before obtaining some documents.  I am prepared to reconsider the matter of costs.  Having said this, I am still of the view that Ds are largely successful in resisting a greater part of the Discovery Summons and I am only prepared to vary the Order Nisi to the extent that P is to pay 80% of Ds’ costs.  As for the costs of this application, I will similarly order P to pay Ds’ costs to reflect P’s limited success.

14.  I will ask Ds to submit a further statement of their costs of this application within 7 days, and P to submit list of objections within 7 days thereafter.