LEE YUK SHING v. DIANOOR INTERNATIONAL LTD (IN LIQUIDATION)

CACV 185/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 185 OF 2015

(ON APPEAL FROM HCMP NO. 2483 OF 2011)

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DECISION ON COSTS

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Hon Kwan JA (giving the decision on costs of the court):

1. On 23 May 2016, we handed down judgment dismissing the defendant’s appeal and made an order nisi that the defendant should pay the plaintiff 60% of the costs of this appeal and that the judge’s costs order dated 30 March 2016 be set aside and substituted by an order that the defendant do pay the plaintiff costs of HCMP 2483/2011 including costs as between the plaintiff and the defendant of the interpleader application taken out by Equipnet, to be taxed on a party and party basis.

2. The defendant issued a summons on 2 June 2016 seeking to vary our costs order nisi so as to provide that the costs of and occasioned by the plaintiff’s application for indemnity costs heard before To J on 25 February 2016 and decided on 30 March 2016 be to the defendant, to be taxed on a party and party basis.

3. Directions were made by the Registrar of Civil Appeals on 2 June 2016 for submissions to be filed.  Neither party has requested an oral hearing.  Having considered the submissions, we think it appropriate to determine the summons on paper.

4. By our costs order nisi, although we set aside To J’s costs order of 30 March 2016, we have made no provision for the defendant’s costs of and occasioned by the plaintiff’s application for indemnity costs heard before the judge on 25 February 2016.  The ruling of our costs order nisi in effect is that indemnity costs should not have been awarded to the plaintiff as the judge’s holding on fraudulent misrepresentation was not upheld on appeal.  The defendant did not seek the costs of the hearing on 25 February 2016 in his amended notice of appeal.

5. The defendant submitted there is no reason to depart from the general rule that costs should follow the event.  As the costs order of 30 March 2016 was set aside on appeal, the defendant should have the costs of and occasioned by the plaintiff’s application for indemnity costs before the judge, to be taxed on a party and party basis.

6. The plaintiff submitted that he should be entitled to the costs of the hearing on 25 February 2016 because of his success in the court below and in the appeal, contending that the costs of that hearing should be treated as an integral part of the action in the court below.  It was at the invitation of the judge in para 145 of the judgment that the plaintiff sought indemnity costs.  The judge had directed the parties to agree to directions for the disposal of the question of costs, including written submissions without a hearing and, failing that, a hearing date be fixed with one hour reserved.  But the defendant did not explore the possibility of written submissions without a hearing, so the plaintiff should not be held responsible for any additional costs incurred.

7. The plaintiff further relied on without prejudice correspondence exchanged in relation to the appeal, when the plaintiff invited the defendant to withdraw the appeal and subsequently agreed to the offer that the appeal be dismissed with costs of the appeal and of the main action to the plaintiff on a party and party basis.  It was submitted that such correspondence would cast doubt whether the appeal was pursued out of the genuine belief that the judgment could be successfully overturned or whether it was a manoeuvre to remove To J’s criticism of the conduct of the liquidator.

8. It would appear from the open correspondence in August and September 2015 that the judge had to resolve the question of costs because the plaintiff did not agree with the defendant that costs of the action should be on a party and party basis and sought indemnity costs instead.  By our judgment, we have determined that the costs below should not be awarded to the plaintiff on an indemnity basis.  The defendant is the successful party on this issue, which we think is sufficiently distinct and separate to constitute an “event” to justify awarding the additional costs incurred to the successful party on this issue.  We do not think the defendant’s proposal of an oral hearing is in any way unreasonable so as to deprive the defendant of the costs attributable to holding that hearing.

9. We do not think it necessary to go into the question whether the without prejudice correspondence the plaintiff sought to rely on is admissible for the purpose of the present application, as the correspondence, even if admissible, would not have advanced the plaintiff’s argument.

10. We vary our costs order nisi to the extent that we order the costs of and occasioned by the plaintiff’s application for indemnity costs heard before To J on 25 February 2016 and decided on 30 March 2016 be to the defendant, to be taxed if not agreed, on a party and party basis.

11. We also award the costs of the present application to the defendant, to be taxed if not agreed, on a party and party basis.