ACHIEVE GOAL HOLDINGS LTD v. ZHONG XIN ORE-MATERIAL HOLDING CO LTD

HCA 1987/2005

[2023] HKCFI 1407

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1987 OF 2005

________________________

________________________

(By counterclaim)

________________________

________________________

(By counterclaim)

________________________

D E C I S I O N

________________________

1.  This is the first stage hearing of the summons (“Summons”)  filed on 13 September 2022 by the 1^st and 2^nd plaintiffs (by counterclaim)  (“Bai Jun Camp”)  for costs order against Mr Zeng Wei (“Mr Zeng”)  personally.

2.  Order 62, rule 6A of the Rules of the High Court provides that:

“(1)  Where the court is considering whether to exercise its power under section 52A or 52B of the Ordinance to make a costs order in favour of or against a person who is not a party to the relevant proceedings -

(a)  that person must be joined as a party to the proceedings for the purposes of costs only; and

(b)   that person must be given a reasonable opportunity to attend the hearing at which the court shall consider the matter further.”

3.  The procedure for an application for costs order against a third party has been laid down in Sun Focus Investment Limited v Tang Shing Bor [2012] 5 HKLRD 853 at §§12-20:

(1)  The application is a summary procedure.

(2)  It is a two-stage process.  The court first considers whether the party should be joined for the purpose of costs, and then, give that party a reasonable opportunity to attend a hearing for the court to “consider the matter further”.

(3)  At the first stage, the court will only refuse joinder if it is clear that the application is an abuse of process, whether on the ground of delay or other misconduct on the part of the applicant, or because the application is manifestly so fundamentally misconceived or doomed to fail as to amount to an abuse of process.  It will not conduct a preliminary assessment of the merits at the joinder stage as this is contrary to the philosophy of a summary process underlying the jurisdiction.

4.  The case authorities refer to two situations where it would be appropriate to make a non-party costs order.  The first is where the third party is considered to be the real party interested in the outcome of the suit.  The second is where the third party has been responsible for bringing the proceedings and they have been brought in bad faith or for an ulterior purpose or there is some other conduct on his part which makes it just and reasonable to make the order against him.

5.  In the present case, the Bai Jun Camp relies on both limbs in support of the Summons.

6.  No delay or misconduct on the part of the Bai Jun Camp has been raised by Mr Zeng.  Having carefully considered the submissions of Mr Zeng, who is acting in person, I am of the view that he has failed to show that Bai Jun Camp’s application for costs against him is “fundamentally misconceived” or “doomed to fail” at this preliminary stage.

7.  By his affirmation filed on 22 December 2022, Mr Zeng essentially raised two points, namely:

(1)  the decisions by the Hong Kong courts were wrong; and

(2)  the beneficial interest of the Angola Camp did not actually belong to him because:

(a)  there was a trust arrangement in November 2009 so that he was holding the shares on trusts for a Wang Zitian （王子田）and Li Saichun（李賽春）(“Trust Arrangement”)  as evidenced by a deed and two declarations of trust all dated 24 November 2009; and

(b)  Mr Zeng had already sold his interest to one Gao Liangyu, purportedly supported by a sale and purchase agreement dated 15 April 2021.

8.  As to paragraph 7 (1)  above, the decisions by the Hong Kong courts are clearly binding on Mr Zeng.

9.  As to paragraph 7 (2)  above, the allegations regarding the Trust Arrangement raised by Mr Zeng should only be considered at the second stage.  They are not knock-out points that would prevent the joinder of Mr Zeng as a party to these proceedings for the purposes of costs.

10.  For the reasons set out above, I make an order in terms of paragraph 1 of the Summons, namely, Zeng Wei be joined as a party to these proceedings for the purpose of costs only under Order 62, rule 6A(1)  of the Rules of the High Court.

11.  I further order that the 1^st and 2^nd plaintiffs (by counterclaim)  do issue a summons for directions for the disposal of paragraphs 2, 3 and 4 of the Summons within 14 days from the date hereof.

12.  I order that costs be reserved.