SINO MORAL LTD v. MAGISTRATE WAT LAI MAN MINNIE

HCAL 1078/2023

[2025] HKCFI 236

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO 1078 OF 2023

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J U D G M E N T

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A.  INTRODUCTION

1.  By the Form CALL-1 dated 3 November 2023 (the “Form CALL-1”), this court:

(1)  refused the Applicant’s application for leave to apply for judicial review against the decision of the Magistrate, Miss Wat Lai Man Minnie, on 21 June 2023 (the “Leave Application”); and

(2)  ordered that the costs of the Leave Application be paid by the Applicant to the 1^st and 2^nd Putative Interested Parties, Messrs V Hau & Chow, Solicitors (“VH&C”) and Mr Koo Ming Kown (“Mr Koo”) (collectively, the “PIPs”), such costs to be summarily assessed with the stated directions (the “Costs Order”).

2.  By the summons dated 6 December 2023 (the “Summons”), the PIPs, inter alia:

(1)  seek leave to join Mr Siu See Kong (“Mr Siu”), the sole director and shareholder of the Applicant, to this action for the purpose of costs; and

(2)  apply to vary the Costs Order such that the costs of the Leave Application are to be paid by the Applicant and Mr Siu jointly and severally to the PIPs, such costs to be summarily assessed with the stated directions.

3.  On 19 June 2024, following the “Stage One” hearing of the Summons, this court ordered inter alia that leave be granted to join Mr Siu as a Respondent (for the purpose of costs) in these proceedings.

4.  This is the determination of the “Stage Two” hearing of the Summons, concerning the PIPs’ application for a non-party costs order against Mr Siu.

B.  FACTUAL BACKGROUND

5.  I refer to the case background set out in the Form CALL-1, the most relevant part is summarised as follows.

6.  In November 2018, Mr Koo published in various local newspapers an advertisement containing a statement which commented on Mr Siu’s claim against Pui Ching Alumni (the “Statement”). Mr Siu regarded the Statement to be “criminal libel” and reported the matter to the police.

7.  In addition, Mr Siu published letters to various entities, including newspaper publishers, accusing Mr Koo of threatening Mr Siu by way of the Statement (the “Accusation Letters”). On the basis of the defamatory nature of the Accusation Letters, Mr Koo in January 2019 commenced action HCA 35/2019 against Mr Siu for civil libel. In August 2020, Mr Siu through his solicitors, Messrs Deacons, made a sanctioned offer to settle that claim. As a counter-offer, Mr Koo through his solicitors, VH&C, proposed further conditions, including a condition that “[Mr Siu] shall withdraw his complaint to the Hong Kong Police (with report no.: LM 351/19 in HK WCH 18/1)” (the “Condition”).

8.  Mr Siu considered the Condition an act of perverting the course of justice and reported the matter to the police. After being informed that the Department of Justice declined to prosecute and/or take further action against Mr Koo and VH&C, Mr Siu sought leave to apply for judicial review to challenge the Department of Justice’s decision on the ground that it was contrary to Article 33 of the Hong Kong Basic Law (which should be Article 25) (the “1^st JR”). Mr Siu’s application was dismissed by K Yeung J as the intended judicial review was not considered reasonably arguable: Siu See Kong t/a Siu and Co v Commissioner of Police [2022] HKCFI 3228.

9.  On 1 February 2022, Mr Siu through the Applicant, a company which he controls, applied to the Magistrate to issue a summons for private prosecution against Mr Koo and VH&C for conspiracy to pervert the course of justice (the “Intended Private Prosecution”). A Review Hearing was held on 8 June 2023. On 21 June 2023, the Magistrate refused the Applicant’s application on the ground of no evidence/prima facie case. The Applicant then commenced the Leave Application by filing Form 86 dated 3 July 2023 (“Form 86”), seeking to challenge the Magistrate’s decision.

10.  Importantly, and as I had pointed out at §§10 and 18 of Form CALL-1, the Applicant’s only ground for the Leave Application was identical to that relied upon by Mr Siu in the 1^st JR.

11.  As mentioned in paragraph 1 above, I refused to grant leave to the Applicant and I made the Costs Order. This brings us to the current Summons.

C.  RELEVANT LEGAL PRINCIPLES

12.  The relevant legal principles are not in dispute.

13.  Where a costs order is sought against a company director and/or shareholder who is not a party to the action, the applicable principles have been summarised by Coulson LJ in Goknur Gida Maddeleri Enerji Imalet Ithalat Ihracat Tiracet ve Sanayi AS v Aytacli [2021] 4 WLR 101 at §§40-41:

“40. (a) An order against a non-party is exceptional and it will only be made if it is just to do so in all the circumstances of the case (Gardiner, Dymocks, Threlfall).

(b) The touchstone is whether, despite not being a party to the litigation, the director can fairly be described as ‘the real party to the litigation’ (Dymocks, Goodwood, Threlfall).

...

(d) In order to assess whether the director was the real party to the litigation, the court may look to see if the director controlled or funded the company’s pursuit or defence of the litigation. But what will probably matter most in such a situation is whether it can be said that the individual director was seeking to benefit personally from the litigation. If the proceedings were pursued for the benefit of the company, then usually the company is the real party (Metalloy). But if the company’s stance was dictated by the real or perceived benefit to the individual director (whether financial, reputational or otherwise), then it might be said that the director, not the company, was the ‘real party’, and could justly be made the subject of a section 51 order (North West Holdings, Dymocks, Goodwood).

(e) In this way, matters such as the control and/or funding of the litigation, and particularly the alleged personal benefit to the director of so doing, are helpful indicia as to whether or not a section 51 order would be just. But they remain merely elements of the guidance given by the authorities, not a checklist that needs to be completed in every case (SystemCare).

(f) If the litigation was pursued or maintained for the benefit of the company, then common sense dictates that a party seeking a non-party costs order against the director will need to show some other reason why it is just to make such an order. That will commonly be some form of impropriety or bad faith on the part of the director in connection with the litigation (Symphony, Gardiner, Goodwood, Threlfall).

…

41. Therefore, 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. Without one or the other in a case involving a director, it will be very difficult to persuade the court that a section 51 order is just. Mr Benson identified no authority in which a section 51 order was made against the director of a company in the absence of either personal benefit or bad faith/impropriety. Conversely, there is no practice or principle that requires both individual benefit and bad faith/impropriety on the part of the director in order to justify a non-party costs order. Depending on the facts, as the authorities show, one or the other will often suffice.” (Emphasis supplied)

14.  On the question of the “exceptional” nature of a non-party costs order, Coulson LJ at §27 of Goknur, Ibid adopted the following meaning, citing §25 of Dymocks Franchise Systems (NSW) Pty Ltd v Todd (Associated Industrial Finance Pty Ltd, Third Party) [2004] UKPC 39:

“Although costs orders against non-parties are to be regarded as ‘exceptional’, exceptional in this context means no more than outside the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense. The ultimate question in any such ‘exceptional’ case is whether in all the circumstances it is just to make the order.” (Emphasis added)

15.  The above principles have been affirmed and applied in Hong Kong: see, for example, Ng Hing Yau & Anor v Kong Art Limited [2022] 2 HKLRD 1153 at §§13-17 and 30, which was upheld by the Court of Appeal in [2023] HKCA 212 at §§35 and 41. I have also previously recognised the “real party” test in Achieve Goal Holdings Ltd v Zhong Xin Ore-Material Holding Co Ltd [2023] HKCFI 1407 at §4.

D.  DISCUSSION

16.  The PIPs submit and I agree that Mr Siu is the “real party” to the Leave Application.

17.  First, although the proceedings are commenced by the Applicant in name, they have in fact been brought at the behest of Mr Siu, the sole shareholder and director of the Applicant. This was expressly conceded by Mr Siu in his Skeleton Submissions at §17, which says that “[the Applicant] takes action upon [Mr] Siu’s instructions as its controlling mind and decision maker.”

18.  Second, Mr Siu stands to benefit personally from the outcome of the Leave Application. In its Form 86 filed in these proceedings at §6, the Applicant unequivocally states that it launched the Intended Private Prosecution against the PIPs because it “has no choice but to seek justice for Mr Siu”.

19.  Further, and as I have highlighted at paragraph 10 above, the 1^st JR and the present Leave Application are mounted on the exact same ground. It is clear that, after having failed in the 1^st JR in his personal capacity, Mr Siu has turned to deploying the Applicant as a corporate vehicle to wage his personal vendetta against Mr Koo. I am satisfied that if the Applicant had succeeded in the Leave Application, Mr Siu would have enjoyed a “real or perceived benefit...(whether financial, reputational or otherwise)”: Goknur, Supra at §40(d) (cited at paragraph 13 above).

20.  In the same vein, I am not persuaded that the Applicant has any real interest in the pursuit of the Leave Application. In asserting the contrary, Mr Siu submits that the 1^st JR and the Leave Application are two wholly separate sets of proceedings. As such, in the present judicial review it is the Applicant who has been aggrieved by the Magistrate’s refusal of the Intended Private Prosecution.

21.  This submission is unconvincing and must be rejected. Any differences in the two sets of proceedings are merely cosmetic and self-engineered: the Leave Application is apparently a repackaged version of the 1^st JR in an attempt to circumvent the dismissal of the latter. Further, the alleged grievance of the Applicant stems solely from the fact that the Intended Private Prosecution was commenced in the Applicant’s name. This does not answer the question of what interest or benefit the Applicant would enjoy in the event of a successful action.

22.  Further still, Mr Siu also relies on the fact that the Magistrate did not challenge the Applicant’s capacity in bringing the Intended Private Prosecution. This is neither here nor there. The Applicant’s capacity to apply for the issuance of a private prosecution summons has never been at issue. Rather, the point is where the Leave Application is brought by the Applicant, when the “real party” is Mr Siu as held above, should Mr Siu be made an additional party to bear the costs if the proceedings fail.

23.  Therefore, I agree with the PIPs that the Applicant has no real interest in pursuing the Leave Application.

24.  Finally, the PIPs are justifiably concerned about the Applicant’s ability to meet the Costs Order. In February 2024, the PIPs made inquiries to the Applicant on its financial status but the Applicant bluntly refused to answer.

25.  In any event, the inability of the Applicant to satisfy the Costs Order is not an additional element that the PIPs need to prove. Indeed, Mr Fong, counsel for Mr Siu, has conceded in his oral submissions that if the PIPs establish Mr Siu as the “real party” to the Leave Application, the fact that there is no evidence of the Applicant’s inability to pay will not prevent an order from being made in terms of the Summons.

E.  CONCLUSION

26.  For the reasons set out above, I order that the Costs Order be varied in the following manner:

“The costs of the application for leave to apply for Judicial Review be paid by the Applicant, Sino Moral Limited, and the Respondent (for the purpose of costs), Siu See Kong, jointly and severally to the 1^st and 2^nd Putative Interested Parties, such costs are to be summarily assessed with the directions that (i) the 1^st and 2^nd Putative Interested Parties shall each file and serve a Statement of Costs within 14 days from the date hereof; and (ii) the Applicant and the Respondent (for the purpose of costs) shall file and serve its Grounds of Objection (if any) within 14 days thereafter. The summary assessment shall be conducted on paper unless otherwise directed by the court.”

27.  Parties agree that costs should follow the event, I therefore order that the costs of and occasioned by the Summons be paid by the Applicant and Mr Siu jointly and severally to the PIPs, such costs are to be summarily assessed with the directions that (i) the PIPs shall each file and serve a Statement of Costs within 14 days from the date hereof; and (ii) the Applicant and Mr Siu shall file and serve its Grounds of Objection (if any) within 14 days thereafter. The summary assessment shall be conducted on paper unless otherwise directed by the court.