BEST JOINT INVESTMENTS LTD v. KAGANI LTD

HCA 2608/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2608 OF 2006

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REASONS FOR DECISION ON COSTS

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Introduction

1.  The plaintiff took out a summons pursuant to RHC Ord. 24 rr. 10 (Inspection of documents referred to in pleadings and affidavits) and 12 (Order for production to Court) on 15 May 2008.

2.  Shortly before the hearing of the summons on 3 June 2008, the plaintiff indicated in its skeleton submission dated 30 May 2008 that:-

“Given the latest affirmations, the Plaintiff will not press for any Order for production/inspection.  The Plaintiff submits that it is entitled to its costs [of the summons]” (para. 9 thereof).

3.  The applicant took issue with the plaintiff’s entitlement to costs, and argued that she should be awarded those costs.  The parties were not concerned with whether the summons be dismissed or withdrawn with leave of court (see Ord. 21 r. 6 in relation to the latter course).

4.  At the end of the hearing on 3 June 2008, I awarded the costs of the summons to the applicant in any event, indicating reasons for doing so would be given later.  They are as follows.

5.  Further, I consider that it is appropriate for leave to be given to withdraw the summons.

Applicable Legal Principles

6.  The relevant part of Hong Kong Civil Procedure 2008, Vol. 1, para. 21/6/1 states:-

“… if the consent of the other party is not obtained or is refused, leave to withdraw [a summons] may be sought only at the hearing of the summons, when the [court] will deal with the costs occasioned thereby”.

7.  Nothing has been said in Hong Kong Civil Procedure 2008 as to how those costs should be dealt with.  But the footnotes to Ord. 21 rr. 2 and 3 (governing the discontinuance of an action, counterclaim or withdrawal of any particular claim) discuss the appropriate costs orders to be made thereunder.

8.  The footnotes which may be relevant to how the court’s discretion as to costs (conferred by Ord. 21 r. 6) should be exercised include the following:-

“Where a plaintiff discontinues his action or withdraws any particular claim or question without leave, the defendant is entitled under O.62 r. 10, without an order to tax his costs … ” (para. 21/5/8);

“It is open to a plaintiff to apply for and obtain leave to discontinue, even when he could do so without leave, in order to avoid the necessity of paying costs which discontinuance without leave involves … ” (para. 21/5/9);

“The principle underlying the requirement for leave is that after proceedings have reached a certain stage the plaintiff, who has brought his adversary into court, should not be able to escape by a side door and avoid the contest … it is for the court to say whether the action should be discontinued and upon what terms … ” (para. 21/5/10);

“… The general rule that a defendant is entitled to costs when an action is discontinued may be departed from in a case where the discontinuance of the proceedings is due to the matter having become academic, rather than to any acknowledgement by the plaintiff of likely defeat … ” (emphasis supplied) (para. 21/5/11).

9.  I consider similar principles should apply to an application for leave to withdraw a summons.

Background

10.  This action is concerned with a residential unit (with a car park) (“the suit property”).  The plaintiff claimed (among other things) it was entitled to vacant possession of the suit property.  The defendant, on the other hand, denied the claim, contending that the documents purporting to evidence conveyance of the suit property (by way of transfer of the plaintiff’s shares) were forged, and that the plaintiff lacked locus standi to sue.

11.  Default judgment was entered against the defendant in January 2007.  His application to have that set aside was dismissed by the master in August 2007.  His subsequent appeal against the master’s order was dismissed by me in December 2007.

12.  In the meantime, the applicant took out a summons seeking to join as a party to this action.  That application is still pending determination.  Various affirmations have been filed by the parties respectively in support and in opposition of it.

13.  The present application for discovery was taken out in connection with the last-mentioned joinder summons.

14.  Prior to doing so, the plaintiff wrote to the applicant seeking the documents now sought in this application.

15.  The applicant declined the plaintiff’s demand and replied in a letter dated 13 May 2008 (2 days before the plaintiff commenced this application):-

“… we are instructed to state that:

(a)     None of the originals of the 25 documents set out … to the Exhibit marked “WL1” … was in [the applicant’s] possession or under her custody or control at any time;

(b)   None of the originals of the documents referred to in your 2 letters .. was in [the applicant’s] possession or under her custody or control at any time, nor were any copies thereof given to her at any time;

(c)     In [the applicant’s] belief, with the exception of [some items], the remainder of the said 25 documents must have been in the possession or custody or control of Calgo Development Ltd. and/or Lau Kwok Leung …

As regards the … documents under the … items Nos.1 and 3(a) to (d), it is understood that the same were copies of documents extracted from the Land Registry and accordingly, the originals thereof would … be in the possession, custody or control of Best Joint Investments Limited as the registered owner of the suit property.  Further, it is understood that the documents under items Nos.24 and 25 of the said Schedule to the said Exhibit … were extracted copies supplied by the Company Registry of original documents of Calgo Development Ltd. and Best Joint Investments Ltd. filed by each … with that Registry … ” (emphasis supplied).

16.  It is unnecessary to set out in detail the history of the proceedings since the taking out of the discovery summons.  Suffice it to say the applicant in essence maintained her stance set out in the above letter.

17.  At an earlier hearing of the summons (on 20 May 2008), the plaintiff levied criticisms at the credibility of the applicant’s affirmation evidence, but has not adduced evidence which can refute her case (see the plaintiff’s skeleton submission dated 16 May 2008).

18.  The lack of refuting evidence was apparently not due to time restraint.  By the hearing on 3 June 2008, the plaintiff still did not file any such evidence.

19.  Instead, the plaintiff argued at that hearing:-

“[it] was clearly entitled to issue and proceed with its summons until the position is clarified” (para. 3, plaintiff’s skeleton submission dated 30 May 2008).

The statement refers to the clarification made in the applicant’s affirmations filed after the date of the summons (see also para. 2 above).  As stated in para. 16 above, the applicant basically maintained the stance set out in the letter dated 13 May 2008.

Reasons for the Costs Order

20.  I have applied the test set out under the heading “Applicable Legal Principles” above when determining what costs order was appropriate.

21.  The dispute concerning the discovery of documents has not become academic by 3 June 2008.  In addition, no reasons have been given for abandoning the discovery summons.  Neither that referred to in para. 2 above or that in para. 19 above amounts to any valid reason.  The purpose of the discovery summons is not to enable the plaintiff to obtain “clarification” on oath.

22.  In these circumstances, the only reasonable inference is that the plaintiff must have (sensibly and correctly) concluded that there was little chance of success in obtaining relief thereunder.

23.  For this reason, I do not consider there to be justification for departing from the usual rule that costs should follow the event.

Other Matters

24.  Upon learning of the said costs order on 3 June 2008, and despite the reasons for the order were yet to be handed down, the plaintiff sought leave to appeal against it.

25.  Naturally, the plaintiff was unable to put forth any ground in support of the application for leave.

26.  For that reason, I will dismiss the application for leave to appeal.