POZDNYAEV, DENIS AND ANOTHER v. KINVAST LTD

HCA 1808/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1808 OF 2014

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D E C I S I O N

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1.  This is my decision.

2.  I refer to my judgment dated 5 July 2016.  By my judgment, I gave judgment in favour of D on D’s appeal against Master Hui’s order made on 17 November 2015 ordering that judgment be entered for P1 and P2 for the sum of $2 million, with interest and costs. 

3.  I also made an order nisi that costs of the hearing before the master and the appeal be costs to D, such costs to be taxed, if not agreed. 

4.  There are two summonses before me. 

5.  By a summons dated 15 July 2016, D seeks a variation of the costs order nisi, and the terms are set out in the summons.  Paragraph 1(b) is no longer pursued.  Essentially, a variation is sought so as to include the costs reserved by Master Hui on 16 April 2015, and more importantly, an order that I do certify for two counsel for the hearing of the appeal. 

6.  By their summons dated 19 July 2016, P1 and P2 seek a variation of the costs order nisi in the terms as set out in the summons.  Paragraph 1(b) is no longer pursued.  Essentially, P1 and P2 ask for all the costs before the master, including the costs reserved on 16 April 2015, and all the costs of the appeal to be paid by D. 

7.  Costs are in the discretion of the court.  As D has succeeded in its appeal against the order of Master Hui made on 17 November 2015, the usual rule is that costs should follow the event.  A party seeking to displace the general rule that costs should follow the event bore the burden of showing that the circumstances justified the exceptional course of such displacement (Mariners International Hotels Ltd v Atlas Ltd (No 2) [2007] 4 HKLRD 194).

8.  Mr Leung, for P1 and P2 on this application but not at the hearings before the master and on the appeal, referred me to certain passages in the transcript of the hearing before the master and submitted that D’s counsel proceeded before the master on the basis that there was no dispute of fact before the master.  It was even submitted that the master was misled into believing that there was no dispute as to facts and that the claim could be resolved by the Order 14A summons. 

9.  I am unable to accept these submissions. On a fair reading of the transcript, it was made clear to the master by counsel for D that there was always a factual dispute as to which party was in repudiatory breach of the PSPA, and that, therefore, it was not appropriate to proceed under Order 14A. This was also clear from paragraph 23 of the revised written skeleton argument of D’s counsel dated 16 November 2015 placed before the master. 

10.  P1 and P2 have failed to satisfy me that the general rule that costs should follow the event should be displaced. 

11.  At the hearing of the appeal, P1 and P2’s stance was that the master correctly decided the matter under Order 14A.  This was maintained throughout by P1 and P2 despite the submissions made on behalf of D. 

12.  In my view, costs should follow the event.  I dismiss P1 and P2’s summons. 

13.  On D’s summons, the main thrust of the application is to obtain a certificate for two counsel. 

14.  Whilst I was pleased to have had the assistance of leading counsel at the hearing of the appeal, in my view, it was not necessary for D to engage leading counsel for the hearing of the appeal.  D was represented by a senior junior at all times.  In my view, the nature of the case was not complex and there were no difficult questions of fact or law to consider.  The claim was not a large claim, it was for $2 million.  The fees for engaging leading and junior counsel for the appeal was, in my view, not proportionate to the amount of the claim. I am not prepared to certify the attendance of two counsel for the hearing of the appeal.    

15.  I would also observe that although P1 and P2 had engaged two junior counsel at the hearing before the master, the master did not see fit to grant a certificate for two counsel. 

16.  On D’s summons, I vary the order nisi to include the costs reserved by Master Hui on 16 April 2015.  The rest of the summons is dismissed. 

17.  Since neither party has succeeded on their application in substance, I make no order as to costs on both applications.