WONG TO YICK WOOD LOCK OINTMENT LTD v. SUN ASCENT DEVELOPMENT LTD AND ANOTHER

HCIP 58/2022

[2025] HKCFI 2152

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

INTELLECTUAL PROPERTY PROCEEDINGS NO. 58 OF 2022

________________________

________________________

________________________

________________________

DECISION ON COSTS

________________________

1.  This is the Plaintiff’s application to vary the costs order nisi (“the Order Nisi”)  I made in the Reasons for Decision handed down on 4 October 2024 (“the Reasons”). In the Reasons, I explained why I dismissed the Defendants’ application (“the Application”)  to set aside the ex parte order granting leave to the Plaintiff to institute committal proceedings and to issue a writ of sequestration on the ground of material non-disclosure. I also made the Order Nisi that the costs of the summons for the Application (“the Summons”)  be the Plaintiff’s costs in the cause with certificate for two counsel. The Plaintiff now applies to vary the Order Nisi to the effect that it should get the costs of the Summons with certificate for two counsel.

2.  In the direction hearing on 13 December 2024 (“the Direction Hearing”), I directed that the costs variation application shall be dealt with on paper.

3.  Mr Yan, SC, counsel for the Plaintiff, submits that the Plaintiff should entitle to the costs of the Summons because:

(i)  The Plaintiff is the successful party in the Application.  Generally where an interlocutory application has been clearly determined in one party’s favour, then almost invariably the successful party will be entitled to its costs, and that it will only be in unusual circumstances that there will be reason for the court to order differently.[1]

(ii)  Since the CJR, the courts are encouraged to order immediate payment of costs of interlocutory proceedings, as the objective is to discourage unnecessary and disproportionate interlocutory applications.  Making immediate costs order relating to interlocutory applications allow the parties to know where they are on costs as the proceedings progress, rather than leaving matters hanging over to the end, with the degree of uncertainly that entails.[2]

(iii)  The Application has no merit at all.  The Defendants had ignored the well-established principles relating to the duty of full and frank disclosure in an application for leave to commence contempt proceedings referred to in §10 of the Reasons (“the Leave Principles”).

4.  The Defendants have no objection to certificate for two counsel but maintain that the costs of the Summons should be the Plaintiff’s costs in the cause.

5.  Mr Clark, solicitor advocate for the Defendants, argues that:

(i)  The Application was triggered by the Plaintiff’s late disclosure of “undisclosed exculpatory evidence” which the Plaintiff had said on oath was “highly relevant”.

(ii)  The Plaintiff had refused to reply as to why there had not been material non-disclosure prior to the issue of the Summons.

(iii)  The Plaintiff had filed evidence and a skeleton in opposition to the Summons that argued that the Defendants had failed to disclose dealings by agent, and yet the Plaintiff had not in its oral arguments relied on the “agent argument”.  Accordingly, none of the new evidence the Plaintiff claimed to be “highly relevant” is, in fact, relevant and need not have been adduced.

6.  I agree with Mr Yan that these arguments have no merit at all.

7.  According to the Leave Principles, the function of the court at the ex parte leave application stage is to filter out: (a)  applications obviously unfounded; or (b)  oppressive applications for committal; or (c)  those which have some suspicion of oppression about them.  In order to satisfy the duty of full and frank disclosure at the ex parte stage, an applicant must give to the court the relevant information which is material to the consideration as to whether an application for committal should be filtered out, including information material to suspicion of oppression in proceeding by way of committal.

8.  Given these principles, the Application, as analyzed in the Reasons, has no merit at all.  The Defendants’ alleged “new evidence” may be relevant in the substantive hearing, but it is not relevant for the purpose of the ex parte leave application.  After all, the court should not engage in a mini-trial at that stage weighting the evidence and assessing the merits of the charge for contempt.

9.  In respect of the Defendants’ letter before the Summons, the Defendants simply gave an ultimatum to the Plaintiff to withdraw the substantive contempt proceedings and pay costs to the Defendants on an indemnity basis failing which the Defendants would apply to set aside the ex parte leave.  The letter did not indicate that the Defendants would be prepared to consider their position based on any explanation provided by the Plaintiff.

10.  As I see it, the question here is: if the Defendants eventually succeed in defending the charge of contempt, is it unfair to order the Defendants to pay for the costs of the Application?  In my judgment, the answer is no.

11.  Having considered the submissions of the parties, I agree that the Application should not have been made in the first place.  In order to discourage parties from taking out unmeritorious interlocutory applications, the courts should be prepared to order the unsuccessful parties to pay for the costs associated with the unsuccessful applications.  There should be no difference here.

12.  The present case is quite different from the scenario that the court may order costs in the cause in the case of an unsuccessful summary judgment application.  If a plaintiff has reasons to believe that the defendant does not have an arguable defence, there is no reason to order the plaintiff to pay for the costs in the case of an unsuccessful summary judgement application.  On the other hand, if the plaintiff’s O 14 application has no merit at all, the court may order the dismissal of the application with costs.

13.  In the present case, I agree with the Plaintiff that the Application should not have been made in the first place given the well-established Leave Principles.  Costs should follow the event, and I therefore vary the Order Nisi to the effect that the costs of the Summons be to the Plaintiff with certificate for two counsel, to be taxed if not agreed.

14.  Insofar as the costs of the costs variation application is concerned, since the Plaintiff succeeds in varying the costs order, the Plaintiff should get the costs of such application.  However, there should be no order as to costs of the Direction Hearing.  As I see it, there is no reason why the parties could not have resolved to dispose of the application on paper.  I take the view that both parties should take some responsibility for the wasted Direction Hearing.  Hence, I order that, save that there be no order as to costs of the Direction Hearing, the costs of the costs variation application be to the Plaintiff.  There is no necessity to engage senior counsel for such kind of application, and so there would be no certificate for two counsel.