LIBERTARIAN INVESTIMENTS LTD v. THOMAS ALEXEJ HALL

HCA 2533/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2533 OF 2006

______________________

______________________

________________________

REASONS FOR RULING

________________________

1.  At the hearing, I varied the costs order nisi and ordered that the costs of the application for interlocutory injunctions be the plaintiff’s costs in the cause, save that the plaintiff be only entitled to 4/5 of the costs of the contested inter partes hearing, and the costs for the short hearing on 8 May 2007 be to the defendant in any event.  I now give my reasons.

2.  On 6 June 2007, I ordered the continuation of an interlocutory proprietary injunction and a Mareva injunction granted ex parte by Sakhrani J and continued pending full inter partes hearing by DHCJ Gill.  The Mareva injunction stood at £21.424 million as before, but the proprietary injunction was reduced from £13.64 million to £8.3 million.

3.  I made an order nisi that the costs of the contested inter partes hearing be costs in the cause of the action, and the costs of the half hour hearing on 8 May 2007 be to the defendant.  The plaintiff asked to be heard on the costs nisi.

4.  Mr. Barlow SC, for the plaintiff, submitted that the costs up to an including the initial inter partes hearing before DHCJ Gill be plaintiff’s costs in the cause; and all subsequent costs in relation to the interlocutory injunctions (including the hearing on 8 May 2007) be to the plaintiff in any event.

5.  As to the  8 May 2007 hearing, Mr. Barlow took out an half hour appointment and tried to persuade me to order a speedy trial and stand over the motion on the interlocutory injunctions to the trial, and to vacate the inter partes hearing for the continuation of the injunctions fixed for 31 May 2007.  I refused the application because there was simply insufficient time to deal with the matter.

6.  Mr. Wright, for the defendant sought to uphold the costs order nisi.

7.  Mr. Barlow submitted that the courts are more willing to depart from the traditional order of the plaintiff’s or the defendant’s costs in the cause for the successful plaintiff or defendant in an application for interlocutory injunction.

8.  Mr. Barlow submitted that the tradition order is more appropriate for the American Cyanamid type of injunction where the plaintiff may not be able to obtain the permanent injunction at trial.  But Mareva injunctions are wholly interlocutory in nature and the contested hearing is a self contained exercise and costs should follow the event.

9.  Mr. Barlow referred to cases where the court made final orders for costs at the interlocutory stage: where the plaintiff abandoned the motion upon seeing the defendant’s affidavit on balance of convenience (see Kickers International SA v. Paul Kettle Agencies Ltd & anor [1990] FSR 436); where an Anton Pillar order was discharged on ground of material non-disclosure (see NAF NAF SA & Anor. Dickens (London) Ltd [1993] FSR 424); and where the plaintiff failed to obtain an interim mandatory injunction (see Asset Managers Co. Ltd. & anor. v. Pacific Electric Wire & Cable Co Ltd HCA 1867/2006 per Hartmann J (date of reasons of ruling: 27 November 2006)).

10.  In Kickers International, Hoffman J (as he then was) said (at p. 438):

“	An order for a party’s costs to be “in the cause” is made because the court has not investigated the merits and considers that it would not be fair for him to recover those costs unless he succeeded at the trial.  But the fact that the merits have not been investigated, or not fully investigated, does not necessarily mean that the court cannot dispose finally of interlocutory costs.  The question cannot be settled simply by reference to practice: it must be answered on the facts of the individual case.
	…
	Thus it seems to me that in making a costs order at the interlocutory stage, there are two risks of injustice which have to be balanced against each other.  On the one hand, a final order might award a party costs which, upon fuller consideration at the trial, he would not have been given.  On the other hand, failure to make a final order might have the practical effect of depriving a party of some or all of the costs which he should in fairness have recovered.  I think it is possible that in the past the courts may have been more impressed by the first risk than by the second.”

11.  Mr. Barlow submitted that the defendant failed to discharge the interlocutory injunctions, and the costs of the exercise should follow the event.  The costs on 8 May 2007 should be treated as costs thrown away by the defendant’s unsuccessful challenge to the inter partes injunction.

12.  Mr. Wright submitted that an order for costs in the cause is appropriate in cases where the court has not yet investigated the merits at the trial.

13.  Mr. Wright pointed out that the examples referred to by Mr. Barlow are cases where the plaintiff failed to obtain interlocutory relief and costs were awarded in favour of the defendant.  In those cases, the court recognized the existence of a risk that the defendant might ultimately not be able to recover his costs because the plaintiff might not proceed to trial.  However, in the present case, the litigation is under the control of the plaintiff, and there is no prejudice to the plaintiff by reason of any possibility of the case not proceedings to trial.  As the plaintiff has effectively obtained security for costs by an interlocutory injunction, there is no risk of not recovering any costs at the end of the day.

14.  Mr. Wright referred to TKI Ltd & anor v. New Happy Ltd & anor HCA 153/1994.  There, the plaintiff obtained an interlocutory injunction ordering delivery up of some moulds, with costs awarded to it.  The appeal in relation to the delivery up was dismissed, but the part relating to payment of costs was allowed.  Nazareth VP said that the order for costs was an unusual order and plainly wrong, and the appropriate order in the particular circumstances would be costs in the cause.

15.  Mr. Wright pointed out that the plaintiff was not wholly successful, as the defendant succeeded in the reduction of the amount of the proprietary injunction.  The significance of the reduction is that the defendant is not entitled to use funds caught by the proprietary injunction for living and legal expenses.

16.  Mr. Wright referred to Toto Toys Ltd v. Lee Man Shu HCA 2600/2004 (12 January 2005) where the plaintiff was not wholly successful in that the injunction granted was on very limited terms from those sought, DHCJ To made an order nisi that costs be in the cause.

17.  In Kickers International, Hoffman J said (at p. 437) that the court has a complete discretion on the costs of interlocutory injunctions, and there are many factors which may influence the exercise of the discretion.

18.  In making the order nisi, I took into account that the plaintiff was not wholly successful, and I ordered costs in the cause instead of plaintiff’s costs in the cause.  This is to reflect that the defendant’s resistance was not wholly futile.

19.  Mr. Barlow referred to In re Elgindata Ltd (Nos. 2) [1992] 1 WLR 1207, 1214 where Nourse LJ said that the general rule (of costs following the event) does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or cost of the proceedings he may be deprived of the whole or part of his costs.

20.  Upon further consideration, I ordered that the costs should be the plaintiff’s costs in the cause, save that the plaintiff be only entitled to 4/5 of the costs of the contested inter partes hearing on 31 May, 1 and 6 June 2007, to reflect the reduction of the amount of the proprietary injunction.  In ordering plaintiff’s costs in the cause, I have taken into account the respective grounds for the claim and the defence (including admissions) on the proprietary claim.

21.  As to the costs on 8 May 2007, I have said that to take out only a half an hour appointment effectively for the continuation of the injunction was not appropriate in the circumstances of the case.  The most obvious point is that the proprietary injunction was continued on varied terms, which could never have been achieved within the time fixed.  Hence, the order nisi for costs on 8 May 2007 was made absolute.

22.  I order that the costs on the hearing on costs be to the plaintiff in any event.