TGL v. SDC AND ANOTHER

CACV 375/2024, [2025] HKCA 229

On Appeal from [2024] HKCFI 1796 &

[2024] HKCFI 2393

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 375 OF 2024

(ON APPEAL FROM HCCT NO 41 OF 2023)

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J U D G M E N T

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Hon Chow JA (giving the Judgment of the Court):

1.  This is the Applicant (Creditor)’s application for security for costs in respect of the Respondents (Debtors)’s appeal against the order of Madam Justice Mimmie Chan dated 10 July 2024 (“the Order”). By the Order, the Judge dismissed the Respondents’ application to set aside her earlier order dated 10 July 2023 granting leave to the Applicant to enforce an arbitral award given by the Shenzhen Court of International Arbitration against the Respondents dated 23 May 2022. Leave to appeal against the Order was granted by the Judge to the Respondents on 10 September 2024 (“the Leave Decision”).

2.  The amount of the security sought by the Applicant comes to HK$585,870, comprising solicitors’ costs in the total sum of HK$218,370 and counsel (including senior counsel)’s fee in the total sum of HK$367,500.

3.  The Respondents do not contest an order to give security for costs, but argue that the amount sought by the Applicant is “excessive”, and the skeleton bill provided by the Applicant is insufficiently detailed. In the Respondents’ skeleton submissions, they raise the following specific objections:

(1)  The time spent on attendance on client is excessive. Although the Applicant says that the issue identified by the Judge for granting leave to appeal involves a “factual point” and therefore input from client is necessary, the Applicant has not suggested that it intends to make any application to adduce further evidence, and thus it is hard to conceive that much time and effort would be necessary for attendance on client by the Applicant’s legal team.

(2)  Even if the Applicant intends to file further evidence, the Applicant should not be entitled to the costs for such late filing of evidence, and this would have an impact on Item C1 in the skeleton bill.

(3)  The issue identified by the Judge, although not the subject of “focused argument” according to her Ladyship, has been touched upon below. It is not a difficult issue of law which necessarily requires the engagement of senior counsel.

(4)  It is unclear why time would be spent by solicitors to “revise” draft skeleton submissions and list of authorities.

(5)  As for perusal of documents by solicitors, there is a clear duplication of work by 2 fee earners.

(6)  The overall amount is too high.

4.  Our views on the Respondents’ objections are as follows. In respect of points (1) to (3) above, the Applicant argues that:

“… some time has been budgeted for attendance on client (Item C1 …) given the importance of the appeal and the issues at stake, and the learned judge’s comments about the possible relevance of the factual context when considering what matters are required to be disclosed.[1] Though the Applicant has not specifically applied to file further evidence, such course cannot be ruled out particularly if and when the legal team devotes more time on preparing for the appeal (including the Respondent’s Notice). Time will have to be taken to take instructions to see if there are relevant facts which ought to be adduced as evidence given how the shape of the case has evolved following the Leave Decision (and thus ought not be characterised simply as ‘late’). It is therefore reasonable to budget for such costs, which is in any event not excessive.”

5.  As can be seen from paragraph 15 of the Leave Decision, the issue on which leave to appeal is granted concerns the duties of an arbitrator to make disclosure throughout the course of an arbitration under Article 12 of the Model Law (and Section 25(1) of the Arbitration Ordinance), the extent of such duties with regard to matters which come to the knowledge of the arbitrator or which he ought reasonably to have known, and whether the matters required to be disclosed should be wider in scope than what would justify recusal of an arbitrator. The Judge considers this issue to be one of “general principle” and of importance, such that a decision of the Court of Appeal would benefit the arbitration community. The Applicant has not challenged the Judge’s characterisation of the issue as one of general principle. We agree with the Judge’s view. We are not persuaded that any substantial time would require to be spent on attendance on client on this issue, and are provisionally of the view that there is no need for further evidence to be filed in the appeal.

6.  As for point (4), we are not prepared to say that engagement of senior counsel by the Applicant would be unreasonable in the present case.

7.  Finally, in respect of points (5) and (6), it is important to bear in mind that in fixing the amount of the security, the Court is not required to carry an exercise similar to a full taxation of a bill. Instead, the Court adopts a broad brush approach. On the other hand, it is generally not the practice of the Court to give a full indemnity in respect of the likely costs that may be incurred by an applicant in the appeal. The Court should seek to do practical justice to the applicant by awarding a reasonable amount as security.

8.  For the above reasons, we make an order in terms of paragraphs (1) to (4) of the Applicant’s summons dated 5 November 2024, save that the amount of the security shall be in the sum of HK$400,000, which we consider to be reasonable in all the circumstances.

9.  The costs of this application shall be in the cause of the appeal. This order is an order nisi, which shall become absolute unless an application is made to vary it within 14 days from the date of this judgment.