DIAGCOR BIOSCIENCE INCORPORATED LTD v. CHAN WAI HON BILLY AND OTHERS

HCA 2107/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2107 OF 2012

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DECISION
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1. On 12 August 2015, I handed down a decision in relation to an application for specific discovery and split trial.

The Decision

2. I made an order nisi that costs of the plaintiff’s summons be in the cause.  In paragraph 86 of my decision, I noted that it was not a straightforward application for discovery.  The plaintiff has won on most classes, but the terms of discovery and undertakings have been modified as a result of the hearing.

3. This is the plaintiff’s application to vary the costs order nisi so that the defendants shall pay 80% of the plaintiff’s costs with certificate for two counsel to be summarily assessed.  The bases of the plaintiff’s application, according to Mr Felix Ng, counsel for the plaintiff, are that:

(a) the plaintiff was the successful party in the summons;

(b) the application for variation of the costs order nisi is consistent with the approach adopted by Deputy Judge Sakhrani in his decision dated 10 November 2014 ordering the plaintiff to bear only 20% of the defendants’ costs after the defendants succeeded in seeking two out of more than 30 items in the request for further and better particulars;

(c) the defendants’ conduct in relation to the summons was unreasonable in refusing to give specific discovery and undertaking as to confidentiality;

(d) the defendants had also misleadingly asserted on affirmation about the non‑existence of their validation data for which specific discovery was sought by the plaintiff.

4. In an interlocutory application costs to follow the event remains an option under Order 62, rule 3(2A).  In deciding on the appropriate costs order to make, the court can take into account all the circumstances, in particular the conduct of the parties.

5. On ground (a), the arguments on the discovery summons were not confined only to classes of documents to be disclosed, but also the mode of discovery of trade secrets.  There was much discussion between the Bench and counsel at the hearing, resulting in the terms of the order as they now stand.

6. The plaintiffs won on classes 1 to 6, but the scope of classes 4 to 6 has been modified.  They lost on classes 7 to 8 which, in my view, were unnecessary and excessive discovery.  In respect of class 9, there was limited discovery ordered.

7. The plaintiff lost on the unless order it sought to impose under the summons, a most unreasonable term to impose on the defendants, and was appropriately abandoned by Mr McCoy at the hearing.

8. The plaintiff also won on the issue of a split trial, which did not take up much time for argument.  In fact, had the issue been in relation to the unless order and the split trial, the hearing would not have taken more time than a usual three‑minute application.  So most of the arguments were centred on the scope of discovery and terms of making disclosure.

9. I maintain my view that the application was not a straightforward one.  It involved issues of fact and issues of law.  As I understand it at the time of the hearing there did not appear to be any leading guidance on discovery of these trade secrets.  It was not a summons that could have been disposed of without a hearing.  I do not seek to depart from my views in paragraph 86 of the decision.

10. On ground (b) it is, in my view, a fruitless exercise to compare what another court did in terms of results of a costs order over an application of a different nature.  Costs are in the discretion of the court.  With respect, Deputy Judge Sakhrani had to deal with an application for further and better particulars, and considerations before him were different to those before me. His decision laid down no general rule that even if a party were to win a small number of items out of a great number claimed, he should get what percentage of costs.  I say no more about having to compare his decision with mine.

11. On ground (c), I have been taken by counsel today to the correspondence before the summons.  Back in 2013 there had been extensive correspondence over what should be done in terms of discovery and also the terms of giving undertaking as to confidentiality, etc.  It was quite clear that the parties were amenable to mediation.  It was also clear that the plaintiff was willing to reciprocate with an undertaking as to confidentiality.

12. Unfortunately, no agreement could be reached, and the parties have had to come before me.  It certainly would have saved a lot of costs if agreement could be reached, but as I say, this matter which ended up in court was not straightforward.

13. The defendants’ opposition to discovery of class 2 was, as I found, due to misconception of their case, but I do not think the blame could entirely be placed on the defendants, as the plaintiff could have made the request clearer as Mr McCoy had done at the hearing.

14. I have today considered the final outcome of my decision to see what the material differences were in the proposals made by the plaintiff in correspondence and the final outcome.

15. The plaintiff had consistently proposed reciprocated undertaking as to confidentiality, and they have offered, by various consent summonses and letters, for the defendants to suggest what the classes of documents which they claim confidentiality are.  That was a reasonable approach.

16. I have to consider the overall outcome in the light of the parties’ correspondence.  I am of the view that whilst a hearing could not be avoided, the plaintiff was successful in a part of the summons.

17. Taking all circumstances into account, I am of the view that the costs order should be varied so that the plaintiff should get 50% of the costs of the summons.

18. In terms of certificate for two counsel, I was indebted to Mr McCoy for his able arguments at the hearing.  Given the points of fact and law involved in the application, I am of the view that there should be certificates for two counsel.

(Submissions on costs)

19. Costs are summarily assessed and allowed at $200,000.

(Further submissions on costs)

20. Following the order I have made on costs, it will be 50% of today’s costs to the plaintiff.  I assess that at $15,000, so the total will be $215,000.