FRIENDSHIP INVESTMENTS LTD v. TO CHUN FAN AND OTHERS

HCCW 197/2018

[2020] HKCFI 1247

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO 197 OF 2018

________________

________________

________________

________________

D E C I S I O N

________________

1.  On 18 March 2020 I handed down my decision in respect of the 7^th Respondent’s application that the Amended Petition and Points of Claim be struck out under Order 18 rule 19 of the Rules of the High Court (“RHC”). I dismissed the application for the reasons explained in the decision.

2.  The 7^th Respondent was joined as a party, so the Petitioner argued, because it might be necessary for it to give discovery and for other reasons explained in Ms Chan Yuk Ying’s 6^th affirmation.  No final relief is sought against the 7^th Respondent.  The basis of the 7^th Respondent’s application was that the reasons advanced in Ms Chan’s affirmation were unsustainable and, in particular, discovery of any relevant document could be obtained from one of the other Respondents and that it was not necessary to make the 7^th Respondent a party. As I explain in paragraph 8, I approached the application on the basis that in order to succeed it was necessary for the 7^th Respondent to demonstrate, as it was a strike out application, that it was plain and obvious that there was no need to join the 7^th Respondent as a party. I was not so satisfied that the 7^th Respondent had demonstrated this.  The 7^th Respondent does not suggest that this is the wrong test.

3.  The 7^th Respondent has sought leave to appeal.  It is not in dispute that in order to obtain leave it is necessary for the 7^th Respondent to demonstrate that the appeal has a reasonable prospect of success [1].

4.  In order to obtain leave the 7^th Respondent needs to demonstrate that (1) it has a reasonable prospect of demonstrating that (2) it is plain and obvious discovery by the 7^th Respondent will not be necessary; and (3) I wrongly exercised my discretion in declining to strike-out the Amended Petition as against the 7^th Respondent.  In paragraph 7 of Mr Phang’s skeleton argument he seems mistakenly to elide these criteria says this: “GAHK submits that it is clearly arguable, if not plain and obvious, that it is unnecessary to join GAHK as a respondent for discovery since all the documents of GAHK are in the power of the 1^st to 6^th Respondents”.

5.  I am not satisfied that the 7^th Respondent has demonstrated that it has a reasonable prospect of demonstrating that it is plain and obvious that discovery will not be necessary and that I wrongly exercised the discretion given to the court under RHC O19 r19.  In my view, the decision was clearly one that it was open to me to reach; whether or not another judge might have reached a different conclusion is irrelevant.  The costs shall be paid by the 7^th Respondent to the Petitioner with a certificate for counsel, such costs to be taxed if not agreed and paid forthwith.

6.  The 7^th Respondent also seeks a variation of my costs order nisi that the 7^th Respondent pay the Petitioner’s costs with a certificate for counsel forthwith. 

7.  Costs normally follow the event [2].  Mr Phang, however, submitted that should either there should be no order as to costs or that the 7^th Respondent pay the Petitioner’s costs in any event.  The justification for the variations sought are as follows:

8.  First, Mr Phang submitted that it was not until the Petitioner filed Ms Chan Yuk Ying’s 6^th affirmation that it explained that one of the reasons for joining the 7^th Respondent was for discovery purposes.  If the Petitioner’s solicitors had replied to the 7^th Respondent’s letter of 31 August 2018 stating that the 7^th Respondent intended to apply to strike-out the claim against it as no final relief was sought, explaining that 7^th Respondent had been joined because of discovery, it might have sought to deal with the matter by directions for discovery at the case management conference on 29 November 2019 rather than proceed with its strike-out application.  Although, it would have been sensible for the Petitioner’s solicitors to reply explaining why the 7^th Respondent had been made a party, it is speculative to suggest it would have made any difference to the 7^th Respondent’s application.  It is also speculation, which I find unconvincing.  Ms Chan’s 6^th affirmation was filed on 22 March 2019 some six months before the hearing.  The reasons given for joining the 7^th Respondent were fairly conventional and I have difficulty seeing why it was thought worth spending fees trying to     strike-out the Amended Petition against the 7^th Respondent when it was clear that other than possibly having to make discovery it would have a nominal role in the proceedings.  It seems to me that, in the circumstances, costs should follow the event.

9.  The second challenge to the costs order is that it ordered that the costs are payable forthwith.  Mr Phang argued that the costs should not be recoverable until the end of the proceedings.  He gives two reasons.  First, that previous orders against the Petitioner made by DHCJ Stock were for costs to be payable in any event.  That seems to me to be largely irrelevant.  The 7^th Respondent’s application was discrete and final in respect of the matter to which it relates.  It is a common practice for costs of discrete applications to be payable forthwith.  The fact that DHCJ Stock dealt with other interlocutory applications differently is not a reason for me to alter what I consider to be the appropriate order.  The second reason is that in some loose sense it would be fairer to have the costs all dealt with together at the end of the proceedings when costs orders can be set-off against one another.  I tend to the opposite view.  There is much to be said for costs order that are immediately taxable as they are inclined to focus a party’s mind on the consequences of an unsuccessful application particularly ones of little value; as I view the 7^th Respondent’s application to have been.

10.  The costs order will be made final and the costs of the application to vary it also payable forthwith with a certificate for counsel, such costs to be taxed if not agreed.