WONG TO YICK WOOD LOCK OINTMENT LTD v. KIN LAM MEDICINE CO LTD AND OTHERS

CACV 82/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 82 OF 2017

(ON APPEAL FROM HCMP NO 2472 of 2016)

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DECISION ON COSTS

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Hon Lam VP (giving the Decision on Costs of the Court):

1.  Pursuant to the request made by the appellants, this appeal was dismissed with costs. The outstanding issue is the basis for taxation. The Applicant (viz the respondent in the appeal) asked for costs on indemnity basis and a statement of costs asking for the total sum of $155,400 was filed.

2.  The Respondents (the appellants in the appeal) resisted costs on a higher basis than the usual party to party basis.  Comments on the Applicant’s statement of costs were also provided by solicitors for the Respondents.

3.  Pursuant to the directions of this Court, counsel lodged their respective submissions on the basis of taxation.

4.  The proceedings below were committal proceedings for contempt of court on account of the breaches of the injunctions and disclosure order granted by the court on 16 September 2015.  The judge found the contempt established and imposed penalties on the Respondents, including a prison sentence against the 4^th Respondent.

5.  In the appeal, the Respondents sought to overturn the penalties on two grounds.  For present purposes, it suffices to adopt the summary of the two grounds of appeal by Kwan JA in the judgment of 20 October 2017 refusing leave to adduce fresh evidence at [18] and [19]:

“ 18. The first is that the judge erred in law in not issuing a warrant for arrest of the directors of the 1^st to 3^rd respondents and of the 4^th respondent to bring them before the court so that they could be heard in mitigation before he imposed any penalty against each of them.

19. The second is that the penalty imposed against each of the respondents is disproportionate or manifestly excessive, because the judge failed to take into account there was insufficient evidence as to “the actual state of mind” of any of the respondents, in particular, there was no or insufficient evidence to prove that the respondents’ contempt was “deliberate” or “contemptuous”. ”

6.  In respect of the award of indemnity costs in contempt proceedings, including appeals arising from the same, the Court of Final Appeal had this to say in Koo Hoi Yan v Kao Lee & Yip (2009) 12 HKCFAR 904 at [12]:

“ The making of an indemnity costs order is a matter of judicial discretion calling for the evaluation of all the relevant circumstances including the need to bring proceedings to force compliance with the court’s order, the contemnor’s persistence in non-compliance, the conduct of the litigation and the penalty, if any, which the court has imposed. The exercise of the discretion, whether for or against the making of an indemnity order, may be difficult to challenge on appeal if the court below has properly engaged in the evaluation of the relevant circumstances. There is jurisdiction to award indemnity costs against a contemnor, and whether or not it is appropriate to do so in any given case depends on an exercise of judicial discretion in all the circumstances of that case.”

7.  It should be noted that in that case, the Court of Final Appeal ordered the appellant to pay the costs of the appeal on indemnity basis notwithstanding that the appeal was partly successful (see [1] of the judgment) in having some findings set aside and penalty remitted.

8.  In the instant case, the judge made a costs order on indemnity basis at the court below and there is no ground of appeal challenging such basis for the order of costs below.

9.  The appeal was abandoned by the Respondents soon after the refusal of leave to adduce fresh evidence.

10.  As submitted by Mr Shipp for the Applicant, the contempt proceedings were occasioned by the non-compliance with the injunction and disclosure order made by the court.  The seriousness of the breaches was highlighted by Chow J at [13] of the judgment of 23 March 2017.  None of the Respondents appeared at the committal hearing and, notwithstanding the submissions by Mr Wu on behalf of the Respondents, we still do not have any explanation by any of the Respondents as to the breaches.  Actually, the 4^th Respondent chose to stay away from the jurisdiction and as far as we know he is still at large.  For the record, we do not accept the pretext given by him in his affirmation of 22 June 2017 (which Mr Wu saw fit to annex to his submission without the leave of this Court) for his not coming back to the jurisdiction.

11.  We must also say that the appeal appears to us to be wholly unmeritorious.  The grounds of appeal are not reasonably arguable.  The proceedings on contempt had been duly served and notice of hearing had been duly given.  It is difficult to see how the Respondents could benefit from their own non-appearance at the contempt hearing purportedly by shifting the responsibility to the judge in not issuing any warrant of arrest.  Nor can we see any basis for suggesting that the penalty was disproportionate when the Respondents chose not to proffer any explanation for their breaches which on their face could only have been deliberate and contumelious.  The fresh evidence which the Respondents sought to adduce was, as held by this Court on 20 October 2017, irrelevant and could not assist the Respondents in the appeal.

12.  With respect, the appeal is hopeless and vexatious.

13.  In all the circumstances of the present appeal, we are of the view that it is appropriate to order costs on indemnity basis.

14.  Having considered the statement of costs and the comments by the solicitors for the Respondents on the same, and bearing in mind that the costs of the unsuccessful application for leave to adduce fresh evidence had been dealt with, we fix the costs payable by the Respondents (including the costs of the application for taxation on indemnity basis) at $125,000.