DMITRY YANISHEVSKIY v. MAXIM MOSKALEV

HCA 1840/2019

[2022] HKCFI 2936

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1840 OF 2019

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D E C I S I O N

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1.  By a summons of 6^th June 2022 (“the Summons”), the Defendant seeks to vary the costs order nisi made in my decision of 23^rd May 2022 (“the Decision”), dismissing the Defendant’s appeal (“the Appeal”) against the decision of Master Cruden of 15^th September 2021 and ordering that the Defendant pay the Plaintiff the costs of and occasioned by the Appeal, with certificate for two counsel, to be taxed if not agreed (“the Costs Order Nisi”). The Defendant says that costs of and occasioned by the Appeal should be in the cause, or alternatively, that he should pay the Plaintiff 75% of the costs of and occasioned by the Appeal.

2.  The Defendant relies on two grounds.

2.1  First, it is said that the dismissal of the Appeal was largely due to the Plaintiff’s change of stance only at the hearing of the Appeal.

2.2  Second, it is said that it was excessive and unnecessary for the Plaintiff to instruct leading counsel.

Relevant principles

3.  The court has a wide discretion as to the appropriate order to be made, costs following the event being but one possible option: RHC O.62 r.3(2A), Cheung Kong Property (Business Development) Ltd v Gold Brilliant Investment Ltd and Another [2021] HKCFI 2330 at [20] to [24].

4.  In exercising its discretion as to costs, the court should take into account the matters set out in O.62 r.5, which includes the conduct of all parties both before and during the proceedings, and the manner in which a party has pursued or defended his case.

5.  Insofar as the Defendant appears to suggest that Midland Business Management Ltd v Lo Man Kui [2011] 2 HKLRD 667 at [9] to [11] encourages the making of orders that costs be in the cause, I do not agree. What Lam J (as he then was) said at [9] to [11] has to be read together with what he went on to say at [12], namely: “However, what I do say is that after Civil Justice Reform the court is more astute to the impact of costs on legal proceedings and an order for immediate payment of costs will be made more readily as a discipline against unmeritorious interlocutory applications.”

The Plaintiff’s change of stance

6.  It is said that prior to the hearing of the Appeal, the Plaintiff had said in solicitors’ correspondence that for the purpose of the appeal, the Defendant had a defence with a reasonable prospect of success, and that the Default Judgment[1] was to be set aside unconditionally, thus rendering paragraph 1 of the Notice of Appeal (which challenged Master Cruden’s decision to set aside the Default Judgment on the grounds that the Defendant had a meritorious defence) academic. The Plaintiff had invited the Defendant to withdraw its appeal on this point and simply argue paragraph 2 of the Notice of Appeal, relating to costs, and had indicated that the Defendant would still be at liberty to argue about the validity of service on such a “costs only” appeal.

7.  The Defendant’s submission is that the Plaintiff had therefore agreed that the issue of regularity of service could in fact be raised at the Appeal, and it was only the Plaintiff’s change of stance at the Appeal (to the effect that it was not open to the Defendant to appeal against the Master’s Costs Order as of right, but only upon showing exceptional circumstances) that led to the Court dismissing the Appeal without consideration of the regularity of service. It is said that “But for the last-minute change of stance, this Court would very likely have progressed to hear the regularity issue in any event… This would have shed a significantly different light on the issue of whether the Appeal was academic.”

8.  However, it is not being said that but for the Plaintiffs’ solicitors’ letters of 30^th November 2021 and 22^nd December 2021, the Defendant would have conducted the Appeal differently and thereby saved costs. As the Plaintiff points out, the Notice of Appeal, which raised the issue of irregularity in paragraph 1, was filed before the Plaintiff’s solicitors’ letters. Furthermore, the Defendant rejected the Plaintiff’s proposals and sought to conduct the Appeal by arguing the issue of irregularity as an independent ground of appeal, rather than as part of a “costs only” appeal.

9.  Insofar as it is said that the dismissal of the Appeal was due to the Plaintiff’s change of stance, I disagree. The Appeal was dismissed because it was academic save as to costs, and there were no exceptional circumstances justifying the hearing of the Appeal. The Plaintiff’s stance in correspondence was also that paragraph 1 of the Notice of Appeal was academic (and paragraph 13 of the Decision did not suggest otherwise).

The instruction of leading counsel

10.  The second ground relied on by the Defendant to vary the Costs Order Nisi is that it was excessive and unnecessary for the Plaintiff to instruct leading counsel.

11.  However, the Defendant is not applying to vary the Costs Order Nisi by revoking the grant of a certificate for two counsel. Nor is the Defendant applying to vary the Costs Order Nisi by limiting the grant of a certificate for two counsel to two junior counsel only. In the circumstances, it is unnecessary and inappropriate to go into the Defendant’s submissions regarding whether it was justified to instruct senior counsel.

12.  Insofar as it is said that instruction of leading counsel should lead to a variation of the Costs Order Nisi such that costs be in the cause or that the Defendant should pay 75% of the Plaintiff’s costs with certificate for two counsel, I do not see the logic of the argument. If the matter has been certified fit for two counsel, there should not be any discount at the same time by reason of the matter not being fit for such counsel.

The Plaintiff’s success in the Appeal

13.  As the Plaintiff says, it has been successful in resisting the Appeal. I see no reason why it should not recover the costs it has had to incur in so doing. Furthermore, appeals which are academic save as to costs are not normally entertained, an important reason being that such appeals are not a good use of the parties’ and the court’s time and resources. They are to be discouraged rather than encouraged. It seems to me that the present case is therefore one in which an order for immediate payment of costs ought to be made “more readily as a discipline against unmeritorious interlocutory applications” (to quote Lam J in Midland Business Management Ltd at [12]).

Disposition

14.  I therefore dismiss the Summons. I further make a costs order nisi that the Defendant pay to the Plaintiff the costs of and occasioned by the Summons, to be summarily assessed. The Defendant is to lodge and serve its list of objections to the Plaintiff’s statement of costs dated 18^th July 2022 within 7 days, and the Plaintiff is to lodge and serve its reply, if any, within 3 days thereafter.