SECURITIES AND FUTURES COMMISSION v. LUI MAN WAH AND OTHERS

HCA 1450/2025

[2026] HKCFI 3041

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1450 OF 2025

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D E C I S I O N

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1.  On 16 April 2026, I handed down a decision (“Decision”)  granting against each of D2, D4, D5, D9, D11 and D14 (“Relevant Defendants”)  an injunction under s.213 of the SFO, but refusing to grant a disclosure order against each of them: [2026] HKCFI 2140.  I made a cost order nisi that the costs of the SFC’s application for injunction and its amendment application as against each of the Relevant Defendants in question were to be in the cause (“Nisi Order”). 

2.  On 30 April 2026, the SFC applied to vary the Nisi Order to seek that (1)  the costs of and occasioned by its applications for injunction and for amendment be paid by each of the Relevant Defendants forthwith, with a certificate for two counsel, to be summarily assessed, or alternatively (2)  save that the costs of and occasioned by the hearing of its applications for injunction and amendment be paid by each of the Relevant Defendants forthwith to be summarily assessed, the other costs of the two applications are to be in the cause.

3.  It is worth pointing out that the SFC had asked at the substantive hearing for all its costs to be paid by the Relevant Defendants forthwith, with a certificate for two counsel, to be summarily assessed if it were to be successful.  However, I did not think at the time that this was an appropriate costs order to be made. I had three reasons.  First, the SFC only obtained the injunctions against the Relevant Defendants on the basis of the various amendments to its summons and the draft orders made during the substantive hearing to narrow the scope of the injunctions, and after it had properly explained the scope of the proposed orders at the hearing (see Decision at [24] to [26]).  Further, the SFC failed to obtain the disclosure order sought against each of the Relevant Defendants (see Decision at [79] to [82]).  Moreover, if the SFC fails to prove the alleged contraventions and any of the Relevant Defendants turns out to be successful at the trial, I did not think it would be fair for them to be responsible for the costs of the injunction application at the interlocutory stage.  Accordingly, I did not accede to the SFC’s previous request to order costs to be paid by each of the Relevant Defendants forthwith. 

4.  In this application to vary the Nisi Order, the SFC renews its request that the costs of both applications should be paid by the Relevant Defendants forthwith. Its grounds are that (1)  it was the successful party for the injunctions, and (2)  the Relevant Defendants unreasonably refused to accept the SFC’s settlement proposal before the hearing.

5.  I acknowledge that there is no longer any default or prima facie costs order in cases of interlocutory injunctions.  The court has a broad discretion on costs, and each case must be looked at having regard to all relevant circumstances.  See China Medical Technologies Inc (in liq)  v Tsang Tak Yung Samson [2022] 2 HKLRD 517 at [12] (Chow JA).  Having considered the SFC’s submissions, it remains my view that a fair cost order should be in the same terms as the Nisi Order.  The reasons are essentially the same as those I gave earlier, which I will not repeat.

6.  The only piece of information that I did not have at the substantive hearing is the fact that without prejudice save as to costs offers were made by the SFC to the Relevant Defendants after its summons for injunction was issued.  An important point to note that is that the SFC at the time only offered to narrow the scope of the injunctions; it never offered to forego its applications for disclosure orders against all the Relevant Defendants.  As I held in the Decision, each of the Relevant Defendants successfully opposed the SFC’s application for disclosure order.  It is therefore wrong for the SFC to say that none of the Relevant Defendants obtained a better outcome or result than what was offered to them by the SFC long before the substantive hearing.

7.  For these reasons, it is my view that none of the Relevant Defendants should be made liable to pay the SFC’s costs in its applications for injunction and amendment forthwith.  It follows that the SFC’s summons to vary the Nisi Order dated 30 April 2026 must be dismissed.  The Nisi Order is made absolute.

8.  I will now hear the parties on costs.

[Submissions on costs]

9.  The costs of and occasioned by the SFC’s summons dated 30 April 2026 are to be paid by the SFC to the Relevant Defendants to be summarily assessed.

[Submissions on summary assessment]

10.  Taking a broad-brush approach, I summarily assess the costs of (1)  D2 and D4 at HK$65,000, (2)  D5 at HK$55,000, (3)  D9 and D11 at HK$60,000, and (4)  D14 at HK$70,000.