Read the full judgment text of HCMP 2483/2011 on BabelCite. This Court of First Instance judgment was delivered on 30 March 2016 before Anthony To J.
Civil practice – costs – indemnity basis versus party and party basis – threshold for awarding indemnity costs – whether Liquidators' conduct of defence constituted an affront to court – auction of 'rough diamond stones' turning out to be synthetic cubic zirconia – defendant company in liquidation – liquidators' conduct of defence – fishing cross-examination on plaintiff's identity – demanding expert testimony without challenging expertise or calling contrary expert – recklessness in assuming stones were diamonds despite knowledge that remaining stone from same batch was not – failure to make inquiries of senior manager with vault access – whether proceedings were scandalous, vexatious, malicious, for ulterior motive, oppressive or abuse of process – principles from Choy Yee Chun v Bond Star Development Ltd and Overseas Trust Bank Ltd v Coopers & Lybrand – plaintiff's right to put defendant to strict proof not a complete answer – conduct of litigation viewed against surrounding circumstances including pre-litigation recklessness – finding of fraudulent misrepresentation based on defendant's actual knowledge and recklessness of liquidators – Misrepresentation Ordinance section 3 – construction of exemption clauses as heart of dispute – creditor interest in insolvent liquidation not a bar to indemnity costs where liquidators used creditor funds to pursue frivolous defences – Plaintiff succeeds; costs awarded on indemnity basis except for costs of argument on construction issue which are taxed on party and party basis
Legal issues: Whether indemnity costs should be awarded against the Defendant for the conduct of the Liquidators in the litigation
Outcome: Plaintiff awarded costs of the action, including costs of the costs hearing, against the Defendant, to be taxed on an indemnity basis, except for the costs of argument on the construction issue of the Notice to Bidders and Conditions of Sale, which shall be taxed on a party and party basis
Cited by 4 cases