Burberry Ltd and Another v. Cheung Ko Ming and Others

HCA 1103/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1103 OF 2013

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DECISION ON COSTS

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1.On the 11 December 2015 I handed down my judgment in the above case and in the last paragraph (§59) invited written submissions from the parties if the plaintiffs were seeking an order for costs on an indemnity basis.

2.Thereafter I was out of the region until late May of 2016 but by letter of the 4 February 2016 the plaintiffs’s solicitors submitted a two‑page document in support of their application for such an order which was e‑mailed to me in England by the Court Administration.

3.Following that the defendants’ solicitors, who had been served with a copy of that written submission, indicated that they wished to reply to it with their own contentions.  At least two extensions of time were granted to them but they have failed to make any representation and by now nearly four months have elapsed since they received the plaintiffs’ solicitors submissions.  Accordingly I have proceeded to make my decision.

4.The two‑page written submission from the plaintiffs’ solicitors, which happily met the limit I imposed on its length, is an admirably succinct and cogently expressed statement of the criteria to the adopted and applied, together with a balanced indication and the merits upon which reliance is placed.

The principles

5.Order 62, rule 28(3) of the Rules of the High Court gives the court discretion to order that costs be taxed on an indemnity basis. By reference to a number of cases it sets out certain examples as to how that discretion may properly be exercised.

6.I do not propose to go into those in detail but it is clear that where proceedings have been vexatious or prosecuted in an oppressive manner it may be proper to order costs on an indemnity basis.  Time and cost‑consuming litigation by a party whose cause is singularly lacking in merit may equally justify an order for such costs.  Arguments advanced by a party which are untenable, frivolous and vexatious, or simply factually incorrect may equally well justify such an order.

The defendants’ conduct of these proceedings

7.The defendants were involved in or had knowledge of a number of other proceedings by the plaintiffs, and the results of those proceedings including judicial decisions.  Notwithstanding these factors they persisted in their purported, spurious defences and prepared to move their offending activities to new premises.  Aspects of these are set out in §§51 to 53 of my judgment (and see also §§36 to 38 which set out my findings in relation to the defendants’ dishonesty).

8.The relationship between the various defendants is set out in §§44 to 50, and the plaintiffs’ case against those defendants is synthesized in §§13 to 20 of my judgment.  For obvious reasons it is not necessary for me to re‑iterate those findings and the picture which emerged, embracing all the defendants.

9.I also identified how the defendants had misused the action procedurally by setting out in so‑called pleadings their attempts to stave off the inevitable judgments against them (see specifically §§ 10 to 12).

10.I have concluded, without difficulty and certainly without doubt, that the defendants indulged in what can only be seen as delaying and filibustering tactics in order to put off the time when they could be comprehensively “run‑to‑earth” and their efforts to keep opening businesses in order to pursue their illegal activity could be “stopped‑up”.

11.Apart from the patent dishonesty, these has been abuse of process which has been vexatious, and but for the obvious efforts to pursue the illegitimate business of fraudulent trading (because that is in essence the nature of their activity) and passing‑off to the detriment of Burberry, could be described as frivolous.  It might be considered as inappropriate to use the term “frivolous” to describe persistent, determined and illegitimate efforts which flout the court’s decisions and the law, in order to maximise illegal sales and profits from what they well knew to be a commercial fraud.

12.This is in my judgment one of the clearest cases justifying an order that the defendants pay all the plaintiffs’ costs on an indemnity basis, not as a punitive measure, but to ensure that they pay all the costs, which the plaintiffs have incurred in chasing the defendants through the courts in their effort to establish their entitlements over the defendants obstinacy and obfuscation and put an end to them.  Accordingly I so order.

Hogan Lovells for the 1^st and 2^nd plaintiffs

Bruno Yiu & Co for the 1^st to 7^th defendants