Fast Track Holdings Ltd v. Boci Securities Ltd and Others

HCA 2480/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 2480 OF 2016

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D E C I S I O N

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INTRODUCTION

1.On 12 October 2016, I handed down a decision (“the Decision”) dismissing the plaintiff’s summons seeking a continuation of an ex parte injunction originally granted by Deputy High Court Judge Wilson Chan on 26 September 2016 (“the Ex Parte Order”) which was subsequently varied by the learned Deputy Judge on 27 September 2016 (“the Variation Order”).  I also made an order nisi that the plaintiff was to pay the 1^st defendant’s costs of the summons, including the costs (if any) incurred by the 1^st defendant arising out of the Ex Parte Order and the Variation Order, to be taxed if not agreed, with certificate for 2 counsel.

2.The plaintiff now applies to vary the order nisi such that the costs order in the 1^st defendant’s favour should be “in the cause”.

3.On the other hand, the 1^st defendant applies to vary the order nisi so that the costs that it has been awarded may be taxed “forthwith” if not agreed.

4.I shall adopt the expressions and abbreviations as defined in the Decision.

DISCUSSION

5.The basic facts giving rise to the plaintiff’s summons and my reasons for dismissing it were set out in my written decision on 12 October 2016, and I do not propose to repeat the same here.  In gist, I found that:-

(1)   there was a serious issue to be tried on the question of liability;

(2)   damages would be an adequate remedy for the plaintiff; and

(3)   the balance of convenience strongly favoured the non‑continuation of the injunction.

6.Significantly, I came to the view that the plaintiff would not, in any event, be able to withdraw the Settlement Sum from its account even if the injunction should be continued (see paragraph 30 of the Decision).  In my view, it was also quite unnecessary for the plaintiff to apply for the Ex Parte Order in the first place.

7.Further, I expressed the view that the plaintiff could derive no real or practical benefit from the continuation of the Ex Parte Order (as varied) against the 1^st defendant (see paragraph 33 of the Decision).  Once the court decided on 27 September 2016 to vary the Ex Parte Order to permit the Clearing Company to complete the sale of the Shares to the 1^st defendant, it ought to have been clear to the plaintiff that the only remaining issue was whether, as between the plaintiff and the 1^st defendant, the purchase of the Shares through the plaintiff’s account was binding on the plaintiff.  That issue could only be determined at the trial.  There was simply no point for the plaintiff to seek to continue the Ex Parte Order (as varied).

8.For the above reasons, I consider it to be clear that the 1^st defendant ought to be entitled to the costs of summons, including the costs (if any) incurred by the 1^st defendant arising out of the Ex Parte Order and the Variation Order. In view of the fact that the proceedings relating to the injunction form a discrete part of the present action, and the costs incurred by the 1^st defendant would likely be substantial, I consider it appropriate to permit the 1^st defendant to tax its costs forthwith.  Mr Li submits that, notwithstanding that the 1^st defendant sought an extension of time (of 1 day) to make the application for variation, it was in fact not necessary to do so because the plaintiff had already applied to vary the order nisi, and thus it never became absolute.  I do not propose to resolve this nice question because I would be minded, if necessary, to grant an extension of time to the 1^st defendant to make the application for variation of the order nisi.  As I understand it, Mr Lam does not seriously object to the extension of time sought by the 1^st defendant.

9.In support of the plaintiff’s application, Mr Lam argues that:-

(1)   there is no lack of merit in relation to the plaintiff’s underlying claim against the 1^st defendant;

(2)   the plaintiff adopted as practical and reasonable an approach as one would expect in urgent circumstances;

(3)   it was primarily due to the intervening circumstances on 27 September 2016 (ie, the variation of the Ex Parte Order) that shifted the balance in the 1^st defendant’s favour; and

(4)   the plaintiff is the sole victim of a significant fraud and it would be fair in the circumstances for this court to order that the 1^st defendant would be entitled to its costs only if it is ultimately successful at the trial.

10.In respect of (1) above, I accept that there is a serious issue to be tried in respect of the plaintiff’s underlying claim against the 1^st defendant, but I do not consider that to be a significant factor when considering the costs of the interlocutory injunction application.  In my view, an absence of merits in respect of the underlying claim may be a reason to make a costs order against the plaintiff, but the fact that the plaintiff may have a meritorious claim is not a good reason for holding that it should not have to pay the costs of the defendant in the event of an unsuccessful application for an interlocutory injunction against the defendant.

11.In respect of (2) and (3) above, I refer to paragraphs 6 and 7 above.

12.In respect of (4) above, I consider that, on the existing materials, both the plaintiff and the 1^st defendant should be regarded as innocent parties.

13.I should mention that in Gary Leung’s 2^nd affirmation filed on behalf of the plaintiff in support of its present application, it is alleged that the 1^st defendant’s employees had given certain assurance or commitment that it would bear the plaintiff’s loss.  This allegation is not accepted by the 1^st defendant. Also, Mr Lam has made it clear that the plaintiff cannot rely on it in support of its present application because the matter was not raised at the hearing on 30 September 2016.  I do not therefore attach any weight on this allegation.

14.Overall, I am not persuaded by Mr Lam that the costs order nisi ought to be varied such that the 1^st defendant would only be entitled to its costs if it should succeed in defending the plaintiff’s claim against it at the trial.

DISPOSITION

15.For the foregoing reasons, I dismiss the plaintiff’s summons dated 26 October 2016, and make an order in terms of the 1^st defendant’s summons dated 27 October 2016.  I shall now hear the parties on the question of costs, including the issue of summary assessment of those costs.

Mr Jacky Lam, instructed by Kok & Ha, for the plaintiff

Mr Laurence Li, instructed by Herbert Smith Freehills, for the 1^st defendant