Securities and Futures Commission v. X Ltd

HCMP 171/2018

[2019] HKCFI 705

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 171 OF 2018

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DECISION ON COSTS

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1.On 17 August 2018 and 5 December 2018 I heard an originating summons issued by the Securities and Futures Commission (“the Commission”) seeking an order that the defendant X Limited comply with the direction of the Commission dated 27 November 2017 (“the Direction”). My decision was delivered at the end of the 5 December 2018 hearing. It is not necessary, therefore, to repeat the substance of the application. For reasons which are apparent from the decision, in particular [3], [4], [10] and [11], I took the view that the appropriate costs order was that there be no order as to costs, and I made such an order on a nisi basis. The Commission challenges that decision seeking either an order that the Commission has its costs of the whole of the proceedings, or at least its costs up to and including the 1^st hearing on 17 August 2018.

2.In short, Mr Li’s submissions in support of the application focus on the way the defendant’s case in response to the Direction and subsequent proceedings developed, and invite me to take into account that, so the Commission suggests, the proceedings were more complicated than might otherwise have been the case because of the defendant’s approach to it.

3.As is apparent from my 5 December 2018 decision, the view I took which justified the costs order that I made on a nisi basis was that the evidence filed in support of the application by the Commission was obscure and, in particular, it was not clear what matters demonstrated that subsection 179(1)(e) of the Securities and Futures Ordinance (Cap 571) was engaged, and that remained the case until the 2^nd hearing, an adjournment of the originating summons having been required in order for the Commission to file further evidence, at which Mr Li explained the evidence that had been filed which even at that time I found a little obscure.  In these circumstances, I took the view that the defendant’s general reluctance to comply fully with the Direction until so ordered by the court was not so unreasonable as to justify the court making the normal order that costs follow the event.

4.It does not seem to me that the suggestion that the defendant raised various arguments at various stages of its dialogue with the Commission and in response to the originating summons, not all of which were argued or fully argued before the court, alters the fact that the Commission’s application in some respects was, in my view, obscure, and that it was not unreasonable for the defendant to require the Commission to come to court and to justify what it sought and obtain a formal order.

5.I will not, therefore, change my costs order which will become absolute today.  I will make an order that the costs of the application to vary the costs order be paid by the Commission to the defendant.

Mr Laurence Li, instructed by the Securities and Futures Commission, for the plaintiff

Mr Derek Chan SC, instructed by Lam & Co, for the defendant