Giorgio Armani Spa and Others v. Elan Clothes Co Ltd F/K/A Dalian Les Copious Clothes Co Ltd

CACV 9/2020

[2020] HKCA 384

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 9 OF 2020

(ON APPEAL FROM HCCT NO 71 OF 2018)

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BETWEEN

Before: Hon Kwan VP in Court

Date of Written Submissions: 18 May 2020

Date of Decision on Costs: 4 June 2020

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DECISION ON COSTS

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1.On 11 May 2020, I made an order in terms pursuant to a consent summons dated 8 May 2020 (“Consent Summons”). Paragraphs (1) to (5) read as follows:

(1) The defendant’s appeal be dismissed;

(2) There be no order as to paragraphs 1 to 4 of the plaintiffs’ summons dated 10 March 2020 (“Security for Costs Summons”);

(3) Costs of and occasioned by defendant’s appeal, excluding costs of and occasioned by the Security for Costs Summons, be paid by the defendant to the plaintiffs on an indemnity basis, to be taxed if not agreed;

(4) Costs of and occasioned by the Security for Costs Summons to be paid by the defendant to the plaintiffs, to be taxed if not agreed on a party and party basis;

(5) Costs of and occasioned by the plaintiff’s summons for variation dated 27 April 2020 and this Consent Summons be argued and disposed of on paper.

2.Pursuant to paragraph (6) of the Consent Summons, the parties have lodged their respective written submissions on the disputed costs referred to in paragraph (5) for the court to make a ruling thereon.

3.The plaintiffs seek an order that the costs of and occasioned by the plaintiffs’ summons for variation dated 27 April 2020 and this Consent Summons (including the costs of the written submissions) be paid by the defendant to the plaintiffs, to be taxed if not agreed, on a party and party basis.

4.The defendant’s position is that the disputed costs should be paid by the plaintiffs to the defendant, alternatively, there should be no order as to costs.

5.The plaintiffs’ summons for variation dated 27 April 2020 was for variation of the order I made on 27 March 2020, by which I ordered the defendant’s appeal be dismissed with costs to be taxed if not agreed, pursuant to a request for dismissal of appeal filed by the defendant on 20 March 2020.  The request for dismissal did not address the outstanding Security for Costs Summons of the plaintiffs.

6.After the order on 27 March 2020 was made, the plaintiffs wrote to the court on 7 April 2020 indicating their intention to apply for variation of the order so as to provide for the costs of the Security for Costs Summons and to seek costs of the appeal (including the Security for Costs Summons) on an indemnity basis.

7.The defendant responded by letter to the court on 16 April stating that they opposed variation of the 27 March 2020 order and contending that it could not be varied as it was not an order nisi.  In any event there should be no order as to costs of the Security for Costs Summons because the amount of security sought was grossly exaggerated and/or unreasonable.

8.On 20 April, I directed that as the order of 27 March 2020 had not been drawn up and entered, it would be possible to vary that order on application.  I granted leave to the plaintiffs to file a summons to vary by lodging it electronically within seven days^[1], on the plaintiffs’ undertaking to file the summons in the High Court Registry within seven days of the resumption of operation of the Registry.

9.On 23 April 2020 at 23:40 hours the defendant sent an email to the plaintiffs (clarified by their email on 24 April at 13:30 hours) indicating that they were prepared to agree to variation of the 27 March 2020 order, and that they would agree to costs on an indemnity basis, but only in respect of the appeal, costs for the Security for Costs Summons would be on party and party basis.  The court was notified on 24 April (Friday).  On 24 April, the plaintiffs made a Calderbank offer to the defendant offering to accept the defendant’s proposal subject to the defendant paying the costs of the variation of the 27 March order.  The defendant made a counter-offer on 27 April (Monday) there be no order as to the costs of and occasioned by the consent summons to be taken out.

10.On 27 April, the plaintiffs lodged electronically the variation summons with a supporting affirmation, pursuant to the directions of the court on 20 April.  The summons and affirmation were filed on 6 May. 

11.The parties continued to negotiate on the terms of the consent summons. In the end, the only consensus reached was as per the Consent Summons of 8 May 2020, pursuant to which I have made an order in terms.

12.The plaintiffs submitted that the variation summons on 27 April was necessitated by (1) the defendant’s failure to include the Security for Costs Summons in their request for dismissal on 20 March, and (2) the defendant’s unreasonable and failed opposition on 16 April to the application to vary the 27 March order, leading to the court’s directions on 20 April.  The defendant’s last-minute concession on 24 April had no effect in saving the plaintiffs’ preparation costs for the variation application, and in any event the parties did not manage to sign the Consent Summons until 8 May.  Hence, they should be awarded the disputed costs of the variation summons on 27 April and the Consent Summons.

13.The defendant contended that the variation summons on 27 April was “unnecessary, oppressive and/or an abuse of process”.  They should therefore have the disputed costs, alternatively, there should be no order as to costs. In support of this contention, they advanced two reasons.

14.First, the defendant submitted that prior to the variation summons of 27 April, they had already consented to paragraphs (1) to (4) of the Consent Summons, pursuant to which an order by consent was made on 11 May.  They agreed to dismissal of the appeal, by lodging a request for dismissal of the appeal on 20 March (paragraph (1)).  They agreed to no order as to paragraphs 1 to 4 of the Security for Costs Summons, in their letter to the court dated 16 April (paragraph (2)).  They agreed to pay costs of the appeal on an indemnity basis, by email to the plaintiffs on 23 April at 23:40 hours and their letter to the court the next day (paragraph (3)). They agreed to pay costs of the Security for Costs Summons on a party and party basis, by email to the plaintiffs on 24 April at 13:30 hours (paragraph (4)).

15.Second, the defendant contended that the plaintiffs took out the variation summons of 27 April solely for the purpose of attempting to force on the defendant the costs of that summons.  The defendant had made clear their stance on 27 April in that as no summons had been taken out for the variation of the 27 March order, no costs could be provided for this and given that consensus had been reached there should be no order as to the costs of the consent summons to be taken out.  The defendant was served with the variation summons later that day without further notice or communication.  The plaintiffs were not required to lodge a variation summons by 27 April, as computation of the seven-day period under the direction on 20 April should not include Saturday and Sunday pursuant to Order 3 rule 2(5) of the Rules of the High Court.  In any event, the plaintiffs could have sought a short time extension from the defendant.

16.I do not accept that the variation summons was unnecessary, oppressive or an abuse of process. It would be wrong to break up the chain of events in the way as suggested by the defendant, that so long as paragraphs (1) to (4) of the Consent Summons were eventually agreed to by the defendant bit by bit, it would not have been necessary for the variation summons to be taken out at all. To do so would be to disregard the reality of the situation. 

17.Work done by the plaintiffs’ solicitors in respect of the application to vary was a continuous and integrated process, commencing from early April when they perceived the need to vary 27 March order, due to the defendant’s failure to include the Security for Costs Summons in requesting for dismissal of their appeal, down to the time of the Consent Summons on 8 May.  In between, work for the purpose of seeking a variation was necessitated and prolonged owing to the unmeritorious opposition of the defendant to any variation of the 27 March order in their response of 16 April.  It was not until the court gave leave to the plaintiffs on 20 April to seek variation that the defendant revised their position somewhat.

18.It is fairly clear from the exchanges of the parties on 24 and 27 April that the defendant would not agree to pay the costs of the variation application, whether this be termed the costs of the variation summons or the consent summons.  In light of the defendant’s stance, I do not see why the plaintiffs should have to wait until 29 April to issue the variation summons (leaving aside the correctness or otherwise of the computation of the seven-day period as asserted, when the direction for lodging the summons electronically was made on the premise this was to be done during GAP with the closure of the Registry) or to seek an extension of time from the defendant.  I decline to infer that the variation summons was issued on 27 April solely to force on the defendant the costs of that summons.

19.I reject all the defendant’s arguments.  I order the defendant to pay to the plaintiffs the costs of and occasioned by the plaintiffs’ summons for variation dated 27 April 2020 and the Consent Summons, including the costs of the written submissions, to be taxed if not agreed, on a party and party basis.

Written submissions by Ms Eva Leung, instructed by de Bedin & Lee LLP, for the Plaintiffs (Respondents)

Written submissions by Reed Smith Richards Butler, solicitors for the Defendant (Appellant)