Chow Steel Industries Public Co Ltd and Others v. Ko Sung and Others

HCMP 2711/2017

[2020] HKCFI 1639

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2711 OF 2017

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DECISION ON COSTS

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1.By my Decision handed down on 26 March 2020 (the “26/3 Decision”), I allowed the Continuation Summons and ordered that the Injunction be continued in the varied sum of THB439,377,853 (equivalent to HK$109,882,608). At the same time, I dismissed the Discharge Summons.

2.In respect of costs, I made a costs order nisi (the “Costs Order Nisi”) that the costs of and occasioned by the Continuation Summons and the Discharge Summons be to the Plaintiffs, to be taxed if not agreed.  I ordered further that any application for variation or summary assessment should be made by submissions to be filed within 14 days thereof.

3.By submission of 6 April 2020, Messrs Fangda Partners (“FP” and “FP#1”) on behalf of the Plaintiffs seeks:

“ an order for the costs of and occasioned by the Continuation Summons and the Discharge Summons (including any reserved costs) to the Plaintiffs forthwith, to be taxed if not agreed, with certificate for two counsel.”[1] (FP’s original emphasis)

4.On behalf of D2, ONC Lawyers (“ONC”) by submissions of 9 April 2020 (“ONC#1”) seeks a different set of variations, to the effect that the costs of and occasioned by the Continuation Summons and the Discharge Summons be either costs in the cause or the Plaintiffs’ costs in the cause.  D2 relies on King Fung Vacuum Ltd v Toto Toys Ltd [2006] 2 HKLRD 785.

5.On 20 April 2020, ONC filed another set of submissions (“ONC#2”) in opposition to FP#1.  Relying on ONC#1 and repeating the same, ONC opposes FP’s application that the costs should be forthwith.  On the issue as to whether a certificate for two counsel should be granted, ONC submits that[2]:

“ While [D2] agrees that the present case is not among the most simple and straight‑forward ones, it is submitted that one counsel is sufficient for the substantive hearing …”

6.On 23 April 2020, FP filed its submissions (“FP#2”) in reply to ONC#2.  It submits (relying on Mendlowitz & Associates Inc v Winner International Group Ltd & Another, unrep, HCA 574/2009, 14 May 2010) that in exercising its discretion on costs, the court can look at the merits of the injunction application on its own at the time of its application to decide upon the proper costs order.  Korea Exchange Bank v SSCP Holdings (Hong Kong) Limited, unrep, HCA 146/2013, 26 June 2013 has also been cited to me, where Au‑Yeung J following and applying King Fung Vacuum observed at §11 that for an interlocutory injunction, where a party has acted improperly or is in some way to be penalized, or the application is totally baseless, the court may consider an immediate order as to costs.

7.In FP#2, FP further submits that as the Injunction is sought and obtained by the Plaintiffs pursuant to ss 21L and 21M of the High Court Ordinance in aid of the Thai Action, which this Court by the 26/3 Decision has “effectively granted ”, “[there] is therefore no further ‘cause’ in these proceedings and, consequently, there is nothing for the costs order in respect of the Continuation Summons and the Discharge Summons to be ‘linked’ to”[3].

8.On 4 May 2020, ONC filed its reply to FP#2.  It submits that given the Thai Action which is on‑going, there remains “cause” in relation to the costs of the Continuation Summons and the Discharge Summons.  It does not dispute that the Court has broad discretion on question of cost, but submits that on the facts of the present matter, the proper costs order is costs in the cause or the Plaintiffs’ costs in the cause.

9.D1 and D3 have not filed any submissions.

10.I have considered parties’ submissions on costs.  I have also considered the authorities cited to me. 

11.I note first of all that King Fung Vacuum did not concern any injunctive relief obtained in aid of foreign proceedings under s 21M.  The interlocutory injunction in that case was obtained in a domestic commercial context to prevent certain correspondence.  There were substantive underlying proceedings.  Its facts are very different from what we have here.

12.ONC submits that the costs of the Continuation Summons and the Discharge Summons should be linked to the Thai Action, the Thai Action being in its submission the “cause”.  I consider this submissions first.

13.I do not accept that the Thai Action should be taken as the “cause” to which the costs concerned should be linked.  S 21M proceedings were introduced so as to give Hong Kong courts power to assist where proceedings “have been or are to be commenced in a place outside Hong Kong”.  The jurisdiction is not conditional upon the applicant having been successful in those foreign proceedings.

14.The right of a successful party in a foreign action is taken care of elsewhere.  He can apply to enforce the judgment or award in Hong Kong, and injunctive relief may be obtained in that regard.  The introduction of s 21M was indeed to address the previous lacuna of the Hong Kong Courts not being able to assist a party to an anticipated or on‑going foreign action — see §E1/21L/7 of Hong Kong Civil Procedure 2020, Vol 2. 

15.If an application under s 21M is otherwise justified and warranted, it will not cease to be so merely before the applicant ultimately fails in the foreign action which the injunctive relief aims to assist.

16.It should also be noted that under s 21M, the injunctive relief that may be obtained is statutorily specified to be interim in nature.  Hence, for an application under s 21M, the application for an interim relief is itself the “cause”.  There is no other substantive underlying “proceedings” or “cause”.

17.I heed the advice of Auld LJ in Bushbury Land Rover Ltd v Bushbury Ltd [1997] FSR 709 (at 712)that “the clear distinction between entitlement to interlocutory relief and final judgment”should not be ignored[4].  In my view, it is particularly important not to do so in a case of an application under s 21M where the application for an interim relief is itself the “cause”.

18.Costs is in the discretion of the court.  In Minmetals Inc v Dragon Boom Limited & Anor, unrep, HCMP 1702/2013, 24 July 2014, Deputy Judge Leung at §19 took the foreign proceeding as the “cause” for the purpose of a particular costs order.  I do not believe that that was meant to be a general proposition. 

19.The next question is this.  In a case such as the present one where, in the context of an application under s 21M, an ex parte injunction having been obtained and continued inter partes, and all having taken place at a stage before the final disposition of the substantial application (in the present case made by way of the Originating Summons), can or should the costs already incurred be in the cause of the substantive application?

20.Conceptually, and using the present case as an illustration:

(a)  the Injunction which the Plaintiffs obtained and which I continued (and refused to discharge) is an interim injunction of the interim relief which the Plaintiffs seek by virtue of the Originating Summons taken out under s 21M in aid of the Thai Action;

(b)  as of today:

(i)   that Originating Summons has not been disposed of.  What have been are the Continuation Summons and the Discharge Summons;

(ii)  hence, the “cause” (ie the substantive application for interim relief by the Originating Summons under s 21M) remains;

(c)  the result is that technically, and should this Court deem it appropriate so to do, it is in my view possible to order that the costs of the Continuation Summons and the Discharge Summons be costs in that “cause”.

21.However, on the facts of this case, I do not believe it is fair or appropriate to order that the costs of the Continuation Summons and the Discharge Summons be costs in that “cause”:

(a)  the test for an application under s 21M has been authoritatively enunciated by the Court of Final Appeal in Compania Sud Americana de Vapores SA v Hin‑Pro International Logistics Ltd (2016) 19 HKCFAR 586 (at §§47 to 56).  I call it for convenience the “Compania Test”;

(b)  as can be seen from the 26/3 Decision, when continuing the Injunction and dismissing the Discharge Summons, I applied the Compania Test, which I was satisfied that the Plaintiffs had passed;

(c)  it would have been possible, had parties consented, to treat the hearing of the Continuation Summons and the Discharge Summons as the hearing of the Originating Summons;

(d)  there is therefore force in FP#2 that I have “effectively granted ” relief sought by the Plaintiffs by the Originating Summons;

(e)  linking the costs of the Continuation Summons and the Discharge Summons to that “cause” (ie to the Originating Summons) will in effect be forcing the Plaintiffs, in order to get the costs, to prosecute the Originating Summons when, given the test I have applied and given my ruling, there is little point in doing so.  Forcing the Plaintiffs to do so may also result in judicial resources being wasted.

22.I have expressed my views on the merits of the Plaintiffs’ application for the Injunction (and for the continuation thereof).  On the facts, they were justified in invoking the court’s jurisdiction under s 21M. They were the successful parties in both the Continuation and Discharge Summonses.  The Defendants have chosen to resist the continuation of the Injunction and fought their cases vigorously.  In the end, I ruled against them.  In allowing the Continuation Summons and dismissing the Discharge Summons, I applied the Compania Test.  I have effectively dealt with the Originating Summons.  That being the case, and in the exercise of my discretion, I accede to the Plaintiffs’ request and make the costs order forthwith.

23.In making the costs forthwith, I am not basing my decision and exercise of discretion upon any impropriety on the part of the Defendants in resisting the Injunction — cf Korea Exchange Bank above. That I do not believe is the basis of Plaintiffs’ application.  I make the order for the reasons set out in paragraphs 11 to 22 above.

24.On the question of certificate for two counsel, I agree that the nature and level of complexity of the matters are such that it is necessary and proper for the Plaintiffs to have instructed both a leading and a junior counsel.  I grant the Plaintiffs a certificate for 2 counsel.

25.In the circumstances of this case, in exercise of my discretion on costs, I vary the Costs Order Nisi and make an order as per the Plaintiffs’ application in FP#1 (see §3 above).

26.I refuse D2’s application to vary.

27.I make no order as to costs in so far as these applications to vary the Costs Order Nisi are concerned.

Submissions on Costs and Reply Submissions on Costs submitted by Fangda Partners, for the 1^st to 3^rd Plaintiffs

Submissions on Costs and Reply Submissions on Costs submitted by ONC Lawyers, for the 2^nd Defendant