China International Fund Ltd v. West China Cement Ltd and Another

HCA 1889/2019

[2021] HKCFI 391

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1889 OF 2019

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BETWEEN

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Before:  Deputy High Court Judge Burns SC in Chambers

Date of Hearing:  8 October 2020

Date of written submission by the Plaintiff:  14 January 2021

Date of written submission in reply by the Defendants:  28 January 2021

Date of Ruling on costs:  23 February 2021

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RULING ON COSTS

(To vary costs order nisi)

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A. INTRODUCTION

1.By a Judgment handed down on 4 December 2020 (“Judgment”), I dismissed the application made by the Defendants (“Ds”) for a stay of these proceedings which was made on the grounds of forum non conveniens and made an order nisi (“Costs Order Nisi”) that the costs of the Ds’ summons, by which the application was made, (“Ds’ Forum Summons”) and the application itself should be paid by Ds to the Plaintiff (“P”) in any event, to be taxed if not agreed. I directed that the Costs Order Nisi would become final unless, within 14 days of the handing down of the Judgment, an application is made by either P or Ds to vary it.

2.By summons issued by Ds on 18 December 2020 (“Ds’ Costs Summons”), Ds applied for an order varying the Costs Order Nisi (“Ds’ Costs Application”) as follows:

2.1  that there be no order as to the costs of Ds’ Forum Summons and the application made thereby (including any Counsel fee commitments) incurred or arising on or before 22 September 2020 and that the costs of Ds’ Forum Summons and the application made thereby incurred after 22 September 2020 be paid by Ds to P, to be taxed if not agreed.

2.2  alternatively, Ds pay 30% of P’s costs of Ds’ Forum Summons and the application made therein, such costs to be taxed if not agreed.

3.Ds’ Costs Summons is supported by the Fourth Affirmation of Suen Pui Ying, affirmed on 18 December 2020 (“Mr. Suen’s Affirmation”).

4.The parties have agreed that Ds’ Costs Application should be dealt with on paper and, with the consent of the parties’ solicitors, I gave directions to that end, including directions for the filing and service of written submissions. Pursuant thereto, written submissions on behalf of P were filed and served on 14 January 2021 and written submissions on behalf of Ds were filed and served on 28 January 2021.

B.  DS’ COSTS APPLICATION

5.The grounds for Ds’ Costs Application are, in short, that on 8 September 2020, 1 month before the date fixed for the hearing of the argument in respect of Ds’ Forum Summons and 2 weeks before Ds were due to lodge their skeleton argument, the Statement of Claim (“SOC”) was substantially amended, involving a “wholesale rewriting” of P’s pleaded case. In particular:

5.1  whereas in the SOC, P’s case was for conspiracy with a sole or predominant intention to injure P arising from the entry into of the Cooperation Agreement in Mozambique on 20 September 2019, the alleged conspirators being SPI and the Mozambique incorporated Guhava Serviços S.A (‘Guhava”) [SOC, §17], the cause of action pleaded in the Amended Statement of Claim (“ASOC”) was for an unlawful means conspiracy, formed largely in the PRC, to implement the “SPI Ouster Plan” (ASOC, §36).

5.2  in the ASOC, P pleaded the alleged eviction by the Mozambique Government as a material fact (ASOC, §27) but this was not mentioned in the SOC.

6.Additionally, for the purposes of Ds’ Costs Application, Ds rely on the fact that, whereas, in the SOC, it was stated that P intended to commence proceedings in Mozambique against SPI and/or Guhava for breach of contract, breach of Mozambique’s Commercial Code and/or tort, this was not repeated in the ASOC.

7.On the other hand, P argues that, as P has succeeded in resisting Ds, Forum Application, costs should follow the event. In response to the matters raised by Ds in support of Ds’ Costs Application, P argues that:

7.1  Ds’ own evidence demonstrated that material events occurred in the PRC and that Mozambique was not the natural forum;

7.2  Ds’ Forum Application would have failed irrespective of the amendments made by the ASOC, in particular because of the failure to overcome not only stage 1 of the Spiliada test but also, stage 2;

7.3  at the hearing of Ds’ Forum Application Ds argued that they should succeed, even on the basis of the ASOC, and

7.4  there is no indication that, had the ASOC been served earlier, Ds’ Forum Application would have been withdrawn.

8.Without prejudice to these points, P submits that P should at least be entitled to the costs of Ds’ Forum Application incurred or arising after 29 June 2020 because P’s grounds of opposition had been articulated in the affirmation of Sun Siu Kong, filed on P’s behalf on 22 June 2020 (“Mr. Sun’s Affirmation”), by which Ds were informed of P’s revised case.

9.I accept that the amendments which were eventually made to the SOC were significant and changed the complexion of P’s pleaded case and that those amendments were particularly significant insofar as Ds’ Forum Application was concerned, as regards both Stage 1 and Stage 2 of the Spiliada test. In my view, in approaching and preparing for Ds’ Forum Application, Ds were entitled to assume that, until formally amended, P’s case was as per the SOC, even after the receipt of Mr. Sun’s Affirmation. Further, I am not prepared to speculate as to whether Ds would have withdrawn Ds’ Forum Application had the ASOC been served earlier.

10.In all the circumstances I will accede to Ds’ application. I will therefore order that, (a) as to the costs of Ds’ Forum Summons and the application made thereby (including any Counsel fee commitments) incurred or arising on or before 22 September 2020, there be no order for costs but that (b) the costs of Ds’ Forum Summons and the application made thereby incurred after 22 September 2020 be paid by Ds to P, to be taxed if not agreed.

C.  CERTIFICATE FOR TWO COUNSEL?

11.By its written submissions, P invites the court to grant a certificate for two counsel in respect of the hearing of Ds’ Forum Application.

12.Ds submit that this application should be rejected on the grounds that the time for making such an application expired on 18 December (14 days after the handing down of the Judgment) and that it is therefore made too late.

13.I do not accept that P’s application is too late. In paragraph 61 of the Judgment it was stated that the Costs Order Nisi would become final unless, within 14 days of the handing down of the  Judgment, an application is made “by either the Plaintiff or the Defendant” to vary it. In my view, the application made by Ds to vary the Costs Order Nisi had the effect of preventing it from becoming final and the mechanism for review was thereby triggered. There did not need to have been a formal application on the part of P to vary the order.

14.I consider that it is appropriate that there be a certificate for two counsel in respect of the hearing of Ds’ Forum Application and so order.

Written submissions by Mr Jason Yu and Mr Lai Chun Ho, instructed by Li & Partners, for the Plaintiff

Written submissions by Davis Polk & Wardwell, for the 1^st and 2^nd Defendants