China Shanshui Cement Group Ltd and Others v. Tianrui (International) Holding Co Ltd and Others

HCA 548/2019

[2021] HKCFI 2745

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 548 OF 2019

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BETWEEN

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Before:  Hon K Yeung J in Chambers

Dates of Written Submissions and Reply by the 1^st to 4^th Plaintiffs:  21 December 2020 and 11 January 2021

Date of Written Submissions by the 1^st, 2^nd and 8^th Defendants:  4 January 2021

Date of Decision on Costs:  13 September 2021

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DECISION ON COSTS

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1.By my decision handed down on 7 December 2020 (the “Decision”)[1], I dismiss §§4 and 5 of the 14/8/2019 Summons. In respect of the other paragraphs, I dismiss them also as they had not been pursued and had in effect been abandoned. On costs, whilst I saw no reason why costs should not follow the event, given parties’ submissions made to me towards the end of the hearing (which I recorded at §85 of the Decision), I did not make any costs order nisi, but simply invited parties to file submissions on costs. They have done so. Below is my ruling on costs.

2.Ps seek:

(a)  in respect of the 6/11/2020 Summons, the costs of and occasioned by the same on an indemnity basis;

(b)  in respect of the 14/8/2019 Summons, 50% of the costs of and occasioned by the same on an indemnity basis, and 50% on a party-and-party basis, representing costs of and occasioned by §§1-3 and §§4-5 of the 14/8/2019 Summons respectively;

(c)  all the costs of and occasioned by both Summonses to be summarily assessed, or alternatively taxed if not agreed and payable forthwith; and

(d)  certificate for two counsel for all costs of and occasioned by both Summonses.

3.The Tianrui Ds’ stance is as follows:

(a)  they accept that they have to pay costs of and occasioned by both Summonses, with certificate for two counsel;

(b)  indemnity costs are however not warranted for either of the Summonses;

(c)  in any event, even if any indemnity costs are to be awarded for §§1-3 of the 14/8/2019 Summons, the proper apportionment should be 25%;

(d)  costs should not be ordered to be paid forthwith, nor summarily assessed (even if the Court is minded to order payment forthwith);

(e)  the proper costs order in respect of both Summonses should be party-and-party costs to Ps in any event.

Applicable legal principles on indemnity

4.I have been cited Commissioner of Inland Revenue v Poon Cho Ming John (No.2) (2020)  23 HKCFAR 74 at §4, which I apply.

The 6/11/2020 Summons

5.I consider the costs position of the 6/11/2020 Summons first.

6.The 6/11/2020 Summons was for leave to file the 4^th Affirmation of Siu Kai Yan (“Siu 4^th”)  exhibiting a Writ of Summons issued on 15 August 2017 (“FSD Writ”)  in the Grand Court of the Cayman Islands, FSD 166 of 2017 in respect of a derivative action by ACC, one of CSC’s shareholders, and certain of its subsidiaries, on behalf of CSC.

7.I have considered parties’ submissions.  For the following reasons, I order indemnity costs in respect of the 6/11/2020 Summons.

8.The 6/11/2020 Summons was filed and served late.  It was only served on Ps’ solicitors at around 4:08 pm on 6 November 2020.

9.The lateness is particularly stark given the fact that the FSD Writ was issued in August 2017, and D8 (one of the Tianrui Ds)  acknowledged service of the same in October 2017. 

10.At the time when the 6/11/2020 Summons was issued, no explanation or justification were offered explaining why it was filed late.

11.Mr Suen submits that the 6/11/2020 Summons was merely an attempt to provide the full context in light of Ps’ arguments.

12.But that attempt turned out, and must subsequently have been accepted to be unjustified, as the 6/11/2020 Summons was withdrawn in the course of the hearing.

13.The following facts and conduct are also relevant:

(a)  At the time when the 6/11/2020 Summons was issued, and despite its lateness, no explanation was given on the relevance or necessity of the FSD Writ for the purpose of considering the 14/8/2019 Summons;

(b)  Ps’ invitation made on 9 November 2020 to the Tianrui Ds’ solicitors to withdraw the 6/11/2020 Summons was refused on 10 November 2020, one day before the commencement of the hearing;

(c)  Ps’ legal team had to divert their time and resources to deal with the 6/11/2020 Summons — see in particular the Notes dated 10 November 2020 prepared by Ps’ counsel team.

14.Mr Suen submits that the 6/11/2020 Summons was withdrawn with a view to saving time and costs.

15.The withdrawal of a summons which should not have been issued to start with hardly justifies or excuses its issue.  Further, and before its withdrawal, Ps’ and its legal team’s time and costs had been unnecessarily wasted, and its resources diverted.

16.I accept Mr Dawes’ submission that in launching a late application, the Tianrui Ds should have carefully considered its merits, failing which they should be expected to be visited with an indemnity costs order — and see Wong Koon Wah v All persons in occupation of Lot No 775 in Demarcation District 216 [2020] HKCFI 1260, per B Chu J at §63.

17.On the facts, I find that there exist special and unusual features for an indemnity costs order to be made.

14/8/2019 Summons

18.I next consider the 14/8/2019 Summons.

19.The focus is the costs in respect of §§1-3 of the 14/8/2019 Summons.  In respect of §§4-5, the Tianrui Ds accept that they have to bear the costs on a party-and-party basis, and Ps are not seeking any enhanced costs.

20.There is no dispute that indemnity costs may be ordered in respect of a part of the proceedings — Petrograde Inc v Texaco Ltd [2002] 1 Costs LR 60 at §64.

21.§§1-3 of the 14/8/2019 Summons were not clearly and unequivocally abandoned until the hearing on 11 November 2020.

22.I used the words “not clearly and unequivocally” for a reason:

(a)  At Section C of his Written Submissions, Mr Suen made extensive submissions under the heading of “No valid service in Hong Kong on [D1]”;

(b)  At Section D of his Written Submissions, Mr Suen made further extensive submissions under the heading of “No serious issue to be tried” in the context of Ps’ pleaded cause of action of unlawful means conspiracy, which submissions were made in support in particular of §2 of the 14/8/2019 Summons;

(c)  Whilst in the Written Reply dated 9 November 2020, it was stated (at §2)  on the Tianrui Ds’ behalf that they “will no longer rely on the ground of invalid service on [D1] as a basis for stay”, §§1-3 were not expressly abandoned.  On the other hand, in other parts of the Written Reply, §3 of the 14/8/2019 Summons continued to be addressed (§3 of the Written Reply), and the merits and elements of Ps’ pleaded cause of action of unlawful means conspiracy continued to be criticized;

(d)  Whilst this court accepts Tianrui Ds’ apology[2] for not having framed the Written Reply more clearly and for the inconvenience caused, a reader of the Written Reply, including this Court, would not have been able to conclude with confidence what remained to be pursued and what not;

(e)  I accept Mr Suen’s explanation that the Written Reply was prepared before receipt of his clients’ instruction not to dispute service.  But late receipt of instructions, whilst capable of exonerating the legal advisers, cannot in my view be relied upon to justify the late abandonment;

(f)  I do not accept Mr Suen’s submission that “[as] a matter of logic, without disputing service, the Tianrui Ds could not have relied on §§1-3 of the 14/8/2019 Summons any longer”[3].

23.Mr Suen relies on Friston on Costs (3^rd ed)  at §16.44 and submits that if a party abandons arguments relating to discrete issues, an order of indemnity would be rare, “because mere abandonment would not generally justify such an award”.  Mr Suen, relying on Fabio Perini SPA v LPC Group plc [2010] EWCA Civ 525 at §119, per Lord Neuberger MR (as he then was), further invites this Court not to too readily penalize a party in costs for abandoning a (possibly bad)  point before trial, otherwise there is a danger that litigants would be reluctant to abandon (possibly bad)  points when they should.

24.I note however that at §119 in Fabio Perini SPA, Lord Neuberger MR also said in the same breath that:

“ I should add that this should not be taken as intending to discourage judges from awarding costs on an indemnity basis when points are abandoned, if the circumstances justify it.”

And in Friston on Costs (3^rd ed), it is further said at §16.45 that:

“ … Timing can be important: if a party abandons issues or their case and delays doing so until a late stage, they may be found liable to pay costs on the indemnity basis, but this will not always be the case, especially where their opponent’s conduct was itself guilty of delay.”

I add immediately that there is no suggestion in the present case that Ps’ conduct was itself guilty of delay.

25.Mr Suen further submits that the decision to abandon §§1-3 of the 14/8/2019 Summons was a strategic one, but was not the result of any concession of lack of merits.

26.I fail to see how that assists the Tianrui Ds’ position on costs.

27.Mr Suen then puts forward a “hypothetical counterfactual”, that had the Tianrui Ds pursued and failed in respect of the entire 14/8/2019 Summons, it is likely that costs would only be on a party-and-party basis.

28.In that regard, I accept Mr Dawes’ submission that the pursuit of unarguable, weak or thin points, or points which are plainly wrong in law, can result in indemnity costs — Nintendo Co Ltd v The World Camera and Radio Co Ltd & Others [1999] 2 HKLRD 199, at 201E-G and 202D-E, and Dixon v Blindley Health Investments Ltd [2016] 4 Costs LO 627 at §26.

29.Mr Suen submits that the abandonment of §§1-3 has resulted in some saving of the hearing time.  I accept that.  Those paragraphs were abandoned at the beginning of the hearing upon my invitation for clarifications.  But the result remains that the late abandonment has resulted in wastage of time, costs and judicial resources.  In particular, the costs, time and resources incurred by Ps’ team in dealing with those paragraphs could have been saved, and the distraction to them could have been spared.

30.Such late and equivocal abandonment should be discouraged, and in my view constitutes on the facts of the present case special and unusual features which justify indemnity costs.

31.On the other hand, given my observation above that the abandonment of §§1-3 did result in some saving of the hearing time, and on a broad brush approach, I apply the apportionment of 35% in respect of the costs of and occasioned by §§1-3 of the 14/8/2019 Summons, so that those percentage of the costs should be assessed on an indemnity basis.

Whether summary assessment, and whether forthwith

32.The assessment of the costs concerned is not going to be complex.  No substantial grounds for disputing the sum claimed for costs has been shown. 

33.I hold that this is an appropriate case for summary assessment.

34.The costs of the 14/8/2019 Summons and 6/11/2020 Summons are severable and self-contained from the rest of the action.  Further, the trial will be some time away in the future.  I do not regard it as fair that Ps be kept out of a substantial sum till trial.

35.There is no suggestion that the forthwith payment of the costs would prejudice the Tianrui Ds’ position in the action in any way.

Disposition

36.For the above reasons, I order that:

(a)  in respect of the 6/11/2020 Summons, the costs of and occasioned by the same be borne by the Tianrui Ds on an indemnity basis;

(b)  in respect of the 14/8/2019 Summons, the costs of and occasioned by the same be borne by the Tianrui Ds, 35% of which be on an indemnity basis, and 65% of which be on a party-and-party basis, representing costs of and occasioned by §§1-3 and §§4-5 of the 14/8/2019 Summons respectively;

(c)  all the costs of and occasioned by both Summonses be summarily assessed, and payable forthwith; and

(d)  certificate for two counsel for all costs of and occasioned by both Summonses.

37.On the further conduct of the summary assessment concerning the filing of statement of costs and objections, I give the directions set out at §35 of Mr Dawes’ written submissions of 21 December 2020.

38.I order that the costs of this application should also be to Ps, to be summarily assessed and payable forthwith, which costs should be covered also by the statement of costs to be filed pursuant to the directions I have given in the paragraph immediately above, and be dealt with in one go.

Written Submissions and Reply by Mr Victor Dawes SC, Ms Bonnie Y K Cheng and Ms Leticia Tang, instructed by Withers, for the 1^st to 4^th Plaintiffs

Written Submissions by Mr Jenkin Suen SC and Ms Natalie So, instructed by Tanner De Witt, for the 1^st, 2^nd and 8^th Defendants