Americhip Inc v. Zhu Hongling and Others

HCA 1644/2016

[2021] HKCFI 3530

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1644 OF 2016

_____________

BETWEEN

_____________

Before: Hon Mimmie Chan in Chambers

Dates of Written Submissions: 22 October, 5 and 12 November 2021

Date of Decision: 23 November 2021

_____________

D E C I S I O N

_____________

1.This is an application for the 1^st Defendant’s payment of costs, enhanced interest on the judgment sum, and interest on costs, under Order 22 rule 24 (2) and (3). The application was made following Judgment being entered against the 1^st Defendant on 14 September 2021 for $12,476,607, and as a result of the Plaintiff’s sanctioned offers made before trial.

2.Order 22 rule 24 (4) provides that the Court shall make the orders under rule 24 (2) and (3) unless it considers it unjust to do so. In considering whether it would be unjust to make the orders, the Court is to take into account all the circumstances of the case, including the matters outlined in rule 24 (5).

3.The Plaintiff relies on the fact that it had made the 1^st sanctioned offer on 20 February 2018, which was long before the trial which commenced on 23 February 2021, offering to accept $10,605,000, when the claim made against the 1^st Defendant in the proceedings was $12,476,607 - the amount ultimately awarded under the Judgment.

4.On 22 January 2019, the Plaintiff made a 2^nd sanctioned offer, offering to accept $8,733,625.

5.The 1^st Defendant did not respond to these sanctioned offers, nor to the other without prejudice offers made by the Plaintiff in June 2017 and April 2020.

6.Counsel for the Plaintiff pointed out that if the 1^st Defendant had accepted the 1^st sanctioned offer within 28 days of 20 February 2018, there would have been a saving of $1,871,607 for the 1^st Defendant, compared to the judgment sum allowed.

7.The 1^st Defendant does not object to the Plaintiff’s claim that she should pay: (1) the costs of the action on party and party basis prior to 21 March 2018, and from the date of the judgment until payment; and (2) interest on $12,476,607 at prime rate +1% per annum from 6 May 2015 until 20 March 2018, and at judgment rate from the date of the judgment until payment. She opposes the Plaintiff’s claim for costs of the action on indemnity basis from 21 March 2018 until the date of the judgment; enhanced interest on the judgment sum at 5% above judgment rate from 21 March 2018 until the date of the judgment; and interest on the Plaintiff’s costs of the action.

8.In opposing the Plaintiff’s claims, the 1^st Defendant has not asserted, nor is there evidence, that the 1^st Defendant had lacked any information required to assess whether or not to accept the sanctioned offers. The only claim made on behalf of the 1^st Defendant is that she had subjectively believed that her conduct, held under the Judgment to be dishonest assistance and knowing receipt, was lawful under Hong Kong law, and she maintained that there were no legal consequences for her actions under Mainland law.

9.I agree with the Plaintiff, that this cannot constitute any good answer to the Plaintiff’s claims under Order 22 rule 24, particularly in light of the specific findings already made in the Judgment as to the 1^st Defendant’s lack of good faith.

10.The 1^st Defendant pointed out that she had, in fact, as early as on 20 July 2016 made payment into court of the entire principal sum claimed by the Plaintiff in these proceedings, of $12,476,607. The contested claim related to interest. According to the 4^th affidavit of Timothy Patrick Clegg (made on 29 April 2021) to which Counsel for the 1^st Defendant has referred in the submissions made to oppose the Plaintiff’s application under Order 22, the interest accrued on the principal sum at prime rate +1%, from 6 May 2015 to July 2021, was in the excess of $4.6 million.

11.Counsel for the 1^st Defendant argued that interest has accrued on the payment made into Court, in the region of not less than $833,000, and that the Court should take this into account and give credit to the 1^st Defendant for such accrued interest.

12.Since the Court has to take into consideration all the circumstances of the case, when deciding whether an order for enhanced interest or interest on costs would be just, the 1^st Defendant’s payment into court is a relevant consideration as to her conduct of the defence in these proceedings.

13.Having regard to the terms of the sanctioned offers made, the early stage at which the 1^st sanctioned offer had been made, and the information available to the 1^st Defendant at the time of such sanctioned offer, I consider that whilst it would not be unjust to make the orders under rule 24 (4), because the 1^st Defendant had been prompt in making payment in full of the principal sum into court as early as 20 July 2016, it would not be fair to require her to pay enhanced interest on the judgment sum at 5% above judgment rate, as the Plaintiff seeks.

14.In the exercise of my discretion, and having given due consideration to the circumstances of this case, including the nature of the claims made against the Defendant and the defences she raised, I will only order her to pay costs on indemnity basis from 21 March 2018 until the date of judgment, and enhanced interest on the judgment sum at 1% above judgment rate from 21 March 2018 until the date of the judgment, in addition to the uncontested claims made in paragraphs 1 and 4 of the Summons of 8 October 2021. In the absence of evidence as to when the Plaintiff was out-of-pocket in having to make payment on account of costs, or to put up funds for payment of its legal costs, nor as to when liability for disbursements was incurred, I will follow the approach used in Golden Eagle International (Group) Ltd v GR Investment Holdings Ltd [2010] 3 HKLRD 273 and order the 1^st Defendant to pay interest on costs at half of the enhanced interest rate I have allowed under paragraph 3 of the Summons.

15.The costs of the application for variation are to be paid by the 1^st Defendant to the Plaintiff.

Mr Colin Wright, instructed by MB Kemp LLP, for the plaintiff

Mr Man Hon Chiu, instructed by Peter Cheung & Co, for the 1^st defendant