Steadfast International Ltd v. Tuenbo Co Ltd and Others

HCA 2095/2016

[2023] HKCFI 569

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2095 OF 2016

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D E C I S I O N

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Introduction

1.By a Decision dated 20 October 2022 (“Decision”), this Court disposed of 2 Amended Summonses issued by the Tuenbo Parties and ordered that HCA 566/2019 be stayed pending resolution of HCA 2095/2016. On a nisi basis, I ordered that costs should be in the cause of both Actions with certificates for 2 counsel. This is an application by Steadfast to vary the costs order so that:

(1)  Costs of the 2095 Summons and Amended 2095 Summons be paid by the Tuenbo Parties to Steadfast; and

(2)  There be no change to the costs order with regard to the Amended 566 Summons, such that those costs be in the cause of this action and HCA 566/2019 with certificates for 2 counsel.

Legal principles

2.As the 2 Amended Summonses involved interlocutory applications, the general rule under Order 62, rule 3(2A) of the Rules of the High Court is that costs may follow the event. The Court is entitled to take into account all the circumstances including those set out in Order 62, rule 5(2), amongst which are: (a) whether it was reasonable for a party to raise, pursue or contest a particular issue; (b) the manner in which a party has pursued or defended his case or a particular issue; (c) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim. Costs to follow the event and costs to the successful party’s costs in the cause are some of the options.

3.Whether a party acted in a culpable way and whether the underlying application was an abuse of the process of the court are weighty matters on the issue of costs: China Health Group Ltd (formerly China Healthcare Holdings Ltd) v Li Zhong yuan & ors [2021] HKCFI 3806, §§20,22.

4.The Court may deprive a successful party of the whole or part of his costs because he had caused a significant increase in the length or costs of the proceedings by raising issues on which he did not succeed.

5.In the course of case management, the court has moved away from the strict doctrine that anybody who asks for anything has to pay costs. The usual order is costs in the cause because it is all part and parcel of trial preparation and case management. See Chung Hiu Bun v Yeung Yiu Sing, HCPI 123/2010, 28 July 2011, §9, Bharwaney J.

6.Where a party reasonably brought matters to the Court’s attention so that proper case management decisions could be made, it is appropriate to order costs to be in the cause even if the applicant did not succeed: TH v Director of Immigration, CACV 224/2015, 24 November 2015, §7.

Application of the legal principles

7.Having considered the written submissions, I agree with Steadfast that it should get costs of the 2095 Summons and Amended 2095 Summons with certificates for 2 counsel.

8.It was true that the 2095 Summonses and 566 Summonses (both as amended) were taken out for case management purposes, to seek directions as to trial of the 2 Actions. However, the real purpose of those Amended Summonses was to enable the Tuenbo Parties to relitigate the Authority Issue that had been affirmatively determined against them. In fact, the arguments at the substantive hearing of the Amended Summonses were directed at whether the Authority Issue had been definitively determined. Those arguments significantly increased the usual length of a hearing for case management.

9.After the hearing, this Court effectively dismissed all the applications with regard to Steadfast. The Court declined to make an order for trial together, given that the 2 Actions involved substantially different issues and Steadfast should not be unnecessarily dragged into the 566 Action (Decision, §75).

10.Steadfast aptly reminds this Court that the Tuenbo Parties’ were found to have abused the process of the court for 7 reasons (Decision, §§35, 40, 42, 45, 46-49, 50, 55). It thus lies ill in the mouth of the Tuenbo Parties to submit that their move was “sensible case management”, “out of concern to ensure that the 2 Actions be resolved in a time and cost effective manner”, “reasonably [bringing] matters to the Court’s attention so that proper case management decisions could be made”, or “for the ultimate objective that [the Tuenbo Parties] should not be required to defend [the 2 Actions] in parallel”.

11.In the premises, I agree with Steadfast that there should be departure from the usual order that in a case management matter, costs should be in the cause.

12.Tuenbo Parties claim that the proper party to argue for the costs now sought should be TCL and not Steadfast; and that Steadfast has been effectively arguing TCL’s case instead of remaining neutral

13.With respect, this is not sustainable for the following reasons:

(1)  The Amended 2095 Summons was served on Steadfast, which was a party separate from TCL.

(2)  The Amended 2095 Summons sought to have the 2 Actions tried together on the ground that there was a common Authority Issue between the two. It was legitimate for Steadfast to show to the Court that that was not the case. To do so was not to effectively argue TCL’s case but to address the application against Steadfast. Steadfast was not obliged to remain neutral.

(3)  Steadfast could not have pressed ahead with the 2095 Action without first having the Amended 2095 Summons resolved.

(4)  Tuenbo Parties’ present position that Steadfast was not a “proper party” is flatly contradicted their own stance in the submission for the underlying hearing that “Steadfast and the Purported Board (of TCL) have offered no alternative sensible case management suggestions to deal with the obvious common major issue of authority. The obvious question arises as to how does Steadfast and the Purported Board intend to resolve the authority issue. … No sensible case management directions have been proposed by them.”

(5)  The Decision did find that there was no common issue in the 2 Actions (§55). Stripped of the Authority Issue, there was not much left of the 566 Action. There was no justification for dragging Steadfast into the trial in the 566 Action.

14.The Court’s stay of the 566 Action pending the outcome of the 2095 Action would not affect the issue of costs in respect of the Amended 2095 Summons. Steadfast was not a party to the Amended 566 Summons and had not made submission on it. For the Tuenbo Parties to nitpick Steadfast’s submission at the underlying hearing that invited the Court to dismiss the 2095 Summons “and the 566 Summons” was to take things out of context. All that Steadfast meant at that time was that its reasoning for the Amended 2095 Summons was equally applicable to the evaluation of the Amended 566 Summons.

15.Tuenbo Parties submit that they came to Court seeking via various alternative routes for the ultimate objective that they should not be required to defend both Actions in parallel. Whilst some of these routes did not succeed before the Court, one succeeded and the objective was achieved.

16.With respect, whilst it was true that the Court stayed the 566 Action pending resolution of the more complex 2095 Action, it was on a basis different from what the Tuenbo Parties relied on. The stay was of the Court’s own motion to meet the ends of justice and avoid possible wastage of Court time, efforts of the parties and costs and not because of the existence of the Authority Issue. In any event, any stay of the 566 Action could be achieved without dragging Steadfast into the failed Amended 2095 Summons.

17.Any (limited) “success” of the Tuenbo Parties has already been reflected in the order for costs to be in the cause of the 566 Action. On the part that the Tuenbo Parties were not successful, they should bear the costs for the reasons given.

18.I have further considered whether it is necessary to apportion the costs of the underlying hearing. However, as far as Steadfast is concerned, they have been made to sit through the process and the costs of hearing should not be reduced.

Conclusion

19.I therefore vary the costs order nisi under §78 of the Decision such that (i) the costs in respect of the 2095 Summons and Amended 2095 Summons be paid by the Tuenbo Parties to Steadfast with certificates for 2 counsel instead of costs being in the cause; and (ii) the costs in respect of the Amended 566 Summons shall remain as costs in the cause.

20.The costs of this variation application shall be to Steadfast as well, summarily assessed in the amount of $80,000.

21.The costs in respect of 2095 Summons and the Amended 2095 Summons shall be summarily assessed on the papers. Steadfast shall lodge and serve its statement of costs within 3 days. The Tuenbo Parties shall lodge and serve their grounds in opposition within 3 days thereafter.

Written submission by Mr Jeffrey Lee, instructed by Simmons & Simmons, for the Plaintiff (Steadfast)

Written submission by Mr Danny Tang and Mr Brian Lee, instructed by Gibson, Dunn & Crutcher, for the 2^nd to 4^th, 6^th and 7^th Defendants (Tuenbo Parties)