Mighty China International Ltd v. China Resources and Transportation Group Ltd and Others

HCA 1960/2021

[2023] HKCFI 1061

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1960 OF 2021

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D E C I S I O N

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1.This is the Plaintiff’s application by summons dated 15 March 2023 (“the costs summons”) to vary the costs order nisi made by this Court in its Decision dated 3 March 2023 (at §59) that “costs of this application be in the cause of the Authority Issue”.

2.The Plaintiff seeks an order that D3 and D4 (collectively “the Defendants”) bear the Plaintiff’s costs of the cross-examination summons dated 19 August 2022 (“the original summons”) as amended by the amendment summons dated 19 January 2023[1] (collectively “the cross-examination summons”) in relation to the hearings held on 10 October 2022 and 21 February 2023.

3.The hearing on 10 October 2022 was a call-overhearing of the original summons before Ng J who, notwithstanding the Plaintiff’s attempt to seek an order for cross-examination on that occasion, adjourned the original summons for substantive argument is which was heard on 21 February 2023.

4.The relevant background and procedural history concerning the Authority Issue as well as the reasons why cross-examination was allowed are set out in the Decision to which reference should be made.

5.The Plaintiff’s basis for the variation it seeks is because despite its invitations (made on 17 August 2022 and 23 September 2022) to the Defendants to deal with the original summons by consent, it received no reply and ultimately it was successful in its application for cross-examination. It was submitted that the general rule that costs should follow the event should apply in relation to those 2 hearings.

The Defendants’ opposition

6.The costs summons is opposed on 2 grounds: (a) the variation sought presupposes that the Plaintiff would succeed on the Authority Issue when that remains an open question; and (b) the cross-examination summons was allowed on the basis of 2 issues neither of which was specifically raised by the Plaintiff.

7.As regards (a), the utility of the cross-examination summons is not a foregone conclusion: the possibility remains that the Plaintiff could be found not to have had authority to sue. In the event of the Plaintiff being unsuccessful on the Authority Issue, that would be the end of its case, rendering futile the entire exercise engendered by the cross-examination summons.

8.In those circumstances, it would be premature and grossly unfair to the Defendants if they are ordered to bear the costs of the 2 hearings sought without regard to the eventual outcome of the Authority Issue.

9.Should the Plaintiff prevail on the Authority Issue, there would be no reason why it would not be awarded costs including those of the 2 hearings now sought. Thus, the only difference is some delay in recovering those costs, assuming that the Plaintiff succeeds on the Authority Issue.

10.As regards (b), the Plaintiff’s letters referred to earlier (inviting the Defendants to deal with the matter by consent) did not set out the basis and purpose of the cross-examination summons. Nor was any affirmation filed in its support.

11.The discrete issues for cross-examination are set out in §54 of the Decision: (a) determination of the date of WSH’s resignation which depends on the credibility of LKL and WSH in relation to the circumstances of the signing of the letter of resignation; and (b) whether the appointment of CSY as director resulted from LYX’s decision to appoint or whether there was a miscommunication between LYX and ZH.

12.Those 2 issues do not feature in the list of factual disputes relevant to the Plaintiff’s authority to sue filed by the Plaintiff as Annex 1 to its skeleton submissions. The inference that the Plaintiff is seeking to make good its case by cross-examining every deponent is virtually irresistible.

13.The Defendants cited Kammy Town Ltd v Super Glory Corp Ltd, HCA 3524/2003, unrep., 14 January 2005 (where the eventual outcome was a consideration taken into account in deciding costs) and Wendy Wenta Seng Yuen v Philip Pak Yiu Yuen [1984] HKLR 431 at §17 (where the costs of the application at first instance were reserved) which the Plaintiff sought to distinguish.

14.For present purposes, I do not consider it necessary to deal with the niceties of the distinctions since the facts of those cases are materially different. The exercise of the court’s discretion on questions of costs are highly fact-sensitive and decisions in other cases involving different facts tend to be of limited assistance.

15.The Plaintiff attaches importance to the fact that while “costs follow the event” is no longer the rule for interlocutory applications, it is still a good option, citing recommendation number 122 of the Working Party on Civil Justice Reform set out in Hong Kong Civil Procedure 2023 §62/3/6, the latter part of which concerned costs orders aimed at deterring unreasonable interlocutory conduct the proceedings.

16.The Plaintiff referred to Predicine Holdings Limited v Bianchi (Hong Kong) Limited [2021] 2 HKLRD 216 at §§31-33. In that case, it was held that costs of successfully obtaining a proprietary injunction should follow the event as the plaintiff was the substantial “winner” of the application, and that “the lack of immediacy of orders to pay costs ‘in the cause’ or ‘in any event’ weakens costs as a sanction against unwarranted[2]applications …”.

17.The facts of the present case are very different. Having regard to §§7-14 above and §§54-58 of the Decision, I do not agree that the Defendants were acting unreasonably in opposing the Plaintiff’s application. In my view, in the circumstances of the present case, I consider costs in the cause the appropriate order to be made.

Conclusion

18.Accordingly, the costs order nisi is made absolute and the costs of this application be to the Defendants in any event.

Mr Tony Ko, instructed by Patrick Mak & Tse, for the Plaintiff

Mr Keith Tam, instructed by Jones Day, for the 3^rd to 4^th Defendants