Cmi Financial Holding Compay Ltd v. Link Holdings Ltd

HCA 471/2023

[2024] HKCFI 917

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 471 OF 2023

__________________

___________________

____________________________

DECISION ON COSTS

____________________________

1.I am now disposing on papers the dispute between the Plaintiff (“P”) and the Interested Person (“IP’) on the costs of IP’s application by summons taken out on 2 August 2023 seeking the leave of the Court under O63 r4 to search, inspect and obtain copies of documents filed with the Registry in this action (“the Summons”).

2.Broadly and briefly, the dispute on costs arose in this way.

3.On 27 March 2023, P obtained an ex-parte injunction from Harris J, which is still continuing, enjoining by paragraph 1(1) thereof the Defendant and its subsidiaries from proceeding with “The facility agreement dated 10 March 2023 entered into between, inter alia, Madison Pacific Trust Limited (“Madison”)(as security trustee of the Finance Parties (as defined in the facility agreement) and Hang Huo Hotel Manager (Singapore) Pte Ltd (formerly known as Hang Huo Investment Pte Ltd)(“HHI”) for the grant of facilities from the “Lenders” (as defined in the facility agreement) to HHI (“the Madison Facility”)” (“the Injunction Order”).

4.I pause to mention that

a.  IP was not mentioned anywhere in the Injunction Order;

b.  the names of the “Finance Parties” and “Lenders” were not spelled out in paragraph 1(1) of the Injunction Order, which were stated to be “as defined in the facility agreement”; and

c.  when one looks at the facility agreement (consisting of about 120 pages), one has to cross-reference a number of definitions in Clause 1.1 thereof before one would understand that “Lender” means, among others, any “Original Lender” and “Finance Parties” means, among others, the “Lender”; and that the identity of the “Original Lender” was set out in Schedule 1 thereof as TAIOF Credit Opportunities Limited (“TCOL”).

5.IP said that it was interested as it was affected by the Injunction Order in that it wholly owned all the interest in TCOL, which was a SPV (Special Purpose Vehicle).

6.Since 12 May 2023, IP, through its solicitors Tanner De Witt (“TDW”), has been asking P’s solicitors Messrs Lo & Lawyers (“L&L”) for the provision of the relevant court orders and other papers filed by P. The requests were refused leading to IP (a) applying by letter dated 18 May 2023 to the Registrar, (b) issuing an ex-parte summons dated 19 June 2023 supported by the affirmation of Jacqueline Poon dated 19 June 2023 (“the Poon Affirmation”), and (c) per the Master’s direction, issuing the Summons on 2 August 2023, to seek leave to inspect the court file and to obtain copies of various documents.

7.The Summons was opposed by P. Directions for the filing of evidence were given by a Master on 4 September 2023 and the substantive hearing was fixed to be heard on 14 March 2024 before this Court. The parties however did not file any affirmation pursuant to the said directions.

8.On 15 November 2023, IP issued a summons for leave to file further evidence, which leave was granted on 5 December 2023. Pursuant thereto and on 6 December 2023, IP filed the 1^st affirmation of Ng Yong Ngee (“the Ng Affirmation”).

9.By a consent summons dated 6 February 2024, P acceded to the IP’s application, and the parties asked the costs dispute be disposed of on papers.

10.The parties’ positions and contentions are essentially these:

a.  P now said that the Poon Affirmation lacked sufficient factual support in providing proof of the relationship between the Defendant and IP, which was only given by the Ng Affirmation. P further said that had such proof been provided earlier in the Poon Affirmation, P would have consented to the Summons. Therefore, P said that the appropriate order is that of no order as to the costs of the Summons.

b.  IP said that costs should follow the event, in that IP obtained the order sought, albeit belatedly by consent, and that P all along has been opposing. IP further relied on (a) a letter dated 15 May 2023 of L&L asking IP, among others, the relationship between the IP and TCOL and TDW’s answer by letter dated 25 May 2023 that TCOL was a wholly owned investment SPV of IP, and (b) L&L’s letter dated 16 August 2023 stating categorically that “Even if [IP is indeed one of the Finance Parties referred to in paragraph 1(1) of the Injunction Order], the alleged interested person is not “sufficiently interested” in the Action and should not be granted access to the documents in this Action”.

11.Having considered the parties’ written submissions, the relevant papers including the correspondence between the parties and between IP and the Registrar and the Master handling the matter, I am of the view:

a.  The repeated bare statements by TDW in the correspondence to L&L (indeed, also to the Registrar and to the Master) that the IP was “one of the Finance Parties defined in the Order” without (i) reference to the provisions in the facility agreement showing that TCOL was indeed the Original Lender and therefore one of the “Lenders” and the “Finance Parties” within the terms of paragraph 1(1) of the Injunction Order, and (ii) proffering tangible proof that IP wholly owned all the interest in TCOL were not sufficient for L&L, the Registrar and the Master to be reasonably satisfied that IP was indeed a person with the requisite interest to be given access to the court file.

b.  Merely putting forth the said bare statements together with the stance that the application was required only to be made ex-parte (under O63 r4(1)(c)) contributed to, if not led to, the refusal by the Registrar and the queries by the Master and the Master’s direction for the issuance of the Summons to formally apply. Hence, more costs were spent as compared to TDW setting forth and explaining those matters clearly and fully and providing the proof at the first opportunity when the sufficiency of its interest was challenged or queried.

c.  In the Poon Affirmation, the sufficiency of interest was stated to be that IP “is explicitly referred to as one of the Finance Parties in paragraph 1(1) of the Order” (my emphasis). That statement, as we see above, was not true or accurate.

d.  I accept as reasonable L&L’s stance that P required sufficient proof, over and above IP’s bare statements, before P could consent to IP’s application.

e.  However, after IP obtained leave to file the Ng Affirmation, P should no longer resist.

f.  On the other hand, I do not accept P’s submission that had the matters been made clear (as by the Ng Affirmation), P would have consented, as it was clearly stated in L&L’s letter of 16 August 2023 that even if IP was a “Finance Party”, P’s stance was that IP did not have sufficient interest and should not be granted access to the court file.

g.  Therefore, it seems to me that even if the materials provided by the Ng Affirmation were proffered at the time of the filing of the Summons, P at the time would still have resisted the Summons.

h.  In any case, IP should bear the costs of its application by summons filed on 15 November 2023 for leave to file further evidence.

12.Considering all these in the round, I do not think that no order as to costs is appropriate, nor do I think it just and appropriate that IP should be entitled to the entirety of the costs it now claims. As a matter of discretion and in the round, I think the just and appropriate costs order for the Summons is that P pays 50% of IP’s costs of the Summons. I so order, and further that IP’s such costs be assessed summarily.

13.As IP has already lodged its Statements of Costs and to implement proportionality and economy, I am making a provisional summary assessment here without as yet P’s List of Objections. Having considered IP’s Statement of Costs, by a broad-brush approach and on nisi basis, I summarily assess IP’s costs of the Summons at HK$75,000, and 50% would be HK$37,500, to be paid by P forthwith. If P seeks to vary the said total amount, it may lodge its List of Objections within the next 7 days.

14.As to the costs of this costs dispute, no one party is wholly successful, with the IP more a winner in my view. I think in the round the IP should also be entitled to 50% of the costs of this costs dispute. Looking at IP’s Statement of Costs, I would particularly tax down solicitors’ costs in preparing the written submissions as counsel was engaged and tax down counsel’s fee as excessive. I would summarily assess IP’s total costs at HK$55,000, 50% would be HK$27,500, payable by P forthwith. I so order on nisi basis. Any party may by letter within 7 days seek to vary the costs award or the amount assessed, giving the succinct reasons therein.

15.I thank Mr Tsui and Ms Cheung for their assistance.

Mr Antonio TSUI, instructed by Messrs. Lo & Lawyers, for the Plaintiff

Ms Jasmine CHEUNG instructed by Messrs. Tanner De Witt, for the Interested Person