Oasis Kindergarten Ltd v. Kowloon Tong Baptist Church

HCA 684/2019

[2025] HKCFI 467

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 684 OF 2019

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(by Original Action)

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(by Counterclaim)

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Before: Deputy High Court Judge Phoebe Man in Court

Date of Hearing: 24 April 2024 and 4 December 2024

Date of Judgment: 24 January 2025

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DECISION

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Background

1.The following background is based on the defendant’s written submissions which are not in dispute:

(1)  The defendant (“D”) is a church which owns the whole building at 55 Cornwall Street (the “Church Premises”).

(2)  By a management agreement dated 13 August 2012 (the “Management Agreement”), D appointed the plaintiff (“P”) to manage and operate a non-profit kindergarten within the Church Premises for ten academic years, commencing in 2013 and ending in 2023.

(3)  Starting from around 2016, the parties’ relationship turned sour. P commenced a number of legal proceedings against D, one of which is the present action. The main action, HCA 2249/2017, concerning P’s failure to pay certain expenses, is scheduled for trial in March 2025.

(4)  The kindergarten was operated on the 2/F and 3/F of the Church Premises (the “School Premises”). The present action arose from the parties’ dispute in respect of the use of the multi-purpose area on 3/F of the Church Premises (the “Disputed Area”).

(5)  P claims that D had breached the Management Agreement by interfering with its use of the Disputed Area by carrying out renovation work at the area and installing CCTV at the Church Premise.

(6)  By a generally indorsed Writ issued on 18 April 2019, (the “Writ”) P sought injunctions in 3 aspects:

(a)  The first aspect relates to the Disputed Area. In gist, P sought to enjoin D from (a) carrying out any renovation affecting the Disputed Area, (b) erect any structure which would block access to the Disputed Area, and (c) removing P’s properties in the Disputed Area (the “First Aspect”).

(b)  The second aspect relates to restricting entry into the School Premises. P sought to enjoin D from entering the School Premises without P’s prior consent.

(c)  The third aspect relates to the removal of 6 CCTV cameras (the “CCTV Cameras”) in the School Premises.

(7)  The injunctions sought specifically had a time limit: until 19 August 2023, the approximate date of expiry of the Management Agreement.

(8)  A summons was taken out on 23 April 2019 (5 days after the filing of the Writ) by P to seek injunctions in the same terms as the First Aspect (the “Injunction Summons”).

(9)  At the 1^st hearing before DHCJ Leung (as his Lordship then was) on 26 April 2019, D gave interim undertaking in the same terms as sought pending the substantive argument on the Injunction Summons (“D’s Interim Undertaking”). The issue of costs was reserved.

(10)  In the meantime, D filed its affirmation in opposition in May 2019. In the affirmation, D had set out the facts that subsequently formed the bases for its counterclaim, namely, that P was already in wrongful repudiation of the Management Agreement and D had accepted such repudiation.

(11)  The Interim Undertaking was continued by B. Chu J on 30 October 2019 until further order of the court. Similarly, the issue of costs was also reserved.

(12)  D filed its Defence and Counterclaim on 22 November 2019, where its counterclaim was first set out. D contended in the counterclaim that P had no right to use the Disputed Area after the termination of the Management Agreement.

(13)  No action had been taken by either side since 2020. The Interim Undertaking subsisted.

2.As the Management Agreement came to an end on 19 August 2023, P considered that there would be no point to continue pursuing the present action or the Injunction Summons. P therefore seeks, by Summons dated 25 July 2023 (the “Summons”) for:

(1)  leave to discontinue the present action;

(2)  leave to withdraw the Injunction Summons; and

(3)  D’s Interim Undertaking to be discharged.

3.In the Summons, P seeks costs against D as follows:

(1)  Costs of the present action be to P;

(2)  Alternatively, no order as to costs (save for the costs of the Injunction Summons be to P) as to the action.

4.Subject to the issue on costs, D does not object to:

(1)  the discontinuation of the present action,

(2)  the withdrawal of the Injunction Summons, or

(3)  the discharge of D’s Interim Undertaking.

5.D contended that:

(1)  they should be entitled to costs of the Injunction Summons, or alternatively, such costs should be reserved for determination at the conclusion of the action;

(2)  P should bear the costs of the action.

6.The only issue on the Summons is thus the issue of costs.

Costs of the action

7.Although P has indicated its desire to discontinue the action, the action would remain ongoing as D has a counterclaim which has not been abandoned. At most, P could only indicate at this stage that they would not be proceeding with their claim.

8.As a result, Mr Henry Chung, counsel for P, and Mr Richard Yip and Mr Matthew Suen (on 24 April 2024 only), counsel for D, sensibly agreed that it would not be appropriate for costs of the action to be determined at this juncture, and the issue should be dealt with after D’s counterclaim has been determined.

Costs of the Injunction Summons - Applicable Principles

9.Parties agree that the court has complete discretion to grant leave to withdraw an application on such terms as to costs as it thinks fit.

10.Mr Yip submitted that as costs of the Injunction Summons had been reserved, it should only be determined at the conclusion of the proceedings, i.e. after D’s counterclaim has been determined. Reliance was placed on §62/1/3 of Hong Kong Civil Procedure 2024, where the commentary provides that: “‘costs reserved’ means that the costs will be lost and will not be allowed on taxation unless the court makes a specific order dealing with them at the conclusion of the proceedings.”

11.Whilst that may in general be the position, in the present context, P has applied to withdraw the Injunction Summons. When the court considers whether to grant leave for the withdrawal, it would be natural for the issue of costs of and occasioned by such an application and all costs previously reserved to be determined, unless there is justification to delay the determination of such incidence on costs.

12.Further, there is no invariable principle against the making of an order as to costs in respect of an application for interlocutory injunction before the conclusion of trial. Nor is there any “default rule” or “starting point” that the costs of such an application should normally be in the cause of the action[1].

13.In any event, I do not understand Mr Yip to be suggesting that the court has no jurisdiction to determine the issue of costs of the Injunction Summons at this juncture.

14.The general rule for a party discontinuing an action is to bear the costs of the opposite party (“the Discontinuance Principle”).

15.The exceptions to the Discontinuance Principle are:

(1)  the discontinuing party is entitled to costs if it is the effective winner (“the Effective Winner Principle”)[2] and/or

(2)  the action/summons is withdrawn because a defendant had done something, after the issuance of writ/summons, which renders it academic for a plaintiff to proceed with the action. The court has full discretion to award costs to a plaintiff after taking all the circumstances of the case into consideration[3]

16.Mr Chung submitted that although P is withdrawing the Injunction Summons, by reason of D’s concession in the form of the continuation of D’s Interim Undertaking during the substantive hearing before B. Chu J on 30 October 2019 and by allowing it to subsist to date, P has achieved all that it has sought, and hence should be treated as the effective winner of the Injunction Summons.

17.Mr Chung further submitted that if D had agreed to P’s pre-action requests, which were on the same terms as the Interim Undertaking, it would not have been necessary for P to file the Injunction Summons.

18.Mr Chung further submitted that the established approach is to treat interlocutory injunctions, their merits and their costs as a standalone application, severed and distinct from the final judgment.

19.Heavy reliance is placed by Mr Chung on the case of Perrine Chamonix Limited v Star League Limited and Anor[4], where the plaintiff applied for an injunction against the defendant. The hearing was vacated upon parties entering into a consent summons on terms that: upon the defendant giving an undertaking not to carry out certain acts, the plaintiff was granted leave to discontinue the action and to withdraw the summons for the injunction. The plaintiff therein claimed costs of the action and of the summons. In determining costs, DHCJ William Wong SC held:

“23. First, the starting point is that the party seeking to withdraw its action should pay the costs of the other party. (Trend Publishing (HK) Limited v Vivien Chan & Co [1996] 2 HKLR 227, 229J–230D per Keith J (as he then was).) The burden of persuading the court to depart from the general rule rests on the party who seeks to withdraw.

24. Secondly, however, when a party has achieved substantially what he or she sought in the action or application, costs should be awarded to him or her. It is an application of the principle that normally costs should follow the event. Harris J in Re Lucky Ford Industrial Ltd [2013] 3 HKLRD 550 at §§14 – 15 said:

‘14. In my view having regard to O.1A r.1 the correct approach to determining costs in cases which do not involve the court granting substantive relief is for the court first to consider the terms of settlement and assess whether the petitioner has obtained substantially what he sought in his petition. If he did it will not be necessary or appropriate for the court to consider evidence and arguments directed to the merits of the case and whether or not the petitioner would have been successful if the petition had gone to trial. The petitioner will be treated as having been successful and entitled to his costs.

15. There may be cases in which it is not clear from the terms of settlement whether it can fairly be said that the petitioner has been substantially successful. In such cases the court will have to determine whether it is probable that the petitioner would have been substantially successful. This may require a consideration of the merits of the case, but this process should be as economical as is consistent with the court’s duty to decide the issue fairly.’

25. The court does not adopt a mechanical approach. The court looks into the substance and the merits of an application. If, but for a plaintiff’s or an applicant’s application, he or she would not have obtained the relief he or she seeks in a writ of summons or a summons, then he or she is in effect the substantive winner of the case. The fact that a defendant consents to the claims by a plaintiff or an applicant which renders it unnecessary for the plaintiff or the applicant to continue the action or summons should not be a reason for denying the plaintiff or the applicant his or her costs. This approach was also adopted by the Court of Appeal in Re Chinese United Establishment Ltd unreported, CACV 214/1995, 24 April 1996 at §§13 and 15:

‘The way that the judge approached the problem was to consider what had been achieved by the petitioners. It had been as a consequence of the filing of the petition that the respondents had made the offer they had. It could be said that the action taken by the petitioners had achieved this.

…

Mr Tang submitted that there had been no determination of the issues between the parties. This is not really germane to the present case. The fact of the matter here is that the petitioner did substantially obtain the relief sought.’

…

29. In the present case, I am of the view that there is no doubt that the Plaintiff is the effective winner. It has achieved all that it wanted to achieve in both the action and the Summons.

(1) Faced with the Summons, the 1^st Defendant offered the Interim Undertaking to the court on 19 May 2017. The 1^st Defendant then took steps, albeit, in my view, inadequate ones, to comply with the Interim Undertaking.

(2) Eventually, the lease to Zhang was terminated by the 1^st Defendant and hence the cessation of the operation of the Brothel which is the primary objective of the present action and the Summons.

(3) I agree that the eventual termination of the lease by the 1^st Defendant was a direct result of the present action and the Interim Undertaking.

(4) The Plaintiff also secured the Final Undertaking which is in terms similar to the injunction sought in the Writ of Summons.”

20.Mr Chung also relied on the Court of Appeal Judgment in Chow Steel Industries Public Company Limited & Ors v. Ko Sung & Ors[5], in which the plaintiffs commenced an action under section 21M of the High Court Ordinance (Cap.4) seeking a Mareva injunction over the assets of the defendants in aid of foreign proceedings in Thailand. An ex parte Mareva injunction was sought and granted on the same day restraining the defendants from disposal of assets. Parties thereafter sought to continue and to discharge the injunction respectively. After hearing submissions at the substantive hearing, the Judge found that the plaintiffs had satisfied the two-stage approach laid down by the Court of Final Appeal in Compania Sud Americana de Vapores SA v Hin-Pro International Logistics Ltd[6] and granted the continuation of the injunction. The Judge granted costs orders in favour of the plaintiffs. On appeal by the defendants against the Judge’s decision on costs, Kwan VP held that:

“18. As the courts have repeatedly emphasised, costs is very much a matter of discretion for the trial judge and the Court of Appeal would be very circumspect in interfering with a decision with such high discretionary content. In the absence of any palpable error in the exercise of the discretion on costs, the mere fact that the appellate judges might have exercised the discretion in a different manner is not a sufficient ground to warrant interference with the discretion of the primary judge: see Poon Ching Man v Lam Hoi Pun [2016] 3 HKLRD 815 at §34.

19. In our view, in the context of the costs of an interlocutory injunction, the discretion is encapsulated in the following statement of Au J (as he then was) in Mendlowitz & Associates Inc. v Winner International Group Ltd & Anr (HCA 574/2009, 14 May 2010) at §28:

‘28. I do not think it is now right to say that as a matter of principle, the costs of an interlocutory injunction should be in the cause unless there is justification for its departure. The Court is entitled to and should look at the merits of the injunction itself as at the time of the application to decide what should be the proper costs order for that application in all the circumstances, which do not necessarily depend on the outcome of the trial.’ (original emphasis)

20. DHCJ Kenneth Kwok SC expressed the same sentiment in Xcelcom Ltd v BGI-Hongkong Co Ltd (No 2) [2017] 1 HKLRD 436. The deputy judge described the “modern approach to costs of interlocutory applications” in §11:

‘11. There is no necessary correlation between success in an interlocutory application and success at trial. A successful plaintiff at trial may have no basis for wasting time and costs by making a thoroughly unmeritorious interlocutory application. A successful defendant at trial may have no basis for wasting time and costs in putting up frivolous grounds for resisting a proper interlocutory application. There is no reason why the costs of an interlocutory application should invariably be made to follow the event at trial. There is also no reason why payment of the costs of an interlocutory application should invariably wait until after trial. There may be no trial and this is not surprising in IP cases.’

21. These decisions correctly identify that there is no invariable principle against the making of an immediate order as to costs in respect of an application for interlocutory injunction. Nor is there any “default rule” or “starting point” that the costs of such an application should normally be in the cause of the action.

22. If anything, in the wake of the Civil Justice Reform, the courts should be more inclined to make an immediate costs order in interlocutory applications. As Lam J (as he then was) said in Midland Business Management Ltd v Lo Man Kui [2011] 2 HKLRD 667 at §§9 to 12:

‘9. Under Civil Justice Reform, the court is encouraged to order immediate payment of costs of interlocutory proceedings and if possible by way of summary assessment of costs. The objective is to discourage unnecessary and disproportionate interlocutory applications. It is recognised that the lack of immediacy of orders to pays costs “in the cause” or “in any event” weakens costs as a sanction against unwarranted applications or resistance, see paras. 529-536 of the Final Report of the Chief Justice’s Working Party on Civil Justice Reform.

10. By reason of O.62 r.5(1)(aa), the court should take into account the underlying objectives in O.1A r.1 in the exercise of its discretion. The objectives in r.1(a), 1(c) and 1(d) are particularly relevant in the present context. In my view, the approach recommended by the Working Party should be adopted in furtherance of these objectives. Unwarranted interlocutory applications should normally be sanctioned by an immediate costs order.

11. In so saying, I must not be taken as saying that an immediate costs order should be made against every unsuccessful party in an interlocutory application. I can readily see that there are cases where such a party may have a proper justification for making an interlocutory application even though he fails at the end of the day. There could also be cases where the court considers that it would be more appropriate to make an order “in any event” or “in the cause” or to reserve costs.

12. However, what I do say is that after Civil Justice Reform the court is more astute to the impact of costs on legal proceedings and an order for immediate payment of costs will be made more readily as a discipline against unmeritorious interlocutory applications.’

23. These observations were approved by the Court of Final Appeal in Wing Fai Construction Co Ltd v Yip Kwong Robert (No 2) (2012) 15 HKCFAR 454. Ribeiro PJ added at §7 that:

‘7. Whether or not the immediate payment of costs should be ordered is quintessentially a matter within the court's discretion. The former practice was generally to order interlocutory costs to be "in the cause", to be settled up at the end of the proceedings where orders which may have been made in favour of the respective parties might be set-off against one another and when the overall result of the proceedings can be taken into account. However, it is now generally recognized that such an approach may lead to procedural laxity and a damaging proliferation of interlocutory or satellite litigation.’

24. Likewise in England, it is not the law or practice that the costs of interlocutory injunctions should normally be in the cause of the underlying action. In Bushbury Land Rover Ltd v Bushbury Ltd [1997] FSR 709, the first instance judge refused to grant an interlocutory injunction against the respondent and ordered the applicant to pay the respondent’s costs. The applicant sought leave to appeal against the costs order, contending that it should be the respondent’s costs in the cause, which was the normal costs order for an interlocutory application. In refusing to grant leave to appeal, Auld LJ said at 712:

‘In my judgment, that argument [that the normal costs order for interlocutory injunction should be the respondent’s costs in the cause unless there was anything to justify a departure] … ignores the clear distinction between entitlement to interlocutory relief and final judgment which underlines Lord Diplock’s identification in American Cyanamid Co v Ethicon Ltd [1975] AC 396 of the criteria on which the court should exercise its discretion whether to grant the former. The fact that a plaintiff may succeed ultimately does not demonstrate that he should have been granted interlocutory relief when the merits of the matter were still unresolved and the court was still balancing convenience. Final judgment provides no hindsight, tipping the earlier balance one way or the other.’

25. In Albon v Naza Motor Trading Sdn Bhd [2008] 1 Lloyd’s Rep 1, the applicant obtained an interlocutory anti-arbitration injunction on the ground that his signature on the joint venture agreement that contained the arbitration clause was forged. The respondent (Naza) sought inter alia permission to appeal against the judge’s decision to award to the claimant the costs of the application. In refusing to grant permission to appeal, Longmore LJ said at §21:

‘21. The argument for Naza on this issue is that costs are not usually ordered on applications for interim injunctions since it is not until trial that it can be known whether the claimant has the right which he asserts he has. … This is not, however, an invariable rule. The narrow issue in the present case is what is to happen while the forgery issue is being determined; that does not depend on the claimant being right on the forgery issue. Granted that the forgery issue is to be determined in England, Naza was perfectly able to form a view as to the likelihood of their persuading the court that that the arbitration should continue meanwhile. The judge was entitled to conclude that they miscalculated and should suffer the consequences. This is very much a matter for the judge’s discretion and I would refuse permission to appeal on this question.’

26. Albon was affirmed in Koza Ltd & Anr v Koza Altin Isletmeleri AS [2020] Costs LR 1479, in which Popplewell LJ emphasised at §4 that there is no “general rule applicable in all cases” and “no invariable practice” that where an applicant obtains an interlocutory judgment on the balance of convenience, the court should reserve costs. In that case, the injunction was not of a “holding the ring” type, and the issues which were ventilated upon the application would not be revisited as part of the substantive dispute.

27. What is important to note from these decisions is that the court’s hands are not tied. If factors are present that warrant an immediate order as to costs, the court may exercise in the exercise of its discretion make such an order.”

21.It is thus clear that there is no invariable rule governing when and what costs order should be given where a party has obtained an interlocutory order. The Court is entitled to and should look at the merits of the injunction itself as at the time of the application to decide what should be the proper costs order for that application in all the circumstances, which do not necessarily depend on the outcome of the trial.

22.Mr Yip on the other hand submitted that:

(1)  P has admitted defeat by virtue of the discontinuance of its claim.

(2)  The effective winner principle is not applicable in relation to the Injunction Summons, as the undertaking was an interim one, instead of a final one. As D’s counterclaim remains, the proceedings have not yet concluded. If D is ultimately successful on its counterclaim, P would have no basis to seek the injunction sought. The costs of the Injunction Summons should therefore be dealt with by the trial Judge after D’s counterclaim is determined.

(3)  The case of Perrine Chanmonix is not applicable, as the undertaking given by the Defendant in that case was a final one and would continue despite the discontinuance of the Action. It was submitted that P chose not to proceed with substantive argument of the Injunction Summons and instead decided to have the Injunction Summons adjourned sine die. Hence P could not have said to have won the Injunction Summons.

(4)  In Picnic at Ascot v Kalus Derigs[7], Neuberger J commented that: “A defendant who accedes to the grant of an interlocutory injunction before the hearing should not, for that reason alone, normally be the subject of a more disadvantageous order for costs than if he had fought and lost. It would be, as I see it, illogical and contrary to the modern approach if a defendant were discouraged from agreeing to a sensible course by knowing that he was likely to be worse off in terms of costs than if he incurred the cost, time and effort in fighting.” It was thus submitted that D should not be penalised in costs for having agreed to the sensible course of offering the Interim Undertaking.

D's Counterclaim

23.At the crux of Mr Yip’s submission is the fact that D has a counterclaim, which was phrased as follows[8]:

“D’s Counterclaim is primarily premised upon P’s repudiatory breaches as follows:-

(a) breach of the Appendix Agreement by stopping the salary payments and MPF contributions of D’s staff; and

(b) breach of the implied terms of the Management Agreement (namely to comply with the Conditions of Grant and not to carry out any act or conduct which may constitute a breach of the Conditions of Grant) by operating the Kindergarten on a net floor area exceeding the maximum prescribed under the Conditions of Grant; and/or

(c) breach of clause 17 of the Management Agreement by unreasonably and unlawfully rejecting D’s nomination of Pastor Wong as the school manager of the Kindergarten.

It is D’s pleaded case that, in each of the above scenarios, P had repudiated the Management Agreement. D has accepted the said repudiatory breach on the part of P and thus claimed for vacant possession of the areas of the Church’s Premises “currently used and occupied by [P]” (i.e. the School Premises).”

24.Mr Yip submitted that if D’s counterclaim were ultimately successful, the Management Agreement would have been terminated and the Licence would have been revoked. P would not be entitled to any right to use and/or occupy the School Premises, be it exclusive or not. P would also not be entitled to any injunctive relief.

Discussion

25.When considering how the court should exercise its discretion in ordering costs for the Injunction Summons, I have taken into account the following:

(1)  At the first hearing before DHCJ Leung (as his Lordship then was) on 26 April 2019, D had voluntarily agreed to offer D’s Interim Undertaking.

(2)  Likewise, at the time of what would have been the substantive hearing of the Injunction Summons before B. Chu J on 30 October 2019, D had voluntarily consented to the continuation of D’s Interim Undertaking until trial.

(3)  P had since 1 April 2019 been requesting D to refrain from doing certain acts. D had all along refused to do so. There is thus little dispute that if P had not taken out the Injunction Summons, D would not have voluntarily acceded to the requests of P in the terms of the Interim Undertaking.

(4)  A party is to be treated as the effective winner when it has obtained substantially what it sought and the Discontinuance Principle will be displaced[9]. There is no dispute that by the time the application to withdraw the Injunction Summons was taken out, P had obtained what it sought under the Injunction Summons.

(5)  Whilst it might be said that D only offered the Interim Undertaking for costs saving purposes and D had not conceded to P’s entitlement to the injunctions sought, the reality is:

(a)  P had set out clearly in the Writ of Summons filed on 18 April 2019 that the injunctions sought would only last until 19 August 2023 (the expiry of the Management Agreement).

(b)  It should thus be clear that despite the court having ordered on 30 October 2019 that D’s Interim Undertaking be continued “until further order of the court”[10], P would not be pursuing the injunctions after 19 August 2023 as it had never asserted any right to such injunctions after that date.

(c)  D, being a party thereto, must have also been aware of the fact that the Management Agreement would expire in August 2023.

(d)  In any event, by the time P filed its statement of claim on 14 June 2019, it would become clear that the brunt of the reliefs sought by P are in the form of injunctions against D, which are specifically until 19 August 2023.

(6)  D should therefore have been aware that if there was not going to be any final determination of the merits of P’s claim before 19 August 2023, P would have in effect obtained a substantial portion of what they had sought in the Injunction Summons, and there would have been no point for P to continue with the Injunction Summons.

(7)  Mr Yip laid blame on P for not proceeding with the action expeditiously, leading to the result that the trial of P’s claim became academic. Whilst P might be criticized for not having prosecuted its claim with expedience, D cannot shirk its own responsibility for letting the case go dormant until P’s entitlement to an injunction extinguished, especially when D was being subjected to the effect of D’s Interim Undertaking.

(8)  When it became apparent that P had no incentive to proceed with the action as they had obtained what they wanted by virtue of D’s Interim Undertaking, there was nothing preventing D from taking action to move the case forward. Instead, D had chosen to not take any steps whilst D’s Interim Undertaking continued to subsist. By doing nothing, D had effectively allowed to P to have the entirety of what it sought in the Injunction Summons.

(9)  I am of the view that D’s counterclaim is a red-herring:

(a)  First of all, D’s counterclaim was only filed on 22 November 2019, nearly a month after D’s Interim Undertaking was continued by B. Chu J. As at 30 October 2019, there was no D’s counterclaim to speak of. At most it could be said that D had set out its counterclaim in its affirmation in opposition the facts which were subsequently relied upon as P’s repudiatory breaches.

(b)  In any event, there is a distinction between interlocutory relief and final judgment: even if D were ultimately successful in its counterclaim, that does not affect the court’s assessment on whether the Injunction Summons was properly taken out by P at the time. This is supported by the authorities set out in paragraphs 19 and 20 hereinabove which clearly set out that it is not the law or practice that the costs of interlocutory injunctions should normally be in the cause of the underlying action.

(c)  The fact that the defendant may be ultimately successful in its counterclaim does not mean that P’s application for interlocutory relief was not justified. As discussed, P would not have obtained the Interim Undertaking but for the Injunction Summons.

(10)  In addition, the offer of the Interim Undertaking on 26 April 2019 and the agreement to continue the Undertaking on 30 October 2019 were only made at the respective hearing before DHCJ Leung and B. Chu J. Costs had already been incurred by P on the basis that D would be proceeding with argument on both occasions. In that sense, costs had been wasted and I do not see any reason why D should not bear those wasted costs by reason of the last minute withdrawal of its opposition to the injunctions.

(11)  The case of Picnic at Ascot v Kalus Derigs is distinguishable as the English Civil Procedure Rules do not apply in Hong Kong[11]. Further, the costs of the hearing of the injunction were in fact granted to the claimant therein as the undertaking was only given 6 days before the intended hearing[12].

(12)  I am also of the view that regardless of the merits of D’s counterclaim, the application of an injunction is justified and warranted for the following reasons:

(a)  Although it can be said that D contended that P was in repudiatory breach and as such was not entitled to operate the kindergarten, in light of the fact that the kindergarten was still in operation and young children were still receiving their education in the School Premises, the balance of convenience would in any event tilt in favour of the injunctions being granted, as the continuous education of the children might be affected.

(b)  D could always seek damages subsequently, if it is found that P had no right to operate the kindergarten from a certain point onwards.

(c)  The propriety of the injunctions (or D’s Interim Undertaking) granted at that time would remain unchanged, despite D might be ultimately successful in its counterclaim.

Determination

26.I will therefore grant the following orders:

(1)  Leave for the plaintiff to withdraw the summons dated 23 April 2019.

(2)  The defendant’s undertaking dated 26 April 2019 to be discharged.

(3)  Costs of the summons dated 23 April 2019 be to the plaintiff, with certificate for counsel, to be taxed if not agreed.

(4)  The plaintiff’s claim under HCA 684/2019 be discontinued.

(5)  Costs of the plaintiff’s claim under HCA 684/2019 be determined at the conclusion of the determination of the defendant’s counterclaim in the same action.

(6)  Costs of the plaintiff’s summons dated 25 July 2023 be to the plaintiff, with certificate for counsel, to be taxed if not agreed.

27.I thank counsel for their assistance.

Mr Henry CW Chung, instructed by Francis Kong & Co, for the plaintiff

Mr Richard Yip and Mr Matthew Suen (on 24 April 2024 only), instructed by So, Lung & Associates, for the defendant