Charm Master Enterprises Ltd v. Grand T G Gold Holdings Ltd and Another

HCA 397/2011

[2025] HKCFI 911

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 397 OF 2011

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DECISION ON COSTS

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A.  INTRODUCTION

1.By summons of 5^th November 2024, J Thomson[1] seeks to vary the costs order nisi (“the Costs Order Nisi”) in my judgment of 23^rd October 2024 (“the Judgment”), so that, in effect:

1.1  in addition to Charm Master, the Company should also be liable to pay to J Thomson the costs of and occasioned by J Thomson’s counterclaim for the period up to 26^th February 2021;[2] and

1.2  the Company should be liable to pay various items of reserved costs to J Thomson.

2.Whilst the Company had interpleaded, J Thomson says that it did so only belatedly and after it had taken an active part in defending the proceedings.

3.The Company says that it should not be jointly and severally liable with Charm Master because it ran a substantially different defence to that of Charm Master; furthermore, it acted reasonably throughout the proceedings. It says that there should be no order as to the costs of J Thomson’s counterclaim.

4.J Thomson was given leave to join the proceedings as the second defendant in February 2018. It filed a Defence and Counterclaim on 6^th March 2018 and amended this on 27^th March 2018. The Company filed a Defence to the Amended Defence and Counterclaim of the 2^nd Defendant on 26^th June 2018. Whilst on the one hand the Company averred that there was a dispute between Charm Master and J Thomson as to the ownership of PN A, at the same time, it put J Thomson to strict proof of its claims. The Company further went on to actively resist J Thomson’s application for summary judgment, obtaining leave to defend the counterclaim on condition that it pay $12m into court,[3] and then seeking leave to appeal against the imposition of the condition.[4] It was only on 25^th February 2021 that the Company sought leave to interplead, despite J Thomson having invited it do so as early as 19^th July 2019, and despite the Company’s own acknowledgment in its letters of 31^st March 2016 and 6^th March 2017 (“the Letters”) that it considered J Thomson to be entitled to payment of the debt under PN D and PN E.

5.The Company says that the Letters had already reasonably indicated its intention to settle subject to J Thomson executing a deed of indemnity (to be drafted by the Company), but J Thomson did not execute it. However, it was the Company which failed to provide the draft of the deed which it wanted J Thomson to sign: see decision of DHCJ Raymond Leung SC of 12^th November 2020 at [61].

6.In these circumstances, where the Company chose to continue defending the proceedings as a party after the joinder of J Thomson despite having accepted that it was liable to pay out under PN D and PN E, it is appropriate for the Company to bear some responsibility for the additional costs incurred as a result.

7.J Thomson says that the Company should be liable jointly and severally with Charm Master for costs up to 26^th February 2021. The Company says that it should not be jointly liable with Charm Master as it had a substantively different and independent defence from that of Charm Master. Reliance was placed on SFC v Yiu Hoi Ying Charles (No.2) (2021) 24 HKCFAR 382 at [32] to say that whilst the general rule is that liability to pay a winning party’s costs should be joint and several, there is an exception in respect of a separate cause raised by one of the losing parties – that losing party should alone be liable for the costs incurred by the winning party in meeting that cause. The Company pointed out that at the hearing of J Thomson’s application for summary judgment, one of the arguments relied upon by J Thomson was that the Letters constituted a separate agreement to pay under PN D and PN E. The Company also said that Charm Master advanced a drastically different version of events from J Thomson, whereas the Company itself merely adopted a “minimalist” defence.

8.However:

8.1  as regards J Thomson’s application for summary judgment, this was also based on its claim to be entitled to payment under PN D and PN E. As J Thomson points out, there was no separate claim for anything in addition to the $12.5m sought under PN D and PN E. The fact that (1) the Company’s application for leave to appeal from DHCJ Raymond Leung’s order granting conditional leave to defend, and (2) J Thomson’s application to amend its counterclaim in the light of DHCJ Raymond Leung SC’s decision, were rendered academic by the Company’s application to interplead, demonstrates that it was the Company’s continued defence of the proceedings and refusal to interplead earlier that led to the incurring of costs unnecessarily;

8.2  as regards the point that Charm Master advanced a different (losing) cause from that of the Company, I agree with the submissions of counsel for J Thomson, Ms Natalie So, that the circumstances of the case need to be taken into consideration. Here, Charm Master and J Thomson were fellow claimants for payment under PN D and PN E, so that Charm Master was the party positively putting forward a particular version of events, whereas the Company was the party requiring J Thomson to come up to proof. Despite these differences of approach, both Charm Master and J Thomson both essentially denied the factual basis for J Thomson’s claim to payment under PN D and PN E. Putting J Thomson to proof essentially required it to disprove Charm Master’s claim. The Company was aware of the case being put forward by Charm Master, but it chose to continue its involvement as an active party in the case rather than to interplead.

9.J Thomson also asks that the Company pay the costs reserved under the following orders:

9.1  the consent order of 8^th November 2019, which provided for directions for the disposal of J Thomson’s application for summary judgment;

9.2  the direction of 9^th March 2020, which gave directions for the re-fixing of the hearing of the application for summary judgment;

9.3  the direction of 5^th February 2021, which reserved costs relating to the Company’s application for leave to appeal against the decision of DHCJ Raymond Leung SC dated 12^th November 2020 giving conditional leave to the Company to defend, the Company’s application to interplead, and J Thomson’s application to amend its counterclaim following on from DHCJ Raymond Leung SC’s decision of 12^th November 2020.

10.Counsel for the Company, Mr Billy Mok, submitted that the costs orders relating to the summary judgment application should follow that of J Thomson’s counterclaim against the Company (for which he submitted that there should be no order as to costs). He submitted that the costs arising out of the interpleader application should be paid by Charm Master to the Company, and that the costs arising out of J Thomson’s application to amend should be paid by J Thomson who withdrew its application.

11.In relation to the first two sets of reserved costs, the costs order made by DHCJ Raymond Leung SC on the application for summary judgment was that J Thomson’s costs should be in the cause of its counterclaim against the Company. I agree with Ms So that any costs which were reserved in relation to the summary judgment application, and which have not otherwise been dealt with, should be paid by the Company to J Thomson as they arise out of that application or are incidental to it.

12.In relation to the third set of reserved costs, I agree with Ms So that these costs should be paid by the Company to J Thomson as they were incurred by reason of the Company’s prolonging its participation in the proceedings failing to interplead earlier. As to the incidence of costs as between Charm Master and the Company, this is not the subject of the current application. As to the costs of J Thomson’s application to amend its pleadings, although it was J Thomson who made and withdrew the application, this application could have been obviated altogether had the Company interpleaded earlier.

13.I therefore make an order in terms of paragraph 1(1) to 1(5) of the summons of 5^th November 2024.[5]

14.I further make a costs order nisi that the costs of and occasioned by the summons should be paid by the Company to J Thomson, to be summarily assessed. J Thomson should lodge and serve a statement of costs within five days; the Company should lodge and serve its list of objections, if any, in bullet point form limited to two pages within five days thereafter; J Thomson should lodge and serve its reply, if any, in bullet point form limited to one page within three days thereafter.

Mr Billy Mok instructed by Wellington Legal for the 1^st Defendant

Ms Natalie So instructed by C.T. Chan & Co. for the 2^nd Defendant