Holinail H.K. Ltd v. Matthias Pou and Others
Read the full judgment text of HCA 2397/2024 on BabelCite. This High Court CFI judgment was delivered on 10 March 2025.
1. On the face of it, this is a very simple time-extension application made by the 2 nd to 4 th defendants, and listed before this Court on 10 March 2025 for 3 minutes only ( “the Time Extension Summons” ). However, because of the way this case has been conducted, I would like to make use of this opportunity to set out my own observations for practitioners’ reference, and hopefully this can achieve the purpose of saving not only the Court’s time but also parties’ costs in future.
Cited by 6 cases · Cites 7 cases
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HCA 2397/2024 [2025] HKCFI 1157 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 2397 OF 2024 ________________________ BETWEEN
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________________________ REASONS FOR DECISION ________________________ A. INTRODUCTION 1.On the face of it, this is a very simple time-extension application made by the 2nd to 4th defendants, and listed before this Court on 10 March 2025 for 3 minutes only (“the Time Extension Summons”). However, because of the way this case has been conducted, I would like to make use of this opportunity to set out my own observations for practitioners’ reference, and hopefully this can achieve the purpose of saving not only the Court’s time but also parties’ costs in future. B. BACKGROUND 2.This action was commenced by the plaintiff on 3 December 2024 against the defendants. In a gist, it is alleged that the 1st, 3rd and 4th defendants, who were former employees of the plaintiff, have, inter alia, diverted the plaintiff’s businesses away from the plaintiff to the 2nd defendant, which is a company set up by the 1st defendant. 3.Upon the commencement of this action, the plaintiff filed a summons (“the Mareva Summons”), returnable on 6 December 2024, to apply for Mareva injunction and disclosure orders. 4.The matter was heard by Tam J, who adjourned the Mareva Summons for argument upon a series of undertakings given by the defendants to the Court. 5.On 11 December 2024, Tam J further granted leave to the defendants to file and serve affirmation(s) in opposition to the Mareva Summons on or before 27 December 2024. 6.By consent, the time for the defendants to file and serve affirmation(s) in opposition to the Mareva Summons was extended by Master Hui on 3 January 2025 to 24 January 2025. 7.On 4 February 2025, the said time limit was further extended by Master Thomas Kwong to 4 March 2025. 8.In the meantime, the plaintiff took out another summons on 25 February 2025 (“the Worldwide Mareva Summons”), and applied to extend the then existing application for local Mareva injunction into one for worldwide Mareva injunction against the 1st defendant covering his assets in Canada, France and United Kingdom. 9.The call-over hearing of the Worldwide Mareva Summons was fixed to be heard before this Court on 28 February 2025 (“the Call-Over Hearing”). 10.As the Worldwide Mareva Summons only concerned the 1st defendant, theoretically, the 2nd – 4th defendants were not required to attend the Call-Over Hearing. However, since all 4 defendants were represented by the same firm of solicitors, that means their solicitors’ firm would have representative attending the Call-Over Hearing anyway. 11.Both the plaintiff and the 1st defendant were represented by counsel at the Call-Over Hearing. Upon negotiation, they agreed that, upon certain undertaking given by the 1st defendant to the Court, the Worldwide Mareva Summons shall be adjourned for argument and to be heard together with the Mareva Summons. 12.The plaintiff and the 1st defendant further agreed that the 1st defendant shall file and serve his affirmation in opposition to the Mareva Summons and the Worldwide Mareva Summons in a composite manner, and the time for doing so should be in accordance with that ordered by Master Thomas Kwong (i.e. 4 March 2025). 13.As the said due date of 4 March 2025 was only 2 working days away, this Court enquired with the 1st defendant’s counsel whether it was realistic to expect the 1st defendant to file an affirmation to deal with the Worldwide Mareva Summons within such a short time. Upon such an enquiry, parties agreed that the 1st defendant should be granted time to file his composite affirmation. It was further agreed that the extension of time should be granted on an unless basis, given the substantive argument for the Mareva Summons has already been fixed to be heard on 3 June 2025. What they could not agree was the deadline by which such an affirmation should be filed. Having heard submissions, it was ordered that unless the 1st defendant’s affirmation would be filed and served by 4pm on 14 March 2025, he shall be debarred from doing so. 14.It may be recalled that the 2nd – 4th defendants were also yet to file and serve their affirmation(s) in opposition by the time of the Call-Over Hearing. The deadline for them to do so was still 4 March 2025. This Court therefore enquired with Mr Lau for the 1st defendant whether those defendants would also ask for an extension of time. What this Court had in mind at the time was that if they intended to seek an extension of time anyway, the matter (which is very straight forward) could be dealt with there and then. Costs and time could be saved. In the circumstances of the present case, in which Tam J had directed that the plaintiff shall file and serve its affirmation in reply within 21 days after the defendants have filed their affirmation(s), I could also see the advantage of the plaintiff having to file 1 affirmation only in reply to the affirmation(s) of all the defendants, rather than filing an affirmation first in reply to the 2nd – 4th defendants, and then another affirmation to deal with the 1st defendant’s composite affirmation. This is particularly so because the 1st defendant, being the most senior employee in charge of the plaintiff’s business and operations while he was in the employment of the plaintiff, had been portrayed as the main culprit. 15.However, upon taking instructions from those instructing him, Mr Lau informed this Court that he had no instruction to apply for any extension of time for the 2nd – 4th defendants. As a result, their deadline to file and serve affirmation(s) in opposition to the Mareva Summons remained 4 March 2025. C. THE 2ND – 4TH DEFENDANTS’ APPLICATION FOR EXTENSION OF TIME 16.To my surprise, it has now transpired that, on 25 February 2025 (i.e. 3 days before the Call-Over Hearing), the defendants’ solicitors, Messrs. Han Kun Law Offices LLP (“Han Kun”), had already written to the plaintiff’s solicitors, Messrs. Ho & Ip (“Ho & Ip”), and asked for extension of time of 28 days for all 4 defendants to file and serve their affirmation(s) in opposition to the Mareva Summons. 17.By the time of the Call-Over Hearing, Ho & Ip had not replied to the said request yet. 18.As aforesaid, the Call-Over Hearing of the Worldwide Mareva Summons was heard on 28 February 2025 (Friday), at which the solicitor of Han Kun present for the 1st defendant informed the Court through counsel that the firm had no instruction to ask for any extension of time, and as a result, no extension was granted. 19.On the following working day (i.e. 3 March 2025 (Monday)), Han Kun wrote to Ho & Ip again (“Han Kun’s 3 March Letter”), and asked for extension of time for the 2nd – 4th defendants to file and serve affirmation(s) in opposition to the Mareva Summons by 14 March 2025 on an unless basis (that is, to make the timetable identical to that which was set by this Court in the Call-Over Hearing). It was also stated that if the plaintiff did not agree to the said proposal, the 2nd – 4th defendants would take out a summons on the following day (i.e. 4 March 2025 – the deadline imposed by the order of Master Thomas Kwong dated 4 February 2025). 20.Ho & Ip replied on the same day. For the purpose of this Reasons for Decision, it is necessary to quote the letter in full:
21.On 4 March 2025, the 2nd to 4th defendants took out the Time Extension Summons, returnable on 10 March 2025 before this Court. 22.On 5 March 2025, Han Kun replied to Ho & Ip by letter that while the 2nd – 4th defendants agreed to bear the plaintiff’s standard costs of $1,040, they refused to pay indemnity costs. 23.Ho & Ip then wrote to this Court on the same day. This letter reads:
24.This Court replied to Ho & Ip on 6 March 2025 in the following way:
25.Unfortunately, as parties could not reach any agreement, the hearing on 10 March 2025 had to proceed as scheduled. D. THIS COURT’S OBSERVATION 26.My observations on how the case has been conducted are as follows. D1. Correspondence between solicitors 27.Understandably, part of litigation solicitors’ usual task is to correspond with solicitors representing the opponent by letters. 28.It is also entirely reasonable that solicitors charge their clients for the time incurred for perusing and writing those letters. 29.However, solicitors must have a duty to their clients not to incur costs unnecessarily, for example, by doing something which is not useful at all in advancing their clients’ case. 30.Ho & Ip’s 3 March Letter serves a good example to illustrate this point. 31.It may be recalled that, by Han Kun’s 3 March Letter, Han Kun has proposed that a further extension of time up to 4pm on 14 March 2025 be granted to the 2nd to 4th defendants to file their affirmation(s) in opposition on an unless basis. While I am not saying that it is blameless for the 2nd to 4th defendants to seek a further extension of time, in the circumstances of the case, there is no doubt that this request would not cause any delay to the proceedings as a whole, and the plaintiff would not be prejudiced in any way because it would still have 21 days thereafter to prepare its affirmation in reply. Indeed, as confirmed by Mr Lo for the plaintiff at the hearing on 10 March 2025, if this request for extension had been made at the Call-Over Hearing, he would have instructed counsel to accept it. 32.The only valid complaint which Ho & Ip could have was why Han Kun informed the Court at the Call-Over Hearing that they did not have instructions to ask for extension of time, when they had in fact, by letter dated 25 February 2025, made such a request even before the said hearing. If they had asked for an extension of time at the Call-Over Hearing, then parties would not have to deal with this matter again. 33.Be that as it may, with greatest respect to the solicitor who decided to make a mountain out of a molehill, there is absolutely no need and inappropriate for Ho & Ip to incur costs for a letter which is as long as the Ho & Ip’s 3 March Letter, reciting the history of time extension(s) obtained by the defendants all the way from December 2024 (because they had already agreed to an unless order). It is also puzzling as to why Ho & Ip considered it necessary to argue that there is no reason that the 2nd to 4th defendants should be granted a longer extension than that which the 1st defendant had obtained. I have not lost sight of Han Kun’s suggestion in their letter dated 3 March 2025 to the contrary, but that is water under the bridge because, despite such a suggestion, the 2nd to 4th defendants were, after all, not asking for such a “longer extension”. 34.When the matter can be dealt with by a short letter, it is unreasonable for litigation solicitors to write long letters which cannot achieve any meaningful purpose (apart from winning an “argument”). This would not only incur costs for their own clients. It would also lead to higher costs to the other side who has to pay for their solicitors perusing such meaningless letters. 35.I therefore urge solicitors to bear this in mind before they decide to incur time and costs on such correspondences. D2. Copying the court with correspondences 36.On 28 October 2016, Lam VP (as he then was) handed down Reasons for Judgment in AXA China Region Insurance Company Limited v Leong Fong Cheng (CACV 113/2016, unreported, 28 October 2016) in which his Lordship reminded practitioners and litigants that:
37.While Lam VP’s reminders were made in the context of an application to the Court of Appeal, they must also be applicable to the Court of First Instance (see Order 32 rule 1 of the Rules of the High Court). 38.I regret to say that, more than 8 years on since Lam VP’s reminders, the Court is still receiving applications made by letters from time to time from solicitors. While there are occasions when they have been expressly permitted to do so, on most other occasions they are not. There have also been occasions when solicitors would seek directions from the Court by letter, and enclosed therewith a large number of correspondences exchanged between the 2 firms. Again, unless they have been expressly permitted by the Court to do so, this is entirely inappropriate. 39.The above conduct is even more unacceptable, when actually solicitors have been reminded not to do it in as recent as May 2023. On 18 May 2023, the Law Society has by virtue of its Circular 23-301 drawn its members’ attention to a letter dated 11 May 2023 issued by Au-Yeung J as Civil Listing Judge of the Court of First Instance. For the sake of completeness, I set out the letter herein in full:
40.The message contained in the above letter is crystal clear. It is sincerely hoped that solicitors would comply with this in future. D3. Indemnity costs 41.Costs are in the discretion of the Court, and it is trite that such discretion is not fettered or circumscribed beyond the requirement that taxation on an indemnity basis must be appropriate: Town Planning Board v Society for Protection of the Harbour Ltd (No 2) (2004) 7 HKCFAR 114, at [13], [16] & [17]. 42.As to when it would be appropriate to make an indemnity costs order, the general rules are also well established and have been discussed in many authorities. 43.In Overseas Trust Bank Ltd v Coopers & Lybrand (a firm) and Others [1991] 1 HKLR 177, Godfrey J (as his Lordship then was) explained that:
44.In Choy Yee Chun (The representative of the estate of Chan Pui Yiu) v Bond Star Development Ltd[1997] HKLRD 1327, Stock J (as his Lordship then was), having referred to the Judgment quoted above, stated:
45.In Cheung Wei Man Vivien and Chan Kim Thiam v Centaline Property Agency Ltd & Others (HCA 286/2000, unreported, 15 December 2006), Lam J (as Lam PJ then was) also had the following to say:
46.It can therefore be seen that, while the Court would take into account the litigation conduct of a party when deciding whether to make an indemnity costs order, such conduct has to be “unreasonable to a high degree”, and unreasonable in this context “certainly does not mean merely wrong or misguided in hindsight”. 47.Although it goes without saying that each application has to be considered on a case-by-case basis, in my view, legal representatives should be able to exercise their good common sense when deciding whether the seriousness of the case which they are handling is to the extent that it worth incurring costs on pursuing for indemnity costs. If the case is not serious enough, it would simply be a waste of costs for putting forward such an application. Legal representatives should also consider proportionality in the process. If the extra amount of costs which their clients would be able to recover from the other side (as compared to the usual party-and-party costs) is not much as compared to the costs which need to be incurred for the purpose of making the application for an indemnity costs order, then the legal representatives should advise their clients accordingly. Indeed, for most lay clients, the court proceeding which they are facing is the only one which they have ever been involved in. Therefore, they normally have to rely heavily on the advice of their legal representatives, especially in relation to matter concerning costs. Hence, it is of utmost importance that appropriate advice be given, so that costs would not be incurred unnecessarily. 48.It should also be borne in mind that, no matter how unmeritorious an application is, the Court is still duty bound to deal with it with reasons. Viewed in this way, legal representatives who advise their clients to make applications without having properly assessed their merits beforehand are irresponsible not only to their clients, but also to the whole justice system, for our precious judicial resources should be wisely used. 49.Unfortunately, the present case is another example when solicitors for the plaintiff should simply not have asked for indemnity costs. I have come to this conclusion for 2 reasons. 50.Firstly, while one can see the grievance of the plaintiff’s solicitors of having to deal with an extension of time application which could have been dealt with conveniently by the Court on an earlier occasion (at the Call-Over Hearing), as a matter of fact, having to deal with this new application is not something really troublesome, and would not lead to much extra time and costs. As aforesaid, in the light of what happened at the Call-Over Hearing, it is in reality a no-brainer that the extension to 14 March 2025 on an unless order basis should be granted, and approving a simple consent summons containing an unless order to be drafted by the other side should not take more than 5 minutes. While one may be interested to know why Han Kun would represent to the Court that they had no instruction to ask for an extension of time at the Call-Over Hearing when they clearly had already been instructed to ask for it by correspondence (see further Section F below), the insistence of knowing the answer in these circumstances simply cannot achieve anything meaningful. Even if it is clear that Han Kun had made a mistake, in my view, it should be apparent that there is still a long way to go before one may categorise this conduct as “unreasonable to a high degree”. If one has to talk about unreasonableness, I would say that Ho & Ip’s insistence of getting an indemnity costs order is even more unreasonable than Han Kun’s conduct at the Call-Over Hearing. 51.Secondly, the plaintiff’s insistence for an indemnity costs order is apparently disproportionate. 52.At the hearing on 10 March 2025, Mr Lo handed up a Statement of Costs and asked for more than $18,000 from the other side. Upon further enquiry, Mr Lo confirmed that:
53.The figures speak louder than words. In my view, the plaintiff’s insistence on an indemnity costs order is clearly in contravention of the underlying objective as provided by Order 1A rule 1(c) of the Rules of the High Court (Cap.4A, Laws of Hong Kong): to promote a sense of reasonable proportion and procedural economy in the conduct of proceedings. 54.I regret to say that this is not the first time I have encountered totally unmeritorious application for indemnity costs, and it seems to me that there is a trend that parties (usually represented) would make such an application quite lightly without seriously considering whether that is appropriate or not. 55.I urge legal representatives to think through the matter carefully before suggesting that an indemnity costs order is appropriate. They should not simply “try their luck”. 56.Before I end this section, I should also record that Mr Lo agreed, upon reflection, that he should not have incurred time and costs on the demand for indemnity costs in the present case. As a result, he has given an undertaking not to charge the plaintiff for Ho & Ip’s 3 March Letter, Ho & Ip’s 5 March Letter and his court attendance on 10 March 2025, which is accepted. D4. Excused from attending hearings 57.From time to time, solicitors would write to the Court and ask to be excused from attending court hearings. For example, if the court hearing relates to an interlocutory application which concerns the plaintiff and a co-defendant (but somehow the summons has been served on a defendant who has no interest in the said interlocutory application), then it is usually advisable for the solicitors acting for such a defendant to ask to be excused, so that costs on attendance at the hearing would not be unnecessarily incurred. 58.However, if a party has an application to make at the hearing, then it is normally[1] not up to that party to put in a skeleton argument (or even a full written submission) and then asks to be excused from attending the hearing, for it goes without saying that the attendance of the legal representative would be necessary so that questions from the Bench may be answered at the hearing. 59.Hence, in the present case, when Ho & Ip has made an application for indemnity costs on behalf of their lay client, they are obliged to attend the hearing. It is inappropriate for them to ask the Court to read the arguments from the correspondence and ask to be excused “to save time and costs”. 60.I should also add this. From time to time, there are cases in which there are only 2 parties in an action, and the receiving end of an application would write to the Court, asking to be excused from attending the hearing, and stating that while it stays neutral to the application, it is up to the applicant to satisfy the Court that the order sought should be made. In my view, normally[2] this is not an appropriate way to deal with the matter. If the respondent has no objection to the application, he should liaise with the applicant on the terms of the consent summons so that the Court may consider whether to make the order and vacate the scheduled hearing. To raise no objection against an application but at the same time refusing to sign a consent summons may be considered unreasonable which may lead to adverse cost consequence. D5. Agreement for time extension 61.In relation to time summonses, normally the party who asks for the Court’s indulgence would be ordered to bear the costs of the other side. 62.It may be because of this usual practice that it is not uncommon, especially in Masters’ Court, to see that applications for extension of time (even for first extension) are met with objection, and the differences between the parties are sometimes whether, for example, the extension should be for 14 or 28 days. While it is of course the applicant’s burden to satisfy the Court that the period of extension sought is reasonable, if the respondent to the application is minded to object against the extension, he should be prepared to explain, in the above example, why the extension should be limited to 14 days and the importance of speeding up the whole matter by 2 weeks. A general assertion that there should be no delay in the matter, without more, is normally insufficient for this purpose. 63.While I should not be taken to mean that parties should be encouraged to ask for a longer as opposed to a shorter extension of time (or to apply for extension at all – after all, the time limit imposed by the Rules of the High Court and the like is supposed to be complied with, and extension of time should not be regarded as the norm), in my view, respondents to such applications (and those advising them) should bear in mind that they have to be reasonable when dealing with the matter. They should consider whether the respondent’s interest would really be prejudiced by the extension, by reference to, for example, the time left before the substantive hearing is heard. They should not object for the sake of objecting. In this regard, practitioners are reminded that the Court is required to further the underlying objectives of the Rules of the High Court by actively managing cases, and that includes, inter alia, encouraging parties to co-operate with each other in the conduct of the proceedings: Order 1A rule 4(2)(a) of the Rules of the High Court. 64.Respondents to time summonses should also not take it for granted that they would be awarded costs no matter what happens at the time summons hearing. It should be borne in mind that the Court has a wide and general discretion in matters relating to costs, and how the discretion ought to be exercised in any given case must depend on the facts and circumstances of the case: China Medical Technologies, Inc (in liquidation) v Wu Xiaodong [2024] HKCA 310, at [8]. If the receiving end of a time summons does not deal with the matter reasonably, it would be open to the Court to make no order as to costs, or even to award costs to the party which has successfully obtained the extension which he asked for. 65.Hence, practitioners are reminded that they have to be reasonable in the conduct of the case, including time summonses. Parties should not apply for extensions lightly, and if applied, the period of extension should be as short as possible. On the other hand, consent to requests for time should not be unreasonably withheld. 66.Having said all the above, it cannot be emphasised enough that the timetable set by the rules or by the Court is supposed to be complied with, all the more so in the case of time limit which has been extended already. Therefore, if an applicant has applied for and been granted a time extension, he is even more expected to comply with it, rather than having to come back to the Court again for another extension of time. E. ORDER 67.Parties had reached consensus (even before the Time Extension Summons is taken out) that the timetable for the 2nd to 4th defendants to file and serve their affirmation(s) in opposition to the Mareva Summons should align with that related to the 1st defendant, and that the extension should be granted on an unless order basis. 68.I therefore ordered that unless the 2nd to 4th defendants do file and serve their affirmation(s) in opposition by 4pm on 14 March 2025, they shall be debarred from doing so. F. COSTS 69.In the present application, while the 2nd to 4th defendants are asking for indulgence of the Court, it is apparent that if the plaintiff did not unreasonably insist on getting an indemnity costs order against them, the hearing on 10 March 2025 would have been vacated by consent. 70.On the other hand, I find that there was no reason why the 2nd to 4th defendants’ solicitors should not have asked for time extension at the Call-Over Hearing. Ms Hui explained that she informed the Court through counsel at the Call-Over Hearing that she had no instruction to ask for extension because she was not in a position to accept an unless order there and then. I do not accept this explanation, because she was simply not asked to agree to any unless order at the Call-Over Hearing. There was nothing to stop her from asking for a 28 days’ extension on a without unless order basis. This would be consistent with her instructions as reflected in her firm’s letter dated 25 February 2025. 71.Taking all these matters into account, I considered that the most appropriate costs order would be “No order as to costs”, which I had so ordered.
Mr K. Y. Lo of Ho & Ip, for the plaintiff Ms Becky Hui of Han Kun Law Offices LLP, for the defendants [1] A common exception is when the garnishee bank (which asks for a small amount of costs) asks to be excused from attending the garnishee proceedings. [2] It is accepted that there are well known exceptions in practice, for example, when an application is made against a bank for banker’s records pursuant to section 21 of the Evidence Ordinance (Cap.8, Laws of Hong Kong), Norwich Pharmacal order or gagging order. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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Further hearings and rulings under HCA 2397/2024