Create Together Technology Co., Ltd v. Welltec Industrial Equipment Ltd

HCA 659/2024

[2025] HKCFI 2450

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 659 OF 2024

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DECISION ON COSTS

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1.This matter first came before me on 16 September 2024 (“the September 2024 Hearing”). By judgment dated 6 November 2024, I continued an Injunction Order on a proprietary basis that had been made against the Defendant in this matter, but declined the continuation of a Mareva injunction on the basis that the Plaintiff had failed to demonstrate a good arguable case ([2024] HKCFI 2819, “the November Decision”).

2.This decision on costs is to be read together with the November Decision, and the abbreviations and nomenclature therein are adopted herewith.

3.In parallel to the hearing in September 2024, the Defendant’s application dated 18 April 2024 for variation of the Injunction Order was ongoing (“the Variation Application”). It had initially been heard on 8 July 2024 before Recorder William Wong SC.

4.At that hearing, the learned Recorder had remarked inter alia that (i) the Defendant had in fact received the US$3.45 million despite there being no contract and/or business relationship with the Plaintiff; (ii) there was little evidence supporting the Defendant’s suggestion that it had recurring expenses; and (iii), it failed to make full and frank disclosure of its financial condition. At that hearing, the Defendant’s counsel sought leave to file further evidence to address the concerns raised, which was granted. The learned Recorder ordered costs of the hearing be to the Plaintiff.

5.Despite leave having been given to the Defendant to file further evidence, no such evidence was ultimately filed. Correspondence was exchanged between the parties following the November Decision, after which the Defendant indicated that there was no need to proceed with its variation application.

6.By the November Decision, I had made a costs order nisi that the Plaintiff was to have its costs in any event, with a 20% discount on the basis that it had failed to progress the case on the Mareva limb.

7.In its 32-page 107 paragraph submission on costs, the Plaintiff now seeks orders that:

a.  The Defendant bear the costs of and incidental to the Variation Application, to be summarily assessed; and

b.  The costs awarded to the Plaintiff for the hearing on 8 July 2024 be summarily assessed.

8.The Plaintiff’s argument, distilled to its key elements, is that:

a.  The general rule is that a party withdrawing should pay the other’s costs (HKCP 2025, §21/6/1).

b.  In order to vary an injunction involving proprietary claims to pay legal expenses, the Defendant must demonstrate with full and frank evidence that there are no other available assets, and if not so, then the court will look at the potential injustice to the Defendant of depriving it of legal assistance to defend. In so doing, it will examine all relevant circumstances, and in particular, will weigh the relative strength of the claim against the defence. (HKCP 2025, §29/1/35; also citing Gee on Commercial Injunctions, 7^th ed., §21-048).

9.The Defendant, on the other hand, puts forward the position that:

a.  The Variation Application was only necessitated by the Mareva injunction. Since the Mareva was not continued, the variation became redundant. It therefore says that the Plaintiff should pay the costs of the Variation Application.

b.  Whilst the principle normally is that costs follow the event, there should not be a usual order insofar as interlocutory applications are concerned. There are a multitude of factors that may be taken into account, including the conduct of all parties, whether a party has succeeded on part of his case, etc. The categories are not closed. (HKCP 2025, §62/3/6).

c.  Insofar as conduct, the Court may take into account inter alia whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue; the manner in which it has been done; whether there was any exaggeration of the claim; and conduct before and during the proceedings. This includes whether such conduct has been reasonable, and/or whether there have been any improper allegations of fraud (O.62, r.5(2), RHC; HKCP 2025 §62/5/7; Lam Wai Lik Eric v Tam Suet Mui [2024] 2 HKC 438 at §11). The Court may elect to look at merits in this exercise as well if it deems it appropriate (Mendlowitz & Associates Inc v Winner International Group Ltd, HCA 574/2009, unreported judgment dated 14 May 2010 at §30).

10.I agree with the Plaintiff. I do not put much stock in the Defendant’s position. In particular:

a.  There were issues with the original application which had been remarked upon by Recorder Wong SC, and which had not been remedied subsequently.

b.  Whilst it is true that the Plaintiff had not successfully maintained the Mareva limb of the injunction, this does not negate the fact that the Defendant’s Variation Application had little evidence demonstrating its position regarding recurring expenses. As I had already remarked upon in the November Decision, despite there having been ancillary disclosure orders made, the evidence regarding the Defendant’s finances remained incomplete and deficient.

c.  It is insufficient for the Defendant to point to any potential deficiencies in the Plaintiff’s case in this regard. The focus in the first place, given it is their Variation Application to carry, is on the sufficiency of the evidence and points in support of their own position.

11.As such, I agree with the Plaintiff that the Defendant should bear the costs of and incidental to the Variation Application, and accordingly make such order.

12.I agree that both sets of costs should be summarily assessed. Having reviewed the submissions by both parties:

a.  The costs of the hearing on 8 July 2024 are summarily assessed at $58,000.

b.  The costs of and incidental to the Variation Application (excluding the 8 July 2024 hearing) are summarily assessed at $150,000.

Mr Chan Yip Hei, instructed by Ivan Tang & Co, for the plaintiff

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