Peking University Founder Group Company Limited (北大方正集團有限公司) v. Nuoxi Capital Limited (諾熙資本有限公司) (in Liquidation in the British Virgin Islands)
Read the full judgment text of FACV 8/2024 on BabelCite. This FACV judgment was delivered on 23 June 2025 before Chief Justice Cheung, Mr Justice Ribeiro PJ, Mr Justice Fok PJ, Mr Justice Lam PJ, Mr Justice Allsop NPJ.
Civil procedure – costs – costs follow the event – certificate for counsel – Keepwell Deeds – cross-border insolvency – transferred loss – Court of Final Appeal – variation of costs order nisi – Whether costs should follow the event at each level of court where appellant succeeded on appeal and respondents' claims were held to sound only in nominal damages – Whether certificate for four counsel justified in highly exceptional case involving sums exceeding US$1.7 billion, first consideration of Keepwell Deeds, cross-border insolvency issues, causation, net loss, and doctrine of transferred loss – Respondents' contention that they succeeded on primary issue of breach before Court of Appeal rejected – Respondents' characterisation of proceedings as merely declaratory and for benefit of creditors rejected – Costs ordered to follow the event at all levels – Certificate for four counsel granted for Court of Appeal and Court of Final Appeal proceedings – Certificate for three counsel restored at first instance – Respondents to pay costs of costs application.
Legal issues: Costs allocation at each level of court following successful appeals · Certificate for four counsel
Outcome: Costs order nisi varied in favour of PUFG. The Respondents must pay PUFG's costs at all levels of court, with a certificate for four counsel for the Court of Appeal and Court of Final Appeal proceedings.
Cites 10 cases
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FACV No. 7 of 2024, [2025] HKCFA 14 FACV No. 7 of 2024 IN THE COURT OF FINAL APPEAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION FINAL APPEAL NO. 7 OF 2024 (CIVIL) (ON APPEAL FROM CACV NO. 184 OF 2023) ________________________ BETWEEN
________________________ FACV No. 8 of 2024 IN THE COURT OF FINAL APPEAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION FINAL APPEAL NO. 8 OF 2024 (CIVIL) (ON APPEAL FROM CACV NO. 185 OF 2023) ________________________ BETWEEN
________________________ FACV No. 9 of 2024 IN THE COURT OF FINAL APPEAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION FINAL APPEAL NO. 9 OF 2024 (CIVIL) (ON APPEAL FROM CACV NO. 186 OF 2023) ________________________ BETWEEN
________________________ (Heard together)
________________________ JUDGMENT ON COSTS ________________________ Mr Justice Ribeiro PJ: 1.This is the judgment of the Court. Allowing the appeals, the Court made a costs order nisi in favour of Peking University Founder Group Company Limited (“PUFG”) and gave the parties liberty to make submissions seeking to vary the same.[1] PUFG and the Respondents[2] have each lodged such submissions. A. The costs orders made 2.Those submissions are made against the background of the following orders:
B. The issues raised by the parties 3.The variations sought by PUFG are straightforward. It seeks an order that the costs payable by the Respondents to PUFG be certified fit for four counsel or alternatively, for three counsel comprising two leading counsel and one junior. It also seeks restoration of Harris J’s order that the Respondents pay PUFG’s costs at first instance, with a certificate for three counsel. 4.The Respondents join issue with PUFG’s proposals, both as to the number of counsel to be certified and, more basically, as to how costs at each level of court should be awarded. It is convenient to begin with the latter issues. C. Costs at each level of court 5.The Respondents seek variations to the Court’s order nisi as it applies at each level of court.
6.These are somewhat startling submissions given that PUFG succeeded on its appeals. They rest on the propositions (i) that the critical issue in the case was whether or not PUFG was in breach of the Keepwell Deeds; and (ii) that Harris J had erred in holding that there was no breach, but he had been corrected by the Court of Appeal and the existence of a breach was sustained by this Court.[7] The Respondents submit that accordingly, they had succeeded “on the primary issue of breach before the Court of Appeal” and that PUFG “ultimately succeeded in the Court of Final Appeal only on the consequences of that breach”.[8] Moreover, they assert “that the present cases do not concern monetary remedies but declaratory reliefs”.[9] They go so far as to suggest that: “The present appeals are unique in the sense that the Respondents do not litigate for their self-interests, but they seek declaratory reliefs in the context of the reorganisation proceedings in Mainland China for the benefit of their creditors, including in particular the bondholders.”[10] D. Costs to follow the event 7.The Respondents propositions are unsustainable. It is wholly unreal to suggest that their Actions are only about establishing breaches of the Keepwell Deeds and not about the consequences – not about monetary remedies. The Respondents sought and obtained from the Court of Appeal declarations that PUFG was in breach and consequently became liable to them in amounts exceeding US$1.7 billion. As they explained to the Court of Appeal,[11] they sought relief in the form of declarations “as evidence to prove their claims in the reorganisation proceedings to which PUFG is subject in the Mainland”. In their Notice of Appeal to the Court of Appeal, they pleaded that the sums in question represented loss they had suffered.[12] The objective of their Actions was obviously not achieved when this Court declared that there was a breach which sounded only in nominal damages. 8.Neither can it plausibly be contended that the Respondents were not acting in their own interests, but were acting for the benefit of their creditors, particularly the bondholders. The immediate reason for the failure of the Respondents’ claim is that breach of the liquidity obligation under the Keepwell Deeds did not result in any net loss to the Respondents since it entailed the replacement of one debt liability for another. But a deeper underlying reason for such failure, as Mr Justice Allsop NPJ points out, lay in the capacity in which the Respondents brought proceedings against PUFG as compared, for instance, to possible action by the Trustee suing on behalf of the bondholders. Their capacity as mere “creatures or vehicles” of the borrowing Company entailed the absence of actionable loss that was at the core of the case. 9.As Allsop NPJ puts it:
10.Our view is that costs should follow the event. The Respondents must pay PUFG’s costs in the Court of Appeal and in this Court. The Court of Appeal’s order having been set aside, Harris J’s order requiring the Respondents to pay PUFG the costs in the Court of First Instance should be restored. E. Certificate for counsel 11.The parties were represented by equal numbers of counsel at each stage. At first instance PUFG and the Respondents were, respectively, represented by three counsel – one Senior Counsel and two juniors. And in the Court of Appeal and in this Court, they were represented by four counsel on either side: two leading counsel (one local and one from London) and two juniors. 12.There is no dispute that the orders for costs made in favour of PUFG should be certified as fit for three counsel at all levels of court. The controversy concerns PUFG’s application for a certificate for four counsel or alternatively, for three counsel comprising two leading counsel and one junior. The Respondents argue that no basis exists for certifying more than three counsel, comprising one silk and two juniors. 13.The practice in the Court of Final Appeal regarding certificates for counsel is well-established.
14.There have been cases where certificates for four counsel have been granted.[18] But they are rare and inevitably turn on evaluative judgments peculiar to the case at hand. 15.PUFG seeks approval for four counsel on two related grounds. First, it argues that this is a case involving issues of sufficient importance and complexity, pointing to the sums exceeding in total US$1.7 billion at issue; the fact that this was the first case involving consideration of the nature and effect of Keepwell Deeds; issues raised by a cross-border insolvency and important legal issues concerning causation and net loss as well as the doctrine of transferred loss. 16.Secondly, it points to the Respondents having sought repeatedly, at each stage of the proceedings, to introduce numerous points that were unpleaded and inconsistent, or new and not relied on in the Court below, adding to the complexity and burdens on PUFG’s legal team in preparing for and arguing the case. 17.In reply, the Respondents rely on the fact that in the Court of Appeal, both sides employed four counsel but that they did not cavil at being granted a certificate for three counsel. They also argue that leave to appeal related only to a single question of law, showing that the case lacks complexity. Lastly, they suggest that engaging London counsel was “to a large extent ... pursuant to the aim of cross-fertilisation” for the benefit of the Hong Kong Bar, the cost of which ought not to be visited on the Respondents. 18.We are unable to accept the Respondents’ aforesaid arguments. It is unsurprising that the Respondents had to be content with a certificate for three counsel in the Court of Appeal since they were there only awarded 50% of their costs. While leave to appeal was given only in respect of one question of law, the issues referred to in PUFG’s submissions above indicate the range of important and complex issues which had to be argued and resolved. The last argument mentioned above does not deserve to be taken seriously. Engagement of London leading counsel was hardly “to a large extent pursuant to the aim of cross-fertilisation”. 19.We see the force of PUFG’s above-mentioned submissions. The issues identified were, in our view, of the requisite importance and complexity, compounded by the Respondents’ repeated attempts to augment or change their case with unpleaded and inconsistent points, as well as points raised on appeal for the first time. It was reasonable for both sides to retain on their team the leaders and juniors who were familiar with the earlier course of the proceedings, particularly, from the point of view of PUFG, given the propensity of the Respondents to seek to widen and change their case. In our view, this is a highly exceptional case which justifies a certificate for four counsel and we vary our order accordingly. 20.Additionally, we accede to PUFG’s request for an order that the costs of the present application be paid by the Respondents to PUFG, certified fit for three counsel. 21.In summary, we make the following costs orders, namely that:
Written submission by Mr José-Antonio Maurellet SC, Mr Tom Ng and Ms Jasmine Cheung, instructed by Freshfields, for the Appellant Written submission by Mr William Wong SC, Mr Look Chan Ho and Mr Tommy Cheung, instructed by Howse Williams, for the Respondents [1] [2025] HKCFA 6 at §119. [2] Comprising Nuoxi Capital Limited (“Nuoxi”); Kunzhi Limited (“Kunzhi”); and HongKong JHC Co Limited (“HKJHC”) (referred to here collectively as “the Respondents” at all stages of the proceedings). Founder Information (Hong Kong) Limited, a plaintiff at first instance, was not involved either in the Court of Appeal or before this Court. [3] [2023] HKCFI 1350 at §95. [4] [2024] HKCA 445 at §§222-226. [5] [2025] HKCFA 6 at §119. [6] Respondents’ submissions at §11. [7] Ibid at §§6(1), 7 and 8(1). [8] Ibid at §7. [9] Ibid at §9. [10] Ibid at §13(1). [11] CA at §46. [12] CA at §113. [13] CFA at §§103-104. [14] Secretary for Justice v Tam Kit-I [2023] HKCFA 24 at §9(1); HKSAR v Chan Kam Ching (No 2) (2022) 25 HKCFAR 181 at §§20-21. [15] Tsit Wing (Hong Kong) Co Ltd v TWG Tea Co Pte Ltd (No 3)(2016) 19 HKCFAR 142 at §2; citing Moral Luck Finance Ltd v Law Kin Leung (FACV 5-6/2015, 11 September 2015) and HKSAR v Pang Hung Fai (No 2) (2015) 18 HKCFAR 1. [16] Lui Ming Lok v Ng Im Fong Loretta [2024] HKCFA 27 at §12. [17] Nina Kung v Wang Din Shin (No 2) (2006) 9 HKCFAR 800 at §66. [18] Cases cited by PUFG include Vallejos v Commissioner of Registration (FACV 19/2012, 16 July 2013) at §8; Mariner International Hotels Ltd v Atlas Ltd (2007) 10 HKCFAR 246 at §20. |
Cases cited in this judgment