Cosimo Borrelli and Others v. Herbert Smith Freehills (A Firm)

HCMP 408/2025 &

HCMP 968/2025

(Heard Together)

[2026] HKCFI 2746

HCMP 408/2025

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 408 OF 2025

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AND

HCMP 968/2025

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 968 OF 2025

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(Heard Together)

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D E C I S I O N  O N  C O S T

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I.  INTRODUCTION

1.This Decision on Costs is upon the parties’ summonses to vary my costs orders nisi made in §88 of my Decision handed down on 27 February 2026 ([2026] HKCFI 1250) (the “Decision”).

II.  THE RECEIVERS/APPLICANTS’ SUMMONSES

2.The Receivers’ Summons filed on 13 March 2026 in HCMP 968/2025 for varying the costs order nisi to be that (a) the Receivers shall only pay 50% (instead of 100%) of the costs of CNG; (b) there shall be certificate for one (instead of two) counsel only; and (c) there shall be taxation (instead of summary assessment).

3.For (a), I do not agree that the Receivers shall pay only 50% of the costs on the ground that I found sufficient connection but refused the Recognition Application just because I found on the evidence I should not exercise my discretion. As I said in §36 of the Decision, it would be academic to entertain a recognition application simply to recognise the receivership upon sufficient connection. The application should be viewed as a whole. The sufficient connection did not result in any practical significance. In the circumstances, I think the Receivers shall pay all the costs of the Recognition Application.

4.For (b), given that the law in relation to recognition of foreign receivers was the first time considered in Hong Kong, the law in relation to the court’s supervisory jurisdiction over documents in solicitors’ possession was reasonably arguable, and the complexity of the factual matters involving a series of litigation in foreign courts, I think a certificate for two counsel is appropriate.

5.For (c), I should consider other summonses as well because the costs involved inevitably overlap and so it would be inefficient to order summary assessment for one part of the costs but taxation of the others. The amounts of costs involved in the two proceedings shown in the statements of costs are very substantial. Further, as the costs incurred by HSFK, being a solicitor party in HCMP 408/2025, were their own costs. Also, there may also be overlap between CNG and HSFK for the oral hearing against the Applicants and the Receivers alone. Overall, I agree that more detailed scrutiny is more appropriate to assess the costs. Thus, I agree that taxation instead of summary assessment should be ordered.

6.The Applicants’ Summons filed on 13 March 2026 in HCMP 408/2025 for varying the costs order nisi to be that (a) there shall be certificate for one (instead of two) counsel only; and (b) there shall be taxation (instead of summary assessment).

7.For the same reasons given above, I think a certificate for two counsel is appropriate and there shall be taxation instead of summary assessment.

III.  HSFK’S AND CNG’S SUMMONSES

8.All the HSFK’s and CNG ‘s summonses seek costs (including costs of the oral application for the Moran’s Affidavit) for taxation on an indemnity basis. The reasons can be summarised as follows:-

(1)  The Receivers/Applicants’ applications were in effect to circumvent the Arbitration Agreement.

(2)  The Court found the Receivers’ failure to make full and frank disclosure before the BVI Courts.

(3)  The Receivers did not give to HSFK and CNG being parties affected prior notice of their ex parte Directions Application in the BVI Court, despite lack of urgency in the matter.

(4)  The Receivers/Applicants only produced the Moran’s Affidavit on the second day of the two-day hearing.

(5)  Specifically to the costs of the SIL’s Delivery Up Application, indemnity costs is the usual taxation basis upon stay pursuant to an arbitration agreement.

(6)  Specifically to HSFK, HSFK submits that the Receivers should make the Recognition Application first, and only after the Hong Kong Court’s recognition of their locus to commence the Receivers’ Delivery Up Application should they then do so.

9.As an overview, while I dismissed the Receivers/Applicants’ applications, their applications cannot be said to be so unmeritorious or unreasonable, let alone any abuse of process.

(1)  As the BVI’s Court officers, the Receivers had properly to discharge their duties. Viewed against CNG’s persistent non-compliance (put mildly), and given that the law involved had not been applied and/or was reasonably arguable, their applications were not unreasonable.

(2)  As the SIL’s Delivery Up Application, the law in relation to court’s supervisory jurisdiction over documents in solicitors’ possession was reasonably arguable.

10.While I found that the applications were to circumvent the Arbitration Agreement, the basic question was whether there was any arguability in the basis for the circumvention. From the overview, I think there was.

11.For the Receivers’ failure to make full and frank disclosure as I found, the failure was a failure to discharge duties to the BVI Courts, not to the Hong Kong Court. Before me, all the matters were fully argued. Similarly, the failure to give notice of the Directions Hearing (if any), was a failure to discharge a duty to the BVI Court. All that said, such conduct was something I should consider.

12.As to the Receivers/Applicants’ production of the Moran’s Affidavit only on the second day of the hearing, I accept that such conduct points toward indemnity basis. Fundamentally, I need to point out that in relation to the costs of the oral application for the Moran’s Affidavit, I made a conscious decision not to provide any costs order nisi given the simplicity of this oral application alone. In any event, for their applications for indemnity basis, first, it would not be appropriate to order indemnity for the whole costs; second, I found that the Moran’s Affidavit actually assisted HSFK and CNG.

13.As regards the usual indemnity costs upon stay pursuant to an arbitration agreement, I think from the overview above, it was not a straightforward application for the stay, involving the law in relation to the court’s supervisory jurisdiction over the documents in solicitors’ possession which was reasonably arguable.

14.As regards HSFK’s submissions that the Receivers should obtain the recognition order before commencing the Receivers’ Delivery Up Application, I think there was justification to have the two applications made and heard together. As I said in the Decision, before the Court would give recognition, the Court would have to know what was the purpose of the recognition so that the Court could properly frame the powers to be given to the receivers upon the recognition. To do that, in the present context, the Receivers’ Delivery Up Application would inform the Court in relation to, and in my view, be part and parcel of, the Recognition Application. I should not be understood as pronouncing any law or procedure such that a recognition application must be made or heard together with the substantive application, although it seems that in general this would be desirable. Each case depends on its own facts, but at least in the present case, I do not think the Receivers were unreasonable and could be faulted.

15.Having considered all the above, I am not satisfied that I should order indemnity taxation.

IV.  CONCLUSION

16.In conclusion, I make the following costs orders:-

(1)  In HCMP 968/2025, the Receivers shall pay the costs (including all costs reserved and the costs of the intervening application, the applications for filing further affirmations and the substitution application I dealt with at the outset of the hearing upon the parties’ consent) to CNG with certificate for two counsel, to be taxed if not agreed;

(2)  In HCMP 968/2025, the Receivers shall pay the costs (including all costs reserved and the costs of the substitution application) to HSFK with certificate for two counsel, to be taxed if not agreed;

(3)  In HCMP 408/2025, the Applicants shall pay the costs (including all costs reserved and the costs of the substitution application I dealt with at the outset of the hearing upon the parties’ consent) to HSFK with certificate for two counsel, to be taxed if not agreed;

(4)  The Receivers/Applicants’ summonses in both proceedings have thus allowed to the extent of the above, and by a broad-brush approach, I think the Receivers/ Applicants should have 70% of the costs of the Summonses to reflect their failure to vary the certificate for counsel to one counsel.

(5)  The HSFK’s Summonses in both proceedings and CNG’s Summons for varying costs orders nisi be dismissed with costs to the Receivers/Applicants.

(6)  In my view, the arguments made in respect of all these summonses go significantly to the merits of the applications, and the proper way is to order taxation rather than summary assessment.

Mr Charles Manzoni SC, Mr Abraham Chan SC and Mr James Wood, instructed by Kwok Yih & Chan, for the 1^st to 3^rd Plaintiffs in HCMP 408/2025 and the 1^st and 2^nd Applicants in HCMP 968/2025

Herbert Smith Freehills Kramer, for the Defendant in HCMP 408/2025

Howse Williams, for the Intervener in HCMP 968/2025