Xinyuan Real Estate, Ltd. (Suing on behalf of Itself and All Other Shareholders of Xinyuan Property Management Service (Cayman) Ltd. Except the 1st To 8th Defendants) v. Shen Yuan Ching and Others

HCA 753/2026

[2026] HKCFI 5786

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 753 OF 2026

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BETWEEN

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DECISION ON COSTS

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I. INTRODUCTION

1.This is the determination of costs on the Plaintiff’s Summons filed on 11 May 2026 (the “Summons”) for interlocutory injunction. At the hearing on 15 May 2026, I refused to grant any interim-interim injunction, and gave directions for filing evidence. After the Defendants filed their opposing evidence, the Plaintiff notified the Defendants of its decision to withdraw the Summons.

2.The Plaintiff does not dispute that it has to pay the costs of the Summons. What is in dispute is:-

(1) The basis of taxation: The Defendants seek indemnity basis, while the Plaintiff submits that it should be party-and-party basis;

(2) Certificate for counsel: The 1^st and 4^th Defendants and the 9^th Defendant (the “Company”) seek certificate for two counsel, while the Plaintiff submits that certificate for only one counsel should be granted.

3.I have considered the detailed written submissions made by the parties. It is not necessary for me to rehearse them here. I only need to set out the core reasons for my decision on costs.

II. ANALYSIS

4.The starting point is that the Plaintiff lacked locus to commence the present proceedings. It was not a registered member of the Company and thus has no locus to commence the present action under sections 728-730 of the Companies Ordinance (Cap. 622). Although such defect may be cured by the time of the substantive hearing, it did not adduce any evidence that it would be prepared to do so or it would be doing so. The Plaintiff also lacked locus to commence any derivative action in the present proceedings. There is no evidence to explain why the Company itself could not commence the action in relation to the alleged wrongdoings.

5.While in determining costs, I should not go into the details of the merits, I am entitled to consider the merits in a broadbrush manner. The terms sought in the Summons, in my view, were too broad. It is not specific to any act that may be said to be harmful to the Company, but a broad injunction restraining the Defendant directors (that is, the 1^st to 8^th Defendants) from acting as Defendant directors, while there was no concrete evidence of any threat of harm by the Defendant directors.

6.In my view, in the circumstances, it is appropriate to take indemnity costs as a starting point.

7.I say it is a starting point only because the following events, in my view, militate against an indemnity costs order:-

(1) On 18 June 2026, the Plaintiff’s then solicitors informed the Defendants that they were applying to cease to act due to failure to receive instructions from the Plaintiff; and

(2) The reconstitution of the board on 26 June 2026 removed the Defendant directors from the board of the Company, rendering the Summons unnecessary.

8.In my view, even in the absence of any express indication that the Plaintiff would no longer pursue the Summons, the Defendants, acting reasonably, would have reasonable ground to believe that, and insofar as there is any suggestion that the Defendants would still have to comply with my directions to prepare opposing evidence, the Defendants could have applied for time extension explaining to the Court the circumstances including the events set out in §7 above, rather than blindly complying with the directions without regard to these events.

9.Therefore, I think there should be indemnity costs until 26 June 2026 (exclusive), and party-and-party basis from 26 June 2026 (inclusive) onwards.

10.In the light of the urgent manner the Plaintiff pursued the Summons, I think two counsel were justified. Therefore, I grant certificate for two counsel.

11.The Plaintiff submits that taxation instead of summary assessment should be ordered. I disagree. The starting point is that summary assessment should be ordered for interlocutory application. I see no circumstances here to depart from this.

12.Finally, in their counsel’s written submissions, the 1^st and 4^th Defendants and the Company also seek costs of the Action. However, when I made directions for the paper disposal, they were for the costs of the Summons only and there was no one suggesting that costs of the Action should also be dealt with. In the absence of a proper application, I do not think it appropriate to deal with the costs of the Action here.

III. CONCLUSION

13.In conclusion, I make the following order:-

(1) The Plaintiff shall pay costs of the Summons to the Defendants:-

(a) On indemnity basis until 26 June 2026 (exclusive); and

(b) On party-and-party basis from 26 June 2026 (inclusive) onwards.

(2) There shall be certificate for two counsel for the 1^st and 4^th Defendants and the Company.

(3) There shall be summary assessment of the costs. The receiving parties shall, within 7 days from today, lodge and serve statements of costs of those until 26 June 2026 (exclusive) and those from 26 June 2026 (inclusive) onwards, and the paying party shall lodge and serve lists of objections within 14 days thereafter.

14.For the costs of the arguments before me, taking a broadbrush approach, I think it should be part of the costs of the Summons on party-and-party basis. In preparing the statements of costs, the costs of the arguments before me should be properly reflected accordingly.

Ms Karman Wan, instructed by Chan King Wong and Co., for the Plaintiff

Mr Roger Phang, instructed by Clifford Chance, for the 1^st, 4^th and 9^th Defendants

Mr Kwan Ping Kan, instructed by Han Kun Law Offices LLP, for the 2^nd, 3^rd, 5^th to 8^th Defendants