Lim Yew Cheng (Suing in a Personal Capacity and Derivatively on behalf of Himself As a Shareholder of Kenora Corporation Ltd) and Others v. Cosimo Borrelli and Others

HCA 1976/2023

[2026] HKCFI 5937

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1976 OF 2023

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D E C I S I O N

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1.On 25 August 2026, I made an order, inter alia, that security be provided by the Plaintiffs for the costs of the 3^rd, 4^th and 7^th Defendants in the sum of HK$14.5 million within 28 days (“the Order”), failing which the Plaintiffs’ action against these defendants would be dismissed without further order: [2026] HKCFI 4937.  The deadline for the provision of security fell on 22 September 2026.

2.On 21 September 2026, the Plaintiffs took out an application for relief from sanction for non-compliance with the order for the provision of security, for time extension, and for the action to be reinstated.  This is the substantive hearing of that application as against the 3^rd, 4^th and 7^th Defendants.  A consent order has already been made in relation to the Plaintiffs’ application as against the 1^st and 2^nd Defendants.

3.RHC O.2 r.5 provides that the court must consider all the circumstances in an application for relief from sanction imposed for a failure to comply with a court order.  The circumstances include the interests of the administration of justice, and whether there is a good explanation for the failure to comply. 

4.The 1^st Plaintiff has filed two affirmations in support of the Plaintiffs’ application.  In short, he explained that the Plaintiffs as businessmen do not keep large amount of idle cash, that their cash position has been severely strained by several years of litigation, and that they did not have sufficient liquid assets to satisfy the payment of the total security as at 22 September 2026.  The 1^st Plaintiff stated that after the Order was made on 25 August 2026, he urgently took steps to raise funds in order to meet the payment obligation for the security for costs.  Evidence was adduced to show that a convertible loan agreement was executed on 19 September 2026 for a loan up to US$13 million to be advanced to the 1^st and 2^nd Plaintiffs.  On 5 October 2026, the requisite funds arrived at the account of the Plaintiffs’ solicitors, who sought to pay the money into court on the same day.  However, the Accounts Office of the Judiciary declined to accept payment without the court’s leave, as the time had expired.

5.At the substantive hearing on 25 August 2026, no evidence was adduced by the Plaintiffs to suggest why they would need a longer period of 56 days for the payment of security to be made, and this was why I only gave the Plaintiffs 28 days to comply: Decision [2026] HKCFI 4937 at [16(4)], [18(3)].  The Plaintiffs have now adduced evidence to say that urgent steps were only taken to raise funds after the Order was made on 25 August 2026.  However, no explanations have been provided as to why they did not seek to raise the funds earlier.  In these circumstances, I do not believe the Plaintiffs have provided a good explanation for the failure to comply with the Order. 

6.Notwithstanding the lack of good explanation for the failure to comply, it is my view that it would be disproportional to refuse the grant of sanction from relief given that the delay in complying is relatively short (i.e. 13 days), and the failure cannot be said to be intentional. 

7.Accordingly, I grant the reliefs sought by the Plaintiffs.  The orders I make are as follows.

(1)  Relief from sanction imposed in paragraph 5 of the Order for non-compliance with paragraph 4 of the Order be granted to the Plaintiffs

(2)  The time for the Plaintiffs to comply with paragraph 4 of the Order be extended for 5 days from today’s date.

(3)  The action against the 3^rd, 4^th and 7^th Defendants be reinstated.

8.I will now hear the parties on costs.

[Submissions on Costs]

9.The Plaintiffs are seeking the court’s indulgence and have not in my view given a good explanation for the failure to comply.  In these circumstances, I think it is right to order the Plaintiffs to bear the costs of this application, including those of the hearing.  However, I do not think the 3^rd, 4^th and 7^th Defendants are entitled to all of them.

10.Before coming to court today, the 3^rd, 4^th and 7^th Defendants have, in my view, taken certain steps which went beyond making the point that the Plaintiffs have failed to provide a good explanation for the failure to comply with the Order.  These include the filing of the affirmation of Ms Leung on 12 October 2026, which contained mostly submissions and unnecessary references to correspondence.  Further, some of the points taken by the 3^rd, 4^th and 7^th Defendants also went beyond saying that the Plaintiffs have not provided a good explanation for failing to comply with the Order. 

11.Accordingly, I order that 50% the costs of and occasioned by the Plaintiffs’ summons dated 21 September 2026 be paid by the Plaintiffs to the 3^rd, 4^th and 7^th Defendants to be summarily assessed.

[Submissions on summary assessment]

12.Taking a broad-brush approach, I summarily assess the 3^rd, 4^th and 7^th Defendants’ costs at HK$95,000.

Mr Thomas Wong and Mr John CK Chan, instructed by Anthony Siu & Co., for the 1^st to 3^rd Plaintiffs

Mr Bernard Lam, instructed by King & Wood, for the 3^rd, 4^th and 7^th Defendants