Galmare Investment Ltd v. Leung Chung Ping and Others

HCA 1905/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1905 OF 2001

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BETWEEN

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Coram : Mr. Registrar C. Chan in Chambers

Date of Hearing : 31 March 2006

Date of Decision : 19 May 2006

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D E C I S I O N

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1.This is one of the cases where I try to decide an interlocutory application on paper without a hearing.  The intention is to deal with the matter expeditiously without waiting to fix a date for hearing.  The parties have agreed to such an arrangement.

2.The Plaintiff’s application to amend the Statement of Claim and to join in Madam Leung Miu King as the 4^th Defendant together with other consequential reliefs came before me in the 3-minute list on 31 March 2006.  Mr. Green for the 1^st and 2^nd Defendants had no objection to the granting of those reliefs sought but he asked for (i) costs incurred and thrown away by the joinder and amendment, and also (ii) the costs occasioned by the amendment to be paid by the Plaintiff to the 1^st and 2^nd Defendants.

3.The Plaintiff objected to such proposal and suggested that costs should be reserved for the trial judge to deal with after trial of the case.  Alternatively, the costs be in the cause.

4.The Plaintiff’s main argument is that the Plaintiff prosecutes and conducts the case as a minority shareholder.  The action taken by the Plaintiff is a derivative action.  In case where the Plaintiff can demonstrate that there are sufficient reasons to institute the action even if it fails at the end, very likely the Plaintiff may not be ordered to bear the costs of this action (Wallersteiner v Moir (No. 2) [1975] Q.B. 375 per Lord Denning at 389A-H, 390A-H and 391A-F).

5.I accept such argument on condition that the Plaintiff has properly and diligently conducted the proceedings.  In this case, the Plaintiff argues that it has good reason for causing the amendments at this late stage.  “It is only after 16 January 2006 that the Plaintiff can confirm (i) there will be no surprised documents from the 1^st and 2^nd Defendants; (ii) the amendments in the Re-amended Statement of Claim; and (iii) the necessity to join the 4^th Defendant.”

6.The Plaintiff does not attempt to explain why the amendments in the Re-amended Statement of Claim and the necessity to join the 4^th Defendant can only take place after 16 January 2006.

7.I have considered the amendments, in particular paragraph 46A to 46P which form the main parts of this amendment exercise.  I am of the view that the Plaintiff knew or ought to have known at beginning of this action the basic material facts relating to the allegation that the transaction was not conducted at arm’s length.  The Plaintiff could have formulated the allegation with the basic facts at the outset.  I do not know why the Plaintiff did not make the amendment earlier.  I do not think that the delay is reasonable.

8.It is not a case where the Plaintiff is not aware of such cause of action or the alleged wrongdoings of the 4^th Defendant until discovery has been completed.  If it is such a case, costs of the amendment as well as costs thrown away should be costs in the cause.  But, this is not such a case.

9.I order that (a) the costs incurred and thrown away by the joinder and amendment and (b) the costs occasioned by the amendment be paid by the Plaintiff to the 1^st and 2^nd Defendants in any event.

10.Under Order 42 rule 5B(6) I make an order nisi as to costs relating to the various submissions on costs:

(a)	The Plaintiff shall pay the 1st and 2nd Defendants the said costs relating to the various submissions and I assess it in the sum of $8,000.00.
(b)	This order shall become absolute 14 days after the date of this decision unless application in writing has been made to vary this order within the said 14 days.

Mr. B. Lee of Messrs. Peter K.S. Chan & Co., Solicitors for the Plaintiff.

Mr. Green of Messrs. Richards Butler, Solicitors for the 1^st, 2^nd and 4^th Defendants.

Messrs. Herbert Smith, Solicitors for the 3^rd Defendant, being absent.