Hong Jing Co Ltd v. Zhuhai Kwok Yuen Investment Co Ltd

CACV 63/2011 and
CACV 254/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NOS. 63 & 254 OF 2011

(On Appeal from HCA 156/2006)

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BETWEEN

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Before : Hon Cheung, Yuen and Chu JJA in Court

Date of plaintiff’s written submissions : 31 July 2012

Date of defendant’s written submissions : 31 July 2012

Date of Determination : 19 September 2012

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DETERMINATION ON COSTS

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Hon Cheung JA (giving Determination of the Court on Costs):

1.CACV 63/2011

1.  Although the defendant succeeded in setting aside the 1^st judgment which determined liability in favour of the plaintiff, a retrial is still required on the double dealing issue and change of stance issue, and this Court determined the following issues in favour of the plaintiff:

(1)   The defendant owed a duty to the plaintiff to use its best or at least reasonable endeavours in good faith (‘the fundamental obligation’).

(2)   The defendant was a fiduciary of the plaintiff and it would be in breach of its fiduciary duty if it did not make best or at least reasonable efforts in good faith to approach BOCGI to reach an agreement, or if it negotiated with third parties behind the plaintiff’s back.

(3)   Asset proof was not a condition precedent to the performance of the defendant’s obligations.

(4)   The defendant had accepted that the Asset Proof furnished by the plaintiff was adequate.

(5)   The defendant had breached the fundamental obligation by reason of its delay in not proceeding with the negotiations with BOCGI expeditiously.

(6)   If there were a change of stance, the defendant would be in breach of Clause 7.2 of P’s MOU if it did not inform the plaintiff.

(7)   The plaintiff did not waive the defendant’s breach by taking part in the tender/auction.

(8)   The defendant had failed to plead that the plaintiff ought to have mitigated by submitting a proper tender and the Plaintiff’s duty to mitigate did not arise in any event.

(9)   Hong Kong law was the proper law of P’s MOU.

(10)  In the event Mainland law applies, the tender was invalid by reason of its being in contravention of the Tender Law and the Guangdong Regulations.

2.In respect of the appeal against the striking out order and the Judge’s order on expert report, the defendant failed in the appeal.

3.In our view the defendant is entitled to 35% of the costs of the appeal in CACV 63/2011 with certificate for three counsel.  We make no other order in respect of costs.

2) CACV 254/2011

4.In respect of CACV 254/2011, the defendant succeeded in setting aside the directions given by Yam J.  With the exception of the issue of the plaintiff’s chance, the substantial issues were decided in the defendant’s favour.  The defendant is entitled to have 80% of the costs of CACV 254/2011 with certificate for three counsel.  We make no other order in respect of costs.

Costs of the proceedings in the Court of First Instance leading to the 1^st judgment

5.Since this Court upheld a substantial part of the 1^st judgment, the plaintiff is entitled to 65% of the costs and the remaining 35% is to be in the cause of the retrial with certificate for three counsel. 

Costs of the proceedings in the Court of First Instance leading to the 2^nd judgment

6.The defendant is entitled to the costs of the proceedings in the Court of First Instance leading to the 2^nd judgment with certificate for two counsel.

Mr Denis Chang SC, Ms Gekko Lan and Mr Newman Lam, instructed by Dominic Y.K. Lai & Co., for the plaintiff

Mr Benjamin Yu SC, Mr Paul Shieh SC and Mr Liu Man Kin, instructed by Paul Hastings, for the defendant