Read the full judgment text of CACV 000139/1995 on BabelCite. This Court of Appeal judgment was delivered on 13 December 1995 before Litton, V-P, Bokhary JA, Godfrey JA.
Civil law – wasted costs – solicitors' personal liability under Order 62 rule 8(1)(c) Rules of the Supreme Court – costs 'wasted by ... misconduct or default' on part of solicitor – ex parte application for Mareva injunction to freeze US$10 million of assets of Beijing-based defendant – plaintiff a BVI 'special-purpose company' with no assets, described in affirmation as a reputable and financially sound merchant bank under the control of a subsidiary of a publicly-listed company – affirmation deliberately tailored to give a false impression of the applicant's standing – no fortification of the undertaking as to damages sought or given – action discontinued less than one month after writ issued, with no explanation – Mareva injunction discharged approximately three weeks after it was granted – Held (Court of Appeal): in conducting litigation a solicitor's duty is not confined to the interests of his own client; as an officer of the court he has a wider duty; on an ex parte application for relief in an extreme form such as a Mareva injunction, the court necessarily relies upon the integrity and good sense of the solicitor responsible, and the solicitor bears an overriding duty to the court to assist the judge so as to ensure that no injustice is perpetrated against the absent party – the trial judge was correct to find that the costs incurred by the defendant from the time its solicitors were instructed to the discharge of the Mareva injunction were wasted costs within O.62 r.8(1) and that the solicitors were guilty of misconduct and default – the wasted costs jurisdiction is compensatory, and the wronged party is in principle entitled to recover from the defaulting solicitor all costs reasonably incurred; the proper basis of taxation of the costs thrown away by the Mareva proceedings is solicitor-and-own-client, while the costs of the inquiry into the solicitors' personal liability are to be taxed on an indemnity basis – the exercise of the jurisdiction does not depend upon dishonesty or personal obliquity; gross naivety and a cavalier attitude in invoking the Mareva jurisdiction are sufficient – appeal by solicitors dismissed – paragraph 1 of the order of 22 May 1995 discharged and replaced with a reworded order that the solicitors personally indemnify the defendant – order nisi that the defendant have the costs of the appeal to be paid by the appellants on taxation.
Legal issues: Scope of solicitor's duty on ex parte Mareva injunction applications · Whether the costs were wasted by the solicitor's misconduct or default · Basis of taxation of the solicitor's personal liability for costs
Outcome: Appeal by K.B. Chau & Co. dismissed; the order of Sears J dated 22 May 1995 directing personal indemnification of the defendant by the solicitors was upheld, although paragraph 1 of that order was discharged and replaced with a reworded order.