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HCA 538/2007
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 538 OF 2007
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BETWEEN
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SUN FOCUS INVESTMENT LIMITED |
Plaintiff |
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and
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TANG SHING BOR |
1st Defendant |
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LIU SU KEI |
2nd Defendant |
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| Before: Hon Mimmie Chan J |
| Date of Hearing: 8 October 2012 |
| Date of Handing Down Decision: 14 November 2012 |
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D E C I S I O N
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Background
1. This action has had a chequered history of interlocutory skirmishes. The writ was issued in March 2007. The defence was filed in April 2007, and witness statements have been filed. In January 2008, the plaintiff filed an Amended Statement of Claim, and after filing an Amended Defence, the defendants issued an application on 2 June 2009 for security for costs and, at about the same time, applied for the Amended Statement of Claim to be struck out. As early as in October 2009, Mr Recorder Shieh SC made an order to strike out the Amended Statement of Claim in its entirety, but he allowed the plaintiff to apply to the Court for leave to file a fresh Statement of Claim. On 15 October 2009, the plaintiff issued a summons for leave to file a fresh Statement of Claim (hereinafter referred to simply as the “Amendment Application”), and in December 2009, the defendants issued a second summons to seek security for costs.
2. On 10 September 2010, Chung J gave leave on the Amendment Application for the plaintiff to file a fresh Statement of Claim (“Chung Order”). In April 2011, the defendants obtained leave from the Court of Appeal to appeal against the Chung Order (“Appeal”), and by agreement, the defendants’ application for security for costs was adjourned to be heard only after the determination of the Appeal.
3. On 23 December 2011, the Court of Appeal set aside the Chung Order and, inter alia, directed a rehearing of the Amendment Application, to deal with the plaintiff’s reliance on section 26 of the Limitation Ordinance. The defendants obtained an order for the costs of the Appeal (including the costs of the application for leave to appeal) to be paid by the plaintiff. These costs were ordered to be taxed forthwith and to be paid forthwith. They were subsequently taxed and allowed at $604,492. The Allocators were issued on 10 September 2012. These costs remain unpaid by the plaintiff.
4. The defendants’ application for security for costs was only restored in January 2012, and was heard on 5 June 2012. Mr Recorder A Chow SC ordered the plaintiffs to provide security in the sum of $360,000, limited to the costs which may be incurred by the defendants in relation to the defendants’ applications for security for costs and the Amendment Application.
5. On 2 February 2012, the defendants issued a summons to join Tang Ngai Piu (“NP”), Tang Kwan Ching (“KC”) and Tang Kwan Yee (“KY”) as parties to the action for the purpose of costs only (“Joinder Application”). This is pursuant to section 52A of the High Court Ordinance (“Ordinance”) and Order 62 rule 6A RHC. The summons for the Joinder Application was served on the plaintiff as well as on the parties sought to be joined.
6. NP was the shareholder and director of the plaintiff until he was adjudged bankrupt in December 2004. After he was discharged from his bankruptcy in December 2008, NP became a director of the plaintiff again. KC and KY are respectively the son and daughter of NP, and were shareholders and directors of the plaintiff at the material time of the Appeal. It is admitted that the plaintiff company is impecunious, and that KC and KY were the financial backers of the plaintiff since the commencement of the proceedings.
7. The issue for determination is whether the court should, in exercising its power under section 52A of the Ordinance and pursuant to Order 62 rule 6A, join NP, KC and KY as parties to these proceedings and award the defendants’ costs of the Appeal against them.
Applicable legal principles
8. As the Court of Final Appeal recognizes in The Liberty Container [2007] 2 HKLRD 507, section 52A of the Ordinance confers a wide discretion on the court. Under section 52A (1), the costs of and incidental to all proceedings in the Court of First Instance “shall be in the discretion of the Court, and the Court shall have full power to determine by whom and to what extent costs are to be paid”. Section 52A (2) goes on to provide as follows:
“Without prejudice to the generality of subsection (1), the Court of Appeal or the Court of First Instance may, in accordance with the rules of court, make an order awarding costs against a person who is not a party to the relevant proceedings, if the Court of Appeal or the Court of First Instance, as the case may be, is satisfied that it is in the interests of justice to do so.”
9. Under Order 62 rule 6A (1):
“Where the Court is considering whether to exercise its power under section 52A or 52B of the Ordinance to make a costs order in favor of or against a person who is not a party to the relevant proceedings-
(a) that person must be joined as a party to the proceedings for the purposes of costs only; and
(b) that person must be given a reasonable opportunity to attend a hearing at which the Court shall consider the matter further.”
10. The provisions of the English equivalent of our Order 62 rule 6A (ie CPR 48.2 (1)) were intended to provide a formal procedural framework for a non-party against whom a costs order is sought to be joined in the proceedings, or at least be given an opportunity of applying to be joined in the proceedings, to be given protection conferred on a party by the rules of court, for example, as to the framing of issues by statements of case, disclosure of documents, payment into court, and an early knowledge of the issues (see paragraph 41 of the judgment of Etherton J in Anstalt & others v Hayek & others [2005] EWHC 2435 (Ch)).
11. The courts have emphasized in cases such as Symphony Group plc v Hodgson [1994] 1 QB 179, Robertson Research International Ltd v ABG Exploration BV, unreported, 7 October 1999 and Anstalt & others v Hayek & others that an application for an order under Order 62 rule 6A (“Non-Party Costs Order”) is a summary procedure, appropriate only for plain and straightforward cases.
12. Order 62 rule 6A contemplates a two-stage process. The court first considers whether the party should be joined for the purposes of costs, and then, give that party a reasonable opportunity to attend a hearing, for the court to “consider the matter further”.
13. In Robertson Research International Ltd v ABG Exploration BV, Laddie J considered the approach to be adopted in an application for a Non-Party Costs Order, as contrasted with an application for a wasted costs order, and indicated that for the former:
“All that is required is that the court should exercise its considerable administrative powers to ensure that the application should be dealt with as speedily and inexpensively as possible consistent with fairness to both sides. For example in many cases cross-examination will not be permitted, although sometimes it will… As the Court of Appeal stated in Symphony Group plc v Hodgson, an order for the payment of costs by a non-party will always be exceptional and the judge should treat any application for such an order with considerable caution. The simple rule that costs follow the event does not apply when it is sought to obtain a costs order against a non-party. The hurdle is much higher. If the judge can see that the claimant is almost bound to fail to negotiate that hurdle or that …the claim is merely speculative, he should dismiss it summarily. But if there is a good arguable case, he should allow the claim and to proceed with it, at risk as to costs.”(Emphasis added)
14. In Anstalt v Hayek, Etherton J explained this further in his judgment:
“Indeed, as I have said, it is common ground that the court will refuse joinder if it is clear that the application for a costs order against a...
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