ALL OVERSEAS LTD AND OTHERS v. BEST CODES NOMINEES LTD AND OTHERS

HCA4515/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.4515 OF 2002

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BETWEEN

  ALL OVERSEAS LIMITED 1st Plaintiff
  BEST RESULT INTERNATIONAL LIMITED 2nd Plaintiff
  GREAT LUCK HOLDINGS LIMITED 3rd Plaintiff
  and  
  BEST CODES NOMINEES LIMITED 1st Defendant
  LAU KING FAI 2nd Defendant
LI HUI ZHANG 3rd Defendant
CHELTON FINANCE LIMITED 4th Defendant

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Before : Hon Burrell J in Chambers

Date of Hearing : 7 March 2006

Date of Decision : 7 March 2006

Date of Reasons for Decision : 9 March 2006

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REASONS FOR DECISION

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1. At the conclusion of this hearing I dismissed the plaintiffs’ appeal with costs. These are my brief reasons.

2. This is an appeal against a master’s costs order following an unsuccessful application by the defendants for a further order forsecurity for costs.

3. In February 2005, the plaintiffs had, by consent, paid in a sum of money as security (they being foreign plaintiffs) for costs upto the determination of their Order 14 application but without prejudice to the defendants’ rights to claim further security forcosts as a result of the case being proceeded further. The sum paid was $220,000.

4. After the Order 14 application, which the plaintiffs lost, the defendants made a further application primarily because significantfurther costs had been incurred well in excess of the sum paid in by consent in February 2005 arising out of other interlocutorymatters which had come before the court in the intervening period. The further sum claimed was $491,000.

5. The master’s order on the application before him was to make no order. As for costs he ruled that the defendants’ costs be costsin the plaintiffs’ cause. He further ruled that his order was without prejudice to the defendants’ rights to make a furtherapplication for security at a future date.

6. Thus the plaintiffs were not awarded their costs of the application but were ordered the next best thing namely “costs in the plaintiffs’cause”.

7. The issue on appeal is solely whether the master, in exercising his discretion on costs, did so unreasonably and erroneously. Courtsare reluctant, on appeal, to interfere with the exercise of a lower court’s discretion. Where the discretion has been in relationto a costs order the reluctance is even more so.

8. In this case Mr Benjamin Chain, for the plaintiffs, in a concise and succinct submission, was unable to persuade this court thatthe master had acted unreasonably or plainly erroneously when exercising the discretion in the way he did.

9. The cumulative effect of the following matters satisfied me that the costs order was unappealable :

(a) The master did not “dismiss” the defendants’ application. He made “no order” in relation to it. I was told by MrAlbert Tsang, who appeared for the defendants on this appeal, that the master said at the time (although he did not give writtenreasons) that the defendants were justified in taking out the summons but that he was not prepared (at that stage) to top up theamount of security.

(b) There was merit in the defendants’ application because they had incurred substantial costs between the consent order and theconclusion of the plaintiffs’ unsuccessful Order 14 proceedings. It is perfectly proper to make an application for security forcosts already incurred rather than future costs.

(c) According to the earlier consent order the conclusion of the Order 14 application was the earliest time that a further applicationby the defendants would be entertained. Any earlier application ran the risk of being dismissed.

(d) The plaintiffs on an overall view, were not 100% successful in opposing the defendants’ application. Mr Tsang described itas a “neutral” outcome.

10. If the above factors contributed to the master’s reasoning in exercising his discretion in the way he did, his order on costs cannotbe criticised. His ruling on the application was short of being a total victory for the plaintiffs. His costs order too was onestep short of being the complete order in the plaintiffs’ favour. It reflected the merits of the application and as such was aproper exercise of his discretion.

  ( M.P. Burrell )
Judge of the Court of First Instance,
High Court

Mr Benjamin Chain, instructed by Messrs So, Lung & Associates, for the Plaintiffs

Mr Albert Tsang, instructed by Messrs Foo & Li, for the Defendants