CAMP340/2023

A A CAMP 340/2023, [2024] HKCA 310 On An Intended Appeal From [2023] HKCFI 2350 & B B [2023] HKCFI 2735 C C IN THE HIGH COURT OF THE D HONG KONG SPECIAL ADMINISTRATIVE REGION D COURT OF APPEAL E E MISCELLANEOUS PROCEEDINGS NO 340 OF 2023 (ON AN INTENDED APPEAL FROM HCA NO 3391 OF 2016) F F G G BETWEEN H H CHINA MEDICAL TECHNOLOGIES, INC 1st Plaintiff (IN LIQUIDATION) I I CMED TECHNOLOGIES LTD 2nd Plaintiff J COSIMO BORRELLI AND YUEN LAI YEE 3rd Plaintiffs J IN THEIR CAPACITY AS THE JOINT AND K SEVERAL LIQUIDATORS OF CHINA MEDICAL K TECHNOLOGIES, INC (IN LIQUIDATION) L L and M WU XIAODONG 1st Defendant M SAMSON TSANG TAK YUNG 2nd Defendant N N CHEN ZHONG 3rd Defendant O ZHU FENG (CHARLES) 4th Defendant O CHONG WING HIP (IN HIS PERSONAL 5th Defendant P CAPACITY AND FORMERLY TRADING AS P KAM HING TRADING CO) Q Q HAO XIAOQING ALLAN 6th Defendant R SUPREME WELL INVESTMENTS LIMITED 7th Defendant R EAST HOPE INTERNATIONAL LIMITED 8th Defendant S S CHEER LINK INTERNATIONAL LIMITED 9th Defendant T INNOVATIVE TECHNOLOGY INVESTMENT 10th Defendant T LIMITED U U V V  - 2 - A A DYNAMIC SENSE LIMITED 11th Defendant B B TIME REGION HOLDINGS LIMITED 12th Defendant C BI XIAOQIONG (IN HER PERSONAL CAPACITY 13th Defendant C AND AS TRUSTEE OF THE XIAO QIONG BI D TRUST AND THE ALISA WU IRREVOCABLE D TRUST) E WORLDPRO INVESTMENTS LIMITED 14th Defendant E LONG CHART INVESTMENTS LIMITED 15th Defendant F F CHAVIS INVESTMENTS LIMITED 16th Defendant G SINOWELL INTERNATIONAL INVESTMENT 17th Defendant G LIMITED H H CHENGXUAN INTERNATIONAL LTD 18th Defendant I WEIXIAO MEDICAL TECHNOLOGY LIMITED 19th Defendant I WB INTERNATIONAL HOLDING PTE LTD 20th Defendant J J MAX PROSPER ENTERPRISES LIMITED 21st Defendant K JUN YUN BI 22nd Defendant K GLOBAL FLASH LIMITED 23rd Defendant L L M AND M IN THE HIGH COURT OF THE N N HONG KONG SPECIAL ADMINISTRATIVE REGION O COURT OF APPEAL O MISCELLANEOUS PROCEEDINGS NO 340 OF 2023 P P (ON AN INTENDED APPEAL FROM HCA NO 1417 OF 2013) Q Q BETWEEN R R CHINA MEDICAL TECHNOLOGIES, INC Plaintiff S (IN LIQUIDATION) S and T T st WU XIAODONG 1 Defendant U U V V  - 3 - A A SAMSON TSANG TAK YUNG 2nd Defendant B B CHEN ZHONG 3rd Defendant C ZHU FENG (CHARLES) 4th Defendant C SUPREME WELL INVESTMENTS LIMITED 5th Defendant D D E E rd (Consolidated by Order of Master Chow dated the 23 day of July 2018) F F Before: Hon Au and Chow JJA in Court G G Dates of Written Submissions: 9 and 23 November 2023 H Date of Judgment: 8 April 2024 H I I JUDGMENT J J K K Hon Chow JA (giving the Judgment of the Court): L L INTRODUCTION M M 1. On 15 September 2023, Ng J made an order dismissing the N 2nd Defendant’s summons filed on 13 October 2022 (“the Joinder N Summons”) seeking the joinder of, inter alia, Bank of China O O (Hong Kong) Limited and Bank of East Asia Limited (“BoC” and “BEA” P respectively, and “the Banks” collectively) as “interested parties” in the P consolidated High Court Action Nos 3391 of 2016 and 1417 of 2013 Q Q (“the Consolidated Action”) “in respect of the adjudication on the nature R of the FISH and SPR Transactions by the Court” (“the Common Issues”), R S and ordering the 2nd Defendant to pay the Plaintiffs, BoC and BEA’s S respective costs of and occasioned by the Joinder Summons forthwith, to T T be summarily assessed on an indemnity basis (“the Costs Order”). U U V V  - 4 - A A 2. The relevant backgrounds facts are well known to the parties, B B and the Judge’s reasons for dismissing the Joinder Summons and making C the Costs Order are set out in the Judge’s written judgments dated C 15 September 2023 (“the Judgment”) and 27 October 2023 (“the Leave D D Judgment”) respectively. They will not be repeated here, save to E mention, in summary, that: E F (1) the Judge dismissed the joinder application because (a) the F 2nd Defendant had failed to identify precisely the “Common G G Issues” involved in the Consolidated Action, the BOC H Action1 and the BEA Action2 required to be determined by H the court, (b) acceding to the 2 nd Defendant’s joinder I application would bring about delay to the Consolidated I Action and additional costs to the Plaintiffs and the Banks, J J but would give rise to no identifiable benefit to the K 2nd Defendant, and (c) the joinder application was just K another attempt by the 2 nd Defendant to delay the L L Consolidated Action3; and M (2) the Judge ordered the 2nd Defendant to bear indemnity costs M because (a) the application was of no benefit to the N N 2nd Defendant and was made by him as another attempt to delay the Consolidated Action (in other words, it was made O O for an improper purpose), (b) the application was devoid of P merits and should not have been brought, and (c) once the P Banks made known that they did not want the “benefit” of Q Q R R S S 1 This is a reference to HCA 1742/2018 commenced by the Plaintiffs against BoC. T 2 T This is a reference to HCA 1741/2018 commenced by the Plaintiffs against BEA. 3 See §§19-34 of the Judgment. U U V V  - 5 - A A joinder, the 2nd Defendant should have withdrawn the B B Joinder Summons (ie he should not have persisted)4. C C 3. On 27 October 2023, the Judge dismissed the D D 2nd Defendant’s application for leave to appeal against the Costs Order. E E 4. By summons filed on 9 November 2023 (“the Leave F F Summons”) in the Court of Appeal, the 2nd Defendant renewed his G application for leave to appeal against the Costs Order. G H H APPLICABLE PRINCIPLES I I 5. The test for granting leave to appeal against a costs order J made by a judge at first instance, and the Court of Appeal’s approach in J an appeal against such an order, are well settled. In general, costs are K K very much a matter of discretion for the judge. The Court of Appeal L will be very circumspect in intervening in such a decision with high L discretionary content. It will only interfere when it is satisfied that the M M decision of the judge is either wrong in principle or plainly wrong. See N Poon Ching Man v Lam Hoi Pun [2016] 3 HKLRD 815, at §34; N Chan Shun Kei v Hong Kong Construction (HK) Ltd, CACV 192/2014 O O (7 March 2016), at §22. The Court of Appeal will take into account the P high threshold for intervention in a costs order made by a judge when P deciding whether to grant leave to appeal. Q Q R DISCUSSION R S 6. In the Further Revised Draft Notice of Appeal attached to S “D2’s Written Statement for Leave to Appeal” dated 9 November 2023 T T 4 See §25 of the Leave Judgment. U U V V  - 6 - A A (“D2’s Statement”), the 2nd Defendant raises 2 intended grounds of B B appeal, which have been summarized in §3 of D2’s Statement as follows: C C (1) Ground 1: the Judge should have made no order as to costs D of the Joinder Summons, or alternatively the 2 nd Defendant D should only pay two sets of hypothetical proper or necessary E costs (ie there will only be one set of costs in favour of the E Banks); and F F (2) Ground 2: in any event, there is no or no sufficient basis for G an order of indemnity costs against the 2 nd Defendant. G H H (i) Ground 1 I I 7. We shall first deal with the various arguments raised by J Mr Lung in D2’s Statement in support of Ground 1. J K K 8. First, Mr Lung argues that as regards case management L matters, a neutral costs order is generally more appropriate unless a party L acts in a “culpable” way. In support of this proposition, he relies on the M M judgment of Recorder Rachel Lam SC in Lau Muk Fat (Manager of Lau N Shau Wo Tso) v Wong Kwok Wa [2023] 1 HKLRD 1067. We do not N consider, upon a proper reading of the judgment of the Recorder, that she O O intended to lay down any general principle that a neutral costs order is P more appropriate in case management matters unless a party acts in a P “culpable” way. Lau Muk Fat concerned an application for Q Q consolidation of several sets of proceedings, and the Recorder noted that R in a number of cases, the court made a neutral costs order (namely, costs R in the cause) where applications for consolidation were rejected and also S S where consolidation had been granted despite unsuccessful opposition, T the underlying rationale being that “consolidation was often a complex T U U V V  - 7 - A A and difficult case management issue … Where any party does not act in a B B culpable way, the Court will be slow to impose costs consequences on any C side if such issue of consolidation needs to be considered in due course”.5 C The application before the Judge was not for any consolidation of D D proceedings. In any event, we agree with the Judge that in relation to E “case management applications, as in any other applications, the E incidence of costs depends on numerous factors including inter alia the F F merits of the case management proposal put forward by an applicant”6. G In matters relating to costs, the court has a wide and general discretion. G How the discretion ought to be exercised in any given case must depend H H on the facts and circumstances of that case. It would not be appropriate I to fetter or circumscribe the court’s broad discretion on costs by reference I to any specific categories of cases. The Judge was correct to reject the J J general proposition advocated by Mr Lung. K K 9. Second, Mr Lung argues that it was eminently reasonable for L L the 2 Defendant to take out the Joinder Summons to invoke the court’s nd M active case management powers conferred by Order 1B, rule 1(2) of the M Rules of the High Court (Cap 4A), when no party involved in the N N Plaintiffs’ multiple actions had ever attempted to make proposals to the O court for the separate actions to be properly case-managed until the O P Plaintiffs were directed to address the problem at §38 of the Judgment. P nd This general submission does not assist the 2 Defendant, because it is Q Q still necessary to consider whether the “case-management” order or R direction sought by the 2nd Defendant has any merits. If, as found by the R Judge, the Joinder Summons was wholly without merits and was an S S attempt by the 2nd Defendant to delay the Consolidated Action, that would T 5 T See §§4 and 5 of the judgment in Lau Muk Fat. 6 See §18 of the Leave Judgment. U U V V  - 8 - A A clearly provide good justification for the court to exercise its discretion to B B order the 2nd Defendant to bear the costs of the application. C C 10. Third, Mr Lung argues that there are common factual issues D D relevant to all of the Plaintiffs’ multiple actions (ie the Consolidation E Action, the BOC Action and the BEA Action), namely, the nature and E value of the FISH and SPR Transactions, the existence of which are F F recognised or acknowledged by the Judge, the Plaintiffs and BEA, but the G Plaintiffs failed to provide any case management proposal or solution. G Mr Lung relies on the fact that the Judge himself proposed a trial on H H preliminary issues (being the Common Issues) involving all parties. I Mr Lung also refers to §9 of the Plaintiffs’ proposal dated 17 October I 2023 (which was filed pursuant to the Judge’s direction at §38 of the J J Judgment seeking case management proposals to achieve the underlying K objectives of the CJR), and submits that the Plaintiffs tacitly accepted that K the Common Issues were relevant across the multiple actions. In our L L view, this argument of Mr Lung misses the real point. The question is M not whether there are Common Issues to be resolved in the Consolidated M Action, BOC Action and the BEA Action, but whether it is appropriate for N N the Banks to be joined as parties to the Consolidated Action, which raises O numerous other issues which are or may be of no interest or concern to O P the Banks. It may well be appropriate for there to be a trial of P preliminary issues involving all interested parties (as to which we express Q Q no view since it is not a matter before us), but that would be very R different from joining the Banks as parties to the Consolidated Action. R As for the Plaintiffs’ proposal dated 17 October 2020, what the Plaintiff S S said was that “an early resolution of the [Consolidated] Action will assist T to narrow the issues in the remaining actions. In particular, if the court T is satisfied, in the [Consolidated] action, that the FISH and SPR U U V V  - 9 - A A Transactions are as contended by the Plaintiffs, it is anticipated that any B B dispute on that issue that exists in the other actions will be far more C easily resolved in those other actions, and may even evaporate”. In C other words, the Plaintiffs were not proposing that the Banks should be D D joined as parties to the Consolidated Action for the purpose of E determining the Common Issues. Rather, according to the Plaintiffs, E those issues should be determined in the Consolidated Action first. F F G 11. Fourth, Mr Lung argues that the Judge’s observation that the G 2nd Defendant’s joinder proposal could have been raised at a Case H H Management Conference (the latest one being scheduled for 30 October I 2023), instead of by way of a separate summons, would only add to the I delay. This argument has no merits. In view of the Judge’s view that J J the 2nd Defendant’s joinder application is devoid of merits, it would be K dismissed by the Judge whether the application is considered separately K or at a Case Management Conference. There is no evidence that any L L delay to the overall progress of the Consolidated Action will be M occasioned by the joinder application being considered at a Case M Management Conference. On the other hand, as observed by the Judge N N at §19 of the Leave Judgment, the incidence of costs of the Case O Management Conference may well be different from that of the Joinder O P Summons. P Q 12. Fifth, Mr Lung argues that there is no effective “winner” in Q the dismissal of the Joinder Summons, because the Banks are still R R required to address the “Common Issues” in their respective actions. S S We do not accept this argument. The Judge considered the Joinder T Summons to be without merits and should have been withdrawn. T Plainly, the 2 Defendant is the “loser” insofar as the Joinder Summons nd U U V V  - 10 - A A is concerned. Further, whether the Common Issues will require to be B B addressed in the BOC Action and BEA Action remains to be seen. This C is because, as submitted by Mr Manzoni SC (for the Plaintiffs) and C recorded by the Judge at §20 of the Judgment – D D “… within the 2 ‘base claims’, there are multiple issues that the E Court needs to consider and determine in the present Action. In E this court’s present estimation, a majority of these issues will be contested by the active Defendants, in particular the F 2nd Defendant, and will occupy a large part of the trial of the F present Action. The same cannot be said of the BOC Action or G the BEA Action, at least at this stage. This is because their G involvement only began after the FISH and SPR Transactions had been entered into and they may well be advised to take a H passive position by just putting the Plaintiffs to prove. This is H of course entirely up to BOC and BEA and their legal I advisers.” I J 13. Sixth, Mr Lung argues that the 2 nd Defendant should only J pay 2 sets of costs, being those of (i) the Plaintiffs, and (ii) BoC/BEA, K K because the Banks essentially adopted a “united front” for the purpose of L the Joinder Summons (namely, they insist that the Commons Issues be L tried in their respective actions), and there is plainly no conflict of interest M M between them. As earlier mentioned, it is by no means certain that the N Commons Issues will have to be tried again in the BOC Action and BEA N Action. In any event, the Judge held, correctly in our view, that “the fact O O of the matter is that BOC and BEA have been separately represented from P P the very beginning of the proceedings against them. The 2nd Defendant Q issued the Joinder Summons with his eyes open. Whether or not there is Q conflict of interest between BOC and BEA vis-à-vis the Joinder Summons R R is irrelevant. Each of the Banks was entitled to separate legal S representation and came to its own view as to the merits of the Joinder S Summons. The Banks objected to the Joinder Summons for reasons of T T their own. If conflict of interest were the test, the Plaintiffs, BOC and U U V V  - 11 - A A BEA should only get 1 set of costs since they all opposed the Joinder B B Summons on the ground that it had no merits. The 2nd Defendant’s C proposition that there should be 1 set of costs for BOC/BEA need only be C stated to be rejected”7. D D E (ii) Ground 2 E F 14. Mr Lung argues that the reasons given by the Judge for F awarding indemnity costs against the 2 nd Defendant were flawed or G G incorrect. According to Mr Lung, the Judge gave the following reasons H for ordering the 2nd Defendant to pay indemnity costs: H I (1) The Joinder Summons was “another attempt to delay the I present action by the 2nd Defendant” (§33 of the Judgment). J J (2) “The Banks, being independently advised by reputable K solicitors and counsel, do not want the purported benefit … K The 2nd Defendant should have withdrawn the Joinder L Summons” (§32 of the Judgment). L M (3) The 2nd Defendant did not gain any personal benefit from the M proposed joinder and therefore, an improper purpose can be N N inferred against him (§25 of the Leave Judgment). O O 15. By way of preliminary observation, it may be noted that the P Judge’s reasons for making an indemnity costs order against the P 2nd Defendant are set out at §25 of the Leave Judgment, as follows – Q Q “It is clear from the Judgment at [31] to [34] that (i) the Joinder R Summons was of no benefit to the 2nd Defendant and was R brought by him as another attempt to delay the present Action - S in other words, it was brought with an improper purpose; (ii) S the Joinder Summons was devoid of merits and should not have been brought; (iii) once the Banks made known that they did T T 7 See §21 of the Leave Judgment. U U V V  - 12 - A A not want the ‘benefit’ of joinder, the 2nd Defendant should have B withdrawn the Joinder Summons ie he should not have B persisted.” C C 16. It seems clear that one of the reasons given by the Judge, but D D not mentioned by Mr Lung, was that the Joinder Summons was devoid of E merits and should not have been brought. In any event, we are not E persuaded by Mr Lung’s criticisms of the Judge’s reasons for making an F F indemnity costs order against the 2nd Defendant. G G 17. In respect of §14(1) above, Mr Lung argues that the finding H H of “another” attempted delay is incorrect, because there was no such prior I finding. He also argues that the suggestion that the 2 nd Defendant took I out the Joinder Summons to stall the progress of the Consolidated Action J J disregards the full procedural context, and refers to various matters by K way of “example” at §17 of D2’s Statement, which it is not necessary to K set out in this judgment. Mr Lung’s complaint that there was no finding L L of any previous attempt by the 2 nd Defendant to delay the progress of the M Consolidated Action is just a semantic point. Regardless of whether M there was any such finding, the Judge was entitled to find, on the N N materials before him, that the Joinder Application was a delaying tactic O by the 2nd Defendant and brought with an improper purpose. This O finding, coupled with the other matters mentioned by the Judge at §25 of P P the Leave Judgment, would justify an order for indemnity costs against Q the 2nd Defendant. Q R R 18. §14(2) and (3) above can be considered together: S S (1) In respect of §14(2), Mr Lung argues that whether the Banks T wish to have the benefit conferred by the proposed joinder is T not relevant, because it is not for the Banks to dictate how U U V V  - 13 - A A the various actions ought to be properly case-managed; B B instead, it is a matter that the Court has an active duty to C resolve even if the parties do not agree. C (2) In respect of §14(3), Mr Lung argues that the lack of D D personal benefit should not be taken as a factor to infer an E improper purpose on the part of the 2nd Defendant. E F F 19. It is, of course, correct to say that it is not for the Banks to G dictate how various actions ought to be properly case-managed. We do G not accept, however, that the proposed joinder sought by the H H 2nd Defendant would achieve the object of proper case-management of I the actions. In our view, it is important to consider the 2nd Defendant’s I professed reason for making the joinder application, which was purely to J J benefit the Banks. No benefit to the 2nd Defendant was identified 8. In K such circumstances, when neither the Banks nor the Plaintiffs were in K favour of the proposed joinder, one may expect the 2nd Defendant to L L withdraw the application at that point. The 2 nd Defendant did not do so. M The question which naturally arose was why the 2 nd Defendant would M persist with the application. Plainly, the Judge did not consider that the N N 2nd Defendant made the application for any altruistic purpose. He O inferred that the application was an attempt to delay the progress of the O Consolidated Action. We consider it was open to the Judge to take such P P a view. Q Q 20. Overall, Grounds 1 and 2 are not reasonably arguable, and R R the 2 nd Defendant’s intended appeal does not have a real prospect of S S T T 8 See §31 of the Judgment. U U V V  - 14 - A A success. There is also no other reason in the interests of justice why the B B appeal should be heard. C C 21. In passing, we should mention that Ms Xu has objected to D D the 2nd Defendant’s reliance on the “Common Issues” as (allegedly) E reframed in §9 of D2’s Statement. Ms Xu says that at the substantive E hearing before the Judge, the 2nd Defendant identified 2 base claims as F F “Commons Issues”, covered by Sections D and G of the Amended G Statement of Claim consisting of 60 pages of pleaded facts, and the Judge G did not consider this sufficient to identify the “Common Issues” or justify H H the joinder application. Ms Xu argues that the 2nd Defendant should not I be permitted to narrow down the “Common Issues” in the present I application9. Neither Mr Julian Lam nor Mr Keith Lam has raised any J J similar objection on behalf of BoC and BEA respectively. For the K purpose of disposing of the present application, it is not necessary for us K to resolve this objection, because we are of the view that the leave L L application ought to be dismissed even if one proceeds on the basis of the M “Common Issues” as defined in D2’s Statement. M N N DISPOSITION O O 22. The Leave Summons dated 9 November 2023 is dismissed P with costs to the Plaintiffs, BoC and BEA, which we summarily assess, P on a party and party basis, in the amounts of HK$60,000, HK$40,000 and Q Q nd HK$40,000 respectively. We do not consider that the 2 Defendant R should be ordered to pay indemnity costs in relation to the leave R application, notwithstanding Mr Keith Lam’s submission. The above S S costs orders, including assessments of the costs of the Plaintiffs, BoC and T T 9 See §9 of Statement in Opposition of the Plaintiffs dated 23 November 2023. U U V V  - 15 - A A BEA are orders nisi, which shall become absolute unless an application is B B made to vary the same within 14 days from the date of this judgment. C C 23. Lastly, as the 2nd Defendant’s application for leave to appeal D D is totally without merit, an order is made that no party may request the E present determination to be reconsidered at an oral hearing inter partes E pursuant to Order 59, rule 2A(8) of the Rules of the High Court. F F G G H H (Thomas Au) (Anderson Chow) I I Justice of Appeal Justice of Appeal J J Ms Cherry Xu, instructed by Karas So LLP, for the Plaintiffs K K nd Mr Vincent Lung, instructed by P. C. Woo & Co, for the 2 Defendant L L Mr Julian Lam, instructed by Allen & Overy, for Bank of China (Hong Kong) Limited M M Mr Keith Lam, instructed by Linklaters, for Bank of East Asia Limited N N O O P P Q Q R R S S T T U U V V