Hong Kong Court Of Appeal Clarifies Principles For Ordering Costs For Unsuccessful Summary Judgment Applications.
Legal News & Analysis - Asia Pacific - Hong Kong - Dispute Resolution
8 February, 2018
The Hong Kong commercial disputes team acted for the plaintiff in the recently reported judgment of the Hong Kong Court of Appeal in Greater China Capital Inc -v- Gbtimes Ltd  HKEC 2602.
The Court of Appeal took the opportunity to remind practitioners of the principles for awarding costs when a party’s application for summary judgment is unsuccessful. The summary judgment procedure (Order 14 of the High Court Civil Procedure Rules) enables a plaintiff to apply for final judgment on his claim without having to go to the full expense and delay of proceeding to a full trial. The plaintiff will have to depose to his belief that there is no defence to the claim. To defeat a summary judgment application, the defendant has to persuade the judge that there are ‘triable issues’ (which in practice is a fairly low threshold) such that it is proper for the case to be sent to trial so that all matters can be properly ventilated. It is only where the judge considers that the issues raised by the defendant are ‘inherently unbelievable’ or ‘practically moonshine’ that summary judgment will be granted.
The decision shows the court’s willingness not to penalise a plaintiff for applying for summary judgment even where, as in this case, the defendant had already filed a substantive defence relying on multiple grounds of defence to the plaintiff’s claim.
The defendant had applied to the Court of Appeal for leave to appeal the costs order made by the deputy high court judge below (the deputy high court judge had already refused the defendant leave to appeal) that (1) the plaintiff’s summary judgment application be dismissed (overturning the plaintiff’s successful summary judgment before the master); (2) the defendant be granted unconditional leave to defend; and (3) the costs of the summary judgment application be costs ‘in the cause’ (i.e. the successful party at trial in due course would be entitled to recover the costs of the summary judgment application from the loser).
On 4 December 2017, the Court of Appeal (Hon Lam VP and Yuen JA) refused to grant the defendant leave to appeal the costs order in (3) above.
Their lordships reiterated that the scope of intervention by an appellate court is very limited on the exercise of a lower court’s discretion on costs.
Their lordships confirmed that as regards the assessment of arguability of a case on a point of fact in a summary judgment context, the Court of Appeal will be slow to intervene and so much so that ‘it would be surprising that a court of appeal would differ from the judge in such assessment’.
Importantly, their lordships also held that ‘the mere fact that a line of defence was known to a plaintiff does not mean that he should have known that it was not appropriate to proceed by way of application for summary judgment. Much depends on the available evidence and the assessment on the probity of proceeding by way of summary judgment is very often a matter of judgment. A wrong judgment in this respect does not necessarily call for sanction in the same manner as an abuse of the procedure’.
The Court of Appeal also clarified that an order to dismiss should be made when the case was not suitable for summary judgment or that the plaintiff knew before making the application that the defendant was relying on an arguable defence. In such a case, the plaintiff would be ordered to pay the defendant’s costs.
An order for unconditional leave to defend should be made (as was the case here) where the defendant had shown that he has a good defence on the merits, or a triable dispute on the facts. The normal costs order when this order is made would be for costs to be ‘in the cause’.
Summary judgment is a powerful tool for a plaintiff to ‘short-circuit’ the usual litigation process and obtain a final and enforceable judgment without the delay and expense of going through the usual interlocutory steps leading to a full trial.
This decision is a welcome clarification on costs orders for unsuccessful summary judgment applications. Lawyers can now confidently advise their clients not to be fearful of applying for summary judgment due to concerns about potential adverse costs orders against them. If you reasonably believe that there is no arguable defence or triable issue, your client can apply for summary judgment safe in the knowledge that, even if the application is unsuccessful, he should not have to pay any costs to the defendant at that stage and, not at all, if he is ultimately successful at the eventual trial (this was the position we maintained in this case and which was accepted by the Court of Appeal).
Read the full judgment here.
For further information, please contact:
Bryan O'Hare, Partner, Hill Dickinson