ISLAMIC REPUBLIC OF IRAN SHIPPING LINES v. PHINIQIA INTERNATIONAL SHIPPING LLC AND OTHERS

HCMP 2034/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 2034OF 2014

(ON AN INTENDED APPEAL FROM HCA NO. 2368 of 2012)

________________________

BETWEEN
	ISLAMIC REPUBLIC OF IRAN SHIPPING LINES	Plaintiff
	and
	PHINIQIA INTERNATIONAL SHIPPING LLC	1st Defendant
	TRADELINE LLC	2nd Defendant
	MAJID SAIF AHMAD AL GHURAIR	3rd Defendant
	AHMAD HUSSAIN LAFIR	4th Defendant
	FREVER ENTERPRISE LIMITED	5th Defendant
	MANUEL XAVIER FREDERICK CORERA	6th Defendant

________________________

Before : Hon Cheung CJHC and Lam VP

Date of the Written Submissions of the 4th to 6th Defendants: 3 October 2014

Date of the Written Submissions of the Plaintiff: 10 October 2014

Date of the Written Reply of the 4th to 6th Defendants: 21 October 2014

Date of Decision on Costs : 3 November 2014

_____________________

DECISION ON COSTS

_____________________

 

Hon Lam VP (giving the Decision on Costs of the Court):

1.  In our judgment of 24 September 2014, we ordered the Plaintiff to pay the costs of the 4^th and 6^th Defendants and we provisionally fixed the costs at $30,000. On 3 October, the 4^th and 6^th Defendants submitted a claim for costs in the sum of $69,152 and attached a statement of costs to support the claim.

2.  The Plaintiff opposed such revision.  Solicitors for the Plaintiff took the objection that the 4^th and 6^th Defendants had not submitted a statement of costs in accordance with the direction of the court in the letter of 18 August 2014.  In that letter, the Registrar referred to directions set out by the Chief Judge in a letter of 10 August 2012 which had been sent to the Bar Association and the Law Society.  One of the direction was as follows,

“Represented parties must submit to the Registry at the same time they lodge their skeleton submissions a statement of costs for the purposes of summary assessment of costs irrespective of whether they intend to seek summary assessment.”

3.  It is unfortunate that some solicitors did not pay sufficient heed to this direction.  In the present case, solicitor for the 4^th and 6^th Defendants did not provide any explanation for the default.  In most cases where parties seek leave to appeal, the Court of Appeal will try to deal with the question of costs by way of summary assessment.  The purpose of the direction is to facilitate the court to make a final decision on costs at the same time when it decides on leave.  Failure to comply with such direction inevitably prolongs the process and the court will have to revisit the case (for considering the quantum on costs) at a later stage.  This is not conducive to the efficient disposal of leave applications.

4.  The non-compliance with the direction is a breach of the duty under Order 1A Rule 3 and it is a matter that the court can take into account under Order 62 Rule 5.  However, we do not think it is appropriate in the present case to bar the 4^th and 6^th Defendants entirely from asking the court to revise the quantum due to the non-compliance with that direction.  That would not be a proportionate sanction to the default.  As the English experience from Mitchell v New Group Newspapers [2014] 1 WLR 795 to Denton v TH White [2014] 4 Costs LR 752 illustrates, it would not be right to adopt a too mechanistic approach in case management.

5.  But it does not mean that there should not be any consequence for such default.  The direct consequence is that the court has to entertain a further round of submissions which the direction is designed to avoid in light of the objective of efficient disposal of leave applications.  More costs are therefore incurred in the process and the 4^th and 6^th Defendants should be responsible for the same.  It would however be disproportionate and an invitation to unjustified satellite litigation if one were to inquire into the details as to how much has been incurred by way of additional costs.  This would wholly defeat the purpose of summary assessment.  In our judgment, a fair approach is that the court should do a global assessment of the situation taking this default into account.          

6.  The Plaintiff also made some comments on certain items in the 4^th and 6^th Defendants’ statement of costs.

7.  Taking all circumstances into account, we would revise our award of costs in favour of the 4^th and 6^th Defendant to $50,000.  In coming to that assessment, we have taken into account the default in the compliance with the direction.  There will not be any additional costs order for the submissions on quantum of costs as we have already taken that factor into account in our award of $50,000.

(Andrew Cheung) Chief Judge of the High Court

(M H Lam) Vice President

Written submissions by Smyth & Co, in association with RPC, for the plaintiff

Written submissions by Holman Fenwick Willan, for the 4^th to 6^thdefendants

HCMP 2034/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 2034OF 2014

(ON AN INTENDED APPEAL FROM HCA NO. 2368 of 2012)

________________________

BETWEEN
	ISLAMIC REPUBLIC OF IRAN SHIPPING LINES	Plaintiff
	AND
	PHINIQIA INTERNATIONAL SHIPPING LLC	1st Defendant
	TRADELINE LLC	2nd Defendant
	MAJID SAIF AHMAD AL GHURAIR	3rd Defendant
	AHMAD HUSSAIN LAFIR	4th Defendant
	FREVER ENTERPRISE LIMITED	5th Defendant
	MANUEL XAVIER FREDERICK CORERA	6th Defendant

________________________

Before : Hon Cheung CJHC and Lam VP

Date of Judgment : 24 September 2014

_______________

JUDGMENT

_______________

 

Hon Lam VP (giving the Judgment of the Court):

1. This is an application for leave to appeal against the decision of Deputy High Court Judge Simon Leung on 21 July 2014. By that decision, the learned judge discharged a Mareva injunction granted in favour of the Plaintiff. The judge did so primarily for the reason that he was not satisfied that there was any risk of dissipation of assets by the Defendants. He was also not satisfied that there is a good arguable case of conspiracy against the 5^th and 6^th Defendants though he found there is a good arguable case of breach of duty of care by them.

2. This decision is interlocutory in nature.  The 1^st Defendant applied for leave to appeal against that decision.  The judge refused leave on 1 August 2014.  Reasons for his refusal of leave were handed down on 1 August 2014.  The Plaintiff now seeks leave to appeal from this court.

3. The history of the matter was adequately set out in the judgment of the judge on 21 July 2014.  The discharge of the injunction was an exercise of discretion.  This court will only interfere with an exercise of discretion in the limited circumstances set out by Lord Diplock in Hadmor Productions Ltd v Hamilton [1983] 1 AC 191 at p.220B-F, see also the recent judgment of the Court of Final Appeal in SPH v SA [2014] 3 HKLRD 497 at para 65.    

4. The judge has carefully explained in his judgment why he was not satisfied with the risk of dissipation.  Contrary to what is suggested by Mr Sussex SC (representing the Plaintiff in this application with Mr Yu), a fair reading of the judgment shows that the judge did not simply discharge the injunction on the ground of delay.  It is delay coupled with the knowledge of legal action (in the form of the English action) by the Plaintiff (and thus the opportunity to remove assets) on the part of the 4^th Defendant during the relevant long lapse of time that the judge took into account.  The judge did have regard to the imputation cast against the 4^th Defendant by reason of his holding that there is a good arguable case on conspiracy and the allegation that he held the shares of DBL for the 1^st or 2^nd Defendants.  In the end, having regard to all these matters, he concluded that the Plaintiff had not made out a case of risk of dissipation of assets. 

5. As the judge succinctly pointed out in his Decision of 1 August 2014 when he refused leave to appeal, in essence what the Plaintiff tried to argue in the intended appeal is to challenge the assessment of risk of dissipation by the judge.  We are of the view that on the materials before him, it is open to the judge to come to the conclusion that the risk of dissipation had not been made out. 

6. On the argument that the judge erred in finding that there is no good arguable case on conspiracy against the 5^th and 6^th Defendants, again it is a challenge to the assessment of the evidence by the judge.  The reasons given by the judge at paras 62 to 65 of the judgment highlighted the evidential gap in the conspiracy case against these defendants.  The judge was also correct in holding that in such circumstances, the Plaintiff has not established the requisite risk of dissipation against the 5^th and 6^th Defendants.

7. On the whole, we also do not discern any errors in principle in the exercise of the discretion by the judge.

8. For these reasons we do not think the intended appeal has any reasonable prospect of success.  We refuse to grant leave.

9. We are of the view that the application for leave is totally without merit and we make an order pursuant to Order 59 rule 2A(8) of the Rules of High Court that no party may request this determination to be reconsidered at an oral hearing inter partes.

10. We also order the Plaintiff to pay the costs of the 4^th to 6^th Defendants in the present proceedings.  We provisionally fix such costs at $30,000.  Parties may put in written submissions (not more than 3 pages) within 7 days if they disagree with that provisional assessment.  In that event, we would deal with those submissions on paper.

(Andrew Cheung) Chief Judge of the High Court

(M H Lam) Vice President

Written submissions by Mr Charles Sussex, SC and Mr Jason Yu, instructed by Smyth & Co, for the plaintiff

Written submissions by Mr Anthony Chan, instructed by Holman Fenwick Willan, for the 4^th to 6^thdefendants