Big Island Construction (HK) Ltd v Wu Yi Development Co Ltd
Court of First Instance
High Court Action Nos 1957 of 2005, 714 and 886 of 2007
Queeny Au-Yeung J in Chambers
26 April 2018

Civil procedure - costs - costs against non-party - application under s.52A for non-party be ordered to pay costs as "real party" - grounds on which such order could be sought - defences which could be raised to resist application - High Court Ordinance (Cap.4) s.52A 

The receiving parties under costs orders made against a company (BIC) in these three actions applied under s.52A of the High Court Ordinance (Cap.4) asking the Court to order that a non-party, L, bear those costs personally on the ground that he was "the real party" to the litigation. There were five limbs to this ground, being that L: (a) owned and controlled BIC; (b) controlled and managed the actions; (c) had funded the actions; (d) had stood to benefit from the actions; and (e) had caused BIC to pursue a false claim or defence in the actions. Opposing the application, L denied that he was the real party and put forward the following four defences: (a) there were disputes of fact and the summary procedure was not appropriate; (b) there had been gross delay on the part of the receiving parties in issuing the application and the delay prejudiced him; (c) previous applications to have him held personally liable had failed and had not been appealed against; (d) even though it was open to them to so apply, the receiving parties failed to apply for further security for costs from BIC in the two actions in which BIC was the plaintiff.

Held, ordering L to bear the costs personally, that:

  1. L was the real party, all five limbs of the "real party" ground having been established (Kebaro Pty Ltd v Saunders [2003] FCAFC 5, Abdul Aziz Essa v Capital Globe [2012] 6 HKC 472, Dymocks Franchise Systems (NSW) Pty Ltd v Todd [2004] 1 WLR 2807, R + V Versicherung AG v Risk Insurance & Reinsurance Solutions SA [2015] EWHC 2586 applied). (See paras.16-59, 102.)
  2. The "procedural" defence failed, there being nothing to cause the Court to turn this summary procedure into one for discovery and cross-examination. (See paras.60-66, 102.)
  3. The "delay" defence failed because although there had been gross delay of about four years after the first instance judgment before applying under s.52A and there had been no warning of any such application, the time had been genuinely used to await the outcome of the appeals, there was no abuse of process by the receiving parties and L was not prejudiced. Any "prejudice" to L arising from delay could have been remedied by reducing the amount of interest that the receiving parties could charge him (R + V Versicherung AG v Risk Insurance & Reinsurance Solutions SA [2015] EWHC 2586 (Comm), Deutsche Bank AG v Sebastian Holdings Inc [2016] 4 WLR 17 applied). (See paras.67-93, 102.)
  4. The "failed previous applications" defence failed because dismissal of the previous applications under s.52A was on procedural grounds and not on the merits. (See paras.94-96.)
  5. The "security for costs" defence failed because the modern trend was that failure to apply for security did not preclude a successful application for costs against a third party and, although the receiving parties could have asked for further security, that should not undermine their rights in these s.52A applications (Petromec Inc v Petroleo Brasileiro SA Petrobras [2006] EWCA Civ 1038, Deutsche Bank AG v Sebastian Holdings Inc [2016] 4 WLR 17 (CA) applied). (See paras.97-101.)

Application

This was an application by the receiving parties under costs orders made in these three actions for a non-party to be ordered to pay costs as the real party under s.52A of the High Court Ordinance (Cap.4). The facts are set out in the judgment.

Jurisdictions: 

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