Wasted Costs Applied To BVI Duties On An Ex Parte Application

The BVI Commercial Court has just provided guidance on wasted costs principles and their application to the duties of an applicant's legal practitioner on an ex parte application. This guidance was provided in a judgment delivered on 6 June 2017 in I U Chong aka Yao Yong & Anor v Greater Achieve Limited & Ors BVIHC (Com) 2015/0140.

The application for an order that the claimants' legal practitioners, Harney Westwood & Riegels ("Harneys") pay wasted costs arose out of the grant and subsequent discharge of an injunction in proceedings in which the Statement of Claim was subsequently struck out as disclosing no cause of action and for abuse of process.

The court concluded that in only one of the complaints advanced in support of the application was Harneys in breach of its duty to the court but that the causal link between that breach and the applicants' costs was not sufficiently strong; and accordingly the breach did not give rise to a wasted costs order. In reaching this conclusion the court reiterated legal practitioners' duties to the court and the court's jurisdiction to punish and compensate for breach of those duties.

The proceedings and the complaints

The proceedings were part of a wider dispute between the parties relating to Mingyuan Medicare Development Company Limited ("Mingyuan"), a Bermudan company listed on the Hong Kong Stock Exchange and operating in the healthcare sector.

On 23 November 2015 the claimants obtained ex parte relief from the BVI court in proceedings that had been started a few days earlier. By that injunction the first defendant was restrained from exercising any voting rights or passing any resolution in its capacity as a shareholder in Mingyuan and the seventh defendant was restrained from disposing of certain shares. That injunction was discharged on 15 January 2016 for material non disclosure. Harneys ceased to represent the claimants in February 2016. The claim against the second to seventh defendants was stayed by order dated 28 April 2016 after the claimants failed to comply with an interim costs order; and the Statement of Claim was struck out against the first defendant by order dated 26 June 2016 for not disclosing a cause of action and being an abuse of process. The claim against the eighth defendant, Mingyuan, was not pursued.

By an amended notice of application the first to seventh defendants sought a wasted costs order against Harneys based on six complaints:

Misleading the court on the ex parte application as to the financial means of the second claimant in relation to the cross-undertaking in damages; Failing to explain to the court on the ex parte application the nature of proceedings in Bermuda, which was relevant to the court's decision on the application; Failing to disclose a matter on the ex parte application relating to the auditors of Mingyuan not being able to verify the bank account of one of its subsidiaries because $66m was missing from the subsidiary of which the second claimant was an executive director; Failing to inform the court on the ex...