(A) Introduction
In Aeneas Capital Ltd and others v. Cheung Wing Tsz, HCA 655/2021, date of judgment: 29 August 2025 [1], the Court addressed the issue of costs in relation to an application for discovery against a non-party taken out by Cheung Wing Tsz (“Cheung”).
This case provides useful guidance on the Court’s approach on its discretion in awarding costs in relation to non-party discovery applications.
(B) Facts
The Plaintiffs (by Original Action) and Defendants (by Counterclaim) (the “Defendants”, and “D1”, “D2”, “D3” and “D4” respectively) alleged that Cheung opened a securities account with Futu Securities International (Hong Kong) Limited under her name (the “Futu Account”) and that D1 was authorized to manage Cheung’s funds on her behalf. [2]
On the other hand, Cheung alleged that the Futu Account was opened without her genuine authorization because the Defendants conspired against her and misused a phone number (the “Designated Phone Number”) and an email not belonging to her to open the Futu Account. [3]
On 16 April 2024, Cheung took out a specific discovery against the Defendants, seeking communications records (emails and SMS messages) linked to certain phone numbers and email accounts. [4]
The Defendants responded, by way of affirmation, that the requested documents were no longer in their possession, custody, or power. In particular, the Designated Phone Number was tied to a prepaid SIM card (the “Prepaid SIM Card”) which was assigned to a mobile phone provided by D1’s operations team to him for trading activities in relation to the Futu Account. [5]
Given the said affirmation, Cheung did not pursue the specific discovery against the Defendants further. [6] Instead, on 3 June 2025, Cheung issued a non-party discovery summons under Section 42(1) of the High Court Ordinance (Cap. 4) and Order 24 rule 7A(2) of the Rules of the High Court (Cap. 4A) (“RHC”) (the “Non-Party Discovery Summons”) against Ling Maximilian Shui Hung (“Ling”). [7] Ling was a director of D1 until 30 November 2024 and police investigations showed that he was the registered owner of the Designated Phone Number. [8]
Ling responded, by way of affirmation, that although he was the registered user of the Prepaid SIM Card, he handed it over to D1’s operations team and had no further involvement. He also confirmed that the service of the Prepaid SIM card had been disconnected. [9]
The Non-Party Discovery Summons was substantively resolved, leaving only the issue of costs to be determined. [10]
(C) Decision
First Issue: Whether Ling should be entitled to his costs of and incidental to the Non-Party Discovery Summons
The Court reaffirmed the principle under Order 62 rule 3(12) of RHC that non-party should generally be entitled to costs of the non-party discovery application and that such costs are normally taxed/assessed on an indemnity basis. The Court retains discretion to depart from this principle. The burden was on Cheung to justify any departure from the usual costs order. [11]
The Court declined to follow Jowers v Kinney [2019] 5 HKLRD 686, which held that a “pre-application request” must be made before taking out a non-party discovery application. The Court viewed that the presence of a pre-application request may be a relevant factor in the exercise of discretion on costs, but it is not an absolute requirement for making the non-party discovery application. [12]
In this case, the Court found no justification to depart from the usual costs order and held that Ling should be entitled to his costs of and incidental to the Non-Party Discovery Summons. [13]
Second Issue: Whether Ling’s costs should be borne by the Defendants or Cheung or both
The Court noted that Order 62 rule 3(12) of RHC only provides for Ling’s entitlement to costs, but does not specify who should be responsible for such costs. This leaves the Court with broad discretion. [14]
The Court found that Cheung was reasonable to take out the Non-Party Discovery Summons without a pre-application request because the police investigations indicated Ling’s involvement as the registered owner of the Designated Phone Number and he was a former director of D1.
Further, the Court explained that the focus should not be solely on which party ultimately “wins” the non-party discovery application. Although Cheung’s ultimate goal of obtaining the documents was not achieved, the Non-Party Discovery Summons was justified. As such, the Court ordered that Ling’s costs be initially shared equally by Cheung and the Defendants, but such costs shall be treated as part of their respective costs of this action. The respective costs of Cheung and the Defendants in relation to the Non-Party Discovery Summons should be costs in the cause. [15]
Third Issue: Whether Ling’s costs should be borne by Cheung on an indemnity basis
The Defendants submitted that Ling’s costs should be borne by Cheung on an indemnity basis on the ground that the Non-Party Discovery Summons was totally without merits. [16]
The Court rejected the said argument and found that the Defendants’ submissions for indemnity costs was totally without merits. The Court reminded practitioners to exercise their good common sense in deciding whether pursuing indemnity costs is justified, based on the seriousness of the case and the merits of the application. [17]
(D) Key Takeaways
In conclusion, this case underscores the Court’s broad discretion in awarding costs in non-party discovery applications. Under Order 62 rule 3(12) of the RHC, non-parties are generally entitled to costs of non-party discovery applications, taxed/ assessed on an indemnity basis. However, the Court may depart from this general principle based on all relevant circumstances.
Further, a pre-application request is not necessary for non-party discovery applications, though it may be a relevant factor in costs decision. The Court will consider the reasonableness and merit of such application, even if the applicant does not ultimately obtain the documents sought.
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