HCA 11070/1998
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO. 11070 OF 1998
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BETWEEN
THE OFFICIAL SOLICITOR, EXECUTOR OF THE ESTATE OF SHIU PAK NIN, DECEASED (SUBSTITUTED AS PLAINTIFF IN PLACE OF SHIU PAK NIN BY HIS NEXT FRIEND THE OFFICIAL SOLICITOR, PURSUANT TO MASTER B KWAN’S ORDER DATED 19 AUGUST 2009)
Plaintiff
and
HSBC INTERNATIONAL TRUSTEE LIMITED
1st Defendant
FLORA SHIU
2nd Defendant
PANTOL LIMITED
3rd Defendant
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Before: Deputy High Court Judge Au-Yeung in Chambers
Date of Hearing: 12 May 2011
Date of Handing Down Judgment: 12 August 2011
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JUDGMENT
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1. This Summons raises the issue of whether or not a next friend should be ordered to pay costs of the defendants for the period when he was the next friend, leaving him to seek indemnity from the estate of the deceased plaintiff for whom he acted.
THE FACTS
2. The facts, which are largely not disputed, are taken from the succinct skeleton submission of Mr Yin for the Official Solicitor.
3. The present action (“this High Court Action”) was instituted by Mr Shiu Yuen Chit (“Mr Shiu”) as next friend for his father Mr Shiu Pak Nin (“the Father”), now deceased. The purpose of the exercise was to set aside 2 trusts (“the Impugned Trusts”). If the exercise were successful, then upon the death of the Father, the bulk of his property would devolve to Madam Law (Mr Shiu’s mother) and her issues under a will (“the Will”) which was purportedly executed by the Father after the date of the Impugned Trusts, instead of being divided more or less equally amongst all of the issues of the Father by different women under the Impuged Trusts.
4. The 2nd Defendant was one of the beneficiaries under the Impugned Trusts but not a beneficiary under the Will. She was the chief protagonist in this High Court Action. She retaliated by commencing mental health proceedings in HCMP 4628 of 2003 (“the MH Proceedings”) in which the Official Solicitor was appointed to act as the committee of the estate of the Father.
5. Mr Shiu was subsequently replaced by the Official Solicitor as the next friend in this High Court Action. On 19 August 2009, the Official Solicitor as executor substituted herself as plaintiff and ceased to be the next friend of the Father in this High Court Action.
6. Eventually, the Official Solicitor decided (with the sanction of the Court sitting in its mental health jurisdiction) that it would not be in the best interest of the Father for this High Court Action to be fought to the end. Pursuant to the Order of Lam J in the MH Proceedings, a Deed of Confirmation was executed in the name of the Father by the Official Solicitor acting as the committee of his estate whereby the validity of the Impugned Trusts was affirmed. At the same time, a statutory will was executed for the Father pursuant to the order of the Court so as to avoid litigation over the validity of the Will which otherwise would almost certainly arise after the death of the Father. This has rendered the issues raised in this High Court Action academic. The present summons was taken out pursuant to an order of Lam J dated 16 May 2007 in the MH Proceedings in order to bring this High Court Action to a formal conclusion.
7. Mr Shiu was next friend from 1998 when the writ in the High Court Action was issued. He remained so despite the order dated 27 March 2000 appointing the Official Solicitor as committee until 31 January 2002 when he (with his consent) was replaced by the Official Solicitor. The Father died on 26 March 2008. The Official Solicitor is now appearing in her capacity as his executor.
8. Paragraphs 1 and 6 of the Summons have been disposed of, such that this High Court Action has been dismissed and the funds in Court have been released to the 1st Defendant as trustee of the 2 Impugned Trusts. Paragraphs 2 and 4 are not in dispute.
THE DISPUTE
9. The disputed parts of the Summons are as follows:
“3. Upon dismissal of this action, [Mr Shiu] do pay the Defendants’ costs of the HC Action incurred prior to 31st January 2002 [i.e. during the time he was the next friend], such costs to be taxed on a trustee basis as against the 1st Defendant and on a party-and-party basis as against the 2nd and 3rd Defendants if not agreed, but such payment is to be without prejudice to any right of indemnity which [Mr Shiu] may have as against the Estate of [the Father] in respect of such costs.
5. Any right of indemnity which the parties may have under paragraphs (2) and (3) above to be determined in HCMP No. 2276 of 1999 [i.e. the MH Proceedings].”
10. Since this High Court Action was dismissed, it is correct that the Defendants should be granted party-and party costs and on the bases set out in paragraph 3 of the Summons. The true question is whether the next friend or the estate is the first port of call for the Defendants’ costs. The dispute is thus effectively between the Official Solicitor as executor and Mr Shiu as former next friend.
11. Mr Shiu submits, in relation to paragraph 3 of the Summons that a next friend is not liable for costs because of the statutory scheme on costs and the view of the Court of Final Appeal. He does not consent to an order being made for fear of insufficient funds in the estate. In relation to paragraph 5, he submits that the Court in its mental health jurisdiction is functus officio. The Official Solicitor, on the other hand, prays in aid the Chancery practice in England and the Court’s inherent jurisdiction to order the next friend (who is an officer of the Court) personally to pay costs to the defendants but with a right to indemnity from the estate.
12. The issues are:
A. Whether the Court has jurisdiction to order a next friend to bear costs?
B. The proper forum for exercise of that jurisdiction if it does exist.
A. WHETHER THE COURT HAS JURISDICTION TO ORDER A NEXT FRIEND TO BEAR COSTS
13. To answer the first issue, one has to examine
(1) the statutory scheme;
(2) the Chancery practice of England; and
(3) the inherent jurisdiction of the Court; and
(4) the view of the Court of Final Appeal.
A1. The Statutory Scheme
14. The power to award costs is regulated by statute and not common law: Financial Secretary v. Wong [2003] 6 HKCFAR 511
“103. One starts with the proposition that, historically, at common law, the court had no power to award costs.
104. As Lord Blackburn pointed out in Garnet v Bradley
“Costs in Courts of Common Law were not by Common Law at all, they were entirely and absolutely creatures of statute ...”
Hence, in R v Beadle
“... as yet, there is no enactment applicable to this case where, on an information for a penalty under an Excise Act, there has been an acquittal, an appeal against that acquittal, and a confirmation of it. It would be becoming that a party thus twice tried, and twice acquitted, should have his costs; but he has them not by common law; and there is no enactment giving them to him.”
105. In the Court of Chancery, the position was different - see the observations of Lord Hatherley in Garnet v Bradley Andrews v. Barnes
106. Then came the Judicature Act 1875, mingling the jurisdictions of the courts of common law and equity. By Order LV (incorporated as part of the Act in the schedule) judges of the High Court were given a general discretion as to costs. Order LV is in these terms:
“Subject to the provisions of the Act, the costs of and incident to all proceedings in the High Court shall be in the discretion of the Court; but nothing herein contained shall deprive a trustee, mortgagee, or other person, of any right to costs out of a particular estate or fund to which he would be entitled according to the rule hitherto acted upon in Courts of Equity: Provided, that where any action or issue is tried by a jury, the costs shall follow the event, unless upon application made at the trial, for good cause shown, the Judge, before whom such action or issue is tried, or the Court shall otherwise order.”
107. Plainly, the intention of the legislature was to sweep all the powers of the judges of the High Court as regards costs under one roof: categorized by Lord Hatherley in Garnet v Bradley
"absolute discretion (meaning of course his judicial discretion) to determine this question of costs".
108. Ever since that time, the jurisdiction in England to award costs has been entirely statutory. Thus, in Zanussi v Anglos Venezuelan Real Estate and Agricultural Development Ltd The Times , 18 April 1996), the Court of Appeal held that the English statute did not confer jurisdiction to award costs other than costs incurred in the proceedings before the court or incidental to those proceedings.
109. In Hong Kong the Supreme Court of Judicature was first established in 1844 by Ordinance No. 15 of that year. In essence the law of England was introduced into Hong Kong, except where local conditions rendered them inapplicable or where they had been modified by laws passed by the local legislature. The Supreme Court Ordinance of 1873 established the model for the modern Supreme Court which existed (with many modification) until the resumption of sovereignty in 1997. Throughout this period the jurisdiction and the practice relating to the award of costs in Hong Kong followed that of England: to the extent that the current s.52A(1) of the High Court Ordinance is in terms virtually identical to s.51(1) of the Supreme Court Act 1981.
110. It follows from what is said above that in Hong Kong, as in England, the jurisdiction of the High Court to award costs is statutory. It would seem from the High Court of Australia's judgment in Knight v FP Special Assets Ltd
15. Since the summons was taken out on 20 December 2007 pursuant to Order 21, it is the pre-CJR provisions on costs that are relevant for consideration. The governing statute then was section 52A of the High Court Ordinance (“the old section 52A”), Cap.4, which provides as follows:
“(1) Subject to the provisions of rules of court, the costs of and incidental to all proceedings in the Court of Appeal in its civil jurisdiction and in the Court of First Instance, including the administration of estates and trusts, shall be in the discretion of the Court and the Court shall have full power to determine by whom and to what extent the costs are to be paid.
(2) Subject to specific provision made in this or any other Ordinance (other than subsidiary legislation) nothing in subsection (1) shall authorize an award of costs against a person who is not a party to the relevant proceedings.”
16. “Party” is defined in section 2 as
“Unless the context otherwise requires … includes every person … served with notice of or attending any proceedings, although not named on the record.”
17. The section 2 definition refers to someone other than the person on record attending proceedings in their own capacities.
“Section 2 refers to someone served with notice of and attending proceedings other than the party on record. The party on record will of course serve and be served with the documents in the proceedings or attending the proceedings in its capacity as a party on record. Section 2 covers those persons who are not parties on record but nonetheless are served with notice of and attending proceedings. In my view, such persons must be served with notice of or attending proceedings in their own capacities. Other than the application before me, National Insurance was not served with notice of proceedings in its capacity as an insurer of the Plaintiff nor had it attended any of the proceedings in its capacity as an insurer of the Plaintiff. The service of the court documents was on the Plaintiff and the attendance in the proceedings was that of the Plaintiff whose action it was.” The Owners of Cargo Lately Laden on Board the “C.R. Pointe Noire” v. The Owners of the Ship “C.R. Pointe Noire” & another, HCAJ 165/1988, 28.6.1994, Deputy Judge Cheung, as he then was
18. The combined effect of sections 2 and 52A is this:
“In the absence of any specific statutory provision, a party who intends to seek costs against a non-party (in the sense that he is not named on record), has to either:
(1) satisfy the court that the non-party is in fact a “party” within the meaning of s 2 of the High Court Ordinance; or
(2) apply for a joinder to join the non-party to the proceedings in order to overcome the prohibition in s 52A(2).”
Best Consultant Ltd v. Aurasound Speakers Ltd [2005] 4 HKC 357 per Deputy Judge Poon (as he then was), upheld by the Court of AppealCACV 41/2006, 17.10.2006, Yuen JA.
19. A next friend is not a party to an action. This is why discovery cannot be ordered against him: In re Corsellis, Lawton v. Elwes [1883] 52 Ch D 399; Pink v. J.A. Sharwood & Co. Ltd [1913] 2 Ch 286.
20. That a next friend is not a party is also borne out by the tenor of the High Court Ordinance (“HCO”). Section 56 HCO provides for the power to make rules of court requiring a party to pending proceedings to make interim payment by payment into court or by paying it to another party to the proceedings. Sub-sections 56(4) and (5)(b) provide:
“(4) Nothing in this section shall be construed as affecting the exercise of any power relating to costs, including any power to make rules of court relating to costs.
(5) In this section-
(a) "interim payment" (中期付款), in relation to a party to any proceedings, means a payment on account of any damages, debt or other sum (excluding any costs) which that party may be held liable to pay to or for the benefit of another party to the proceedings if a final judgment or order of the Court in the proceedings is given or made in favour of that other party; and
(b) any reference to a party to any proceedings includes a reference to any person who for the purposes of the proceedings acts as next friend or guardian of a party to the proceedings.”
21. I agree with Mr Tracy acting for Mr Shiu that a next friend is not generally to be regarded as a party under HCO, otherwise s.56(5) which imposes a role on the next friend as if he were a party for interim payment purposes would be otiose.
22. Section 56(4) precludes not only a interim payment on account of costs (as opposed to damages), but must also rule out any exception to the principle that a next friend, as a non-party, cannot be ordered to pay the costs of the proceedings by the court in its general costs jurisdiction under the old section 52A(1).
23. There is nothing specific in HCO or any other Ordinance which authorizes an award of costs against a next friend. So the old section 52A(2) is not satisfied.
24. On the face of the old section 52A, there is no jurisdiction for the Court to order a next friend to bear costs.
A2. Chancery Practice in England
25. Chancery practice in England has always recognized the liability of the next friend for costs.
26. Before a committee is formed for a mentally incapacitated person (described as “of unsound mind” or “a lunatic” in the old days) (“the patient”), anyone willing to act can be the next friend:
“In Chancery it had long been the settled practice to institute suits in the names of lunatics not so found by inquisition, by a next friend. Applications to stay such suits were also frequently made with success: see generally on such suits Jones v. Lloyd (2); Beall v, Smith (3); Farnham v. Milward & Co . (4); In re George Armstrong & Sons . (5) The alleged lunatic could make such application himself if he asserted his sanity; and any
one willing to act as next friend could make it in the alleged lunatic’s name, as in Howell v. Lewis . (6) Even the defendant might apply: see Wartnaby v. Wartnaby (7)and Porter v. Porter (8),per Cotton L.J. When a lunatic was so found by inquisition, the Court of Chancery would stay a suit instituted in his name until the appointment of a committee: see Hartley v. Gilbert. ” See Didisheim v. London and Westminster Bank [1900] 2 Ch 15, at 44
27. A next friend is there in order to give security for the costs to the defendant although the defendant can waive that requirement: In re Brocklebank [1877] 6 Ch D 358.
28. The next friend alone is liable for costs:
“The position of the infant is such that no costs can be recovered from her either directly or indirectly, for she has no estate, and is apparently disabled for life. The next friend, therefore, alone is liable for costs, …” Rhodes v. Swithenbank [1889] 22 QBD 577, per Lord Esher, MR
29. The court has jurisdiction to order him to pay costs: Huxley v. Wootton [1912] 29 Times Law Report 132. He has to pay costs where the court does not make an order on the motion: Buckly v. Buckeridge [1767] Dickens 395.
30. The imposition of liability on costs was irrespective of fault of the next friend. For example, a next friend resident abroad is liable to security for costs: Didisheim v London and Westminister Bank [1900] 2 Ch 15, CA; also In re Payne, Randle v. Payne [1883] 23 Ch D 288,where the court made an order for security for costs against the next friend on the ground that he was a person of no property and dismissed the action with costs when the order was not complied with.
31. Certainly, the justification for liability to pay costs is stronger where there is misconduct or where the next friend does not act in the best interests of patient or infant. The following are examples :
(i) The next friend was aware of all the circumstances for several years and it was only after a quarrel with the defendant that he took the proceedings. The court held that the real cause of his bringing the action was the desire to annoy the defendant. Golds v. Kerr [1884] WN 46.
(ii) Where the next friend instituted the action with the sole object of extorting money which ought never to have been commenced: Huxley v. Wootton [1912] 29 Times Law Report 132.
32. Mr Tracy submits that the “infant” cases were special cases. It was by reason of the infant’s inherent incapacity to bind himself or to hold property in England, and of his being under the protection of the Court of Chancery that that Court would not order costs against him but against his next friend. By contrast, there was no “patient” cases which say that a patient’s next friend was primarily liable in costs. Palmer v, Walesby [1867-68] LR3 Ch App 732 shows that the next friend of a patient would be liable if there was misconduct.
33. Infants and patients are recognized to be persons having legal disabilities requiring assistance and the court does require those who act for them to act in their best interests. I do not think the law should impose different costs obligations on a next friend depending on which category of persons he acts for and whether or not that person has property rights.
34. The Chancery practice in England has been succinctly summarized in The Supreme Court Practice 1999, Vol 1, para 80/2/10 and 80/2/11:
“Where an action brought by a person under disability is dismissed, with costs awarded against the next friend or guardian ad litem, then, in the absence of misconduct on his part, he is entitled to remedy over for such costs as against the property of the minor or mentally incapacitated person. In such circumstances, the judgment should direct the costs to be paid by the next friend without prejudice to his right of indemnity as against the property of the infant or patient.
35. The Chancery practice has existed at a time when section 51 of the Supreme Court Act 1981, c.54[1] , and its predecessors[2] were in force. Those statutory provisions were in terms similar to our old sub-section 52A(1) HCO but did not contain sub-section 2. Despite that, the authorities considered that the English Court had no power to order costs against non-parties: Forbes-Smith v. Forbes-Smith [1901] p.258; John Fairfax and Son Pty. Ltd. V. E.C. de Witt and Co. (Australia) Pty. Ltd [1958] 1 QB 323. In that light, the Chancery Court still considered it fit to make the next friend who was not a party primarily liable to costs. It was only in 1986 that the House of Lords overruled those decisions and held that the English version gave wide powers to the Court over costs and it contained no implied ban on an award of costs against non-parties because of the express wording of statute. The House of Lords did recognize the “special cases” where costs might be awarded against “a solicitor acting for a party in the proceedings, against a relator in a relator action, and against a next friend” as instances where costs might indeed be awarded against a person who was not a party to the proceedings: Aiden Shipping Co. Ltd. v. Interbulk Ltd [1986] 1 AC 965. Further, the repealed County Court Rules O10, r.12 and Rule 21.4(3)(c) of the Civil Procedure Rules of England[3] expressly require a next friend to give an undertaking to pay costs subject to recoupment from the assets of the child or protected person.
Application to Hong Kong
36. The Chancery practice has been adopted in Hong Kong by virtue of section 12(2)(a) HCO:
“(2) The civil jurisdiction of the Court of First Instance shall consist of-
(a) original jurisdiction and authority of a like nature and extent as that held and exercised by the Chancery, Family and Queen's Bench Divisions of the High Court of Justice in England; and
(b) any other jurisdiction, whether original or appellate jurisdiction, conferred on it by any law.”
37. The question is whether the practice to make a next friend liable for costs survived in Hong Kong? I agree with Mr Tracy that the answer is in the negative for the following reasons:
(i) As stated in paragraph 14 above, the power to award costs is regulated by statute and not common law (or equity). Section 12(2)(a) cannot introduce the general jurisdiction on costs to Hong Kong when Hong Kong has its own old section 52A which was markedly at variance from the English section 51 Supreme Court Act.
(ii) Section 12(2)(a) is not a “specific provision” made in the HCO or any other Ordinance that authorizes an award of costs against a next friend who is not a party to the relevant proceedings.
(iii) The maxim of statutory interpretation that “the general does not derogate from the particular” precludes the general section 12(2)(a) from overriding the specific prohibition in the old section 52A(2).
38. Mr Tracy additionally relies on the reason that there is no power to award costs in the Court’s general jurisdiction as to costs against an officer of the Court. He relies on the authority of AIE Co. Ltd v. Kay Kam Yu [1997] HKLRD 161, per Godfrey JA. I differ from his view because the Court there was saying that there was no power to make a solicitor bear the costs for the litigation which the solicitor had not acted. The circumstances were quite different from that of a next friend conducting the litigation.
39. The net result in Hong Kong is therefore that the Chancery practice is adopted in form by requiring a next friend to act for a patient (or an infant) but the very basis for having a next friend (which is to make him solely liable for costs) has been eroded. Order 80 of the Rules of the High Court contains no rule similar to repealed County Court Rules and rule 21.4(3)(c) of the English Civil Procedure Rules.
40. In my view, that net result is not unworkable or unjust. The next friend still retains a role of assisting the patient (or infant) in the conduct of the proceedings but he is not exposed to the risk of costs unless he is guilty of misconduct. A defendant is left to resort to the assets of the patient (or infant) for his costs.
41. I am aware that para 80/2/9 of the Hong Kong Civil Procedure 2008 (valid to the regime under the old section 52A) has adopted the Chancery practice as the Hong Kong practice but that has not considered the different statutory schemes on costs in the 2 jurisdictions.
42. Much as I appreciate the sound rationale behind the Chancery practice, I am unable to hold that the Chancery practice on costs against a next friend applies to Hong Kong.
A3. Inherent Jurisdiction
43. The Court has inherent jurisdiction to penalize special classes of non-parties for costs. A typical example is the power to make wasted costs orders against solicitors who are officers of the court: Ma So So Josephine v. Chin Yuk Lun Francis [2004] 3 HKLRD 294:
“They are officers of the court and owe duties to the court in the conduct of proceedings. The court has an inherent jurisdiction to supervise their conduct and to impose sanctions where the solicitor concerned has acted in breach of his duties
to the court. The sanctions include ordering the solicitor concerned to be personally liable for the costs for which his client or an opposite party would have been responsible. The jurisdiction to make such orders is commonly referred to as the wasted costs jurisdiction: Myers v Elman [1940] AC 282, Ridehalgh v Horsefield [1994] Ch 205 at 227B-E.”
44. The granting of a wasted costs order is a matter of discretion: Ma So So Josephine v. Chin Yuk Lun Francis [2004] 3 HKLRD 294.
“13. Ultimately, it is important to appreciate that the summary jurisdiction under the rule is discretionary. The court may make an order. It is not bound to do so and the aggrieved party has no right to an order.”
45. The making of a wasted order against a solicitor is premised on misconduct of the solicitor as expressly required by the old Order 62, rule 8. The applicant for wasted costs has to show a prima facie case for making such an order before the court will ask the solicitor to show cause as to why it should not bear costs wasted: Ma So So Josephine v. Chin Yuk Lun Francis, at para. 15 and 16.
46. The burden of proof is on the applicant: Ma So So Josephine v. Chin Yuk Lun Francis, at para. 23.
“Where the court exercises its discretion at the first stage deciding that the application should proceed further, the burden of proof does not shift to the solicitor. The burden remains on the applicant. It is for him to satisfy the court that an order should be made. However, where the court calls upon the solicitor to show cause, having satisfied itself that the applicant has shown a strong prima facie case, the evidential burden may, depending on the circumstances, shift to the solicitor: Ridehalgh v Horsefield at 239B; Bahai v Rashidian at 1342H-1343B.”
47. The next friend has also been described as an officer of the court:
“A next friend is an officer of the Court to take all measures for the benefit of the infant in the litigation in which he appears a next friend”: Rhodes v. Swithenbank, [1889] 22 QBD 577 per Bowen LJ; Aiden Shipping Ltd v. Interbulk Ltd [1986] 1AC 965, per Lord Goff.
In the premises, there is power under the Court’s inherent jurisdiction to order costs against a next friend.
48. The inherent jurisdiction of the court is part of procedural law, not of substantive law. It enables the court to maintain its authority and to prevent its processes being obstructed and abused: see Lord Morris of Borth-y-Gest in Connelly v. DPP [1964] AC 1254 at p.1301; Halsbury’s Laws of Hong Kong, Vol.5(1), para.909.0029; Financial Secretary v. Wong , [2003] 6 HKCFAR 511-514. Such power would be exercised, by analogy with wasted costs orders against solicitors, where a next friend is guilty of misconduct. The burden of proving misconduct falls on an applicant, the estate in this case.
49. There are rules governing the making of wasted costs orders against solicitors under Order 62, but none governing that against next friends. In my view, the rules do not confer jurisdiction but govern practice and procedure or how the jurisdiction is exercised. Lack of rules should not preclude the Court from making an order for costs under its inherent jurisdiction in an appropriate case.
A4. The CFA’s View on Jurisdiction
50. The Court of Appeal has held that there was no jurisdiction to order costs against a next friend: Wu Yee Pak v Un Fong Leung & Ors [2005] 2 HKLRD 169.
“16. Counsel for the respondents asks for costs to be paid by the next friend on the ground that it is he who has been advising the appellant. The appellant is now in his advanced years and had suffered a stroke a few years ago. He is represented by his son as next friend pursuant to a court order and since he is obviously unable to attend court, his son and granddaughter appear on his behalf. I do not think the Court has the power to make the order as requested by the respondents, nor is it proper to do so in the circumstances of this case.”
51. W.S. Clarke rightly points out that the Court of Final Appeal did not refer to any authorities to support its finding of lack of jurisdiction. He suggests that the explanation may lie in the fact that the next friend is not a party to the proceedings: see In re Corsellis, Lawton v. Elwes (1884) 52 L.J. See W.S, Clarke, Hong Kong Civil Court Practice (2008), Vol 1A, para.80.2.3.
52. The circumstances in which the next friend appeared in the Wu Yee Pak case were distinguishable. The appellant was old, had a stroke and was unable to attend Court. There was no mention of his being mentally incapacitated within the meaning of O.80, rule 1. Unlike Mr Shiu who voluntarily assumed the office of next friend, the next friend there was appointed by the Court to deal with an extant appeal. He was not, as required by Order 80 of the Rules of the High Court, represented by a firm of solicitors. Without being referred to authorities, I do not think the Hon. Chan PJ intended to exclude even inherent jurisdiction of the Court to order costs against a next friend.
B. THE APPROPRIATE FORUM FOR CONSIDERING THE EXERCISE OF THE COURT’S JURISDICTION TO ORDER COSTS AGAINST A NEXT FRIEND
53. Paragraph 5 of the Summons suggests that the Court in the exercise of its mental health jurisdiction is the appropriate forum. I agree with Mr Tracy that that is not the appropriate forum.
54. Upon decease of a mentally incapacitated person, the powers of the Court ceases except in relation to consequential matters. In Re KKC , HCMP3843/1998, 28.12.2005, Lam J held (at para 4),
“Upon the death of a patient, there are a number of consequences. First, the committee is automatically discharged under section 27(4) of the MHO. Second, the court can no longer exercise any Part II jurisdiction in respect of the estate. The only residual matters that the court may give directions are in respect of the final account of the estate, remuneration of the committee and transfer and delivery of funds belonging to the estate to the proper authority (c.f. Para.5-021 of Heywood & Massey, Court of Protection Practice). ”
55. Likewise, in Re IWY ,HCMP1192/2005, 22.2.2008, Lam J says,
“3. By reason of Section 27(4), upon the demise of IWY the Committee is discharged. The court ceases to have general jurisdiction under Part II of the Mental Health Ordinance to deal with the estate of IWY. It only has jurisdiction to deal with residual matters pertaining to or arising from the management or administration of her estate during her lifetime, see Re KKC HCMP 3843 of 1998, 28 December 2005.
4. Usually the residual jurisdiction involves this court giving directions for final account to be lodged and approved, for remuneration (if any) to be fixed and paid to a professional committee. The court may also be required to give directions regarding the transfer of assets or funds belonging to the estate to the proper authority. Heywood & Massey sets out a list of matters that may be dealt with by way of residual jurisdiction in para. 5-021. However, one must not treat that list as exhaustive. Given the infinite possibilities that a committee appointed under Part II may have acted in respect of the administration and management of the properties and affairs of a mentally incapacitated person, the court has to consider each case on its own facts to decide whether an act falls within the scope of the residual jurisdiction as a matter of principle. If it does, it is the duty of the court to give directions even though there is no precedent for the same in the past.”
56. Further, the persons interested in the estate of the Father during his period of incapacity might be different from those upon his death. Accordingly, it is not appropriate to invoke the Court’s jurisdiction under the MH Proceedings.
57. Other options would be to deal with the question of indemnity to the estate under (i) this High Court Action (akin to wasted costs proceedings against solicitors dealt with in the same set of proceedings in which the costs arose); or (ii) by fresh proceedings. I express no view on the appropriateness of any of these without the benefit of legal arguments.
58. The way the Summons is framed is to deal with the party-and-party costs between the Plaintiff and the Defendants. It purposively hives off issues of misconduct which the Court has to investigate if jurisdiction to order costs against a next friend exists. I therefore express no view on whether there was misconduct in Mr Shiu to justify an order for costs against him personally without a proper application and supporting evidence.
CONCLUSION
59. There is no jurisdiction under the old section 52A HCO to make an order for costs against a next friend. The English Chancery practice on such costs is not applicable because of a different statutory regime on costs in Hong Kong. Accordingly, the first port of call for the defendant’s costs is the patient (or his estate) and not the next friend. The Court has inherent jurisdiction to make costs orders against a next friend who is an officer of the Court, but such inherent jurisdiction will be exercisable only where misconduct is involved. Accordingly, insofar as party-and-party costs of this High Court Action is concerned, the costs order should be made against the estate. The MH Proceedings is not the proper forum for exercise of the costs jurisdiction against the next friend.
60. I order that:
3. Upon dismissal of this action, the Plaintiff (meaning the estate of the Father) do pay the Defendants’ costs of the HC Action incurred prior to 31st January 2002, such costs to be taxed on a trustee basis as against the 1st Defendant and on a party-and-party basis as against the 2nd and 3rd Defendants if not agreed.
5. The MH Proceedings is not the appropriate forum for determination of any right of indemnity for costs against the next friend.
61. By consent, there will be an order in terms of paragraphs 2 and 4 of the Summons, provided that “Shiu Yuen Chit” in paragraph 4 be substituted for by “the Plaintiff”.
COSTS
62. Costs of this Summons including all costs reserved should follow the event and be borne by the estate on the same basis as provided for in paragraphs 2 and 3 of the summons. Mr Shiu is not asking for costs and I make no order as regards him.
63. As for costs of this hearing, Mr Shiu, D1 and D2 are not asking for costs and I make no order.
64. The Official Solicitor’s costs shall be recovered from the estate on trustee basis.
65. All of the costs orders are on a nisi basis which will be made absolute 14 days after the handing down of this judgment.
66. I thank counsel and solicitors for their assistance.
(Queeny Au-Yeung)
Mr Michael Yin instructed by the Official Solicitors for the Plaintiff
Messrs Baker & Mckenzie for the 1st Defendant, absent
Mr Kevin Chan of Messrs Hastings for the 2nd Defendant
Miss Yvonne So of Messrs Yu, Tsang & Loong for the 3rd Defendant
Mr Maurice Peter Tracy leading Miss Jessie Shum instructed by Messrs Hau Lau Li & Yeung for Mr. Shiu Yuen Chit (former next friend of Shiu Pak Nin, deceased)
Appendix
(1) Predecessors to Section 51 of the Supreme Court Act 1981, c.54 of England referred to in footnote 2.
Act
Contents
Schedule, Rules of Procedure , rule 47 Supreme Court of Judicature Act 1873, c.66
Subject to the provisions of this Act, the costs of and incident to all proceedings in the High Court shall be in the discretion of the Court; but nothing herein contained shall deprive a trustee, mortgagee, or other person of any right to costs out of a particular estate or fund to which he would be entitled according to the rules hitherto acted upon in Courts of Equity.
Supreme Court of Judicature Act, 1875, c.77, Rules of Court in the First Schedule, Order LV
Subject to the provisions of the Act, the costs of and incident to all proceedings in the High Court shall be in the discretion of the Court; but nothing herein contained shall deprive a trustee, mortgagee, or other person of any right to costs out of a particular estate or fund to which he would be entitled according to the rules hitherto acted upon in Courts of Equity: Provided, that where any action or issue is tried by a jury, the costs shall follow the event, unless upon application made at the trial for good cause shown the Judge before whom such action or issue is tried or the Court shall otherwise order .
Section 5, Supreme Court of Judicature Act, 1890, c.44
Subject to the Supreme Court of Judicature Acts, and the rules of court made thereunder, and to the express provisions of any Statute, whether passed before or after the commencement of this Act, the costs of and incident to all proceedings in the Supreme Court, including the administration of estates and trusts , shall be in the discretion of the court or judge, and the court or judge shall have full power to determine by whom and to what extent such costs are to be paid.
Section 50, Supreme Court of Judicature (Consolidation) Act 1925, c.49
(1) Subject to the provisions of this Act and to rules of court and to the express provisions of any other Act, the costs of and incidental to all proceedings in the Supreme Court, including the administration of estates and trusts , shall be in the discretion of the court or judge, and the court or judge shall have full power to determine by whom and to what extent the costs are to be paid.
Act
Contents
Order 4, rule 2 of the repealed County Court Rules 1936 (as amended up to 15 September 1961) which required a next friend to sign an undertaking in a statutory form
“On giving the undertaking, the next friend shall be liable for costs in the same manner to the same extent as if he were himself a plaintiff, and, if the proceedings fail or are discontinued, an order for payment of costs may be made against the next friend whether an order for costs is or is not made against the person under disability, and proceedings may be taken on the order of the recovery of the costs as for the recovery of any amount payable under a judgment.” See Butterworths on Costs, Vol. 2 (1962), at page 1472.
Section 51, Supreme Court Act 1981, c.54
(1) Subject to the provision of this or any other Act and to rules of court, the costs of and incidental to all proceedings in the civil division of the Court of Appeal and in the High Court, including the administration of estates and trusts , shall be in the discretion of the court, and the court shall have full power to determine by whom and to what extent the costs are to be paid.
(2) Civil Procedure Rules
Act
Contents
CPR rule 21.4
(1) This rule does not apply if the court has appointed a person to be a litigation friend.
[1] It provides that:
(1) Subject to the provision of this or any other Act and to rules of court, the costs of and incidental to all proceedings in the civil division of the Court of Appeal and in the High Court, including the administration of estates and trusts , shall be in the discretion of the court, and the court shall have full power to determine by whom and to what extent the costs are to be paid.
(2) Nothing in subsection (1) shall alter the practice in any criminal cause or matter, or in bankruptcy.
(3) Provision may be made by rules of court for regulating any matters relating to costs of proceedings in the civil division of the Court of Appeal or in the High Court, including the administration of estates and trust.
[2] See appendix item 1 to this judgment which sets out all the relevant provisions.
[3] See item 2 of the Appendix.