YAN OI TONG LTD v. CHAN KA WING

HCA 253/2018

[2019] HKCFI 2794

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 253 OF 2018

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DECISION

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Introduction

1.  This was a simple matter.  Unfortunately, the parties made it unnecessarily complicated. 

2.  By a summons filed on 3 September 2019 (“the Summons”), the Plaintiff (“P”) sought leave to file two supplemental witness statements, without providing this Court, or the 2^nd Defendant (“D2”), with the drafts. 

3.  Since D2 had not seen the drafts and was not in a position to consent, the Summons was opposed, and adjourned for arguments. Some directions for the filing of affidavit evidence were given. 

4.  Drafts were eventually produced by P on 23 September 2019, and D2 was in a position to consider his position.  On 8 October 2019, D2 stated he would be prepared to consent to the Summons, provided that there be an additional direction granting leave to D2 to file his own supplemental witness statements in reply.  More controversially, D2 then said he would ask for costs, payable by P forthwith, “on indemnity basis”, and stated his reasons. 

5.  D2’s request that costs of the Summons be paid by P forthwith “on indemnity basis” provoked a very strong response from P.  To put this in context, D2 accused P “and its legal advisors” of misconduct and asked for HKD 130,850. 

6.  Since P and D2 could not reach an agreement on the issue of costs, the Summons was listed before me, with 2 hours reserved. 

7.  Having heard the parties’ submissions, my decision is to make the following orders: -

(1)  Leave be granted to P to file and serve the signed versions of its supplemental witness statements together with their signed statements of truth as per the drafts annexed to the Affirmation of Leung Chung Boon filed on 23 September 2019 at or before 5pm on 26 November 2019; 

(2)  Leave be granted to D2 to file and serve the signed versions of his supplemental witness statements in reply together with their signed statements of truth, the contents of which must be limited to matters raised in and/or arising from P’s aforesaid supplemental witness statements, at or before 5pm on 24 December 2019; and 

(3)  Costs of the Summons, including the costs of today(for which there shall be Certificate for Counsel), be costs in the cause of this action. 

(Collectively, “the Decision”)

8.  My reasons for the Decision are as follows. 

P’s Submissions

9.  Mr Brian Lo, Counsel for P, submits, inter alia, that: -

(1)  The observations of Lam J (as Lam V-P then was) in Midland Business Management v Lo Man Kui (No 2) [2011] 2 HKLRD 667 should be distinguished on the facts of this case, and on the facts of this case the costs of the Summons should be “in any event” instead of “forthwith”;

(2)  With reference to both Asgain Co Ltd v Cheng Ka Yan [2017] 4 HKLRD 779 and Lessy SARL v Pacific Star Development Limited and Another [1996] 2 HKLR 1, the issue of the costs of today’s hearing should be treated separately so that whereas the costs of the Summons should be paid by P to D2, the costs of today’s hearing should be paid by D2 to P; 

(3)  It was wholly unreasonable and wrong for D2 to have insisted on being awarded costs “on indemnity basis”, and/or to have put in a grossly inflated statement of costs; 

(4)  Even if P were ordered to pay the costs of the Summons to D2 forthwith, the quantum of such costs should at most be HKD 9,800 (as opposed to HKD 130,850 as claimed); and 

(5)  The costs of D2’s affirmation in opposition should in any case be disallowed. 

D2’s Submissions

10.  Ms Eva Wong, Solicitor for D2, submits, inter alia, that: -

(1)  The observations of Lam J (as Lam V-P then was) in Midland Business Management (above) applies in our present case, and the costs of the Summons should be paid “forthwith” instead of “in any event”;

(2)  Indemnity costs would be appropriate in our case but even if costs should be assessed on party-and-party basis, D2 should still be paid HKD 94,100 for the Summons; and

(3)  Since D2 had prepared, filed and served his affirmation in opposition pursuant to and in compliance with a valid court order, the costs of doing so should not be disallowed. 

My View

11.  In my view, both P and D2 were plainly at fault.  Borrowing the well-known words of Stone J in Wong Shui Kee Roger v Victor LL Chu [2003] 1 HKC 125 at 138 (paragraph 38): -

“It strikes me that a healthy dose of perspective and common sense has been sorely lacking in this litigation, which in my view represents, at the least, a remarkable waste of costs.”

12.  P was at fault, as P plainly should have sought D2’s consent to file its supplemental witness statements by correspondence.  As events transpired, D2’s concern was merely the absence of drafts, and the absence of a proposal enabling D2 to file his own supplemental witness statements in reply.  These obstacles could have been resolved by correspondence at very low costs.  If P had simply sent its drafts to D2 with a draft Consent Summons attached for D2’s comments, one would have thought the whole issue would have been resolved amicably.  Just how it was that P saw fit to take out the Summons, but without sending draft supplemental witness statements to D2 for his comments, is with respect a mystery to me. 

13.  D2 was also at fault.  Once D2 had read P’s drafts, D2 should have simply sent a draft Consent Summons to P for its comments.  Instead of doing so, D2 embarked on a wholly unnecessary attack on the conduct of P and its lawyers.  With respect, the attack did not assist this Court and did not in any way advance D2’s own interests.  Further, on the facts of this case, D2’s insistence on being awarded costs “on indemnity basis” is, with respect, misconceived.  Having read everything, I take the view that the litigation conduct of P, whilst not satisfactory, came nowhere near the kind of conduct which would justify having costs taxed on the indemnity basis. 

14.  In my view, both P and D2 should be reminded of Order 1A rule 1(c) of the RHC, which emphasizes the need for all litigants to have a sense of reasonable proportion and procedural economy in the conduct of proceedings.  Further, both P and D2 should be reminded that this Court shall take into account the factors set out in Order 62 rule 5 of the RHC in exercising its judicial discretion on costs. 

15.  Given the conduct of the parties as set out above, and the fact that there is no clear “winner” for the Summons, it would in my view be inappropriate to order costs against either P or D2, or to order costs to be paid forthwith. 

16.  All things considered, the most appropriate costs order for the Summons is costs in the cause of this action.  The question on how much of D2’s costs, if any at all, for preparing, filing and serving his affirmation in opposition should be allowed on taxation should be left to the Taxation Master ultimately responsible for taxing the costs of the whole action.  I do hope P and D2 can from now on focus on the real, substantive, issues in dispute in this action, and refrain from turning interlocutory matters into satellite litigation with a life of its own. 

17.  Given that D2 attempted to seek a forthwith payment of HKD 130,850 from P for the Summons and the sum was plainly excessive, it was appropriate for P to have instructed a “baby junior” Counsel to attend this hearing to resist it.  Mr Lo, Counsel for P, had in fact been helpful to this Court.  I do certify the attendance of Mr Lo at this hearing as reasonable, necessary and proper. 

Final Remarks

18.  I do thank both advocates for their most able assistance.