FENN KAR BAK LILY v. SO SHIU TSUNG THOMAS

DCCJ 2047/2020
DCCJ 220/2021
(Heard Together)

[2021] HKDC 1401

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2047 OF 2020

--------------------

BETWEEN

---------------------

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 220 OF 2021

--------------------

BETWEEN

---------------------

--------------------

DECISION

--------------------

Background

1.  By my decision dated 16 June 2021 (“the Decision”), this court determined the parties’ respective applications in these two actions leaving the costs issues unresolved pending written submissions of the parties. I have received all the written submissions and I dispose of the costs issue by this decision.

2.  In this decision, I shall adopt the abbreviations used in the Decision.

3.  To recap, this court allowed the striking out applications of Mr So and struck out the statements of claim in each of the two actions. Further, this court dismissed both actions and the applications for consolidation of the two actions. I also dismissed the Interlocutory Injunction Summons taken out by Madam Fenn.

4.  Mr So asks for indemnity costs in his 1^st and 2^nd S/O Summonses. In the Decision, I indicated that I had in mind making indemnity costs orders in respect of all the applications against the Claimants including Madam Fenn. In her written submissions, Ms Cheung for Mr So sets out the grounds for indemnity costs and Mr Au by his letter adopts her submissions. On the other hand, the Claimants in their written submissions even ask for costs against Mr So despite their total failure in these two actions.

Analysis

5.  Pertinent to the costs issue is the fact that this court acceded to the applications of Mr So to strike out the statements of claim in these two actions and dismissed the two actions on the ground that they were oppressive, vexatious and an abuse of process. This conclusion normally leads to an award of indemnity costs.

6.  Relevant principles relating to indemnity costs can be found in the oft-cited dictum of Godfrey J (as he then was) in Overseas Trust Bank Ltd v Coopers & Lybrand (a firm) and Others and Peat, Marwick, Mitchell & Co (a firm) and Another [1991] 1 HKLR 177 at pp.182G-183C, quoted with approval by the Court of Appeal in Choy Yee Chun v Bond Star Development Ltd [1997] HKLRD 1327. The judge had this to say,

“A case in which the successful party has demonstrated that the proceedings were initiated or prosecuted by the unsuccessful party in a manner which constitutes that party’s proceedings an abuse of the process of the court may well be a candidate for an award of taxation of costs on an indemnity basis. A taxation of the successful party’s costs on an indemnity basis could properly be ordered, where the proceedings were scandalous or vexatious, or had been initiated or prosecuted maliciously, or for an ulterior motive, or in an oppressive manner. Any proceedings instituted or prosecuted in such circumstances as to constitute an affront to the court could properly be the subject of a direction for taxation of the successful party’s costs on the indemnity basis.”

7.  Stock J (as he then was) in the Choy Yee Chun case added that though there must still be shown special and unusual features, even the circumstances particularized by Godfrey J are not to be taken as exhaustive of the conditions in which it might be appropriate to make such an award, and that the power to award taxation on an indemnity basis is not confined to cases which have been brought with an ulterior motive or for an improper purpose.

8.  I have expressed my strong views on the lack of merit of the two actions. Ms Cheung in her written submissions sets out all my criticisms about the misconceived allegations made in the two actions[1]. I do not see any need to repeat the same here. Madam Fenn and the Claimants are practising solicitors. Disappointingly, they saw fit to institute three sets of proceedings against Mr So, a seasoned professional arbitrator, with their demonstrably unmeritorious allegations devoid of factual basis. I have concluded that the two actions lack bona fides and amount to an abuse of process.

9.  In light of the established principles and given my findings and conclusions, an indemnity costs order is amply justified in my view.

10.  Ms Cheung further highlights the steadfast effort made by Mr So’s solicitors to convince Madam Fenn and the Claimants that the two actions should be discontinued by their letters dated 15 June 2020, 9 December 2020 and 3 February 2021 (collectively “the Letters”). They also warned them that striking out applications would be made and indemnity costs would be sought against them. Unfortunately, Madam Fenn and the Claimants failed to pay heed to such sound advice in the Letters and insisted on prosecuting the two actions. This is another reason why they should be ordered to pay indemnity costs to Mr So.

11.  Ms Cheung lastly draws my attention to the fact that Madam Fenn in other unrelated actions were also ordered to pay indemnity costs to her opponents. My conclusions in the Decision were made without any reference to those actions. I am of the view that those costs orders have no bearing on the present costs issue.

12.  Now I turn to the submissions of the Claimants. Principally, they complain about the refusal of Mr So to take part in mediation to settle their differences. They pointed out that they filed and served a mediation notice and a mediation certificate. They also made a sanctioned offer.

13.  In my judgment, in the particular circumstances of the present cases, Mr So’s refusal to accept any alternative dispute resolution is perfectly understandable. A number of serious and false allegations were made against him, attacking his professional integrity. The Claimants should not have instituted these proceedings against him at all. There is no reason why Mr So should be expected to make any concession in order to have these actions be discontinued and have his name cleared.

14.  Mr So was fully entitled to strike out the actions. His position stated in the Letters was correct and eventually agreed by this court in the Decision. The Claimants are unable to show that they have made any better offers prior to the striking out applications.

15.  In the premises, nothing advanced by the Claimants can justify an avoidance of an award of indemnity costs, let alone a departure from the general principle of costs following the events.

Conclusion and Order

16.  For the reasons given above, I am convinced that the Claimants should pay indemnity costs in all the applications in which they turned out to be an unsuccessful party.

17.  Therefore, I order that Madam Fenn should pay Mr So costs of and occasioned by the 1^st Action including the 1^st S/O Summons on an indemnity basis, to be taxed if not agreed, with certificate for counsel. Likewise, the Claimants should pay Mr So and Mr Au costs of and occasioned by the 2^nd Action including the 2^nd S/O Summons on an indemnity basis, to be taxed if not agreed, with certificate for counsel.

18.  Madam Fenn should also pay Mr So costs of and occasioned by the 1^st Consolidation Summons and the Claimants should pay Mr So and Mr Au costs of and occasioned by the 2^nd Consolidation Summons on an indemnity basis, to be taxed if not agreed, with certificate for counsel.

19.  Lastly, I order that Madam Fenn should pay Mr So costs of and occasioned by the Interlocutory Injunction Summons including all costs reserved, on an indemnity basis, to be taxed if not agreed, with certificate for counsel.