RE WING FAI CONSTRUCTION CO LTD

CACV 244/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 244 OF 2004

(ON APPEAL FROM HCCW nO. 735 OF 2002)

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J U D G M E N T

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1.  On the 23^rd July 2004, Kwan J gave her decision against the appellants – Kelly Cheng Kit Yin and Robert Yip Kwong. The judge adjourned the argument on costs to the 23^rd September 2004 after the respondent – David John Kennedy indicated that indemnity costs would be sought.

2.  The appellants filed their Notice of Appeal on 10 August 2004 to meet the 21 days’ time limit prescribed under Order 59 Rule 4 (1)(b) of the Rules of the High Court.

3.  In their Notice of Appeal, the appellants sought an order that “the decision and any costs order (made) may be set aside”.

4.  On the 23 September 2004, the judge after hearing full arguments, ordered the appellants to pay indemnity costs to the respondent. There was then neither an amendment to the Notice of Appeal nor an application for leave to appeal against the indemnity costs order.

5.  At the hearing of the substantive appeal in June 2005, leading counsel for the appellants indicated that the indemnity costs order would be challenged irrespective of the success or otherwise of the substantive appeal.

6.  The Court of Appeal indicated that full particulars should be provided before considering the issue. Hence the present application by the appellants for leave to amend the Notice of Appeal with a view to set aside the indemnity costs order.

7.  Mr Whitehead SC, on behalf of the appellants, argues that no leave is required to appeal against the indemnity costs order as it is not an appeal against costs only, but part of a larger appeal. Mr Whitehead seeks reliance on the decision in Wheeler v Summerfield [1966] 2 QB 94 and in particular, the decision of Lord Denning as follows:

“As I have always understood this section of the Judicature Act, it means this: If a person makes no complaint against the judgment below, except about the order for costs, then he must obtain the leave of the trial judge before he can come to this court. But if he makes a complaint, not only about the costs but also about other matters then he can appeal both on those other matters and also on the costs; and the court has full jurisdiction to deal with them. Even if he fails on the other matters, this court has jurisdiction to deal with the costs.”

8.  Mr Whitehead emphasizes that the sequence of events made it not possible for the appellants to particularize the appeal against the indemnity costs order in the original Notice of Appeal. Mr Whitehead also indicates in his written submissions that, if necessary, leave to appeal against the indemnity costs order out of time should be granted.

9.  Mr Wadham of Messrs. Clifford Chance, on behalf of the respondent, argues that the Notice of Appeal filed on 10 August 2004 could not have intended to refer to the indemnity costs order, which was not made until 23 September 2004. If it was intended to refer to the indemnity costs order, Mr Wadham suggests that the Notice of Appeal offends Order 59 rule 3(2) for failure to refer to specific orders.

10.  Mr Wadham seeks to distinguish the appellants’ application from Wheeler v Somerfield (supra)on the basis that that case concerned a situation where the appeal was brought against both the substantive orders and the costs order by a notice filed after both sets of orders were made.

11.  Mr Wadham, relying on para. 59/3/16 of the Hong Kong Civil Procedure (2004), suggests that separate notices of appeal are required against separate orders made at separate hearings.

12.  Mr Wadham’s argument is a powerful one. Logically, the Notice of Appeal filed on 10 August 2004 could hardly have intended to refer to the indemnity costs order, which was only made on 23 September 2004.

13.  On the other hand, the appellants’ intention to challenge the indemnity costs order should come as no surprise to the respondent at all.

14.  After the judge decided against the appellants on 23^rd July 2004, the respondent there and then sought an order for indemnity costs, which was objected to and it led to the hearing on 23 September 2004.

15.  If the appellants had not intended to appeal against any indemnity costs order (thought sought but not yet made), there was hardly any explanation for them to include in their Notice of Appeal an application to set aside “any costs order”.

16.  If their appeal succeeds, any costs order would have to be set aside and if they fails, an adverse party and party costs order, which the appellant had conceded at the out set, would be inevitable.

17.  The suggestion that the appellants, by their Notice of Appeal, asked the Court of Appeal to consider the costs issue only if the substantive appeal was successful is perhaps too narrow and unrealistic a view to take.

18.  I am persuaded that the Court of Appeal, in an appeal on substantive issues, does have jurisdiction to deal with the costs order when no leave has been obtained under s 14(3)(e) of the High Court Ordinance if the costs issue has been properly brought before the Court.

19.  I am also of the view that the costs issue could only have been properly brought before the Court if the appellants, after the judge made the indemnity costs order on 23 September 2004, had filed a fresh notice of appeal or had promptly amended the original Notice of Appeal.

20.  The appellant did neither and is now seeking the indulgence of this Court to allow them leave to amend the Notice of Appeal.

21.  I would have refused the application if I were satisfied that there would be undue and significant prejudice to the respondent by allowing the application.

22.  However, I am not satisfied that the procedural irregularities in question will lead to any undue or significant prejudice to the respondent.

23.  The appellants’ approach to the costs issue is not unexpected. The alleged difficulties encountered by the respondent in dealing with the various applications by the appellants and in enforcing previous costs orders are not factors relevant to the exercise of my discretion. A party is entitled to take such steps as may be permitted by the rules and any attempt to operate outside the rules will be visited with the appropriate costs orders.

24.  I am persuaded that on the facts of this case, allowing the appellants to amend their Notice of Appeal to include their complaints against the indemnity costs order is a proper exercise of my discretion and I so order.

25.  In the light of the history and the nature of the complaints, I do not consider it necessary to have a separate hearing to deal with costs issue. It could be disposed of properly by way of written submissions.

26.  As both parties indicate that their approaches to the costs issue depend on the decision of the Court of Appeal in the substantive appeal, I will refrain from making immediate directions for the filing of written arguments on the costs issue.

27.  Upon the delivery of the judgment by the Court of Appeal, the parties should within 7 days indicate to the Court if and how the costs issue should be dealt with.

28.  As between the appellants and the respondent, I make no order as to costs of this application so that the position of the Official Receiver, who had raised no objection to the appellants’ application and is not present, would not be affected.