杨建梅 v. CHOW TAK WA

HCA 2507/2016

[2020] HKCFI 2020

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2507 OF 2016

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D E C I S I O N

(Variation of Costs Order Nisi)

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Introduction

1.  This Court handed down the judgment on 5 March 2020 after a trial in relation to P’s claim against D seeking repayment of alleged loans (“Judgment”).  I shall continue to adopt the abbreviations in the Judgment in this decision unless otherwise indicated.

2.  Pursuant to the Judgment, P’s claim against D was dismissed by this Court, and also the Injunction discharged.  I order P to pay D’s costs of and incidental to this action including any costs reserved to be taxed if not agreed (“Order Nisi”).

3.  On 12 May 2020, P applied for the Order Nisi to be varied to that be no order as to costs.

4.  The background to the parties’ dispute has been set out in the Judgment and will not be repeated herein.

Ground for variation

5.  The sole ground for variation by P was D’s refusal to mediate. 

Chronology of P’s attempts to mediate

6.  I set out the following chronology of P’s attempts at mediation, based essentially on the chronology prepared by P’s Counsel, Ms Rachel Chiu, in her written submissions[1]:

Event	Date	Reference to Bundle
P filed a Mediation Certificate indicating that she was willing to dissolve the dispute by mediation.	5 January 2017	[44-48]
D filed his 1st Mediation Certificate that he was unwilling to attempt mediation.	8 February 2017	[49-52]
The Registrar ordered D to file another Medication Certificate.	26 July 2017	[178-180]
D filed his 2nd Mediation Certificate that he was unwilling to attempt mediation with a letter in a sealed envelope to the Court explaining why he refused mediation.	27 July 2017	[53-56], [168-169]
It was ordered by the Court that the parties should attempt mediation as soon as practicable.	16 May 2019	[57-60]
P’s solicitors proposed two mediators to the D’s solicitors.	22 May 2019	[170-175]
D wrote a 2nd letter to the Court indicating he refused mediation.	23 May 2019	[176]
Without any reply, P’s solicitors sent another letter to D’s solicitors concerning arrangement of mediation.	15 July 2019	[177]

D’s reasons for refusal to mediate

7.  His Counsel, Mr Cheung, submitted that D, in declining mediation, had never taken the position that he had a strong case, and that facing the evidence of the Note, he had an uphill battle all along. Essentially, D’s reasons for refusing to attend mediation was because he did not owe P one single cent and that her conduct indicated that she was not a person to be trusted and that he had lost all faith in her sincerity and integrity, and that as such, there was no room to concede at all at a mediation.  Mr Cheung further submitted that if D were to agree to pay any amount at the mediation, this would only mean he had admitted liability which was contrary to his case and truth.  Mr Cheung also submitted that in any event, mediation would not have any reasonable prospect of success unless P managed to walk away with a large sum of money paid by D and pointed out that P’s steadfast adherence to her story during the trial confirmed the belief that she would not have agreed to accept anything much less the sum she was claiming.

Discussion

8.  Ms Chiu had referred the Court to Order 62 rule 5(1) of RHC, that in exercising its discretion as to costs, the Court shall, to such extent, if any, as may be appropriate in the circumstances, take into account, among others, the underlying objectives of Order 1A, rule 1 and conduct of parties.

9.  Further, the following is set out in paragraph 62/5/6, p 1265 of the Hong Kong Civil Procedure Vol 1, 2020 that:

“If a party gave a good reason why it thought ADR would not serve a useful purpose, that was one thing, if it failed to do so, that was a matter which the court might consider relevant although not conclusive in exercising its discretion as to costs.”

10.  Paragraph 4 of Practice Direction 31 also states that:

“In exercising its discretion on costs, the Court takes into account all relevant circumstances. These would include any unreasonable failure of a party to engage in mediation where this can be established by admissible materials. Legal representatives should advise their clients of the possibility of the Court making an adverse costs order where a party unreasonably fails to engage in mediation.”

11.  The issue here is whether D’s explanation for refusing mediation is a good reason or not.

12.  As said in the Judgment, the parties’ cohabitant relationship lasted at least 10 years and although it had its ups and downs, it was a loving relationship, and that there was no sufficient evidence that D was insincere or deceiving P in divorcing his wife, and that after D obtained the divorce, P decided to marry another man.  It is understandable that each side had accused the other of being insincere or deceitful, and there were a lot of emotions involved as seen from P’s evidence during the trial.  Having said this, due to the small amount involved, namely of RMB 952,500, the matter should really never have be commenced in the High Court, and further even though at the time of commencement, it was over the statutory monetary limit in the District Court, there was no reason why any excess could not have been waived by P, instead of incurring higher costs.  In any event, the matter should never have gone on to a 3 day trial including submissions.

13.  Even at the late stage of the PTR, this Court was still directing the parties to attempt mediation.  I understand that D’s position that he did not owe P one single cent notwithstanding the Note signed by him, but this would not mean that there was no room to concede at all at a mediation.  By way of example, any settlement can be expressed to be without prejudice to liability, or a proposed settlement can include no payment but simply in the form of mutual waiver of costs already incurred/ordered. Further, before one agrees to any settlement, a party is entitled to seek his/her own legal advice.  Any settlement would have saved further costs being incurred which would only benefit the lawyers. 

Conclusion

14.  Having considered the circumstances of this case, whether there was any reasonable prospect of success or not, I do not find the reasons given by D for his outright refusal to even attempt to mediate to be reasonable and they were not good reasons.  In fact, his letters show that there has been a complete misunderstanding on his part as to the mediation process.  I am thus prepared to vary the Order Nisi.

15.  However, I do not think there should be no order as to costs.  As said in the Judgment, I found P’s evidence unsatisfactory and that she was tailoring her evidence of the Loans according to the withdrawals on her bank statements, and that her oral evidence was also not consistent with her written evidence.  D is after all the overall winning party, and that he was dragged into a litigation, which was found to be unmeritorious, but spanned over 4 years and he had incurred substantial legal fees and that his bank account frozen due to the Injunction.  There is no reason why he should be deprived of his costs completely.  

16.  Having regard to all above said and the circumstances of this case.  I am prepared to vary the Order Nisi to that P is to pay 80% of D’s costs of and incidental to this action including any costs reserved, to be taxed if not agreed, and to include the costs of the present application.