MO YING v. BRILLEX DEVELOPMENT LTD AND ANOTHER

HCA 111/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 111 OF 2011

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D E C I S I O N

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1.  In a judgment handed down on 5 May 2014, I dismissed the claims brought by the plaintiff (who was referred to as the “Wife” in the judgment) against the 1st and 2nd defendants (who were referred to respectively in the judgment as the “Purchaser” and the “Husband”). I made an order nisi that the costs of the Defendants are to be paid by the Plaintiff to be taxed if not agreed.

2.  I now have two applications before me to vary my costs order nisi.  The first application is made by the Wife to make the Purchaser pay two-thirds of her costs in this action or, alternatively, to deprive the Purchaser all or some part of its costs in this action.  The second application is made by the Purchaser for a certificate for two counsel.

3.  I deal with the Wife’s application first.

A. Wife’s application on costs

4.  In determining this application, I have borne in mind the following rules and principles:

(1) Rules of the High Court Order 62, rule 3(2) provides, amongst other things, that:

“the Court shall, subject to this Order, order the costs to follow the event, except when it appears to the Court that in the circumstances of the case some other order should be made as to the whole or any part of the costs.”

(2) There is a discretion in the court to deprive a successful party of the whole or part of his costs because he had caused significant increase in the length or costs of the proceedings by raising issues on which he did not succeed.  Whether or not it should be done depends on all the circumstances.  This discretion exists for the purpose of avoiding the rigour of too inflexible an application of the rule that costs generally follow the event.  It is to be approached with due circumspection so as not to undermine the utility of that general rule.  See Commissioner of Inland Revenue v HIT Finance Limited (unreported, FACV 8/2007, 26 June 2008) paragraph 7 (Bokhary PJ).  These observations of Bokhary PJ in HIT Finance were recently repeated by the CFA in Pony HK World Limited v Vand Petro-Chemicals (BVI) Company Limited (unreported, FACV 4/2013, 18 March 2014) paragraph 4.

(3) Rules of the High Court Order 62, rule 5 provides:

“(1) The Court in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account -

(aa) the underlying objectives set out in Order 1A, rule 1;

...

(e) the conduct of all the parties;

(f) whether a party has succeeded on part of his case, even if he has not been wholly successful;

...

(2) For the purpose of paragraph (1)(e), the conduct of the parties includes-

(a) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(b) the manner in which a party has pursued or defend his case or a particular allegation or issue;

(c) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim; and

(d) conduct before, as well as during, the proceedings.”

(4) The burden rests with the losing party to demonstrate the circumstances which justify the exceptional course of displacing the general rule that costs should follow the event.  See Mariner International Hotels Limited v Atlas Limited (No 2) [2007] 10 HKCFAR 246 at paragraph 18 (Bokhary PJ).

(5) Where the successful party raises issues or makes allegations improperly or unnecessarily, the court may not deprive him of his costs but may order him to pay the whole or a part of the unsuccessful party’s costs.  See Re Elgindata Limited (No 2) [1992] 1 WLR 1207 at 1214B to C (Nourse LJ), applied with modification by Yuen JA in Wang Din Shin v Nina Kung (unreported, CACV 460/2002, 19 April 2005) at paragraph 39.

5.  Mr William Wong SC, on behalf of the Wife, leading Mr Justin Lam, pointed out that there were three distinct issues at the trial, namely (1) the Common Intention Construction Trust Issue, (2) the Bona Fide Purchaser Issue and (3) the Estoppel, Waiver, Acquiescence and Laches Issue, and that the Purchaser failed on the issues (2) and (3).  He submitted that the Purchaser’s failed issues caused a significant increase in the length and costs of the proceedings and that the Court should either order the Purchaser to pay two-thirds of the Wife’s costs or deprive the Purchaser of the whole or part of its costs in these proceedings.

6.  The starting point is to recognise the general rule that costs should follow the event.  In this case, I consider the general issue for determination by the Court was beneficial ownership of the Property. This was the “event”.  This central issue or “event” was resolved against the Wife and in favour of the Purchaser and the Husband.  This is why I made an order nisi in the judgment that the costs of the Purchaser and the Husband in this action are to be paid by the Wife to be taxed if not agreed.

7.  I am not persuaded by Mr Wong that the issues (2) and (3) were distinct issues.  In my view, those issues were defences raised by the Purchaser to resist the Wife’s claim that she had some beneficial interest in the Property.  They were not something so distinct and separate in themselves that the decision of them constituted an “event”.  As I made clear in paragraphs 99 and 135 of the judgment, these issues strictly did not arise given that I had ruled against the Wife on her claim regarding the beneficial ownership of the Property.  In any event, I do not agree with the suggestion that issues (2) and (3) had caused significant increase in the length or costs in the proceedings.

8.  For these reasons, I see no basis to depart from the general rule that costs should follow the event.  The Wife’s application to vary the costs order nisi is therefore dismissed.

B. Purchaser’s application for certificate for two counsel

9.  I now turn to deal with the Purchaser’s application for a certificate for two counsel, which is opposed by the Wife.

10.  A preliminary point was taken by Mr Wong to contend that the Purchaser’s Summons dated 20 May 2014 was filed out of time (being one day late) and therefore should be dismissed outright.

11.  Mr Alan Kwong, counsel for the Purchaser, accepted that his client was one day late in taking out that summons.  I was informed that the one-day delay was due to the miscalculation of time by the Purchaser’s solicitors.  The Purchaser has applied for an extension of time to make its application.  Mr Wong opposed this application on the basis that prejudice had been suffered by his client.  In response, Mr Kwong relied on a sentence in the Hong Kong Civil Procedure 2014, Volume 1, at paragraph 3/2/2 on page 59 which says:

“Where the delay is caused by mistake or omission by the applicant’s legal advisor, this may be a sufficient ground for justifying the Court in granting the extension.

And a case of Mobil Petroleum Company Inc v Registrar of Trademarks was referred to to support that proposition.

12.  As mentioned earlier, the Purchaser was only one day late in making its application.  Moreover, I note that the Purchaser’s solicitors already indicated to the Court on 19 May 2014 by a letter that they would like to have a certificate for two counsel, although this was not done in the form of a formal application.  In the circumstances of this case, I would exercise my discretion to grant to the Purchaser the necessary extension of time to apply for a certificate for two counsel.

13.  Turning to the merits of the application, I am of the view that it was appropriate in the circumstances of this case for the Purchaser to instruct a leading counsel and a junior counsel.  In reaching this decision, I have borne in mind the principles set out by Master Poon, as he then was, in Xin Juan Trading Company Limited v NPH Petrochemical Limited (unreported, HCA 18159/1998, 25 September 2000) at paragraphs 24 to 26.

(1) Given the nature of and the issues involved in the case, and despite the relatively modest value of the property in question, it seems to me that the Purchaser was justified to instruct a leading counsel for the trial.

(2) Further, I consider that it was reasonable for junior counsel to be instructed to assist leading counsel in the proper preparation of the case and to carry out legal research on the wide-ranging issues of law.

14.  Accordingly, I accede to the plaintiff’s application and grant a certificate for two counsel to the Purchaser.

15.  As far as the Purchaser’s summons for extension of time dated 6 June 2014 is concerned, the costs of that is to be paid by the Purchaser to the Wife and the Husband, to be taxed if not agreed.

16.  As far as the Wife’s summons dated 15 May 2014 and the Purchaser’s summons dated 20 May 2014 are concerned, the costs of those summonses are to be borne by the Wife in favour of the Purchaser and the Husband, to be taxed if not agreed.  I also make the order that the costs of the Wife’s application are to be taxed in accordance with the Legal Aid Regulations.