LAW SHU KEUNG STEPHEN t/a EXCEL FINANCE COMPANY v. NG MING AND OTHERS

DCMP3032/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 3032 OF 2014

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D E C I S I O N

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1. In a written judgment that I handed down on 18 March 2016, I made a number of orders in respect of these proceedings. One of the orders that I made was a costs order nisi.

2. At page 20 of my judgment, I granted a costs order nisi ordering the 1st defendant to pay the plaintiff’s costs of these proceedings, and assessed costs in the sum of $55,700.  In paragraph 46 of my judgment, I gave my reasons for declining to award costs on an indemnity basis.  Hence, the summary assessment of the costs of these proceedings was on a party-and-party basis.

3. After the handing down of this judgment, the solicitors for the plaintiff wrote to this court on 21 March 2016 requesting a variation of the costs order.  The reasons for such request are set out in their letter with the main reason being that, according to clause 14.1, subparagraph (2) of the legal charge, the plaintiff should be awarded costs on an indemnity basis as, according to the plaintiff’s submissions, the present proceedings are part and parcel of the steps of the enforcement actions taken by the plaintiff to enforce the legal charge.

4. Under the direction of the court, the plaintiff issued this inter partes summons dated 30 March 2016 to apply for the variation of the costs order nisi.  At the hearing of this summons, the plaintiff is still represented by Miss Cheng and the 1st defendant appears in person.  Miss Cheng repeated the submissions in the letter of 21 March 2016.  Mr Ng, the 1st defendant, was initially unclear as to the stance he was adopting in this application.  He is obviously concerned with the amount of costs he is liable to pay.  After some discussion Mr Ng decided to oppose the plaintiff’s application for a variation.

5. As for the reasons for Mr Ng’s opposition, Mr Ng is only trying to tell the court the circumstances as to how he ended up taking a loan from the plaintiff and how he ended up signing the legal charge mortgaging his interest of the subject property.  Understandably, since the 1^st defendant is acting in person, Mr Ng cannot be expected to be able to respond to the plaintiff’s submissions in relation to the plaintiff’s reliance on the contractual provisions as well as the plaintiff’s submission that these proceedings are part and parcel of the proceedings in connection with the enforcement of the legal charge. 

6. In my view, in determining whether this court should vary my earlier costs order by awarding costs to the plaintiff on an indemnity basis rather than on a party-and-party basis, I should decide whether the present proceedings are part and parcel of the proceedings in connection with the enforcement of the legal charge.  It cannot be disputed that under clause 14.1(2) of the legal charge, the plaintiff is contractually entitled to be awarded costs on an indemnity basis in connection with proceedings for the enforcement of the legal charge. 

7. According to paragraph 46 of my judgment, I declined to award costs on an indemnity basis because I was of the view that these proceedings are, by virtue of their having been based on the Petition Ordinance, are not mortgagee actions like those  in the earlier proceedings, and are therefore separate actions.  Thus, in deciding whether the present proceedings are not separate proceedings but are part and parcel of the proceedings for the enforcement of the legal charge, I should go back a little and look once again at the genesis of these proceedings. 

8. In paragraphs 5, 6, 7 and 8 of my judgment, I have already set out the genesis of these proceedings.  According to paragraph 5 of my judgment, it is stated that the plaintiff in the earlier proceedings had also included applications for the relief of the delivery of vacant possession of the property and an order for sale under section 6 of the Petition Ordinance. For some unknown reasons, the court in the earlier proceedings, (as I pointed out in paragraph 7) did not grant any order for the delivery of vacant possession or for the sale of the property.  Since the plaintiff was unable to obtain these reliefs, the plaintiff commenced the present proceedings. 

9. Principally, the plaintiff in these proceedings mainly wishes the court to grant an order for possession and the sale of the 50 per cent interest of the 1st defendant in the property.  Hence, the Petition Ordinance was engaged.  There is no doubt in my mind that although the Petition Ordinance was engaged, in essence, what the plaintiff was trying to achieve was to obtain an order for sale.

10. This power for sale upon a default of the 1st defendant in paying the monthly instalment of the loan can be found in clause 6.01 of the legal charge.  Under these provisions, the plaintiff is entitled, upon the 1^st defendant’s default, (sub-paragraph (2)) to enter into and take possession of the mortgaged property, (subparagraph (3)) exercise any powers or rights incidental to the ownership of the property, (subparagraph (5)), to bring, enforce any claim, action, suit or proceedings in relation to the mortgaged property, and (subparagraph (6)) to sell the subject property. 

11. Thus, the powers provided in clause 6.01 of the legal charge are wide and they include the power of sale.  I am persuaded that the expenses and costs of these proceedings are in connection with the enforcement of the legal charge, which expenses and costs, according to this clause, are covered by clause 14.01 of the legal charge.  Further, clause 14.01(2) allows the plaintiff to be reimbursed all expenses including legal costs.

12. For these reasons, I therefore take the view that in spite of the substantial overlap of the costs in these proceedings with those incurred in the earlier proceedings, these proceedings are part and parcel of the enforcement proceedings provided in clause 6.01 and the costs incurred fall within clause 14.01 of the legal charge. The plaintiff should therefore be entitled to costs on the contractual basis.  

13. As to the duplication of costs of these proceedings with the earlier proceedings, it is only a matter of quantum. Any injustice arising from the duplication can be properly dealt with should this court direct the taxation of the costs.

14. I therefore vary the costs order nisi to the extent that the costs are awarded on indemnity basis.  As to whether I should direct costs to be summarily assessed or to be taxed, I will now hear submissions from parties.[1]

(The proceedings are now shifted to the punti language.)