LI NGAN KWAN AND ANOTHER v. GAO LI HUI AND OTHERS

CAMP 35/2022 and CACV 187/2023, [2024] HKCA 298

On Appeal From [2021] HKCFI 2878

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 35 OF 2022

(ON AN INTENDED APPEAL FROM HCA NO 933 OF 2007)

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AND

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 187 OF 2023

(ON APPEAL FROM HCA NO 933 OF 2007)

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DECISION ON COSTS

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Hon Au JA (giving the Decision on Costs of the Court):

1.  By a decision dated 29 September 2021 (“the Decision”), Au‑Yeung J (“the Judge”) dismissed the plaintiffs’ summons (“the Summons”) for leave to amend their Statement of Claim in refusing all the proposed amendments to the Statement of Claim (“SOC”) as set out in the draft Amended Statement of Claim (“DASOC”).

2.  On 19 June 2023, this court handed down its judgment (“the CA Judgment”) after a rolled-up hearing:

(1)  granting (a) under CAMP 35/2022, the plaintiffs leave to appeal from the Decision for those grounds of appeal which relate to the proposed amendments which do not introduce a new claim, (b) under the EOT Summons (as defined in the CA Judgment), the plaintiffs extension of time to file the Notice of Appeal out of time for those grounds of appeal which relate to amendments that introduce a new claim, and

(2)  allowing the appeal (which became CACV 187/2023) on some of the grounds of appeal and granted leave to the plaintiffs to amend the SOC in the form of the DASOC in relation to the Constructive Trust[1], Unjust Enrichment[2] and Fraudulent Misrepresentation[3] and part of the Breach of Fiduciary Duties[4] claims.

3.  We further directed the parties to lodge written submissions on costs under CAMP 35/2022 and the appeal proper, as well as the costs below[5]. The parties have since done so.

4.  This is our decision on costs.  This decision should be read together with the CA Judgment, and we would not repeat the background and the reasons for making the above orders which have been fully set out in the CA Judgment.  We also adopt in this decision the abbreviations used in the CA Judgment.

5.  Ms So for the plaintiffs submits that, adopting the usual costs should follow the event starting position, they should be entitled to 80% of the costs under both CAMP 35/2022 and the appeal proper, as well as below, as they are the substantial winner of the appeal, whilst recognising that they have failed in relation to some of the proposed amendments.

6.  On the other hand, Mr Mak for the 1^st defendant submits that, adopting an issue-based approach in considering costs:

(1)  The plaintiffs and the 1^st defendant should each bear 50% of the costs of the other side, or alternatively, costs should be in the cause.  This is so, as the 1^st defendant only succeeded in 6 out of the 15 issues[6] which called for determination of this court.  In particular, the plaintiffs were unsuccessful in their “substantial efforts” in advancing in the appeal (a) the DOT Forgery Claim and (b) Non Est Factum claim.

(2)  The costs below should not be disturbed, or alternatively, should be in the cause.  This is so as:

(a)  Substantial amount of the plaintiffs’ costs (both in terms of pre-hearing preparation and actual time spent at the hearing) would have been related to the Judge’s findings relating to the plaintiffs’ claims against the 2^nd and 4^th defendants from which no appeal lies.

(b)  The proposed claim against, among others, the 1^st  defendant for conspiracy in the DASOC was disallowed by the Judge; however, there is no appeal by the plaintiffs against this part of the Judge’s decision.  Such plea has therefore been abandoned by the plaintiffs.

7.  The 1^st defendant also asks for the costs incurred and thrown away by the amendments allowed by this court.

8.  In our view, this is not a case which is appropriate to adopt an issue-based approach in considering costs in the way as proposed by Mr Mak.  This is so, as although the plaintiffs’ appeal related to the Judge’s refusal of the various proposed amendments in the DASOC in support of different specific causes of action, they are inter-related and based on a common factual context.  This is underlined by the fact that we allowed the appeal against some of the judge’s refusals of the proposed amendments by reason of common errors committed by Judge under Sections E and F1 of the Decision[7].

9.  Further, in our view, the plaintiffs are the overall winner in the appeal.  As rightly submitted by Ms So:

(1)  Out of the seven claims pleaded in the DASOC[8], as mentioned above, almost five were allowed[9] (with slight adjustment to the specific scope of the breach of fiduciary duty claim and the declaratory reliefs sought).  All of the proposed amendments on background facts were also allowed.

(2)  The three core arguments relied upon by the plaintiffs on appeal in challenging the Decision (see [23] of the CA Judgment) were all accepted by this court, which found that the Judge had fallen into error in:

(a)  holding there was a “change in bases” of the 1^st  plaintiff’s claim on beneficial ownership (Section E1 of the Decision);

(b)  rejecting of the plaintiffs’ proposed causes of action just on the basis of rejection of the DOT Forgery claim (Section E2 of the Decision); and

(c)  refusing the application on the ground of delay (Section E3 of the Decision).

(3)  Even for the Non Est Factum plea, which was disallowed, this court pointed out that the Judge had erred in her reasoning below.  The amendment was disallowed on the basis there was no useful purpose (see [70] of the CA Judgment), which was not an objection relied upon by the 1^st defendant at all.

10.  In the premises, and taking into account the fact that the plaintiffs are unsuccessful in some parts of the appeal, a just and fair costs order is that the plaintiffs shall be entitled to two-thirds of the costs of the appeal and of CAMP 35/2022 (including the application for leave to appeal below).

11.  In relation to the costs below, we have reversed the Judge’s decision and given leave to the applicant to amend in relation to the Constructive Trust[10], Unjust Enrichment[11] and Fraudulent Misrepresentation[12] and part of the Breach of Fiduciary Duties[13] claims, the Declaratory Relief in respect of the Purported DOT, the Purported Instrument, and the Letter of Registration[14], as well as the various amendments in relation to background facts[15].  All these amendments are in substance related to the plaintiffs claim against the 1^st defendant (and presumably that is also why this appeal was only served on the 1^st defendant, but not the other defendants).  The plaintiffs therefore should have the costs below in relation to these amendments as against the 1^st defendant.  In this respect:

(1)  This does not affect the costs order made by the Judge insofar as it relates to the 2^nd and 4^th defendants, and hence, Mr Mak’s submission at [6(2)(a)] above is irrelevant.

(2)  Similarly, Mr Mak’s submission at [6(2)(b)] above is irrelevant, as the 1^st defendant would have the costs below in relation to the amendments relating to the conspiracy claim and the DOT Forgery Claim[16].

12.  In the premises, the Judge’s costs order[17] shall be varied to as follows:

(1)  The plaintiffs shall pay the 2^nd and 4^th defendants’ costs of the Summons;

(2)  The 1^st defendant shall pay the plaintiffs’ costs of the Summons in relation to the amendments for the Constructive Trust, Unjust Enrichment and Fraudulent Misrepresentation, part of the Breach of Fiduciary Duties claims, and the Declaratory Relief in respect of the Purported DOT, the Purported Instrument, and the Letter of Registration, as well as the various amendments in relation to background facts; and

(3)  The plaintiffs shall pay the 1^st defendant costs of the Summons in relation to the DOT Forgery Claim and the conspiracy claim.

13.  Insofar as the costs of the EOT Summons is concerned, taking into account the factors that (a) the plaintiffs were seeking the indulgence of the court, and (b) the 1^st defendant was unsuccessful in opposing it, a fair and just order would be no order as to costs.

14.  As to the costs of and occasioned by the amendment, as rightly accepted by Ms So, they should be to the 1^st defendant[18] and, in so far as applicable, the other defendants.

15.  We therefore make the following costs order:

(1)  Two-thirds of the costs of CAMP 35/2022 (including the application for leave to appeal below) and CACV 187/2023 be to the plaintiffs to be taxed if not agreed, with certificate for two counsel;

(2)  There be no order as to costs of the EOT Summons;

(3)  Costs of and occasioned by the amendments be to the 1^st defendant and, in so far as applicable, the other defendants, to be taxed if not agreed; and

(4)  As to the costs below:

(a)  The plaintiffs shall pay the 2^nd and 4^th defendants’ costs of the Summons, to be taxed if not agreed;

(b)  The 1^st defendant shall pay the plaintiffs’ costs of the Summons in relation to the amendments for the Constructive Trust, Unjust Enrichment and Fraudulent Misrepresentation, part of the Breach of Fiduciary Duties claims, and the Declaratory Relief in respect of the Purported DOT, the Purported Instrument, and the Letter of Registration, as well as the various amendments in relation to background facts, to be taxed if not agreed; and

(c)  The plaintiffs shall pay the 1^st defendant costs of the Summons in relation to the DOT Forgery Claim and the conspiracy claim, to be taxed if not agreed.