MING LEE FOUNDATION CO LTD v. W.M. CONSTRUCTION LTD

HCA 1065/2021

[2022] HKCFI 3373

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1065 OF 2021

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REASONS FOR DECISION

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1.  This is the plaintiff’s appeal from a costs order made by Master Benny Lo on 28 June 2022. At the conclusion of the hearing, the appeal was dismissed with costs. My reasons appear below.

Background

2.  The costs order arose in the following circumstances:

(a)  on 28 December 2021 the defendant filed its amended defence together with a counterclaim;

(b)  on 31 December 2021 the plaintiff noted that the counterclaim was filed without leave and sought confirmation that the defendant would be seeking leave to file and serve a counterclaim out of time;

(c)  on 21 January 2022 the plaintiff invited the defendant to make a consent application to discontinue both the action and the counterclaim with no order costs, imposing a deadline for a response by close of business on 24 January 2022;

(d)  in a follow-up on 24 January 2022 the plaintiff set out the broad grounds that would be relied on in striking out the counterclaim;

(e)  on the same day, after referring to the letters in (c) and (d) above, the defendant advised the plaintiff that it was seeking instructions from its client and obtaining counsel’s advice on the issues raised in those letters, stating that a substantive reply would be made within the next 3 days i.e. by 27 January 2022;

(f)  the plaintiff did not extend the deadline and, instead, took out 2 summonses the next day (25 January 2022): one for the discontinuance of the action with costs to the plaintiff (“Summons 1”) and the other summons was to set aside/strike out the counterclaim (“Summons 2”);

(g)  on 28 January 2022 the plaintiff asked the defendant if the summonses would be opposed and, if so, for the defendant’s proposed directions for the further conduct of the summonses and suggesting that a consent application might be appropriate to vacate the call over hearing scheduled for 4 February 2022;

(h)  on the same day the defendant stated that it had no objection to the discontinuance of the action except the proposal as to costs and confirmed its intention to oppose the setting aside/striking out summons, seeking costs should the application proceed; it also intimated that the call over hearing for 4 February 2022 should be vacated and if the plaintiff disagreed with the cost proposed by the defendant for disposal of Summons 1 and insisted on proceeding with Summons 2, the defendant requested the plaintiff to draft a consent summons on the consequential directions;

(i)  also on the same day the defendant filed its re-amended defence, replacing it with a new and different counterclaim;

(j)  on 31 January 2022, the plaintiff proposed that the question of costs of Summons 1 be adjourned for substantive argument and for Summons 2, the plaintiff would be applying to withdraw the same with costs; and

(k)  on 4 February 2022, Master Ho ordered inter alia that the question of costs of Summons 1, Summons 2 and the plaintiff’s withdrawal summons filed on 31 January 2022 (“Summons 3”) be adjourned to a date to be fixed for substantive argument.

3.  The argument on costs of all 3 Summonses was heard by Master Benny Lo on 28 June 2022 who, in respect of Summons 2 and Summons 3 ordered that “there be no order as to costs”.

This appeal

4.  Despite the fact that the appeal is an appeal from the Master on costs alone, the hearing bundle does not contain a transcript of the hearing before the Master nor his reasons for making the order that he did.

5.  It is well established that in an appeal as to costs only from the discretion of the master, the application should not be allowed unless it can be shown that the order made by the master was unreasonable or the master erred in law i.e., if he either failed to take into account proper matters or took into account matters that should not have been taken into account: see per Sakhrani J in Paul Y-ITC Construction Limited v Kin Shing Co Ltd [1999] 1 HKC 511 at 515 A-C and cases cited therein, and Hong Kong Civil Procedure 2022 at §58/1/6.

6.  Mr Vincent Li, counsel for the plaintiff, submitted that a transcript was unnecessary as most of the hearing concerned Summons 1 from which there is no appeal and little was said by the Master as to his reasons for the costs order made in respect of Summonses 2 and 3.

7.  With respect, I do not agree. In challenging only the costs aspect of a Master’s order, the court cannot accept simply the plaintiff’s account that such and such happened at the hearing or that such and such was not mentioned by the Master when there should be no difficulty in obtaining a transcript of the hearing.

8.  The plaintiff has not even attempted to explain why a transcript was not obtained. Errors of law and/or omissions of essential facts are more readily ascertainable or identified by reference to a transcript. This court is thus seriously handicapped by the absence of a transcript.

9.  Mr Li sought to extricate himself from the difficulty by stating that he was content to rely on what is set out in §24 of the written submissions of Mr Pakco Chan, counsel for the defendant, which reads:

“During the hearing, Master Benny Lo took into account P’s unreasonable behaviour. P only informed D of its intention to set aside/strike out AD&CC on Friday (21 January 2022). On the next business day (24 January 2022), D asked for 3 more days to take instructions and seek counsel (sic) advice. However, P refused to allow any time for D to make constructive response. P swiftly issued the Setting Aside/Striking Out Summons on 25 January 2022. On 28 January 2022, D filed RA-D&CC which addressed the concerns of P.”

10.  The plaintiff then made copious references to the correspondence summarised in §2 above.

11.  The defendant’s request for a short extension of 3 days has to be seen against the backdrop of the plaintiff’s letter being sent on Friday 21 January 2022, stipulating a deadline for a response immediately after the weekend, by Monday 24 January 2022. The request for the short extension was made inter alia in order to obtain counsel’s advice. Viewed in that context, the request (to respond by Thursday 27 January) could hardly be considered outrageous or unreasonable.

12.  But the thrust of the plaintiff’s complaint appears to be that even if the plaintiff had acceded to the defendant’s request it would not have made any difference to the defendant’s response given that it reiterated its opposition to Summons 2 in its letter of 28 January.

13.  I do not consider it is correct to assume that the response the defendant would have given had it been granted the 3 extra days to reply would be the same as that given on 28 January. The issuance of Summonses 1 and 2 on 25 January was an unnecessarily confrontational step that could only serve to enrage the opponent and may well cause him to jettison any desire he may have entertained to settle the dispute amicably.

14.  The plaintiff did not allude or object to the opening sentence of §25 of the defendant’s written submissions which states that:

“Master Benny Lo found that P’s refusal for time for D to make constructive response to be unreasonable.”

15.  In my view, it was open to the Master to consider that the plaintiff’s refusal to grant the short extension was unreasonable.

16.  The exercise of the Master’s discretion over costs has not been shown to be unreasonable. Nor has it been shown that he had erred in law. It was open to the Master to take the view that the issuance of the Summonses by the plaintiff on 25 January 2022 was not consonant with the underlying objectives set out in RHC Order 1A.