YU MAN FUNG ALICE v. CHIAU SING CHI STEPHEN

HCA 1584/2012

[2021] HKCFI 298

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1584 OF 2012

________________

AND

HCA 1243/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1243 OF 2017

________________

_______________________________

COSTS DECISION

_______________________________

A. Introduction

1.  In my Judgment dated 23 December 2020, given after trial, I found against the plaintiff Ms Yu and in favour of the defendant Mr Chiau.

2.  I made an order nisi that costs should follow the event, so that Ms Yu must pay Mr Chiau’s costs of both actions, to be taxed if not agreed.  The order was to become absolute unless either party sought a variation of it within 14 days.  I also stated that if any variation application were to be made, I would give directions as to how to deal with that application.

3.  Both parties took out applications to vary the costs order, as follows:

 (1)     by summonses dated 31 December 2020, Mr Chiau sought variations:

 (a)     that there be certificate for two Counsel, and

 (b)     that the costs of (i) Ms Yu’s summons dated 10 November 2020 (“Ms Yu’s New Evidence Summons”) and (ii) Mr Chiau’s summons dated 16 November 2020 (“Mr Chiau’s New Evidence Summons”), by which summonses (together “New Evidence Summonses”) the parties respectively sought leave to disclose and rely upon new documents, should be paid by Ms Yu;

 (2)     by summons dated 4 January 2021, Ms Yu sought variations:

 (a)     that there should be no order as to the costs of the New Evidence Summonses, and

 (b)     that Mr Chiau’s costs in respect of the expert evidence and the preparation of the evidence, witness statements and supplemental witness statements of Madam Ling Po Yee, Dicky Tsoi and Carol Gaw be disallowed.

4.  The costs variation summonses were originally fixed for argument on 15 January 2021.  However, by consent, I gave directions on 11 January 2021 that those summonses be dealt with on paper submissions only, with submissions to be filed in accordance with an agreed timetable.  The hearing on 15 January 2021 was accordingly vacated.

5.  The parties have filed their submissions on 25 January 2021 and 1 February 2021 (reply submissions from Ms Yu’s side only).

6.  This is my Costs Decision.

B.     Applicable Principles

7.  The principles applicable in relation to the discretionary decision on costs are well settled.  RHC Order 62 rule 3(2) identifies the general rule – or at least the starting point – that costs should follow the event. 

8.  Following CJR, this means that the burden is on the unsuccessful party to show why some different approach should be adopted on the facts of the particular case.  The court needs to be satisfied that there is some justification for depriving a successful party of all or some part of his costs.  Whilst it is no longer necessary for a party to have acted unreasonably or improperly to be deprived of his costs of a particular issue on which he has failed, it is not the law that whenever a successful party fails on some issues the Court must assess the costs of each issue separately to deprive him of some costs: see Lo Yuk Siu v Fubon Bank (Hong Kong) Ltd [2019] HKCA 1345 at §§12-18.

9.  In that case, the Court of Appeal also noted that Order 62 rule 5 requires the court, in exercising its discretion, to take into account the matters set out in rule 5(1), including the conduct of the parties.  Rule 5(2) provides that such conduct includes whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue, and the manner in which it has been pursued or defended.  Further, relevant conduct can be the conduct before, as well as during, the proceedings.

10.  As to the costs of interlocutory proceedings, the court has a wide discretion and the general rule that costs follow the event does not apply.  However, costs following the event is one obvious option, and in many cases is the appropriate order to make.

C.     Certificate for Two Counsel

11.  This is not controversial, as Ms Yu does not object to such a certificate.

12.  In any event, I accept that a certificate for two Counsel is appropriate, and I so order.

D.     New Evidence Summonses

13.  On behalf of Ms Yu, Mr Dawes submits that there should be no order as to costs in respect of either of the New Evidence Summonses. 

14.  As to Ms Yu’s New Evidence Summons – which related to the 5 December 2007 email – I originally dismissed that application at trial, but subsequently allowed the document to be added to the trial bundle when it in any event became evidence in the case as a result of cross-examination.  Therefore, the starting point, Mr Dawes says, is that Ms Yu succeeded on her summons and is prima facie entitled to the costs of the application.  For those costs, it does not matter that I ultimately held the 5 December 2017 email did not support Ms Yu’s case, as the email was relevant and justified the application.

15.  Nevertheless, in light of all the circumstances, Mr Dawes submits that the appropriate order is that each party should bear his/her own costs in respect of that summons.

16.  On behalf of Mr Chiau, Mr Man submits that the starting point should be that Mr Chiau should be awarded his costs of Ms Yu’s own application to adduce new evidence.  First, my original decision was in his favour.  Secondly, the 5 December 2017 email only became evidence at trial following cross-examination because of the evidence given by Ms Yu for the first time in her oral evidence.  Mr Man says that not only was the email found to be of no help to Ms Yu’s case, the application to adduce it had been made in a misleading manner, and her oral evidence was contradicted by her own witness and held to be untrue.

17.  Whilst there is perhaps something in those points, it seems to me that more weight needs to be given to the fact that the application originally failed but the 5 December 2017 nevertheless became evidence.  I think it did so as a result of the line taken by Mr Chiau’s Counsel.  On balance, I agree that no order as to costs is the appropriate order.

18.  As to Mr Chiau’s New Evidence Summons – relating to Carol Gaw’s notebooks – I originally allowed the application, but the notebooks later became of little or no evidential value once the decision had been made not to call Carol Gaw to give evidence.  Mr Man submits that decision was the direct result of Ms Yu abandoning her allegation that Mr Chiau had acknowledged liability in meetings and discussions at which Carol Gaw was present.  Therefore, the subsequent developments should not be a reason to make a different costs order than that reflecting the event of the decision on the application.

19.  In response, Mr Dawes submits that though the application was originally allowed, Mr Chiau subsequently “refused to call Carol Gaw to testify” and I eventually decided to ignore the handwritten notes.  So, says Mr Dawes, Mr Chiau’s application in substance failed, so that it might be said that prima facie Ms Yu is entitled to the costs of the application.  However, again overall, Mr Dawes accepts that a lesser order should be made, being no order as to costs.

20.  I disagree.  I do not think it correct to say that Mr Chiau “refused” to call Carol Gaw.  Rather, he (or his Counsel) declined to call her by reference to the state of the evidence at trial – and in particular the state of the evidence at the point that Carol Gaw might have been called.  I choose not to speculate as to whether the disclosure of the notebooks in any way affected the state of the evidence reached by that point. But, that Carol Gaw was not then called meant that it was likely that little weight could or would be given to the content of the notebooks, but it did not render those notebooks irrelevant.  Rather, it might be thought they joined the other tracts of disclosed material and evidence which ultimately were not referred to at trial, and to which little or no weight was (or needed to be) given. I note the notebooks might, if desired, have been referred to in cross-examination of Mr Chiau as he was at the meetings and discussion said to have been noted.

21.  In those circumstances, it seems to me that the costs of Mr Chiau’s New Evidence Summons should follow the event, and should be payable by Ms Yu.

E.     Mr Chiau’s Witnesses Not Called

22.  A distinction might be drawn between the expert evidence and the factual evidence.

23.  Until a very late stage of the proceedings, quantum was an issue between the parties.  As a result, expert opinion evidence on valuation of House 12 was obtained.  However, on day 9 of the trial, Mr Chiau decided not to contest Ms Yu’s expert’s valuation, which was then accepted in my Judgment.

24.  On that basis, Mr Dawes submits that the issue of valuation is a sufficiently distinct and separate issue so as to constitute an “event”, and that Ms Yu prevailed on that issue.  Applying the relevant principles, Mr Dawes submits that Mr Chiau should be deprived of the costs in respect of the expert evidence.

25.  On the other hand, Mr Man suggests that the approach adopted by Mr Chiau was to save court time and legal costs of the parties in going through the evidence of the expert witnesses at trial. Nevertheless, even had the expert witnesses been called, Mr Chiau would have succeeded in defending Ms Yu’s claims, so it makes no sense for Mr Chiau now to be deprived of his costs when all he had done was to save time for the court and the parties.

26.  I disagree.  Though it may be correct that some court time and some witness costs were saved at trial, it was saved for both parties, and it was saved because Mr Chiau effectively conceded the quantum issue on valuation of House 12.  That issue was in effect a discrete issue from the other matters falling for determination at the trial.  The concession could have been made much earlier, but it was not.  When it was, I accepted the evidence of Ms Yu’s expert witness.  Those circumstances seem to me to provide justification to deprive Mr Chiau of his costs of preparing the expert evidence.

27.  As to the factual witnesses, who provided witness statements but who were not ultimately called as witnesses at trial, the position seems to me to be different.  It is correct that it was only on day 9 of the trial that the decision was taken not to call or tender Madam Ling, Dicky Tsoi or Carol Gaw as witnesses at the trial.  But that was in light of the evidence already adduced at trial, including evidence elicited through cross-examination of Ms Yu.

28.  It may be that in the context of the totality of the evidence as was adduced at trial, the evidence which might have been adduced through Madam Ling, Dicky Tsoi and Carol Gaw would have been of limited probative value.  But that was not necessarily known until the point at which they might have been called.  In my view, despite some doubts in relation to whether there was ever likely real utility of the witness statement of Madam Ling, the preparation of their witness statements was on balance reasonable.  Not calling them as witnesses did save some time and costs at trial for both parties.  In the exercise of my discretion, I do not think the matters overall are such as to justify disallowance of the costs in the preparation of those witness statements and supplemental statements.

F.     Result

29.  In the circumstances, I vary the costs order nisi, so that the costs order to be made absolute is as follows: Ms Yu must pay Mr Chiau’s costs of both actions, including the costs of Mr Chiau’s summons dated 16 November 2020, with certificate for two Counsel, to be taxed if not agreed, save that (1) there shall be no order as to the costs of Ms Yu’s summons dated 10 November 2020, and (2) Mr Chiau’s costs of the valuation expert opinion evidence are disallowed.

30.  As neither side has fully succeeded on the costs variation argument, a fair order seems to me to make no order as to the costs of the variation summonses.  I so order.