CHEN YUNG NGAI KENNETH AND ANOTHER v. HO YUK WAH DAVID AND OTHERS

CAMP 210/2024, [2025] HKCA 587

On Appeal From [2024] HKCFI 2135

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 210 OF 2024

(ON AN INTENDED APPEAL FROM HCA NO 971 OF 2012)

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J U D G M E N T

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Hon Au JA (giving the Judgment of the Court):

A.  INTRODUCTION

1.  This the renewed application[1] of the joint and several liquidators of the 6^th defendant[2] (“the Liquidators”)  for leave to appeal against the costs order (“the Costs Order”)  made by Ng J (“the Judge”)  in his judgment dated 14 August 2024 (“the Judgment”).  The Judgment is in relation to the plaintiffs’ summons[3] (“P’s Summons”)  asking, among others, the Liquidators to take all necessary steps to register the plaintiffs (“the Trustees”)  as the sole shareholder of the 6^th defendant.

2.  The background leading to P’s Summons has been set out succinctly by the Judge at [1] - [9] of the Judgment and will not be repeated here.  P’s Summons was opposed by the Liquidators.

3.  After hearing it on 14 August 2024, the Judge by way of the Judgment allowed P’s Summons and ordered (a)  the Liquidators to register the Trustees as the sole shareholders of the 6^th defendant, and (b)  the Trustees to reimburse the costs of the secretarial firm to be incurred by the Liquidators not exceeding HKD15,000 plus disbursement.  The Judge then further made the Costs Order ordering the Liquidators to pay the Trustees costs personally forthwith, which were summarily assessed at HKD110,000.

4.  The Judge has developed and set out his reasons for making the orders, including the Costs Order, at [14] - [18] of the Judgment:

“14. From the correspondence, it appears another obstacle is the question of costs of the Summons. The Trustees insist the Liquidators to bear the costs whereas the Liquidators insist there should be no order as to costs. However, in Mr Chan’s skeleton at para 46, the Liquidators ask for the Summons be dismissed with costs against the Trustees on an indemnity basis.

15. This is not the first time nor the last time that parties cannot agree on costs of an application and are so-called ‘compelled’ to argue on the substantive matter. This is an entirely wrong approach.

16. Costs are at the discretion of the Court. Disagreement on costs should not preclude the parties from behaving reasonably in relation to the substantive matter. If the parties in this application were reasonable, the Summons could have been dealt with by consent in that they could very well agree on the outcome of the substantive application and come to Court to argue costs or invite the Court to deal with costs on paper. That would save a lot of the Court’s time and allow the Court to focus on the real difference between them.

17. By opposing the Summons, when in fact the Liquidators do not in principle object to the Trustees’ reasonable requests to be registered as shareholders of the 6^th Defendant, they are in fact wasting the Court’s time. If their only concern is the costs of the secretarial firm, they can come to Court to argue that point only instead of opposing the entire Summons.

18. Having said that, the Trustees are also wasting the Court’s time by not willing to bear the costs of the secretarial firm. In para 3 of the Summons, the Trustees ask for an Order that a solicitor of at least 25 years’ standing from the Trustees’ solicitors firm be directed under section 25A of the HCO to take all steps and execute all documents as may be necessary to cause the Plaintiffs to be registered as the sole shareholders of the 6^th Defendant. That would involve costs as well.” (emphasis added)

5.  By way of his further judgment dated 16 October 2024 (“the Leave Judgment”), the Judge dismissed the Liquidators’ application for leave to appeal the Costs Order[4]. Hence, this renewed application for leave to appeal.

6.  Having considered the papers and the submissions before us, we are satisfied that it is appropriate to deal with this application on paper pursuant to Order 59, rule 2A(5)  of the Rules of the High Court (Cap 4A)  (“RHC”).

B.  THE PROPOSED GROUNDS OF APPEAL

7.  The Draft Notice of Appeal relied on by the Liquidators in support of this application contains three proposed grounds of appeal (which are the same as those advanced before the Judge), namely, in making the Costs Order:

(1)  The Judge had erred in failing to take into consideration the Trustees’ poor litigation conduct (“Proposed Ground 1”).

(2)  The Judge had erred in principle to order costs against a non-party, the Liquidators, without finding impropriety or bad faith on their part (“Proposed Ground 2”).

(3)  The Judge had erred in principle to order that the Liquidators cannot recoup their costs from the assets of the 6^th defendant (“Proposed Ground 3”).

B1.  Legal Principles

8.  The applicable principles relating to an application for leave to appeal are well-established[5]:

(1)  Leave to appeal will not be granted unless the court is satisfied that the intended appeal has a “reasonable prospect of success”.  That means a prospect that is more than “fanciful” but without having to be “probable”;

(2)  But even if the threshold test of reasonable prospect of success is satisfied, the court still retains a discretion whether to grant leave, although the fact there is, ex hypothesi, a reasonable prospect of success would heavily influence the court’s exercise of discretion.  The court may refuse leave to appeal in the interests of procedural economy and proportionality.

(3)  The Court of Appeal will not interfere with the exercise of a judge’s discretion in the award of costs unless it was shown that he failed to exercise the discretion, or exercised it upon a false principle, or did not exercise it judicially.

9.  Bearing these principles in mind, we now turn to consider the proposed grounds of appeal.

B2.  Proposed Ground 1

10.  It is clear from the Judgment that, in exercising his discretion in making the Costs Order, the Judge had taken into consideration the following[6]:

(1)  The Trustees’ application under P’s Summons asking the Liquidators to register them as the sole shareholder of the 6^th  defendant was a reasonable and straightforward one, which flew naturally from the Judge’s earlier judgment dated 28 September 2020.

(2)  The Liquidators’ conduct in opposing P’s Summons in its entirety all along, without limiting themselves only to the position that the Trustees should reimburse their costs for registering the Trustees as the sole shareholder of the 6^th  defendant was most unreasonable, in particular when their counsel was already warned about the possible costs consequences in opposing P’s Summons in its entirety at the call-over hearing.

(3)  The Trustees’ unreasonable conduct in “not willing to bear the costs of the secretarial firm” to be engaged by the Liquidators to carry out the requisite registration work.

11.  It is therefore plain from the Judgment that, after weighing all these factors (including the Trustees’ litigation conduct)  together, the Judge came to the conclusion that the Liquidators were culpable in unreasonably and unjustifiably opposing P’s Summons in its entirety and thus wasting the court’s time, and therefore should bear the costs personally[7].  The Judge therefore did not fail to take into account the Trustees’ litigation conduct as asserted by the Liquidators under this ground. Moreover and importantly, in our view, this conclusion is one which was clearly open to the Judge to arrive at in the exercise of his wide discretion on costs. Indeed, we agree with his view.

12.  Proposed Ground 1 plainly has no merit and is bound to fail.

B3.  Proposed Ground 2

13.  Under this ground, Mr Chan for the Liquidators submits that:

(1)  In view of the decision in Super Speed Ltd (in liquidation)  v Bank of Baroda (HCCW 273/2012, unreported, 11 November 2015, Anthony Chan J), impropriety is a necessary ingredient that needs to be satisfied before a non-party liquidator can be made liable for costs; but no such findings were made by the Judge (nor could such findings be made by him)  in the present case.[8]

(2)  In the premises, it must at least be reasonably arguable that the Judge had erred in principle in making the Costs Order without first finding impropriety on the Liquidators.

(3)  Leave to appeal under this ground should thus be granted.

14.  This contention must be scrutinized in the following context.

15.  As recorded at [34] of the Leave Judgment, the issue of a personal costs order against the Liquidators was raised by the Trustees in the submissions lodged by their counsel, Mr Wong, at the call-over hearing before the Judge on 30 May 2024.  However, neither Mr Wong nor Mr Chan had addressed the court at the substantive hearing along the line that such order could not be made by the court without finding impropriety or bad faith[9]. In the circumstances, the Judge observed that he did not have the opportunity to hear the parties’ submissions on this point or to consider whether or not to make any finding of impropriety.

16.  The Judge then noted that as a matter of law, there appeared to be different authorities on whether conducts amounting to unreasonableness or impropriety would be required to make a non-party liquidator liable for costs personally.  See [35] - [42] of the Leave Judgment.  At [42], the Judge distinguished this case from the normal case where a liquidator is performing a statutory duty.  There was no statutory duty or any element of public interest to justify the Liquidators’ opposition to P’s Summons the purpose of which was to implement an earlier judgment of the court.[10]

17.  However, the Judge went on to say at [43] and [44] of the Leave Judgment that this did not matter as he would have found the Liquidators’ continued conducts in opposing P’s Summons in its entirety, in particular after being warned of the risks of personal costs consequence at the call-over, as improper or unreasonable in the circumstances, justifying making a personal costs order against the Liquidators.  He therefore refused to grant leave to appeal under this ground.

18.  Given the Judge’s above view, we similarly will not grant leave to appeal under Proposed Ground 2 for the following reasons:

(1)  It is plain that even if we were eventually to allow the intended appeal under Proposed Ground 2, we would remit this matter to the Judge to assess and evaluate whether the proper basis contended for by the Liquidators (ie, impropriety)  had been met in light of the Liquidators’ conducts in this matter.

(2)  However, the Judge had already expressed his clear view that such basis was met.

(3)  In the premises, it would be wholly academic and a further waste of costs and time to grant leave to appeal under Proposed Ground  2, as the Judge would come to the same conclusion that the Liquidators should bear the costs of P’s Summons personally.

(4)  We would therefore exercise our discretion not to grant leave to appeal under this ground, in particular when it was the Liquidators themselves who had failed to address the Judge in the first place on what they now contended to be the proper basis required in law to make a personal costs order against them.

B4.  Proposed Ground 3

19.  Under this ground, the Liquidators contend that the Judge erred in principle by ordering that the Liquidators cannot recoup their costs from the assets of the 6^th defendant.

20.  This ground was also advanced before the Judge when seeking leave to appeal but, as stated at [3] of the Leave Judgment, this was not pursued by Mr Chan for the Liquidators after the Judge had “reminded him there was nothing in [the Judgment] which ordered that the [Liquidators] could not recoup their costs from the 6^th Defendant’s assets”.

21.  Despite what transpired, this ground is now again advanced in this court.

22.  There is again plainly no merit in this ground and the renewed reliance on it in this leave application clearly amounts to an abuse of process wasting time and costs:

(1)  It is plain, as pointed out by the Judge, that he has not made any order that the Liquidators could not recoup their own costs from the 6^th defendant’s assets.

(2)  There is therefore nothing in this ground that the Judge erred in making the alleged order which was never made.

(3)  Despite having rightly withdrawn this ground before the Judge, the Liquidators through counsel now unjustifiably see fit to “revive” this before this court.  This is improper and is an abuse of process.

23.  We would not grant leave to appeal under Proposed Ground 3.

C.  DISPOSITION

24.  For all the above reasons, we dismiss the Liquidators’ application for leave to appeal.

25.  Given that all the proposed grounds of appeal are hopeless, and the Liquidators’ pursuit of this renewed application (despite knowing all the reasons in the Leave Judgment and their express withdrawal of Proposed Ground 3 before the Judge)  amounts to a clear abuse of process, we further order on a nisi basis that (a)  the Liquidators shall personally pay the costs of this application to the Trustees on an indemnity basis, summarily assessed at HKD77,720 as sought in their Statement of Costs dated 12 November 2024, and (b)  the Liquidators shall not recoup their own costs in relation to this application from the 6^th defendant’s assets.  Unless any of the parties applies to vary it by summons, the nisi costs order and assessment shall become absolute 14 days from today.

26.  Given this leave to appeal application is totally devoid of merit, we further make an order pursuant to Order 59, rule 2A(8)  of the RHC that no party may request the determination to be reconsidered at an oral hearing inter partes.

27.  Finally, before leaving this judgment, we must also point out that the Application Bundle prepared by the Liquidators’ solicitors does not even contain the very summons dated 30 October 2024 (annexed with the draft Notice of Appeal)  issued by them for this application and the supporting written statement.  This is not in compliance with paragraph 8 of PD4.1 and is unacceptable.