THE JOINT AND SEVERAL TRUSTEES OF THE PROPERTY OF SO CHING WAN v. ASSEN LTD (IN LIQUIDATION) AND OTHERS

HCB 4475/2002

[2024] HKCFI 1877

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 4475 OF 2002

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BETWEEN

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JUDGMENT

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Background

1.  This is a review of a taxation review conducted by Master Lai on 21 March 2024. The review decision by Master Lai was handed down on 14 June 2024 (the “Master’s Review”).

2.  The Applicant had previously already applied for another review of another taxation review by Master Lai in relation to the 2^nd to 4^th respondents in the same matter. The previous review was dismissed by Deputy High Court Judge Reyes S.C. on 18 March 2024 (the “March 2024 Judgment”).

3.  The learned Judge had set out the background in paragraph 1 of the March 2024 Judgment and I gratefully adopt them herein, substituting references to the 2^nd to 4^th Respondents with the 1^st Respondent (“R1”) and the basis of taxation from “party-and party” to “indemnity basis”:

“1. The costs orders that were the subject of the taxation arose from a judgment dated 6 June 2019 of Deputy High Court Judge William Wong SC ([2019] HKCFI 1491). The judgment concerned an amended summons that (if allowed) would have required the [1^st] Respondent to answer certain questions and provide related documents. Deputy Judge Wong dismissed the amended summons. He ordered the Applicant to pay the [1^st] Respondent’s costs on [an indemnity] basis. The Applicant appealed. The Court of Appeal dismissed the appeal as “totally without merits” on 29 December 2020 ([2021] 3 HKC 5).”

4.  The principles on review by a Judge over a Master’s taxation has been summarised in paragraphs 8 – 10 of the March 2024 Judgment and I do not repeat them here. Suffice to say such principles are not disputed by Mr Chu, counsel for the Applicant, and that short of any error on the law, disregard in operative principles, misapprehension of facts or reliance on irrelevant matters on the part of the Master, the court will not intervene.

5.  In the summons filed by the Applicant on 21 June 2024 (the “Summons”), no ground has been put forward in support of a review against the Master’s Review. Instead, the Summons sought for directions for the Applicant to file affidavit evidence to set out the items to be reviewed. This is inappropriate. Order 62 rule 35(4) of the Rules of the High Court clearly provides that unless the judge otherwise directs, no further evidence shall be received on the hearing of such application under this rule.

6.  It was only upon receipt of Mr Chu’s written submissions on the day before the hearing that all of the Applicant’s grounds of complaint in this review became apparent. I thus proceeded to consider such grounds at the hearing:

(1) R1 was wound up. The liquidator of R1 did not seek leave to defend the summons heard before DHCJ William Wong S.C. and as such had no locus to appear before the Judge. It was submitted that Master Lai did not have jurisdiction to make the costs order in favour of R1’s liquidators (the “Jurisdiction Complaint”).

(2) Master Lai erroneously refused discovery sought by the Applicant on the items /documents for time allegedly spent by R1 for preparation of the hearing. There was thus no basis for the Master to arrive at the quantum of costs as he did (the “Discovery Complaint”).

(3) R1 had no assets and the liquidator was effectively claiming their remuneration as liquidators of R1 from the Applicant. The Master was wrong to have ignored this fact and allowed R1’s costs (the “Remuneration Complaint”).

(4) R1 acted in person and should not have been able to claim professional charging rate (the “Charging Rate Complaint”).

(5) The quantum allowed by Master was in any event excessive (the “Quantum Complaint”).

Analysis

7.  The above complaints are completely unmeritorious.

The Jurisdiction Complaint and the Remuneration Complaint

8.  The learned Master’s task was only limited to taxing R1’s bill of costs. He had no jurisdiction to determine, at the taxation stage, to disallow the taxation of R1’s costs, which would in effect overturn the costs order made by DHCJ William Wong S.C.

9.  The Applicant had in fact applied to vary the costs orders before DHCJ William Wong S.C. and such application was dismissed.

10.  If the Applicant had wished to object to the costs order granted by the Judge, he should have lodged an appeal against such costs orders, which he did and the appeal was dismissed.

11.  It can thus be seen that the Applicant was aware of the proper procedure and avenue to challenge the costs orders. It is completely disingenuous for the Applicant to raise the Jurisdiction Complaint and the Remuneration Complaint as grounds for review. There is no merit in these grounds.

The Discovery Complaint

12.  Mr Kurt Ng, counsel for R1, pointed out that there was in fact no application made before the learned Master for discovery of documents. It was only mentioned by way of a comment in the list of objections filed by the Applicant to R1’s bill of costs, which was not further pursued at the oral hearing. In any event, this does not fall within a review of a taxation review. If there had been an application for discovery and if the Applicant disagreed with the learned Master’s refusal to order discovery of documents, he should have appealed against that decision. There is no merit in this ground.

The Charging Rate Complaint

13.  R1 clearly dealt with the proceedings before DHCJ William Wong S.C. as liquidator of the wound up company. He acted in a professional capacity offering his services to the wound up company. I do not understand on what basis Mr Chu could submit that the R1 acted in person in the sense that he had personal interest in the litigation. There is no merit in this ground.

The Quantum Complaint

14.  Mr Chu criticised that the amount allowed by the Master was excessive for a 3-hour hearing. There was no particular item that Mr Chu pointed to that ought to be reviewed. What Mr Chu had failed to appreciate is the fact that the costs order against the Applicant is on an indemnity basis. The learned Master had correctly identified the principles for taxation on indemnity basis in paragraphs 23 – 28 of the Master’s Review. In fact, the learned Master had already taxed off about 45% of R1’s bill of costs. Mr Chu had not been able to point out what error the Master had committed in coming to his determination given that this is an indemnity costs order against the Applicant. There is no merits in this ground.

Conclusion

15.  It follows that the Applicant fails on this review of the Master’s Review. The review is dismissed.

16.  Mr Ng, submitted that the Applicant should bear R1’s costs on an indemnity basis because:

(1) The Applicant had not set out any ground of review in the Summons. Despite the solicitors for R1 having complained by letter dated 3 July 2024 about the lack of grounds of review, the Applicant had failed to provide them until one day before the hearing by way of submissions.

(2) There is no merit in any of the grounds put forward by the Applicant.

17.  Mr Chu did not dispute that there was no ground of review set out in the Summons. However, Mr Chu sought to argue that there was no requirement under Order 62 rule 35 for an applicant to provide grounds in a review of taxing master’s certificate by a Judge.

18.  Although there is no such express requirement under the said rule, any reasonable practitioner or litigant would have endeavoured to set out the grounds of review so that the opponent and the court would be aware of the basis of his challenge. As Order 62 rule 35 expressly provides that no further evidence shall be received on the hearing of an application under this rule, the reasonable alternative would be to provide such grounds in the summons for review.

19.  Even if one does not set out the grounds of review in the summons, out of courtesy to the opponent and to the court, such grounds should have been provided in good time before the hearing so that the opponent can prepare for the arguments and the court can prepare for the disposal of such application.

20.  As noted above, the majority of the grounds of review were only provided by way of written submissions the day before the hearing. Mr Chu argued that there was nothing improper as those grounds are essentially legal arguments and need not be disclosed or informed to the other side anytime earlier than when written submissions were served.

21.  I reject such submission. It is essential for all grounds of review to be provided in good time before the hearing so that the other side can properly consider and seek advice on whether to contest to such review.

22.  I am of the view that the failure on the part of the Applicant to set out all the grounds of review in good time before the hearing indicates a lack of conviction in his application for review.

23.  As to the merits in the grounds of review put forward by Mr Chu, it can be seen from the above that they are completely devoid of merit. The Applicant is not a stranger to taxation proceedings. After the many taxation hearings before the taxing Master and the review application before DHCJ Reyes S.C., it is inconceivable that the Applicant is not aware if what the applicable principles are and whether there is any merit in his application for review in the present case.

24.  The lack of conviction and the lack of any merit strongly indicate that the review is just a try-on by the Applicant to delay the inevitable result of payment of costs ordered. In such circumstances, I agree that the Applicant should be liable for costs on an indemnity basis.

25.  The Summons is dismissed. Costs of the Summons be paid by the Applicant to the 1^st Respondent on an indemnity basis, to be summarily assessed.

26.  The 1^st Respondent do lodge and serve a statement of costs within 7 days hereof. The Applicant do lodge and serve a list of objections (if any) within 7 days thereafter. The summary assessment of costs will be carried out on paper after the deadlines stipulated above.