KAM LEUNG SUI KWAN v. KAM KWAN LAI AND OTHERS

FACV No. 4 of 2015

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 4 OF 2015 (CIVIL)

(ON APPEAL FROM CACV NO. 266 OF 2012)

____________________

_______________________

JUDGMENT ON COSTS

_______________________

The Court:

1.  By its judgment dated 11 November 2015, the Court allowed the petitioner’s appeal and directed the parties to lodge written submissions on the issue of costs.  Having considered the parties’ submissions, this is the judgment of the Court on costs.

2.  The general rule, although sometimes departed from, is that costs follow the event and it is that rule which the petitioner’s prays in aid in seeking an order for costs (see paragraph 4 below).

3.  As to the relevant “event”, the petitioner’s petition was dismissed by the Court of First Instance (“the CFI”) and the subsequent appeal to the Court of Appeal (“the CA”) was also dismissed.  In this Court (“the CFA”), the petitioner succeeded in obtaining a winding-up order in respect of Yung Kee Holdings Limited (“the Company”).  In simple terms, the petitioner is the winning party and, in terms of the general rule, would be entitled to the costs of the appeal and in the courts below (proceeding on the hypothesis that those courts should have given judgment in favour of the petitioner to the extent of his success in the CFA).

The costs orders sought by the petitioner

4.  The petitioner seeks orders that the respondents pay 80% of the petitioner’s costs of (1) the appeal to the CFA, (2) the appeal to the CA and (3) the trial of the petition in the CFI, with a certificate for 3 counsel in each level of court[1]. The reduction in costs of 20% built into this proposed order is to reflect the fact that the petitioner was unsuccessful in the CFA and in the courts below on the issue of whether there was jurisdiction to make an order under section 168A of the former Companies Ordinance (Cap.32) for the 1^st respondent to buy the petitioner’s shares in the Company.  The reduction conceded by the petitioner is based on principle (iii) in Nourse LJ’s judgment in Re Elgindata (No.2)[2].

The costs orders sought by the respondents

5.  For their part, the respondents submit that, instead of global costs orders in each court in favour of the petitioner, issue-based costs orders should be made to reflect the various issues raised in the litigation on which the petitioner lost.  Issue-based costs orders would result in the petitioner being ordered to pay a portion of the respondents’ costs and not merely to suffer a reduction in the amount of costs he is to recover from the respondent.  In addition, in the present case, the respondents contend that the issues on which the petitioner lost consist of more than just the section 168A issue.

6.  On this basis, the respondents submit that the appropriate costs orders should be that: (1) the respondents pay two-thirds of the petitioner’s costs and the petitioner pay one-third of the respondents’ costs in the CFA; (2) the respondents pay 60% of the petitioner’s costs and the petitioner pay 40% of the respondents’ costs in the CA; and (3) the respondents pay half of the petitioner’s costs and the petitioner pay half of the respondents’ costs of the trial in the CFI (or there be no order as to the costs of trial).

7.  Alternatively, say the respondents, if global costs orders are to be made, the petitioner should suffer a larger reduction in the amount of costs in each level of court to reflect the issues on which he lost.  Thus, on this alternative basis, the respondents say the costs orders should be that: (1) the respondents pay two-thirds of the petitioner’s costs of the appeal to the CFA; (2) the respondents pay 60% of the petitioner’s costs of the appeal to the CA; and (3) the respondents pay 50% of the petitioner’s costs of the trial in the CFI.

Discussion

8.  As this Court has previously said, too inflexible an application of the rule that costs generally follow the event is to be avoided but the discretion to depart from the rule should be exercised with due circumspection[3] since too ready a departure from the general rule encourages unnecessary argument[4].  Nevertheless, the principles for depriving a successful party of part of his costs set out in Re Elgindata (No.2)[5] are well-established and continue to apply in this jurisdiction notwithstanding the amendments to the rules of procedure under the Civil Justice Reform[6].

9.  In the present case, although discrete arguments were raised by the petitioner on which he was unsuccessful, the ultimate result of the appeal to the CFA is that the petitioner has succeeded on his petition in obtaining a winding-up order in respect of the Company pursuant to section 327(3)(c) of the ordinance[7] on the just and equitable ground, essentially because of the facts and matters relied upon in support of the allegation of unfair prejudice.

10.  Notwithstanding the respondents’ submissions, we do not consider that issue-based costs orders are appropriate in this case.  Insofar as relief in the petition was sought under section 168A, this should not be treated as a separate event from the remainder of the petition for the purposes of costs. In the present case, we are satisfied that global costs orders should be made in each level of court in favour of the petitioner.

11.  In view of the ultimate result in the litigation, there would be an argument for awarding all of the costs to the petitioner in this Court without any discount.  However, the petitioner has made a concession in inviting the Court to make a global 20% reduction of his costs both in the CFA and the courts below.  We consider this concession to be a fair one and a suitable global discount, the totality of which appropriately reflects the extent to which additional time and expense was incurred in the litigation by reason of the various issues, including the section 168A issue, raised by the petitioner and on which he failed.

Disposition

12.  Thus, we make orders that the respondents are to pay 80% of the petitioner’s costs of, respectively, (i) the appeal to the CFA, (ii) the appeal to the CA[8] and (iii) the trial in the CFI.

13.  As to the petitioner’s request for a certificate for three counsel in each level of court, this would appear to relate only to the appeals in the CA and the CFA.  Although three counsel appeared on behalf of the respondents in the CFA, we are satisfied that this is not an appropriate case in which to exercise the discretion to grant such a certificate in respect of either appeal.  The issues were undoubtedly novel and of great general or public importance but we do not think this was a case of such an exceptional nature as to justify a certificate for more than two counsel and so we decline the petitioner’s request[9].