POON LOI CHEUNG DESMOND v. POON LOI TAK

HCMP 1174/2025

[2026] HKCFI 2571

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1174 OF 2025

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DECISION

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A.      INTRODUCTION

1.  This Decision deals with the costs of the action which has been settled between the parties.

B.      BACKGROUND

2.  The late Poon Nuen (“Father”) and his late wife (i.e. the Deceased) had 6 children, and the parties are 2 of them.

3.  The Deceased died intestate on 6 February 2012, survived by Father and all 6 children.

4.  Father died intestate on 20 April 2016.

5.  By Letters of Administration dated 19 December 2016, the defendant was appointed as the sole administrator of the estate of the Deceased (“the Estate”).

6.  In 2016, the defendant commenced a civil action (HCA 3348/2016) (“the Civil Action”) as administrator of Father’s estate against the plaintiff, for the recovery of funds which the plaintiff had withdrawn from 2 bank accounts held in the joint names of the plaintiff and Father with HSBC.  The trial of the Civil Action took place in December 2021 (“the Civil Action Trial”).  Ultimately, the court handed down a Judgment on 9 January 2023 and ordered the plaintiff to, inter alia, repay the sum of HK$14,248,000 (“the Civil Action Judgment”).

7.  By Originating Summons filed on 15 July 2025 (“the Originating Summons”), the plaintiff applied, inter alia, for the following orders:

(1)     The defendant do exhibit by affidavit filed in the court, a true full and proper inventory and account of the whole of the Estate (“the Inventory Order”);

(2)     The defendant shall account for all rental income and receipts derived from a property (“the Property”) situated in Western District (“the Account Order”);

(3)     The defendant shall give access to the plaintiff on demand all supporting documents in his possession, custody and power to the inventory and accounts in respect of the Estate (“the Documents Order”).

8.  At the call-over hearing on 6 October 2025 (“the Call Over Hearing”), parties informed this Court that they have reached agreement on the substantive orders to be made by the court, except on costs.

9.  By consent, this Court made the Inventory Order, the Account Order and the Documents Order on 23 October 2025.

10.  However, parties still could not agree on costs.

11.  Hence this Decision.

C.      PARTIES’ RESPECTIVE STANCES

12.  The plaintiff’s position is that his costs of these proceedings shall be borne by the defendant personally on indemnity basis; and the difference, if any, between such costs and a full indemnity be paid to the plaintiff out of the assets of the Estate.

13.  On the other hand, the defendant contends that:

(1)     There should be no order as to the costs of the proceedings up to the Call Over Hearing.  If the Court holds that the plaintiff should be entitled to such costs, the quantum thereof should be assessed on party and party basis, and the assessed costs should be borne by the Estate;

(2)     The defendant’s costs incurred after the Call Over Hearing should be paid by the plaintiff on indemnity basis.

D.      ISSUES TO BE RESOLVED

14.  In light of the parties’ respective stances, the Court has to resolve the following issues herein:

(1)     Should the plaintiff or the defendant bear the costs of the action up to the Call Over Hearing?

(2)     If the defendant is ordered to pay the plaintiff’s costs of the action, should he be ordered to bear such costs personally?

(3)     What should be the basis of taxation/assessment in relation to such costs (if applicable)?

(4)     What should be the appropriate quantum of such costs (if applicable)?

(5)     Who should bear the costs of the action incurred after the Call Over Hearing?

(6)     What should be the basis of taxation/assessment in relation to such costs?

(7)     What should be the appropriate quantum of such costs?

E.      DISCUSSION

E1.    Costs of the action up to the Call Over Hearing

E1.1   The law

15.  It is trite that if a case is settled save as to costs, the court has a wide discretion regarding costs. 

16.  The starting point is Order 62 rule 3(2) of the Rules of the High Court (Cap.4A, Laws of Hong Kong):

“If the Court in the exercise of its discretion sees fit to make any order as to the costs of or incidental to any proceedings (other than interlocutory proceedings), the Court shall, subject to this Order, order the costs to follow the event, except when it appears to the Court that in the circumstances of the case some other order should be made as to the whole or any part of the costs.”

17.  The established principles have been summarized by Au-Yeung J in Famous Marvel Co Ltd and Others v Conversant Group Ltd and Others (HCA 2153/2009, unreported, 29 October 2012) as follows:

“22. There is no dispute that even if a case is settled except as to costs, the Court still has power to determine which party should be liable for costs. There is no tradition for there to be ‘no order as to costs’ in such a scenario. I am guided by the following principles in deciding costs:

(i) The Court is to decide if the party seeking costs has substantially obtained the reliefs sought in the litigation: Re Chinese United Establishment Ltd, HCCW 291/1994, 5 October 1995, Rogers J (as he then was), approved in CACV 214/1995; Lai Yuet Chun v Super Deluxe International Limited & ors, HCCW 186/2001, 3 June 2003 Kwan J (as she then was).

(ii) At each end of the spectrum there will be cases where it is obvious which side would have won had the substantive issues been fought to a conclusion. In between, the position will, in differing degrees, be less clear. How far the Court will be prepared to look into the previously unresolved substantive issues will depend on the circumstances of the particular case, not least the amount of costs at stake and the conduct of the parties. Brawley v Marcynski (No.1) [2003] 1 WLR 813.

[…]”

E1.2   The defendant’s grounds of opposing an adverse costs order

18.  Therefore, the first question to ask is who should be regarded as the successful party herein. 

19.  In my view, the answer is clear – it must be the plaintiff, who has been able to obtain the substantive orders which he sought by way of the Originating Summons.

20.  It seems that the defendant does not dispute the above.

21.  However, the defendant submits that the plaintiff should not be entitled to costs, on the following grounds:

(1)     It was not necessary for the plaintiff to commence these proceedings;

(2)     The proceedings were taken out not in good faith;

(3)     There were unusual circumstances justifying the speed of administration;

(4)     The defendant has discharged his duty reasonably and in good faith.

22.  The defendant seems to be suggesting also that the plaintiff has been unreasonable in the negotiation process. 

E1.3  Deliberation of the defendant’s grounds

E1.3.1 Necessity of commencing this action

23.  In gist, the defendant submits that there was no need for the plaintiff to commence these proceedings because:

(1)     All siblings (including the plaintiff) were aware of the fact that the Deceased did not have valuable assets apart from the Property;

(2)     The Deceased’s financial documents had been kept by Father for a long time.  When the defendant applied for the Letters of Administration, no one knew the whereabouts of the bank accounts;

(3)     Therefore, all siblings, including the plaintiff, knew that no account or inventory was necessary for the Estate;

(4)     After a whole decade, the plaintiff informed the defendant that some bank accounts had been identified.  The latter had taken action immediately to report to the Probate Registry about the additional schedule of assets, and to report to the siblings;

(5)     At the end of the day, no meaningful balance in the bank accounts had been identified;

(6)     It would be unfair to conclude that the defendant would never have fulfilled his duty as administrator but for these proceedings, for it is common sense to prioritise matters in the Civil Action and the subsequent enforcement actions for the benefits of the same pool of beneficiaries.

24.  With respect, these points are all unmeritorious.

25.  Firstly, even if the Deceased’s Estate did not have much assets, it would not relieve the defendant from his duties as the administrator of the Estate.

26.  In fact, it can be inferred that it is due to his recognition of such duties that he consented to the making of the various orders by consent in October 2025.

27.  Moreover, not only does the fact that there were not much assets in the Estate not amount to an excuse for his failure to discharge his duties, it actually works against him – given the simplicity of the administration of the Estate, he could have completed it long time ago if he cared to do what he should have done. 

28.  Secondly, the defendant’s reliance on his ignorance of the Deceased’s Estate is futile. He had the duty to investigate the matter.

29.  It is also difficult to understand why he emphasized that the Deceased’s documents were kept by Father.  He even stated in his affirmation that it would be disrespectful if he asked his Father about the Deceased’s assets.  However, it should be noted that by the time the defendant was granted Letters of Administration of the Deceased’s Estate, Father had passed away for 8 months.  There is no evidence that the defendant could not have access to the documents previously kept by Father.

30.  Thirdly, the question is not whether the defendant had followed up the matter timely upon being informed by the plaintiff about the Deceased’s bank accounts. Rather, the question is why the defendant did not discharge his duty and find out whether the Deceased had any bank accounts which were unknown to him.

31.  Further, it seems that the defendant had knowledge at least about a Hang Seng Bank account held by the Deceased, as he had referred to this account during his testimony in the Civil Action Trial (held in December 2021).

32.  Fourthly, whether at the end of the day any meaningful balance in the Deceased’s bank accounts had been identified is neither here nor there.

33.  Fifthly, it is evident that the plaintiff was not the first beneficiary of the Estate who asked for an account and inventory of the Estate.  Another sibling, Poon Loy Koon, had made a similar request through solicitors in May 2023.  Yet, there is no evidence that the defendant had ever replied to the same.

34.  Further, it is futile for the defendant to shift the blame to the Civil Action and the enforcement of the Civil Action Judgment, for these matters should not relieve his duty as administrator of the Estate. 

35.  Sixthly, despite the plaintiff’s enquiry which was first made on 21 February 2025 through solicitors, the defendant did not provide the plaintiff with, for example, a list of assets of the Estate.  The defendant only stated that he would update the list of assets after receiving the relevant banks’ reply. When the plaintiff raised further questions on the rental matter related to the Property by solicitors’ letter dated 30 April 2025, the defendant did not even reply. 

36.  At the end of the day, the plaintiff only commenced these proceedings in July 2025.  I cannot see how it can be said that the plaintiff was unreasonable to do so, when the defendant had failed to give further replies to the plaintiff solicitors after 25 March 2025.

E1.3.2 The alleged ulterior motive on the part of the plaintiff 

37.  The defendant alleged that the plaintiff is actually not interested in the account of the Estate, and that the present action is only his “distraction tactics” from the enforcement actions against him in relation to the Civil Action Judgment.  The defendant has drawn this court’s attention to the “close timing” between his enforcement steps (which were taken in January, February and July 2025).

38.  I do not understand how these proceedings may create “distractions” as alleged.  The defendant was all along represented by solicitors in both the Civil Action and herein. 

E1.3.3 Unusual circumstances justifying the speed of administration

39.  The defendant submits that he has been preoccupied by the Civil Action which (together with the enforcement thereof) must be given first priority, and as a result, the delay in the administration of the Estate is understandable.

40.  This submission is rejected. 

41.  In my view, it is not open to the defendant to say that he had to devote his time entirely on the Civil Action, for the reason, as aforesaid, that he had a legal team to assist him, not to mention that he in fact was not conducting the Civil Action in his capacity as administrator of the Deceased’s Estate, but Father’s Estate.

42.  The defendant also blames the plaintiff for having taken away the original deeds of the Property.  Putting aside the plaintiff’s denial of this for the time being, this matter cannot be relevant to explain the defendant’s failure to provide an account of the Estate and account of rental of the Property.

E1.3.4 The defendant’s discharge of his duty

43.  The defendant alleged that he has discharged his duties as administrator honestly, reasonably and diligently.

44.  This submission is rejected for the reasons explained under Section E1.3.1 above.

E1.3.5 Offers to settle

45.  The defendant also relies on the parties’ conduct during negotiation to settle, including the followings:

(1)     On 10 September 2025, the plaintiff made an offer that the defendant shall be personally liable for costs of and occasioned by the Originating Summons up to the date of settlement on a party and party basis, to be taxed if not agreed.

(2)     On 23 September 2025 and thereafter, the defendant repeatedly asked the plaintiff for a bill of costs, which the plaintiff refused to provide.

(3)     On 16 October 2025, the defendant proposed to pay costs at HK$40,000, half of which to be borne by him personally and the other half to be paid out from the Estate.

(4)     On 28 October 2025, the defendant further proposed to pay the plaintiff’s costs on party and party basis, to be borne by the Estate.

46.  The defendant submits that the plaintiff has unreasonably refused to provide a bill of costs, and to accept different reasonable offers made by the defendant.

47.  I do not agree with these submissions.  Although the plaintiff has refused to provide any statement of costs, that should not affect the negotiation, as the plaintiff’s costs would be subject to summary assessment by which the defendant’s interest would be protected.

48.  Although the defendant subsequently did not insist to have sight of the plaintiff’s statement of costs and agreed for the plaintiff’s costs to be summarily assessed by the court, that offer is not good enough because he refused to bear such costs personally.  As will be explained in Section E2 below, this is unacceptable.

49.  Furthermore, the small amount of costs proposed to be paid by the defendant cannot be regarded as reasonable, not to mention that he only offered to bear 50% thereof personally.

E1.4  Conclusion

50.  To conclude, I find that the circumstances of the present case do not justify the making of any order other than ordering the costs to follow the event.

E2.     The defendant’s personal liability on costs

E2.1  Legal principles

51.  There is no dispute between the parties that the court has discretion to order the defendant (as administrator of the Estate) to bear the plaintiff’s costs personally if the defendant has been at fault in discharging his duty.

E2.2    Deliberation

52.  By the time when the plaintiff commenced these proceedings, the Deceased had passed away for over 12 years and more than 8 years had lapsed since the defendant was granted the Letters of Administration of the Estate. 

53.  The fact that no beneficiary had chased the defendant for an account does not relieve his duty as administrator of the Estate.  Further, as pointed out above, in fact another beneficiary had requested the defendant for an account in 2023, but the defendant did not bother to give any substantive reply.  The defendant adopted the same attitude when the plaintiff made a similar request in 2025.

54.  Since the defendant has breached his duty as the administrator of the Estate, I see no reason why he should be able to recover his costs (and the plaintiff’s costs which he is obliged to pay) from the Estate. 

55.  I therefore order that the defendant should bear the plaintiff’s costs personally.

E3.    Basis of taxation/assessment

56.  The plaintiff asks for indemnity costs.

E3.1    Legal principles

57.  The general principles as to when the court may order costs on indemnity basis have been referred to in Holinail H. K. Limited v Matthias Pou & Others [2025] HKCFI 1157 as follows:

“41. Costs are in the discretion of the Court, and it is trite that such discretion is not fettered or circumscribed beyond the requirement that taxation on an indemnity basis must be appropriate: Town Planning Board v Society for Protection of the Harbour Ltd (No 2) (2004) 7 HKCFAR 114, at [13], [16] & [17].

42. As to when it would be appropriate to make an indemnity costs order, the general rules are also well established and have been discussed in many authorities.

43. In Overseas Trust Bank Ltd v Coopers & Lybrand (a firm) and Others [1991] 1 HKLR 177, Godfrey J (as his Lordship then was) explained that:

‘[…] In order to justify a taxation on the indemnity basis, the successful party has to show, either that the case is one of a type already recognised in the practice of the court as warranting a taxation on that basis (such as, for example, the contempt cases to which I have already referred) or that there is some feature in the case even more special or unusual than one which would justify a taxation on the common fund basis. A case in which the successful party has demonstrated that the proceedings were initiated or prosecuted by the unsuccessful party in a manner which constitutes that party’s proceedings an abuse of the process of the court might well be a candidate for an award of taxation of costs on an indemnity basis. A taxation of the successful party’s costs on an indemnity basis could properly be ordered, in my opinion, where the proceedings were scandalous or vexatious, or had been initiated or prosecuted maliciously, or for an ulterior motive, or in an oppressive manner. Any proceedings instituted or prosecuted in such circumstances as to constitute an affront to the court could properly be the subject of a direction for taxation of the successful party’s costs on an indemnity basis.’ (at 182G – 183C)

44.     In Choy Yee Chun (The representative of the estate of Chan Pui Yiu) v Bond Star Development Ltd[1997] HKLRD 1327, Stock J (as his Lordship then was), having referred to the Judgment quoted above, stated:

‘It has since been held that, though there must still be shown special and unusual features, even the circumstances particularised by Godfrey J. are not to be taken as exhaustive of the conditions in which it might be appropriate to make such an award, and that the power to award taxation on an indemnity basis is not confined to cases which have been brought with an ulterior motive or for an improper purpose. (See Macmillan Inc. v. Bishopsgate Investment Trust Ltd., 10 December 1993 (unreported) cited in Sung Foo Kee Ltd. v. Pak Lik Co. [1996]3 HKC 570).

In Sung Foo Kee Ltd a litigant had been repeatedly in contempt of court orders and the trial judge had found that the defendant had deployed defences which he termed “hocus pocus” and had used the legal process to prevent the plaintiff obtaining its just payment.  The Court of Appeal said that it would have awarded costs on an indemnity basis.  It remarked (at page 575) that the circumstances in which an indemnity award might properly be made were not restricted to circumstances such as those described by Godfrey J. in Overseas Trust Bank (supra). At p.575B - E of Sung Foo Kee Ltd. (supra), Godfrey J.A. said –

‘Here, as in England and Wales, the judge has a discretion, in a case which does fall outside the general rule, to direct the taxation of the receiving party’s costs on the basis which he considers to be appropriate to that case. This is not a discretion limited by indications in previous cases, such as, eg the observations of Godfrey J in Overseas Trust Bank Ltd v Coopers & Lybrand [1991] 1 HKLR 177 (in which he declined to order the successful party’s costs to be taxed on the indemnity basis), as to the sort of special or unusual feature (there does have to be some special or unusual feature) which could justify an award of indemnity costs. Although the examples given in the judgment of Godfrey J at 182J‑183C may be of assistance in other cases in which indemnity costs are claimed, his judgment does not purport to be and is not to be taken as determinative of the sort of case in which indemnity costs may be ordered.’

The Court of Appeal endorsed the view of the English courts that :

‘The power to order taxation on an indemnity basis is not confined to cases which have been brought with an ulterior motive or for an improper purpose.  Litigants who conduct their cases in bad faith, or as a personal vendetta, or in an improper or oppressive manner, or who cause costs to be incurred irrationally or out of all proportion as to what is at stake, may also expect to be ordered to pay costs on an indemnity basis if they lose, and have part of their costs disallowed if they win.  Nor are these necessarily the only situations where the jurisdiction may be exercised; the discretion is not to be fettered or circumscribed beyond the requirement that taxation on an indemnity basis must be ‘appropriate’.’ (see Macmillan Inc. v. Bishopsgate Investment Trust Ltd. supra)

Further at p.576 -

‘… it is a pity that various courts have attempted to define in exactly what circumstances indemnity costs may be ordered.’ (see Munkenbeck & Marshall v. McAlpine (1995) 44 Con LR 30 per Hollis J, at page 33)

The Court of Appeal in Sung Foo Kee Ltd at page 576F added :

‘… Our rules do now expressly provide for the taxation of costs on an indemnity basis and when they consider it appropriate judges should not be slow to make orders for the receiving party’s costs to be taxed on that basis.’ ”

(at 1334G – 1335G)

45.     In Cheung Wei Man Vivien and Chan Kim Thiam v Centaline Property Agency Ltd & Others (HCA 286/2000, unreported, 15 December 2006), Lam J (as Lam PJ then was) also had the following to say:

‘6. It is also useful to remind ourselves what Simon Brown LJ said in Liam v MGN Ltd (No.2) [2002] 1 WLR 2810 at Paras.11 and 12 in considering whether the conduct of a losing party is so unreasonable so as to warrant an award of indemnity costs. In particular, at Para.12, His Lordship observed,

‘I for my part understand the court there to have been deciding no more than that conduct, albeit falling short of misconduct deserving of moral condemnation, can be so unreasonable as to justify an order for indemnity costs. With that I respectfully agree. To my mind, however, such conduct would need to be unreasonable to a high degree; unreasonable in this context certainly does not mean merely wrong or misguided in hindsight.’ ’

46.     It can therefore be seen that, while the Court would take into account the litigation conduct of a party when deciding whether to make an indemnity costs order, such conduct has to be ‘unreasonable to a high degree’, and unreasonable in this context ‘certainly does not mean merely wrong or misguided in hindsight’.”

E3.2   Deliberation

58.  The plaintiff asks this Court to assess costs on indemnity basis so as to mark its disapproval of the defendant’s default in the administration of the Estate and how he has dragged on with the plaintiff’s repeated requests for the provision of inventory and account of the Estate.

59.  I agree with the plaintiff’s submissions.  The defendant has failed to discharge his duties as administrator of the Estate for a very long time.  He has totally disregarded the requests made by 2 different beneficiaries, and put up all sorts of excuses.  If he had handled the aforesaid requests reasonably, the plaintiff did not have to incur costs on this action at all.

60.  As to the defendant’s excuses, I repeat what I said under Section E1.3.3 above.

61.  All in all, I conclude that an indemnity costs order against the defendant should be made in the circumstances of the present case.

62.  The plaintiff also asks that the difference, if any, between the costs to be paid by the defendant after taxation/assessment and a full indemnity be paid to the plaintiff out of the Estate. 

63.  The plaintiff is not a trustee.  I can see no reason why he should be put in a position which is more favourable than other successful litigants, who normally would have to bear themselves the costs which have been taxed off.  I therefore refuse to grant such an order.

E4.    Summary assessment of the plaintiff’s costs up to the Call Over Hearing

64.  The plaintiff has produced a statement of costs and asks for the sum of HK$144,753.33.

65.  As the defendant is liable to bear the plaintiff’s costs on indemnity basis, I would consider the plaintiff’s statement of costs on the basis that all his costs are to be allowed except those unreasonably incurred or of unreasonable amount.  The plaintiff would be given benefit of any doubt.

66.  Adopting a broad-brush approach, the plaintiff’s cost is summarily assessed at HK$125,000.

E5.    Costs of the action after the Call Over Hearing

67.  The defendant asks for indemnity costs against the plaintiff in relation to the period after the Call Over Hearing (on 6 October 2025) on 2 grounds:

(1)     The plaintiff has asks for excessive costs (exceeding HK$150,000) despite the early settlement between the parties;

(2)     The plaintiff has refused the defendant’s reasonable offers.

68.  With greatest respect, the defendant’s arguments are totally unmeritorious and must be rejected.

69.  First of all, it is in fact difficult to understand (and the defendant’s solicitor did not explain) why a line should be drawn on 6 October 2025.  It is even more puzzling to see that the defendant has relied on negotiations which started on 22 September 2025 in support.

70.  In any event, as can be seen under Section E4 above, the plaintiff’s costs has been assessed at HK$125,000.  This shows that the plaintiff’s initial demand on costs was not exorbitant.

71.  Further, as discussed under Section E1.3.5 above, the defendant’s offers on costs cannot be said to be reasonable at all. It is entirely understandable why the plaintiff had rejected them.

72.  Even if either of the 2 grounds is accepted, it is inappropriate for the defendant to ask for indemnity costs against the plaintiff. As stated by Simon Brown LJ (as he then was) in Kiam v MGN Ltd (No 2) [2002] 1 WLR 2810 at [13]:

“[…] it will be a rare case indeed where refusal of a settlement offer will attract under Part 44 not merely an adverse order for costs, but an order on an indemnity rather than standard basis.”[1]

73.  In short, I am of the view that the position on costs incurred after the Call Over Hearing on 6 October 2025 should be as same as those incurred before such a date.

E6.    Basis of taxation/assessment

74.  The conclusion reached under Section E5 above means that the plaintiff’s costs incurred after the Call Over Hearing should also be assessed on indemnity basis.

E7.     Summary assessment of the plaintiff’s costs after the Call Over Hearing 

75.  The plaintiff’s cost is summarily assessed at HK$25,000.

F.      ORDER

76.  By reasons of the aforesaid, I make the following orders:

(1)     The plaintiff’s costs of this action shall be borne by the defendant personally on indemnity basis;

(2)     The plaintiff’s costs are summarily assessed at HK$150,000, which shall be paid within 14 days thereof.

G.      COSTS

77.  Costs in relation to the argument on costs should follow the event, and should also be assessed on indemnity basis.

78.  I therefore order on nisi basis that the defendant shall personally pay the plaintiff the costs occasioned by and incidental to the argument on costs, which should be assessed summarily.

79.  The above order nisi shall become absolute in the absence of application to vary (which, if any, will be disposed of on paper) within 14 days hereof.

80.  The plaintiff’s 2^nd statement of costs dated 2 April 2026 has covered the costs on the submissions on costs, and in respect of which the defendant has lodged a statement of objection.  The plaintiff’s cost is summarily assessed at HK$75,000.