MAK NGUN TAI AND OTHERS v. FUNG MING IP AND OTHERS

CACV 83/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 83 OF 2017

(ON APPEAL FROM HCAP NO 37 of 2015)

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JUDGMENT

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Hon Lam VP (giving the Judgment of the Court):

1.  This is an appeal against the decision of Recorder L Wong SC (as L Wong J then was) on costs made in the context of an application by the Plaintiffs for appointment of administrator pendente lite [“the APL application”]. The Plaintiffs were successful and the learned judge ordered costs against the 1^st and 2^nd Defendants.

2.  Leave to appeal was sought by both defendants.  The background to that application was set out in the judgments of this Court on leave in HCMP 197 of 2017 (13 March 2017 and 28 March 2017).  The Court saw no merit in the intended appeal by the 1^st Defendant and, for his appeal, leave was refused. 

3.  However, in respect of the 2^nd Defendant, Mr Lai (counsel for the defendants) said that she had adopted a neutral stance in the APL application and that was reflected in the skeleton submission placed before the judge at the hearing.  Unfortunately, confusion crept in after the judge had reached her decision on the substantive merit of the APL application.  In the written submissions on costs of 6 November 2016, Mr Lai made submissions on behalf of the both defendants.  That led the judge to come to the impression that both defendants had participated in the opposition to the APL application.  The judge therefore awarded costs against both defendants.

4.  In the application for leave, Mr Lai contended that the 2^nd Defendant had actually been neutral in the APL application.  The Court therefore gave an opportunity to the parties to see if there had been some misunderstanding and if so whether the matter could be sensibly resolved by some form of undertakings.

5.  After we had handed down our judgment on 13 March 2017, counsel for the Plaintiffs (Mr Yau) lodged a written submission contending that though she had professed to be neutral, in reality the 2^nd Defendant was not neutral in the APL application.  In light of that stance, the Court granted leave to the 2^nd Defendant to appeal and invited parties to consider, in line with the spirit of the underlying objectives in Order 1A, if the appeal could be proceeded as a paper appeal as the scope of the appeal would be very narrow.

6.  Parties agreed to have the appeal to be processed on paper and appropriate directions were agreed.  Submissions and appeal bundle were filed accordingly.

7.  Having read the submissions and papers, we are satisfied that it is appropriate to process the appeal on papers. 

8.  As we have said in the leave judgments, the only issue in this appeal is whether the 2^nd Defendant had maintained a neutral stance in the APL application.

9.  In the submissions lodged on behalf of the Plaintiffs in this appeal, Mr Yau took us through some correspondence prior to the hearing before the judge to show that prior to the filing of the skeleton submissions for the hearing, she had opposed the APL application.  We accept it was fair to say that at an early stage, she did oppose to the suggestion of the appointment of APL.  However, we also note, as submitted by Mr Lai, that after the filing of the application she did not take any step in opposition.  We do not believe her earlier stance has added to the costs of the Plaintiffs in the APL application.

10.  We have also gone through the transcript of the hearing before the judge.  Mr Yau invited our attention to his submissions to the judge on the basis that both defendants opposed the application and Mr Lai had not corrected him.  Having read the parts of the transcript Mr Yau relied upon, we do not find any unequivocal statement from Mr Lai at the hearing suggesting that the 2^nd Defendant had changed her neutral stance from the position set out in the written submissions.  Mr Yau failed to pay proper regard to the statement in the written submissions and he could not put the blame on the other foot when he had apparently misunderstood the position.  

11.  Further, as we have said in the leave judgments, the judge in her judgment of 14 October 2016 invited submissions on costs from 1^st Defendant only.  Hence, apparently, at that stage the judge did not labour under any misconception (as Mr Yau did) that the 2^nd Defendant took part in the opposition to the APL application.

12.  Whilst we accept Mr Lai’s written submissions on costs of 6 November 2016 had muddled the picture and confused the judge, that alone cannot rewrite the substantive stance of the 2^nd Defendant actually taken in the APL application.

13.  On the materials before us, the 2^nd Defendant had adopted a neutral stance in the APL application.  Thus, the judge erred in ordering costs against her.

14.  In the circumstances, we allow the appeal and set aside the judge’s order on costs as far as the 2^nd Defendant is concerned.  In its place, there should be no order for costs as between the Plaintiffs and the 2^nd Defendant in the APL application.

15.  In terms of the costs of the appeal, though the 2^nd Defendant is successful, we bear in mind that Mr Lai’s submissions on costs of 6 November 2016 had confused the judge. 

16.  Further, those acting for the 2^nd Defendant could have written to the judge to clarify that the 2^nd Defendant did not take part in the APL application.  Instead, solicitors for the 2^nd Defendant simply wrote on 28 December 2015 asking for reasons for the decision on costs, which did not assist the judge at all in getting a correct understanding of the situation.

17.  Had the solicitors for the 2^nd Defendant been more mindful of their duties under Order 1A Rule 3 and taking the more reasonable course, we are quite certain that the judge would have corrected herself (as she was entitled to do before the perfection of the order on costs) and the appeal (and the costs of the application for leave to appeal and the appeal) could have been obviated.

18.  Worse still, the 2^nd Defendant did not make any application for leave to appeal within time.  Hence, there had not been any application for leave before the judge.  If that course had been taken, with the correct position put before the judge, it is unimaginable that the judge would not give leave on paper.  In other words, even if the 2^nd Defendant did not act in time before the sealing of the order on costs, those acting for her could have save some costs of the leave application by moving in a timely manner to seek leave from the judge who would be in the best position to assess if the 2^nd Defendant had actually opposed the APL application at the hearing before her. 

19.  At the same time, those acting for the Plaintiffs should have been more realistic in deciding whether to oppose the appeal, particularly in light of this Court’s judgment on 13 March 2017.  Having taken a stance which failed to persuade us, there is no reason why they should not be ordered to bear at least part of the costs of the appeal.

20.  Bearing these matters in mind, we would only order the Plaintiffs to pay the 2^nd Defendant half of the costs of the appeal but not the costs of the leave application in HCMP 197 of 2017 (which we had reserved by ordering the same to be costs in the cause the appeal).  Such costs could be assessed summarily and we direct the 2^nd Defendant to lodge and serve a statement of costs within 7 days and the Plaintiffs may comment on the same within 7 days thereafter.