CHAU YUET CHING BRENDA v. CHAN BO MAN WILLIAM AND OTHERS

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DECISION ON COSTS

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1.  This is the application of the plaintiff (by original action) and the 1^st defendant (by counterclaim) to vary the costs order nisi made in the Decision dated 11 November 2019 (“the Decision”) which provided for (1) the costs of (a) the discharge summons and (b) the variation summons be the plaintiff’s costs in the cause and that (2), there be no order as to costs for the amendment summons.

2.  For present purposes, reference should be made to the Decision regarding the 3 summonses then before the court, the submissions of the parties described therein and the Court’s reasoning for its Decision.

3.  The plaintiff proposed that the costs order be varied as follows:

(a)   costs of and occasioned by the 3^rd defendant’s application under the Summons dated 6 July 2018 be paid by the 3^rd defendant to the plaintiff forthwith, on an indemnity basis, to be taxed, if not agreed, with certificate for 2 counsel;

(b)  costs of the 1^st and 2^nd defendants’ application to discharge the injunction under the discharge summons be the plaintiff’s costs in the cause save that the plaintiff’s costs of the 9 October 2019 hearing (“the 2019 hearing”) in dealing with the 1^st and the 2^nd defendants’ application be paid by the 1^st defendant and the 2^nd defendant forthwith, with certificate for 2 counsel, to be taxed if not agreed;

(c)   costs of the plaintiff’s variation summons be the plaintiff’s costs in the cause, save that the plaintiff’s costs of the 2019 hearing in dealing with the variation summons be paid by the 1^st defendant and the 2^nd defendant forthwith, with certificate for 2 counsel, to be taxed if not agreed; and

(d)  the plaintiff’s costs of the 2019 hearing in dealing with the amendment summons be to the plaintiff, to be paid forthwith, with certificate for 2 counsel, to be taxed if not agreed. 

Costs order as varied

4.  Having considered the written submissions of the parties, the costs order nisi should be varied as set out in §19 below.

The 2019 hearing was unnecessary

5.  The 1^st to 3^rd defendants do not challenge the court’s view (see §74 of the Decision) that the Dormeuil Freres’ approach was applicable.

6.  The 3^rd defendant made an application by summons to discharge the undertaking it had given. In its submissions in opposition to the variation application it took issue with the court’s observation at §69 of the Decision that it (the 3^rd defendant) had provided its undertaking embodied in a court order made on 4 May 2017 by consent without any reservation whatsoever. The 3^rd defendant sought to rely on the letters dated 6 April 2017 and 10 April 2017 from its solicitors (“Undertaking by Letters”) made on a without prejudice and non-admission basis.

7.  But on 26 April 2017, based on facts showing that the 3^rd defendant had breached that Undertaking by Letters, the plaintiff made its application which resulted in the undertaking embodied in the Court order of 4 May 2017. That undertaking embodied in the court order was plainly made without any reservation. It follows that the 3^rd defendant should not have made its application for discharge.

8.  As regards the 1^st and 2^nd defendants, in view of the fact that the plaintiff had repeatedly advocated the Dormeuil approach since the hearing in December 2018, their insistence on seeking resolution of the factual dispute (as to the material non-disclosure) at the 2019 hearing was unreasonable.

9.  In so far as it was said that the effect of the variation to the costs order nisi sought by the plaintiff regarding the costs of the 2019 hearing is that the court would be deciding the issue of costs before deciding on the issue of material non-disclosure, that submission is misconceived.

10.  The variation relates only to the costs of the 2019 hearing as distinguished from the costs of the earlier hearings and/or the costs of the 1^st and 2^nd defendants’ application under the discharge summons which fall to be decided after trial by the trial judge.

11.  Having regard to the without prejudice letters from the plaintiff’s solicitors to the defendants’ solicitors dated 12 and 22 August 2019 containing proposals for the disposal of all 3 summonses, had they been reasonably considered by the defendants, the 2019 hearing could and would have been avoided.

12.  The conduct of the 1^st to 3^rd defendants in insisting on the resolution of the factual dispute (as to material non-disclosure) at the 2019 hearing was entirely unreasonable. Their rejection of the proposals is deprecated and merits sanction. 

13.  As regards the amendment summons, it is clear that its resolution at the 2019 hearing mirrored the plaintiff’s proposals repeatedly made for its disposition prior to the 2019 hearing. Had those proposals been reasonably considered, the amendment summons would have been disposed of without any need for a hearing. The plaintiff seeks an order for costs of the amendment summons with certificate for 2 counsel. Whilst I agree the plaintiff should be awarded her costs, the matter was not one that would justify the award of such certificate.

Immediate taxation

14.  The matters to be taken into consideration when deciding whether or not to make an order for immediate taxation are the following: (i) the extent to which the proceedings are from a taxation point of view separable and self-contained from the rest of the action; (ii) the justice of making such an order having regard to the effect of the cash flow of the respective parties; and (iii) whether the amount at stake on the taxation were sufficient to justify putting the parties to the expense of having a separate taxation: see Midland Business Management Limited v Lo Man  Kui (No2) [2011] 2 HKLRD 667 at §7 applying the test set out in Kickers International SA v Paul Kettle Agencies Limited [1990] FSR 436, 429.

15.  In my view, the costs of the 2019 hearing are separable and self-contained from the rest of the action. There is nothing in the hearing bundles to suggest that the making of an immediate taxation order will have any effect on the cash flow of the 1^st to 4^th defendants. Further, that those costs are fairly substantial is also apparent and would justify the expense of a separate taxation.

16.  In the circumstances, I take the view that the unreasonable conduct of the 1^st to 4^th defendants does warrant an order for immediate payment.

Costs order as varied

17.  It is appropriate that the costs order nisi be varied such that the 1^st to 3^rd defendants should bear the costs of the 2019 hearing, that the plaintiff should additionally have the costs of the 3^rd defendant’s application to discharge its undertaking under the discharge summons (other than the costs of the 2019 hearing), and that the plaintiff’s costs of the defendants’ discharge summons and the plaintiff’s variation summons otherwise be costs in the cause.

18.  Whilst the 3^rd defendant (having given an undertaking without reservation) ought not have applied for its discharge, the court’s disapproval of such conduct is sufficiently reflected by ordering that plaintiff should additionally be given its costs of that application (other than the costs of the 2019 hearing). I do not consider that those costs should be awarded on an indemnity basis.

19.  Accordingly, the costs order as varied is as follows:

(a)  Costs of and occasioned by the 3^rd defendant’s application under the Summons dated 6 July 2018 be paid by the 3^rd defendant to the plaintiff forthwith, to be taxed, if not agreed, with certificate for 2 counsel.

(b)  Costs of the 1^st and 2^nd defendants’ application to discharge the injunction under the discharge summons be the plaintiff’s costs in the cause save that the plaintiff’s costs of the 2019 hearing in dealing with the 1^st and the 2^nd defendants’ application be paid by the 1^st defendant and the 2^nd defendant forthwith, with certificate for 2 counsel, to be taxed if not agreed.

(c)   Costs of the plaintiff’s variation summons be the plaintiff’s costs in the cause, save that the plaintiff’s costs of the 2019 hearing in dealing with the variation summons be paid by the 1^st defendant and the 2^nd defendant forthwith, with certificate for 2 counsel, to be taxed if not agreed.

(d)  The plaintiff’s costs of the 2019 hearing in dealing with the amendment summons be to the plaintiff, to be paid forthwith, with certificate for counsel, to be taxed if not agreed.