TONG CUN MING v. CHEUNG SUN LING SANNY, the Administratrix of the Estate of KWAN YAU HANG, deceased AND OTHERS

HCMP 143/2011

[2024] HKCFI 465

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 143 OF 2011

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HCMP 1013/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1013 OF 2011

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HCMP 2477/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2477 OF 2011

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(Heard together)

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DECISION ON COSTS

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1.  The background of these cases has been set out in my Judgment on Preliminary Issues dated 2 September 2015 (“the 2015 Judgment”) and the Decision handed down on 29 September 2022 (“the 2022 Decision”). I do not want to repeat the same here.

2.  For the purpose of this Decision on Costs, I will adopt the same abbreviations that I used in the 2015 Judgment and the 2022 Decision.

3.  After the handing down of the 2015 Judgment and the 2022 Decision, I understand that the memberships of the Reformists’ Camp had been restored.  Elections were held though the differences between the two camps remained.

4.  In the hearing on 17 April 2023, the Plaintiffs in the Better Administration Action (HCMP 143/2011) confirmed that they would not pursue for any further relief in the said Action as the claim was superseded by subsequent events.  They considered that their main complaints, i.e. that there was no proper election and they had been wrongly expelled from the Koon, had been vindicated by the 2015 Judgment, and there would be no need for them to pursue the other alleged complaints pleaded in the Better Administration Action. According to Mr Chain, counsel for the Reformists’ Camp, their clients had already indicated their stance as early as 2016 and 2017.  Based on such confirmation, I granted leave for the discontinuance of the Better Administration Action without prejudice to the parties’ positions on costs.

5.  The remaining issue is costs in respect of the three actions.

6.  It is common ground that the costs of the SJ have to be indemnified, and the issue is who should pay for such costs.  The SJ does not have any particular view as to who should pay for their costs.

7.  There were various attempts to settle the disputes between the two camps in the past.  It is the submission of Mr Vaughan, counsel for the Traditionalists’ Camp, that the court should take into account the attempts made by the Traditionalists’ Camp to settle the disputes when considering the costs of the three actions.

8.  According to Mr Vaughan, the Traditionalists’ Camp made at least three attempts to settle the disputes.

9.  The first attempt was by way of an open offer made by their counsel during the hearing of the first case management summons on 20 September 2012 (“the 2012 Hearing”).  By that time, the Traditionalists Camp agreed that, with a view to settle the claims, the memberships of the Reformists’ Camp would be restored and the 5 councillors would vacate their office.

10.  The second attempt was made by way of a Calderbank offer contained in a letter dated 12 September 2014.  The terms were more or less the same as the ones made in the 2012 Hearing.

11.  The Reformists’ Camp replied to such offer on 15 September 2014.  In short, the position of the Reformists’ Camp can be summarised as follows:

(i)     the offer did not resolve all the disputes between the parties and the Reformists’ Camp insisted to a have a better administration order for the Koon to be managed by a new management system;

(ii)    pending the making of the better administration order, it was open to the councillors to resign in any event;

(iii)   the Reformists’ Camp requested to get the costs of the legal proceedings;

(iv)  the offer did not deal with the legality of the unlawful resolutions made in the past; and

(v)  no offer was made by the Traditionalists’ Camp to pay damages to the members wrongfully expelled from the Koon.

12.  Before the commencement of the trial on preliminary issues on 5 January 2015, the parties had tried to settle their disputes by way of the restoration of the memberships of the Reformists’ Camp and the holding of a special meeting to decide the future operation of the Koon.  With some persuasion by the court, the parties made another attempt to settle the case after the commencement of the trial on 5 January 2015.  The Traditionalists’ Camp then engaged Mr Fung SC to represent them solely to negotiate for the settlement.  In the draft order submitted by Mr Fung to the court on 19 January 2015, the Traditionalists’ Camp proposed the following settlement terms, inter alia:

(i)     a declaration be made that the Expulsion Resolution is void and the Reformists’ Camp have all along been the members of the Koon;

(ii)    an Annual General Meeting of the Koon be held for a fresh election of the councillors;

(iii)   there be no order as to costs in respect of the Membership Action (HCMP 2477/2011);

(iv)  the costs of the Resolution Action (HCMP 1013/2011) and the Better Administration Action to be determined by the court provided that, in deciding the question of costs, the court shall not hold against the relevant Defendants the fact that the said Defendants have entered into that consent order (which they have done purely for the welfare of the Koon and without regard to the merits of their own case) and the fact that the relevant Plaintiffs have obtained certain reliefs (whether or not such reliefs were those substantially claimed by them) as a result of that consent order.

13.  Unfortunately, the parties could not agree on the last proviso relating to costs (“the Proviso”).  According to the Reformists’ Camp, the court should take a broad brush approach in deciding the question of costs taking into account all the circumstances of the case, including the fact that the case was resolved by a consent order agreed by the parties.  On the other hand, the Traditionalists’ Camp insisted that the court could not take that matter into account.

14.  By insisting on such stance, the Traditionalists’ Camp were in essence arguing that the court should make a no-order-as-to-costs order.  The court should not make any adverse costs order against the Traditionalists’ Camp unless the claims against them were found to be meritorious.   Hence, they insisted that the court could not take into account the terms of the proposed settlement in deciding the question of costs.

15.  As I see it, the stance taken by the Traditionalists’ Camp could not have resulted in an early disposal of the cases.  Adopting the approach as suggested by them, the court would need to go into the merits of the claims in deciding the question of costs.  The court could not take a broad brush approach as proposed by the Reformists’ Camp, and making any adverse costs order against the Traditionalists’ Camp without a full consideration of the merits of the case might lead to further satellite litigation involving the construction of the Proviso in the proposed consent order.

16.  In my judgment, the Reformists’ Camp should get the costs of the three actions at least up to the handing down of the 2015 Judgment.  According to the 2015 Judgment, the Reformists’ Camp did have meritorious claims for both the Membership and the Resolution Actions.  Though the trial on preliminary issues was mainly concerned with the issues in these two actions, it was also found in the 2015 Judgment that there had been no proper elections of the officers of the Koon throughout the years, which was a main complaint of the Reformists’ Camp in the Better Administration Action.  All the offers by the Traditionalists’ Camp prior to the trial were made on the basis that the parties were to bear their own costs of the actions.   Yet the subsequent 2015 Judgment shows that the Reformists’ Camp do have a good case on the Resolution and the Membership Actions, and so it would be right for the Reformists’ Camp to insist for a costs order favourable to them at that stage.

17.  As mentioned above, by insisting to include the Proviso in the consent order, the Traditionalists’ Camp are opposing any adverse costs order against them unless there is a full consideration of the merits of the claims.  Such stance is not right or reasonable given the findings made in the 2015 Judgment.  Hence, they should bear the costs of the Reformists’ Camp and the SJ incurred up to that stage.

18.  The Traditionalist’ Camp then lodged an appeal against the 2015 Judgment which was unsuccessful.  They also took out summonses to strike out the claims in the three actions. 

19.  The striking out summonses came before me for argument on 4 and 5 July 2017.  By that time, the Court of Appeal had dismissed the appeal against the 2015 Judgment with reasons to be handed down at a later date.  In the Reasons for Judgment handed down on 28 July 2017, the Court of Appeal made it clear that they would not entertain the challenge of the Traditionalists’ Camp on the lack of locus, and they would leave the matter to be considered by me in the striking out applications.

20.  In view of the dismissal of the appeal, the parties agreed that the claims in the Resolution and the Membership Actions became academic.  The Koon would then convene meetings and conduct the affairs giving effect to the rulings in the 2015 Judgment.  The parties also agreed for the Reformists’ Camp to discontinue the claims in these two Actions with the question of costs to be argued later.

21.  The Reformists’ Camp also sought to discontinue the Better Administration Action.  But in view of the outstanding striking out summons on the lack of locus in commencing the better administration proceedings, the parties required this court to determine the merits of the striking out application which might have an implication in the arguments on costs.  Eventually, the court also ruled in favour of the Reformists’ Camp on such issue in the 2022 Decision.

22.  It is clear from these developments that the Traditionalists’ Camp should pay the Reformists’ Camp and the SJ all the costs of the three actions.  The costs incurred after the handing down of the 2015 Judgment relate to matters which were eventually ruled by the court against the Traditionalists’ Camp, including: (i) the unsuccessful appeal against the 2015 Judgment; (ii) the unsuccessful striking-out applications; and (iii) the present unsuccessful arguments on costs on the part of the Traditionalists’ Camp.  After the handing down of the 2015 Judgment, the Reformists’ Camp indicated their stance not to proceed with the three actions, and it was only because of the aforesaid matters that dragged on the litigations for quite some time.  Under such circumstances, the Traditionalists’ Camp should be ordered to pay for the costs of the Reformists’ Camp and the SJ after the handing down of the 2015 Judgment.

23.  There is an issue as to whether the Koon should be ordered to pay the costs.  It is common ground that the Koon should not be ordered to do so for the Membership and the Resolution Actions.  For the Better Administration Action, the Traditionalists’ Camp ask the court to consider the option of ordering the Koon to pay part or all of the costs.  According to them, they were conducting the affairs of the Koon and the present proceedings in the interest of the Koon, and so the latter should at least bear some responsibility for the costs of the legal proceedings.

24.  I disagree.  The present proceedings basically involve disputes which are very much personal in nature.  The two camps took different views as to how the business of the Koon should be conducted.  As the court found that the Traditionalists’ Camp were not right to making various decisions relating to the operation of the Koon, and their decisions were targeting the Reformists’ Camp who took a different and yet correct view about the operation of the Koon, the Traditionalists’ Camp should bear the responsibility resulting from their acts and conducts.  The Traditionalists’ Camp might have thought that they were acting in the interest of Koon, but the Reformist’ Camp had no option but to commence these three actions to restore their memberships in the Koon and to compel the Traditionalists’ Camp to conduct proper elections of the councillors.  Under such circumstances, the Traditionalists’ Camp should be held liable for the payment of the legal costs and not the Koon.

25.  Based on the aforesaid reasons, I make the following costs orders:

(i)     for the Resolutions Action (HCMP 1013/2011), the 2^nd to 5^th Defendants have to pay for the costs of the Plaintiffs including the costs relating to the arguments on costs;

(ii)    for the Membership Action (HCMP 2477/2011), the 2^nd to 15^th Defendants have to pay for the costs of the Plaintiffs and the 17^th Defendant including the costs relating to the arguments on costs; and

(iii)   for the Better Administration Action (HCMP 143/2011), the 2^nd to 5^th Defendants have to pay for the costs of the Plaintiffs and the 7^th Defendant including the costs relating to the arguments on costs.