WONG KWEI PIU v. CHOW CHI CHEUNG t/a SUN LEE CO

DCEC 1082/2017

[2025] HKDC 999

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 1082 OF 2017

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IN THE MATTER OF AN APPLICATION BETWEEN

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DECISION

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Background

1.  By summons (“Summons”) dated 22 October 2024, Mr Tam Kam Tong (“Mr Tam”) applied for variation of the costs order nisi (“Order Nisi”) this court made on 8 October 2024.

2.  The underlying proceedings that gave rise to the Order Nisi have a protracted history. They involved two connected parallel actions of a personal injury action and an employees’ compensation claim, the present action. In both of these actions, the Director of Legal Aid (“Director”) assigned Mr Tam to represent the employee, Wong Kwei Piu (“Piu”), against the employer. Counsel was also assigned, but he is not the subject matter of the Summons. By an order of this court dated 25 September 2023, Piu was ordered to pay the costs of the employer in this action on an indemnity basis. As the court was critical of the conduct of Mr Tam and the assigned counsel, the Director issued a summons (“WC Application”) on 13 November 2023 to apply for a wasted costs order (“WCO”) against, among others, Mr Tam. On 8 October 2024, this court handed down its decision ([2024] HKDC 1637) (“WC Decision”) dismissing the WC Application and made the Order Nisi of no order as to costs.

3.  Mr Tam did not accept the Order Nisi. Hence, the Summons.

4.  Pursuant to the parties’ requests, this court directed the Summons to be disposed of on paper in lieu of an oral hearing.

5.  Ms Elizabeth Cheung and Mr Edward Tsui are counsel for Mr Tam and Ms Sally Cheung is the Senior Legal Aid Counsel for the Director.

Applicable Principles

6.  From the written submissions of the parties, I set out below the relevant legal principles applicable to the present application.

7.  Firstly, the court is statutorily empowered to exercise wide discretion in determining costs: see the District Court Ordinance, s 53.

8.  Secondly, for an interlocutory application as in the WC Application, an order of costs to follow the event should be an option: O 62, r (3)(2A), but it should not be the prescribed ‘usual order’: Hong Kong Civil Procedure 2025 (“HKCP”), §62/3/6.

9.  Thirdly, the Court, in exercising its discretion as to costs, is entitled to take into account all the circumstances of the case, including the parties’ conduct: Order 62, r 5(1)(e) of the Rules of the Direct Court;[1] and Woo Kwok Ping v The Incorporated Management Committee of Tsuen Wan Trade Association Primary School [2020] HKCFI 688 at §5.

10.  In Mr Tam’s Skeleton Submissions dated 13 December 2014, Mr Tam relied on the Court of Appeal decision of Hung Fung Enterprises Holdings Ltd v Agricultural Bank of China[2] to support his submission that costs should follow the event. In dealing with the costs of a trial, the Court of Appeal in that case, after having referred to the English decision of Atkin LJ in Ritter v Godfrey[3] at §101, stated that to deprive a wholly successful defendant of costs, the court has to consider, generally the conduct of the defendant. I do not think that the principle deduced from Hung Fung Enterprises Holdings Ltd is applicable to the present case. This is because the Court of Appeal in Hung Fung Enterprises Holdings Ltd was concerned with costs of a full trial, not costs of interlocutory applications. Ritter v Godfrey, which the Court of Appeal cited, was also about the costs of a full trial.

11.  Fourthly, the Director, the applicant of the WC Application, as a statutory protector of public funds entrusted with the duty of administering the legal aid schemes,[4] is undisputedly not a private individual. In the United Kingdom, the principle of costs concerning regulatory and statutory bodies is applied differently from those in relation to private individuals. In the UK, absent dishonesty or a lack of good faith, a costs order should not be made against such a regulator unless there is good reason to do so: HKCP, §62/5/9.

12.  The Director in his Supplemental Skeleton Submissions dated 14 March 2025 cites the case of Employees Compensation Assistance Fund Board v Wo Chun Wah[5] to advance his argument that an order as to no costs should be the starting point as the Director is not a private individual. In this case, the Court of Final Appeal (“CFA”) was required to determine the costs of the Employees Compensation Assistance Fund Board (“Board”) after the latter had intervened in the substantive proceedings in the employee’s claim against the employer. Analogically, the Board is similarly entrusted with statutory duties to deal with the provisions of relief for employees and others who are entitled to employees’ compensation or damages in respect of employment-related injuries. The CFA held that where the Board was joined as a party and carrying out its statutory monitoring function, the starting point should generally be no order as to costs: Wo Chun Wah at §72 (c); and HKCP, §62/5/9.

13.  Despite the special statutory status of the Director, I do not think that the costs principle adopted in the UK concerning statutory bodies should be applied here. Neither do I consider that the related English authorities[6] the parties referred to should be adopted. This is because the law and principles governing the question of whether statutory bodies should be treated differently from private individuals in civil proceedings are not settled in Hong Kong. I also do not consider it suitable to directly apply the starting point of “no order as to costs” in Wo Chun Wah to the WC Application. I agree with Mr Tam’s submission that the CFA in Wo Chun Wah has not laid down a general principle that the starting point it adopted in that case should also be applied to all public and statutory bodies. In the judgment of Wo Chun Wah, after stating the starting point of “no order as to costs”, the CFA went on to caution against strait-jacket applicability, stating that “the court has a wide discretion and may depart from this if the circumstances warrant a different order”: Wo Chun Wah (supra) at §72 (c).

14.  However, the undisputed statutory position that the Director assumes, in my view, should be taken into account in the consideration of this court’s discretion.

15.  The parties have also referred to a number of authorities concerning judicial reviews involving statutory bodies. Each case turns on its own facts. For brevity, I do not think it is necessary for this court to discuss them.

Parties’ arguments

16.  Briefly stated, the main thrust of Mr Tam’s arguments is that as a successful party of the WC Application, he should be awarded the costs. Mr Tam submitted that he had not brought about the WC Application, and neither had he acted wrongfully in his conduct in the underlying proceedings. There were therefore no special circumstances to justify not ordering the Director to pay Mr Tam’s costs. It was further submitted by Mr Tam that the WC Application was fundamentally defective from the outset and was doomed to fail.

17.  In opposition to the Summons, the Director urged this court to exercise its wide discretion to consider all the circumstances, including the conduct and performance of the parties and the reasonableness of the Director’s having issued the WC Application. The Director contended that the WC Application was only issued after having considered the comments and criticisms this court made of Mr Tam’s conduct in the decision dated 25 September 2023 ([2023] HKDC 1253) (“Decision on the Employer’s Costs Variation”) concerning the employer’s applications for variation of the costs orders nisi made in the parallel proceedings. It was contended that the Director, as a responsible guardian of public funds, had acted reasonably and with a justified cause.

Discussion

18.  Having considered the parties’ detailed arguments set out in several rounds of written submissions of Skeleton Submissions, Reply Submissions, Supplemental Skeleton Submissions, Further Submissions and Further Reply Submissions, I am not persuaded that this court should exercise its discretion to vary the Order Nisi. My reasons are as follows.

19.  First and the foremost, the WC Application was brought about by Mr Tam’s conduct. It should be borne in mind that the genesis of the WC Application arose from the court’s criticisms of Mr Tam’s conduct. In the Decision on the Employer’s Costs Variation, Mr Tam’s unsatisfactory conduct was already highlighted in different places. This court’s disapproval of Mr Tam’s conduct was clearly reflected in its concluding remark, stating:

“[156] … The orders this court made … would likely impact upon the costs liability of the Director … Having considered the evidence adduced before this court against the conduct of … and the comments I made in various places in this Decision concerning Mr Tam’s conduct and his handling of this case, I grant leave to the Director to apply … for wasted costs orders against … and Mr Tam.”

20.  Hence, I respectfully disagree with Mr Tam’s submissions that his conduct was not wrongful in the underlying proceedings. Quite the contrary, Mr Tam’s wrongful conduct was extensively enumerated in the WC Decision, Part C.2:

“[10] … When Mr Tam became Piu’s assigned solicitor, this court criticized him for having a misconception about the EC and the PI Action as ‘combined’ actions. The court also faulted Mr Tam for not having regard to the statutory set off provisions in s 26 of the Employees’ Compensation Ordinance … in allowing the EC Action to continue.”

21.  The Director failed in his WC Application largely due to the high threshold requiring a finding of gross negligence instead of only “mere” negligence. After having had the opportunity of examining the evidence in detail that the Director adduced in the WC Application, this court maintained the criticisms of Mr Tam’s conduct despite finding that the Director had failed to reach the requisite standard. In the WC Decision, this court stated:

“[68] As for the Director’s allegation of wrong advice and sub-standard legal knowledge of the Assigned Lawyers ([the assigned counsel and Mr Tam]), I would be inclined to agree with the Director’s allegation. In my Judgment[7] and the Costs Decision,[8] I have expressed similar comments. The performance of the Assigned Lawyers ([the assigned counsel and Mr Tam]) is not at all satisfactory. However, the legal principles have firmly established that bad performance is not sufficient for a court to make a WCO. Since the Director is not alleging gross negligence or abuse of process, the complaint does not meet the required threshold for a WCO.

…

[77] … I do not think that [Mr Tam’s] strategy of using ‘combined trial’ and ‘joint trial’ would likely improve the chance of Piu overcoming the costs issue of the Sanctioned Payment. In this regard, I believe that Mr Tam had clearly committed an error of judgment.”

22.  The above excerpts from the WC Decision plainly show that Mr Tam has committed a catalogue of misdeeds in different stages in the underlying proceedings. The reason that the Director was not able to proceed the WC Application to the second stage of inquiry was evidently not due to any lack of evidence of Mr Tam’s misconduct.

23.  Second, there was good justification for the Director to issue the WC Application. As stated above, the premises upon which the Director took out the WC Application were the adverse remarks this court made. Owing to the adverse costs orders this court made against Piu, the Director would likely be adversely impacted (as this court had observed in the Decision on the Employer’s Costs Variation). Undisputedly, the Director had no personal financial benefit in the bringing of the WC Application. He had clearly acted bone fide and in good faith not only for the protection of public funds, but, in my view, for the maintenance of the integrity of his panel of solicitors.

24.  I find Mr Tam’s criticisms[9] of the Director of having adopted a highly belligerent approach, and unnecessarily and actively prolonged his intervention leading to the escalation of costs wholly unjustified.

25.  In my view, Mr Tam had adopted a very unsensible approach by issuing the Summons. As the Director has rightly pointed out in his Further Reply Submissions dated 30 April 2025, Mr Tam chose to issue the Summons to vary the Order Nisi when this court had already given its broad reasons in the WC Decision as to why the court would not grant the usual order of ordering “costs to follow the event”. The Summons is a simple costs variation application; however, he continued to unnecessarily increase the incurring of costs by engaging two counsel.

26.  Third, the WC Application had reasonable merits and was not defective or doomed to fail as Mr Tam averred. Given the host of criticisms this court had laid against Mr Tam in the underlying proceedings and the impact of the adverse costs orders made against Piu, the Director, in my view, was duty-bound to act not only to protect the interests of the aided person, but also to protect public funds.

27.  During the long period of time I was involved with the underlying proceedings, I have observed how Mr Tam had conducted the proceedings. Not only did I find that Mr Tam lacked competence, I further believed that he did not conduct the proceedings in the best interest of his aided client. My dissatisfaction with his conduct prompted this court to include a Postscript in the Decision on the Employer’s Costs Variation, urging the Director to actively review the mechanism of nomination.

Disposition

28.  For the reasons stated above, the Summons is dismissed. I grant an order nisi that Mr Tam do pay the Director’s costs of the Summons, to be taxed if not agreed.

29.  Lastly, I wish to thank both parties for the assistance they have rendered to this court.