CHINA MEDICAL TECHNOLOGIES, INC. (in liquidation) v. SAMSON TSANG TAK YUNG

CACV 197/2014

[2021] HKCA 1039

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 197 OF 2014

(ON APPEAL FROM HCCW 435/2012)

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JUDGMENT ON COSTS

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The Court:

1.  In this appeal, we dismissed an application for the striking out of the appeal on 28 April 2015 and handed down our reasons for such dismissal on 28 February 2018. We also gave our decision on the costs of the strike out application on 28 February 2018.

2.  The appeal was heard and dismissed with costs on 13 May 2016. Our reasons were also handed down on 28 February 2018.

3.  The Respondent, Mr Tsang, who was successful in the strike out application but unsuccessful in the appeal, filed a summons on 14 March 2018 seeking to vary the costs orders:

(a)  To antedate the effect of the costs order in his favour in the striking out application to 28 April 2015 or alternatively 21 January 2016; and

(b)  To vary the costs order against him in the appeal to let him have the costs attributable to the Respondent’s Notice of 20 October 2014 (which was filed by the Petitioner), or alternatively reduction of 20% of the costs payable by him or other reduction as this Court shall deem appropriate.

4.  Having read the written submissions lodged in respect of the summons of 14 March 2018, we rule that:

(a)  The costs order in the strike out application is antedated to take effect from 28 April 2015 carrying interests at different interest rates for the period prior to 28 February 2018 and the period thereafter; and

(b)  The costs order in the appeal will not be varied and our original costs order is made absolute.

5.  As for the costs of the summons of 14 March 2018, as Mr Tsang is successful on one part but fails on the other part of the application, we will order each party to bear his or their own costs.

6.  Our reasons for the ruling are as follows.

7.  First, we disagree with the Petitioner that the non-compliance with the order for examination by Mr Tsang had any bearing on the present application.

8.  Second, on the costs of the striking out application, it was basically costs following the event. In view of the unsuccessful attempt on the part of the Petitioner to strike out the appeal, there was no reason why they should not bear the costs of that application. The delay in the handing down of the reasons for that decision and the decision on costs should not work in favour of the Petitioner concerning their liability as to costs. We accept the submissions of Mr Tsang that it would be unjust if the twist of events leading to the costs order for the unsuccessful strike out application should carry interests from a later date than the order for costs in the appeal.

9.  As explained by Lord Ackner in Hunt v Douglas [1990] 1 AC 398 at p.415, as it is likely a party has paid his lawyers prior to taxation, there is no injustice in having liability for costs to carry interests even before the amount is fixed by taxation. It was held in that case that the incipitur rule should apply instead of the allocatur rule. This principle has been followed in Hong Kong: see Wong Wai Chun v Lewin [2000] 2 HKC 271.

10.  The Court has the power to antedate its order if justice so required: see Order 42 Rule 3(2). The Petitioner did not dispute that the court can do so. It was argued however that doing so would enable Mr Tsang to obtain costs “on a higher basis”. We do not see how this would be so bearing in mind that costs are only awarded to compensate what Mr Tsang had actually incurred and what we shall say with regard to interest rates.

11.  Whilst it is correct that the time lapse between the dismissal of the strike out application and the handing down of the reasons for decision and the decision on costs was not within the Petitioner’s control, we do not see any unfairness arising from interests on such costs starting to run from the dismissal of the striking out application as such costs should already have been incurred by Mr Tsang by that stage.

12.  At the same time, we do not think the Petitioner should bear interest on such costs at judgment rate before the handing down of the decision on costs on 28 February 2018. Hence, we would also order that the Petitioner shall only pay interest at prime plus 1%, the usual commercial rate, from 28 April 2015 to 28 February 2018 and thereafter at judgment rates.

13.  In respect of the costs of the appeal, we are not persuaded by Mr Tsang’s submissions that this is a proper case for ordering costs by adopting the issue-based approach. We do not find the costs on the Respondent’s Notice to have significantly increased the costs of the appeal and in the present circumstances we do not see a strong ground to support the exercise of discretion to reduce Mr Tsang’s liability for costs of the appeal by reason of the Respondent’s Notice.

14.  Lastly, we regret the delay in having this decision handed down in respect of the summons.