TANG KIM KWAN PATRICK ALSO KNOWN AS PATRICK TANG AND ANOTHER v. LEE CHI TING KAREN ALSO KNOWN AS KAREN LEE

CACV 163/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 163 OF 2012

(ON APPEAL FROM HCA 920/2009)

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JUDGMENT (ON COSTS)

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Hon Cheung CJHC (giving the judgment of the court):

1. On 21 February 2014, we handed down our judgment in this appeal, which we disposed of as indicated in paragraphs 32, 45 and 46 of our judgment. The defendant now seeks the costs of the inquiry on restitutionary compensation ordered against her in the judgment below which we set aside, on an indemnity basis. The 1^st plaintiff is prepared to bear the costs of the inquiry, which he pursued despite the lodging of the appeal against the judgment below. However, he does not agree that costs should be paid on an indemnity basis.

2. The 1^st plaintiff also seeks to vary the costs order nisi which we made in paragraph 46 of our judgment, giving the defendant 70% of the costs of the action below.  He contends that he should be given 20% of the costs of the action.  Alternatively, looking at the matter globally, he says that there should be no order as to the costs of the action (including the costs of the inquiry).

3. The defendant maintains that our costs order nisi is fair and just, and should be made absolute.

4. We will not repeat what has been said in our judgment.

5. As regards the costs of the inquiry, the 1^st plaintiff is correct to concede the costs thrown away by the futile inquiry.  The position is governed by this court’s decision in Active Profit Ltd v Nissho Iwai Hong Kong Corp Ltd [2005] 3 HKC 499.  In that case, the court pointed out that as a matter of commonsense and logic, costs incurred in enforcing a judgment which is subsequently set aside and in pursuing remedies granted by such a judgment must naturally be to the party that has successfully had the judgment set aside and incurred costs as a result of it.  In particular, a plaintiff who insists on proceeding with an inquiry does so at the risk that if the judgment in his favour is overturned on appeal, he will have to bear the costs of the inquiry which have been wasted by his insistence on pressing ahead with it.  See paragraphs 6 to 9 of the judgment.

6. However, we see no logic or reason why, as a matter of general principle, such costs should be ordered on an indemnity basis absent some special or unusual feature[1] going beyond the mere fact that the paying party had insisted on enforcing the judgment or pressing ahead with the remedy granted by it despite the pending appeal.  In our view, the reversal of a judgment on appeal is a normal incident of litigation.  Costs thrown away as a result of such reversal are costs incurred in the normal course of litigation.  They are recoverable from the unsuccessful respondent to the appeal on a party and party basis, just like all other costs incurred for the purposes of litigation, absent some special or unusual feature justifying the award of costs on a higher basis.  Looking at this from the perspective of the unsuccessful respondent to the appeal, he has caused the incurrence of costs on the other side by his enforcement of the judgment below or his pressing ahead with the remedy granted thereunder despite a pending appeal.  He is therefore rightly required to pay the costs of his opponent who is successful on appeal.  However, that by itself is no different, in substance, from his seeking to defend the judgment below by resisting the (successful) appeal and thereby causing, in that sense, the incurrence of costs by his opponent.  Absent some special or unusual feature, such costs of his opponent are awarded on a party and party basis.

7. In the present case, we see no special or unusual feature justifying the award of costs on any basis other than a party and party basis.  We therefore order that the costs of the inquiry be paid by the 1^st plaintiff to the defendant, to be taxed on a party and party basis if not agreed.

8. As for the costs of the action below, we believe that our costs order nisi best reflects the course of the litigation and its result.  The action involved four properties purchased under different circumstances.  The defendant has successfully defended her title to three of them, and in relation to the fourth one, she has been successful in asserting an entitlement to the net profit of sale.  In our view, awarding 70% of the costs of the action in favour of the defendant would fairly and justly reflect the issues involved, the course taken to resolve them and the final outcome.  In the circumstances, we refuse the 1^st plaintiff’s application to vary the costs order nisi.  Instead, the same is made absolute.

9. For the reasons explained above, we further order that the costs thrown away by the taxation of the 1^st plaintiff’s costs of the action ordered under paragraph 7(a) of the sealed judgment be paid by the 1^st plaintiff to the defendant, to be taxed on a party and party basis if not agreed.

10. As for the present applications before us regarding costs, looking at the matter globally, we order that the defendant shall have 70% of the costs of these two applications, to be taxed if not agreed.