FONG CHAK KWAN v. ASCENTIC LTD AND OTHERS

HCPI 242/2016

[2022] HKCFI 780

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 242 OF 2016

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D E C I S I O N

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I.  INTRODUCTION

1.  In the present action, the plaintiff (“P”)  was all along legally aid until the Director of Legal Aid (“DLA”)  filed Notice of Discharge (on 3 May 2019)  giving notice that the Legal Aid Certificate dated 28 January 2016 issued to P was discharged on 30 April 2016.

2.  On 29 April 2020, I handed down judgment (“Judgment”)  to dismiss the summons filed on 1 November 2018 (“Summons”)  by the 3^rd defendant (“D3”)  for the Setting Aside and Stay Applications referred to in paragraph 17 of the Judgment, and to grant a costs order nisi that D3 shall pay 70% of P’s costs of and occasioned by the Summons, including all costs reserved if any, to be taxed if not agreed (“Costs Order Nisi”)  (collectively, “Order”).

3.  On 11 June 2020, the DLA filed a Notice of Issue of Legal Aid Certificate and a Legal Aid Certificate giving notice that legal aid was granted for P to continue the present action for the limited purpose of opposing D3’s application for leave to appeal against the Order.

4.  On 7 August 2020, I handed down decision (“Decision”)  to grant leave for D3 to appeal against the Order, and to grant a costs order nisi that costs of and occasioned by the application for leave to appeal (including all costs reserved, if any)  be costs in the cause of the appeal.

5.  For convenience, I shall adopt herein the abbreviations used in the Judgment and the Decision.

6.  On 5 August 2021, the CA handed down judgment in CACV358/2020 (“CA Judgment”)  to dismiss D3’s appeal against the Order, and to grant a costs order nisi that (a)  D3 shall pay 80% of P’s costs of the appeal with certificate for two counsel and (b)  P’s own costs be taxed according to Legal Aid Regulations (“CA Order”).

7.  On 22 December 2021, the CA handed down decision in CACV358/2020 (“CA Decision”)  to dismiss D3’s application for leave to appeal to the CFA with (a)  costs to P with certificate for two counsel and (b)  P’s own costs to be taxed according to Legal Aid Regulations.

8.  On 5 January 2022, P filed a summons (“Costs Summons”)  to vary the Cost Order Nisi as follows:

(a)	D3 shall pay 70% of P’s costs of and occasioned by D3’s Summons, including all costs reserved if any, up to and including 16 April 2019 on a party-and-party basis to be taxed if not agreed with certificate for counsel (“Part A Relief”);
(b)	D3 shall pay 100% of P’s costs of and occasioned by D3’s Summons, including all costs reserved if any, from 17 April 2019 on an indemnity basis to be taxed if not agreed with certificate for counsel (“Part B Relief”);
(c)	P’s own costs on or before 30 April 2019 be taxed in accordance with Legal Aid Regulations (“Part C Relief”).

9.  By the Costs Summons, P also sought costs of the Costs Summons to be taxed if not agreed, and for an order that P’s own costs be taxed according to Legal Aid Regulations.

10.  On the same day, P filed Lam’s 2^nd affirmation in support of the Costs Summons (“Lam 2^nd Aff”).

11.  On 12 January 2022, I granted written case management directions for P and D3 to lodge/serve their respective written submissions. On 26 January 2022, Mr Wong, counsel for P, lodged his written submissions in support of the Costs Summons. On 9 February 2022, D3’s counsel, Mr Wang, lodged his written submissions in opposition. On 23 February 2022, Mr Wong lodged his written submissions in reply.

12.  On 22 February 2021, the CFA handed down determination in FAMV43/2922 (“CFA Determination”)  to grant leave for D3 to appeal to the CFA against the CA Order on the following questions:

(a)	“[on] a proper interpretation of the phrase ‘the damage was sustained … within the jurisdiction’ in Gateway F, whether ‘the damage’ is limited to damage directly caused by the alleged tortious act, or whether it extends to indirect or consequential damage (e.g. the pecuniary expenditure or other loss resulting from the direct damage)  sustained within the jurisdiction?”;
(b)	“[is] section 33(d)  of the Employees Compensation Assistance Ordinance (Cap 365)  [“ECAO”] applicable and if so, what are its consequences for the appeal?”.

13.  The appeal before the CFA on the above 2 questions was listed for hearing on 19 May 2022.

14.  Having considered the Costs Summons, the Lam 2^nd Aff and counsel’s written submissions, I find an oral hearing unnecessary, and considered the Costs Summons to be fit for paper disposal.

II.  LAM 2^ND AFF AND CHRONOLOGY

15.  In the Lam 2^nd Aff, Lam referred to a series of without prejudice save as to costs correspondence between P’s solicitors (“PSols”)  and D3’s solicitors (“D3Sols”).

16.  On 16 January 2919, PSols wrote to D3Sols on the Summons returnable on 15 May 2019 (“16/1/19 Letter”). By such letter, P offered as follows:

“Solely for the purpose of resolving the matter amicably and expeditiously, we are prepared to advise aided client [ie P] to set aside the Interlocutory Judgment against [D2] dated 4^th July 2017 [ie the D2 Judgment]. However, [D3’s] position that the Court has no jurisdiction in this matter on the ground of forum non conveniens is not agreeable to aided client [ie P]. To save parties’ time and costs, we enclose our draft Consent Summons for your consideration. If our draft Consent Summons hereof is agreeable to [D3], we shall engross the same for your endorsement.”

The draft Consent Summons annexed to the 16/1/19 Letter contained the following terms:

“1. Paragraphs 2 and 3 of the [Yu Order] dated 17^th October 2016 for leave to [P] to issue and serve the [CWoS] be set aside;

2. The [D2 Judgment] dated 4^th July 2017 be set aside; and

3. The costs of [D3’s] Summons dated 1^st November 2018 be costs in the cause.”

17.  On 11 February 2019, PSols wrote to D3Sols (“1/2/19 Letter”)  to chase for a reply within the next 7 days.

18.  On 13 February 2019, D3Sols replied to PSols (“13/2/19 Letter”)  that the proposal in draft Consent Summons annexed to the 16/1/19 Letter would only be agreeable to D3 upon the following conditions: (a)  P would undertake not to apply for leave to issue and serve a concurrent writ of summons out of jurisdiction on D2 in the present action, and (b)  costs of D3’s Summons be paid by P to D3. D3Sols stated that, as apparent from the reliefs sought in paragraphs 3 and 6 of the Summons,[1] D3 was of the view that:

“…… material non-disclosure aside, [P] could not have obtained leave under Order 11 on the ground of the lack of gateway and/or jurisdiction of the Hong Kong Courts over [P’s] claim in any event, and this action should not have been brought in Hong Kong against [D2] at all.

In refusing to admit lack of jurisdiction and proposing costs of [D3’s] Summons to be in the cause, we take it [P] intends to reserve the right to make another application for leave to issue and serve Concurrent Writ of Summons against [D2] in these proceedings in the future. If [P] does subsequently make such fresh application, we have standing instructions to contest the application on similar grounds. That being the case, the issues raised in [D3’s] current application would need to be re-argued before the Judge, thereby causing substantial waste of time and costs, as well as delay of these proceedings. We take the view that it is against the spirit of CJR and would amount to any abuse of process.

In any event, we note that the terms of your draft Consent Summons do not deal with [D3’s] present application in full, including, inter alia, paragraphs 3 and 6 of the order sought. In the circumstances, if [P] is not agreeable to the conditions above, [D3] would proceed with the present application as scheduled.

……”

19.  On 1 April 2019, PSols wrote to D3Sols (“1/4/19 Letter”)  stating that upon taking further instructions, P’s stance was that subject to D3’s consent that leave for service of the concurrent writ of summons out of jurisdiction be re-granted to P, P would agree for the D2 Judgment be set aside with costs of the Summons to be paid by P to D3. On the issue of re-granting leave to serve the concurrent writ of summons on D2, PSols drew D3Sols’ attention to Brownlie (SC) “where Baronness Hale PSC held that the word “damage” in the English equivalent of O.11 r.1(1)(f)  bears its ordinary and natural meaning. It is not confined to damage which completes the cause of action, and covers pain, suffering and loss of amenity sustained within the jurisdiction. In the circumstances, [P’s] claim plainly falls within the scope of O.11 r.1(1)(f)”, and added P would not concede on the issue of forum non conveniens and would not give undertaking not to apply for leave to issue and serve a concurrent writ of summons out of jurisdiction on D2. D3 was invited to revert on P’s proposal within the next 7 days.

20.  On 17 April 2019, D3Sols replied to PSols (“17/4/19 Letter”)  stating D3 would not agree that the present action be entertained by the Hong Kong court, so D3 rejected P’s offer in the 1/4/19 Letter.

21.  On 29 April 2020, I handed down the Judgment. On 12 May 2020, PSols wrote to D3Sols (“12/5/20 Letter”)  referring to the 16/1/19, 11/2/19, 13/2/19, 1/4/19 and 17/4/19 Letters and the Judgment, and suggesting that by reason of the following findings in the Judgment P had obtained a result better than P’s offers for settlement in the 16/1/19 and 1/4/19 Letters, that D3 should have accepted P’s offer on/before 8 April 2019, and that D3’s failure to do so unnecessarily forced P to proceed with the Hearing on 21 October 2019:

(a)	“upon careful consideration and notwithstanding the material non-disclosure as found, [this court] find it appropriate to continue the Yu Order, i.e. the leave granted to [P] to issue and serve concurrent writ out of jurisdiction on [D2] (§280)”;
(b)	“even if [this court] was wrong and the Yu Order ought to be discharged, [this court] would have re-granted leave for [P] to issue the concurrent writ and to serve it on [D2] out of jurisdiction (§281); and”
(c)	“Hong Kong was clearly the forum conveniens (§§194, 284)”.

PSols further referred to Montrio Ltd & anor v Tse Ping Shun David[2] and Leung Lai Kwan v Lo Kai Wong,[3] and suggested that “failure to accept an offer which one reasonably to have accepted can attract an order for indemnity costs”. PSols on behalf of P proposed that the Cost Order Nisi be varied by consent as follows, and urged for D3’s response by close of business on 12 May 2020:

(i)	D3 shall pay 70% of P’s costs of and occasioned by the Summons before and up to 8 April 2019 on a party and party basis to be taxed if not agreed;
(ii)	D3 shall pay 100% of P’s costs of and occasioned by the Summons after 8 April 2019, including all costs reserved if any, on a party and party basis, to be taxed if not agreed;
(iii)	there be no order as to costs of the application for variation of the Cost Order Nisi.

22.  On 13 May 2020, D3Sols wrote to PSols advising that D3 would shortly apply for leave to appeal to the CA against the Order, and indicating that D3 would be agreeable for a time extension for making application to vary the Cost Order Nisi until 14 days of the disposal of such application for leave to appeal or the substantive appeal, which would be later.

23.  By my order dated 19 May 2020, time for the parties to take out application to vary the Cost Order Nisi was extended for 28 days.

24.  By my order dated 12 June 2020, time for the parties to take out application to vary the Cost Order Nisi was further extended until 14 days after the disposal of D3’s application for leave to appeal against the Order or D3’s substantive appeal against the Order, whichever would be later.

25.  On 10 August 2021, PSols wrote to D3Sols (“10/8/21 Letter”)  referring to the CA Judgment, my order dated 12 June 2020 and the 12/5/20 Letter, and indicating that P was prepared to re-open his without prejudice offer as set out in the 12/5/20 Letter for 7 days, ie by close of business on 17 August 2021, failing which P would take out summons to apply for variation of the Cost Order Nisi.

26.  On 17 August 2021, D3Sols wrote to PSols stating they were in the course of taking D3’s instructions and they would revert to PSols by 19 August 2021.

27.  On 26 August 2021, D3Sols wrote to inform the court that D3 would not apply to vary the Cost Order Nisi.

28.  By my order dated 30 August 2021, time for the parties to take out application to vary the Cost Order Nisi was further extended until 14 days after the disposal of D3’s application for leave to appeal to the CFA against the CA Order or the substantive appeal against the CA Order, whichever would be later.

29.  The Lam 2^nd Aff stated it was evident from the above correspondence that D3 did not accept P’s offers in the 16/1/19 and 1/4/19 Letters, and that D3 by the 17/4/19 Letter expressly rejected P’s offer in the 1/4/19 Letter, which offer was made (a)  after P’s reliance on the 2^nd Limb of Gateway F in P 6^th Aff filed on 26 March 2019, and (b)  more than 6 months after the Hearing on 21 October 2019. Given that this court ultimately dismissed D3’s Summons, Lam believed that had D3 accepted one of P’s aforesaid offers, the parties would not have to proceed with the Hearing and relevant litigation time/costs could have been avoided.

30.  Lam also noted D3’s appeal to the CA against the Order was dismissed by the CA Judgment, and D3’s application to the CA for leave to appeal to the CFA was dismissed by the CA Decision. As seen in paragraph 12 above, the CFA granted leave to appeal on the 2 questions referred therein, but the appeal was yet to be heard.

III.  LEGAL PRINCIPLES

31.  Interlocutory proceedings  There was no dispute that the court has a wide discretion in dealing with costs of interlocutory proceedings. Order 62 rule 3(2A)  of the RHC provides that:

“If the Court in the exercise of its discretion sees fit to make any order as to the costs of and incidental to any interlocutory proceedings, it may, subject to this Order, order the costs to follow event or make such other order as it sees fit.”

Thus, in interlocutory proceedings, the general rule of costs following the event is no longer the prescribed usual order, but is an option for the court in ordering costs.

32.  In Waxman & anor v Li Fei Yu & anor,[4] To J held as follows:

“14. There is a wide spectrum of interlocutory proceedings. It is impossible to make any meaningful list of all the circumstances which are relevant for considering what is the appropriate type of costs orders in each factual situation. Generally, the ultimate merit of the claim or defence are not relevant, but the lack of merit or a real risk of such lack of merit is. If at the end, a claim is bound or is likely bound to fail, the opponent should not be burdened with unnecessary interlocutory proceedings and all the costs that those proceedings will incur. If a party pursues interlocutory proceedings for the purpose of delaying the evitable or for the purpose of seeking an impossible claim, he should be deprived of his costs even if he succeeds in the interlocutory proceedings. Hence, an order that a successful party shall have his costs only if he succeeds in the action, or bear his own costs or even pay the opponent’s costs are possible options under the new r 3(2A), depending on the court’s perception of where justice lies.

……

19. Summing up on the post-CJR position, I think the court has much wider discretion as to costs in interlocutory proceedings. Unlike other proceedings, the general rule of costs following the events do not apply. The court is entitled to take into account all the circumstances of the case, including those set out in r 5, to make such order as it thinks fit. In the exercise of its discretion, the court may take the issue-based approach or may take into account merit of the parties’ case or the possible outcome of the action. The circumstances of interlocutory proceedings are so numerous that it is impossible to make any general rule. Costs to follow the event and costs be to the successful party’s costs in the cause are obvious options.

20. As for the onus of proof, I think it is the same post-CJR as it was pre-CJR.  It must be the successful party’s burden to satisfy the court as to the type of costs order it is entitled. To begin with, the successful party is assisted by the general rule of costs to follow the event.  By the mere fact of being successful, the successful party has discharged the evidential burden of showing it is entitled to costs. Thus, effectively, the evidential burden is on the unsuccessful party to adduce sufficient evidence or argument that some other or lesser order is appropriate, such as no order as to costs, costs be to the successful party’s costs in the cause or costs to the unsuccessful party. In the absence of evidence or convincing argument to the contrary, the successful party would also have discharged the legal burden.  Costs to follow the event would be the appropriate order to make.  If the unsuccessful party is able to discharge that evidential burden, it will be the legal burden of the successful party to show that he is entitled to the costs order which he seeks. In reality, having heard the interlocutory application, it would be quite obvious to the court what costs order would best serve the justice between the parties without relying on the burden of proof.”

33.  Apart from Order 62 rule 3(2A)  of the RHC, Order 62 rule 5(1)  of the RHC provides that the court in exercising its discretion on costs shall, to such extent if any, as may be appropriate in the circumstances, take into account inter alia the following:

“(aa)  the underlying objectives set out in Order 1A, rule 1;

……

(d)  any written offer which is expressed to be “without prejudice save as to costs” and which relates to any issue in the proceedings, ……;

(e)  the conduct of all the parties;

(f)  whether a party has succeeded on part of his case, even if he has not been wholly successful; and

(g)  any admissible offer to settle made by a party, which is drawn to the Court’s attention.”[5]

34.  In relation to Order 62 rule 5(1)(d)  of the RHC, Order 62 rule 5(2)  of the RHC provides that the conduct of the parties includes (a)  whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue, (b)  the manner in which a party has pursued or defended his case or a particular allegation or issue, (c)  whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim, and (d)  conduct before, as well as during, the proceedings.

35.  Calderbank offer and indemnity costs  Mr Wong cited Leung Lai Kwan in which the plaintiff rejected the defendants’ offer marked “without prejudice as to costs” and the defendants’ 2 offers marked “sanctioned offer”, but subsequently the judge dismissed the action and made an order nisi that the plaintiff was to pay the defendants costs on a party-and-party basis. The defendants sought to vary the costs order nisi. DHCJ Saunders held that the defendants’ offers were not sanctioned offers, but there was no reason why they should not be taken into account in the exercise of the court’s discretion as to costs. The learned judge went on to say as follows (page 159):

“27. A party who is in receipt of an offer which is reasonable and who goes to trial having rejected that offer is always liable to a higher level of costs if they do not do better than the offer that has been rejected. Over a period three offers were made in this case each of which has proved to be worthy of acceptance by [the plaintiff]. Each offer was significantly better than the total failure of [the plaintiff’s] litigation which was the end result. Each offer was rejected. The level of costs enhancement sought by [the defendants], staged as it is progressively, is reasonable and fair.” (my emphasis)

After considering a factor particular to the facts in Leung Lai Kwan, ie that the plaintiff propounded false evidence in support of a claim, DHCJ Saunders held that it was appropriate that indemnity costs should be awarded against the plaintiff.

36.  Neither Mr Wong nor Mr Wang referred me to the decision of the CA in HCMP1554/2015 in which the plaintiff in Leung Lai Kwan sought leave to appeal against the final costs order made by DHCJ Saunders.[6] Although the CA dismissed the application, the CA made interesting observations on the matter of indemnity costs awarded by DHCJ Saunders:

“9. Whether the exercise of the discretion should attract the same consequences as if a valid sanctioned offer has been made is not raised in Mr Lam’s grounds of appeal and we do not need to discuss that in this decision. The Judge did not equate the offers with sanctioned offers. He did not award indemnity costs based on the offers of 12 September 2013 and 19 June 2014. Though he awarded costs on indemnity basis for the trial, the Judge did so primarily due to the Plaintiff propounding false evidence given at the trial than the offer of 7 July 2014.

……

11. Bearing in mind that even if this ground were established, this court would have to exercise the discretion afresh, we directed the parties to address us on the question whether the propounding of false evidence by the Plaintiff (as found by the deputy judge)  warrants the imposition of costs of the trial on indemnity basis or, if not, on common fund basis. We also drew the attention of counsel to these authorities: Maysun Engineering v International Education and Academic Exchanges Foundation [2011] 2 HKLRD 844; Chinachem Charitable Foundation v Chan Chun Chuen HCAP 8 of 2007, 16 April 2010; Dr Koo Chih Ling Linda v Dr Lam Tai Hing [1992] 1 HKC 193; Cheung Wei Man Vivien v Centaline Property Agency Ltd HCA 286 of 2000, 15 December 2006.

12. After hearing submissions, if we were to exercise the discretion afresh, we would not be minded to impose costs on indemnity basis. However, costs on common fund basis would in any event have been justified in light of the offers.” (my emphasis)

37.  Further, given the court’s wide discretion on costs, I am not persuaded that whenever a party fails to do better than an offer which he has rejected, the court must always award costs against him on a higher scale. In this respect, I refer to my discussion on the effect of a Calderbank offer and the principles on awarding costs on an indemnity basis in 郭生琼作為2015年8月5日法庭命令委任為死者馬黑皮的遺產代表人及另一人 訴 黃文俊及他人 as follows:[7]

“67. 就上述第58(3)段提及的事宜, 翟律師陳述指稱, D3要求以彌償基準評定其訟費的法律基礎有二: …… (2)  法庭可依據該規則第62號命令第28(3)  條規則頒令判給D3的訟費按彌償基準評定。

……

83. 本席認為, 基於上述分析, 由於該D3指稱附帶條款和解提議包合有關訟費的條文, 該等提議並非該規則第22號命令下的有效附帶條款和解提議, 亦不會有該規則第22號命令第23(4)(a)  條規則下以彌償基準評定訟費的後果。雖此, 法庭仍可以「Calderbank offer」形式考慮該等提議。

84. 於Wong Yim Man Anthea 一案,[8] 被告人作出要約 (offer), 提議原告撤回其申索並在訟案中不作訟費令 (第251頁)。余法官指, 「[having] found the Offer to be incapable of being made in O.22，I should take into account the Offer in my consideration of the costs issue pursuant to O.62 r.5(1)(d)  ……」(第259頁)。同樣地, 黃法官在Choi Tak Man 一案[9]指出 (第625-626頁)：[10]

「23. Although the Offer is not a sanctioned offer，it can still be taken into account as a Calderbank offer in considering the issue of costs pursuant to O.62 r.5(1)(d)  of the RHC：Wong Yim Man Anthea (at [47]-[50]，per DHCJ Kent Yee)，Leung Lai Kwan (at [7]，per Lam V-P).

……

25. Whilst I agree that a party who fails to do better than an offer which he has rejected may justify the court awarding costs against him on a higher scale，I am unable to accept that the court must always do so. At the end of the day，the existence of a settlement offer is just one of the many factors that the court can take into account in the exercise of its discretion on costs under O.62 r.5.」

85. 於Wong Yim Man Anthea、Choi Tak Man、Ng Hau Wan[11]及Kan Wan Chung[12]的案例，雖然指稱的附帶條款和解提議並非該規則第22號命令下的有效附帶條款和解提議，法庭在該規則第62號命令第5條規則下行使訟費酌情權是可以「Calderbank offer」性質考慮該等提議。但是，在上述案例的個別情況，法庭裁定不應命令支付方以彌償基準支付對方的訟費。

86. 就上述第67段提及的第 (2)  點, 本席已於Wong Shu Keung v Li Sing Ming [13] 及Heung Wing Yan v Hangway Housing Management Limited & ors [14] 二案述明有關以彌償基準評定訟費的法理原則, 並解釋法庭如何行使訟費酌情權指令支付方以彌償基準支付對方的訟費。本席採納該等法理原則, 但在此不贅。

87. 正如本席在Liu Hui Hong (劉輝紅)，the person appointed to represent the estate of Li Shiyou，deceased (by carry on order dated 30 September 2015) 及另一人v Fong Wai Meng (馮偉明) 及其他人 一案所述，「…… [as] explained in such authorities ……, there is an infinite variety of situations which can come before the courts and which the courts may consider appropriate to make an order for indemnity costs. In my view，bringing an incompetent and unsalvageable application before the court is plainly a circumstance that takes the conduct of legal proceedings so out of the norm as to justify an award of costs on indemnity basis」(重點加強)。[15]

88. 本席亦於Heung Wing Yan一案指出如下:

「19. Although the discretion to award indemnity costs is unfettered and uncircumscribed,[16] there must be some special or unusual feature in the case to justify an order for indemnity costs.[17] I accept indemnity costs are no longer limited to cases where a party’s conduct lacks moral probity or deserves moral condemnation for which the court wishes to express disapproval. But such conduct must be “unreasonable to a high degree; unreasonable in this context certainly does not mean merely wrong or misguided in hindsight..... It follows from all this ...... it will be a rare case indeed where the refusal of a settlement offer will attract ...... not merely an adverse order for costs, but an order on an indemnity rather than standard basis”.[18] Further, whilst pursuit of a weak claim will not usually, on its own, justify an order for indemnity costs, the pursuit of a hopeless claim (or a claim which the party pursuing it should have realised was hopeless)  may well lead to such an order.[19]

20. But there is an infinite variety of situations which can come before the courts and which the courts may consider appropriate to make an indemnity order. So the court must consider each case on its own facts to ascertain whether there is something in the conduct of the action, or the circumstances of the case in question that takes it out of the norm so as to justify an award of indemnity costs.」 (重點加強)” (my emphasis)

38.  I particularly draw attention to the 4 authorities cited in paragraph 85 in 郭生琼作為2015年8月5日法庭命令委任為死者馬黑皮的遺產代表人及另一人 (see paragraph 37 above)  which showed that notwithstanding failure to beat the Calderbank offers, costs were not awarded on indemnity basis. Costs were awarded on indemnity basis in 郭生琼作為2015年8月5日法庭命令委任為死者馬黑皮的遺產代表人及另一人 by reason of a prior settlement of the case which made the plaintiffs’ case incompetent. As explained in the above authorities, much would turn on the circumstances of each case.

39.  Issue-based approach  In dealing with costs of interlocutory applications, the court may (not must)  adopt an issue-based approach. In Zhuhai International Container Terminals (Jiuzhou)  Limited v Lo Tong Hoi & anor,[20] Kwan JA (with whom Cheung and Yuen JJA agreed)  gave the following guidance:

“33. …… On the established principles, it is not necessary to establish that a successful party has acted unreasonably or improperly in raising an issue for it to be deprived of the whole or part of its costs. The court may so order where the failed allegation of the successful party has caused a significant increase in the length or costs of the proceedings (Re Elgindata Ltd (No. 2) [1992] 1 WLR 1207 at 1214B to C). By the amendments introduced to Order 62 rule 5, litigants should bear in mind the possible costs implications. There is incentive to conduct litigation in a responsible way and be selective as to the issues raised.”

40.  But in Momin Lok v Hospital Authority,[21] G Lam JA (giving the judgment of the court)  reminded as follows:

“10. On the other hand, we bear in mind that an issue-based costs order must not be so readily made as to undermine the utility of the general rule that costs follow the event and to lead to the proliferation of unwarranted costs disputes. The question of costs is one that ultimately depends heavily on the facts and circumstances of each case. As Bokhary PJ, giving the judgment on costs of the Court of Final Appeal in Commissioner of Inland Revenue v Hongkong International Terminals Ltd [2014] 4 HKLRD 412, stated:

“There is a discretion in the court to deprive a successful party of the whole or part of his costs because he had caused a significant increase in the length or costs of the proceedings by raising issues on which he did not succeed. That can be done even if it was not unreasonable to have raised those issues. Whether or not it should be done depends on all the circumstances. This discretion exists for the purpose of avoiding the rigour of too inflexible an application of the rule that costs generally follow the event. It is to be approached with due circumspection so as not to undermine the utility of that general rule.””

That said, I bear in mind the above observations concerned costs in relation to a trial of preliminary issues, and this court is presently concerned with costs in relation to interlocutory proceedings in respect of which Order 62 rule 3(2A)  of the RHC would be applicable.

41.  Statutory body In Wo Chun Wah v Employees Compensation Assistance Fund Board,[22] the Employees Compensation Fund Board (“Board”)  obtained leave to be joined as the 3^rd defendant in employees’ compensation and common law proceedings on the ground that it wished to participate in the assessment of damages. The plaintiff secured judgment against the 2^nd defendant in the employees’ compensation proceedings and eventually settled his potential claim against the Board in relation thereto. The plaintiff was awarded damages against the 2^nd defendant after trial in the common law proceedings. The judge ordered the 2^nd defendant to pay the plaintiff’s costs, but refused the plaintiff’s application for costs against the Board as from its joinder in the action, directing that there be no order as to costs between the plaintiff and the Board. The CA dismissed the plaintiff’s appeal on the ground inter alia that although the court had jurisdiction to make costs orders against the Board when it was joined as a party, there was a wide discretion as to costs and there was no basis for interfering with the order made. The CFA re-affirmed the court has jurisdiction to make costs orders against the Board where it has taken an active role in the proceedings or where it has joined as a party, but dismissed the plaintiff’s appeal against the CA’s decision.

42.  Ribeiro PJ at page 514 opined that “the court should not adopt as its starting point the “costs follow the event” criterion and should not equate the Board with an employer conducting adversarial proceedings against the employee”, and went on to say as follow:

“44. Thus, the Board is authorised and required to scrutinise and, if thought necessary, to intervene in order to test the validity of the plaintiff’s case whether on liability, quantum or both, in carrying out its statutory duties.  Where an employee obtains an award of damages after such scrutiny or intervention it does not mean that the Board has “lost” the case so as to constitute “the event” justifying an award of costs against it.  The “event” properly viewed, is the outcome of the plaintiff’s action against the employer (whether or not actually present)  and not the process involving the Board’s intervention. 

45.  The Board’s role was properly recognised by the Trial Judge:

“In participating in the proceedings, the Board’s function is neither to contest the employee’s claim in place of the employer nor to help save public funds, but is to ensure that employees in need can obtain such damages as they are entitled to. The Board has a duty to screen out unmeritorious or inappropriate claims to ensure (inter alia)  that this assistance mechanism will not be abused, its recipients will not exaggerate their claims, and public funds will not be used for improper purposes. Therefore, unless it is necessary to contest false claims or suspected fraudulent claims, the Board should not adopt an antagonistic attitude in the proceedings. It should act as a filter and adopt an impartial attitude in the proceedings so as to assist the court in coming to a correct ruling.”

46.  In my view, such recognition dictates that where the Board has been joined as a party and properly carries out its “filtering” or monitoring functions, the appropriate starting point should generally be no order as to costs, irrespective of whether the Board sought to test the case as to liability, quantum or both. 

47.  That is the starting point and a different costs order might be warranted on particular facts.  One naturally expects that, having intervened, the Board will behave in a responsible manner but if, in what will hopefully be a rare case, its conduct is unreasonable or misconceived or unjustifiably antagonistic, unnecessarily prolonging its intervention, or otherwise untoward, the court may, in the exercise of its discretion, consider ordering the Board to pay the plaintiff’s costs.  Factors such as those referred to in RHC Order 62 rule 5(2)  set out above would be relevant.  Where such considerations may arise, ECAO section 29 offers are especially relevant and will be taken into account. It must, however, always be kept in mind that the discretion to order costs is broad and to be flexibly exercised in the light of the specific circumstances.” (my emphasis)

IV.  PARTS A AND C RELIEFS

43.  P’s application for the Part A and C Reliefs was uncontroversial. The Part A Relief was the same as the Cost Order Nisi in relation to P’s costs of and occasioned by the Summons (including all costs reserved if any)  for the period up to 16 April 2019. The Part C Relief did not concern D3 for it dealt with P’s own costs, and it could not be disputed that P was legally aided on or before 30 April 2019 (see paragraph 1 above).

44.  The crux of the dispute in respect of the Costs Summons concerned the Part B Relief to which I now turn.

V.  PART B RELIEF

45.  P’s stance  Mr Wong submitted that as evident from the without prejudice save as to costs correspondence between PSols and D3Sols set out in Part II above, P’s offer in the 1/4/19 Letter (ie that subject to D3’s consent for leave to serve the concurrent writ out of jurisdiction to be re-granted to P, P would agree for the D2 Judgment to be set aside with costs of the Summons to be paid by P to D3, “April Offer”), which was made after P’s reliance on the 2^nd Limb of Gateway F by way of the P 6^th Aff filed on 26 March 2019 and more than 6 months before the Hearing of the Summons on 21 October 2019, was rejected by D3 by way of the 17/4/19 Letter, but D3 failed to do better than the April Offer given this court’s holdings in favour of P on both the 2^nd Limb of Gateway F (see paragraph 260 of the Judgment)  and on the issue of forum conveniens (see paragraph 198 of the Judgment), which were upheld by the CA in paragraphs 52 and 65 of the CA Judgment.

46.  Mr Wong therefore submitted that D3 ought reasonably to have accepted the April Offer, and but for D3’s rejection of the April Offer, the costs incurred as from 17 April 2019 in respect of the Summons could have been saved. Mr Wong argued that D3’s rejection of the April Offer was unreasonable, which justified the Part B Relief (ie D shall pay 100% of P’s costs of and occasioned by the Summons (including all costs reserved if any)  from 17 April 2019 on an indemnity basis to be taxed if not agreed)  because:

(a)	D3 failed to do better than the April Offer in that (i)  this court refused to set aside the Yu Order, (ii)  there was no need for any re-grant of leave for service of the CWoS out of jurisdiction, and (iii)  D3 was ordered to pay 70% of P’s costs;
(b)	as noted by this court in paragraph 10 of the Decision, “[the] starting point is that the Gateways are disjunctive in the sense that P only had to establish 1 and not all 3 of the Gateways relied on”;
(c)	more importantly, the CA observed in the CA Judgment as follows: “77. Our second concern is, more importantly, on the approach adopted by [D3] in this case. The starting point is that [D3] is authorised and required to scrutinise and, if thought necessary, intervene in order to test the validity of [P’s] case whether on liability, quantum or both, in carrying out its statutory duties : Wo Chun Wah v. Employees Compensation Assistance Fund Board (2019)  22 CFAR 515 per Ribeiro PJ at [44].  In this case no one can seriously criticise [D3] for not discharging its duty if it was to accept the default judgment and take part in the assessment of damages. This must be the most appropriate and economical way of dealing with the case when by [D3’s] own admission, [D2] was the employer of [P], and the potential witnesses of an accident which happened seven years ago are not based in Hong Kong. Instead, it chose to challenge [P’s] right to sue [D2] in Hong Kong. As [P] only needs to fulfill any one of the three gateways in order to obtain leave, in respect of Gateway (F), the objective bench mark and criterion for [D3’s] consideration must be the majority decision of Brownlie (No. 1) which is in line with this Court’s previous decision of Dynasty Line Ltd. On this basis, any objective assessment must result in concluding that [P] has satisfied the ‘good arguable case’ threshold for the first limb of Gateway (F). But most extraordinarily, [D3] said that the majority view is wrong and the minority view is to be preferred. By advocating this stand, [D3] must have forgotten its proper role under the ECAO. It is not an ordinary hostile litigant with unlimited funds to litigate and with its own self interest to protect and advance. On the contrary, it is the keeper of public funds collected from levies from employees’ compensation insurance policies for payment out in appropriate circumstances.  Its role is to prevent abuse by litigants seeking unmeritorious claims for compensation from the fund, but not to put unnecessary obstacles in their rightful pursuit for damages arising from an employment related accident nor to pursue litigation simply because the majority view does not accord with its own perception of what is the correct law. In our view, by such an intervention, [D3] has strayed beyond its proper role under the statutory scheme.” (my emphasis)

47.  D3’s stance  Mr Wang submitted the Cost Order Nisi was well justified given (a)  P’s material non-disclosures as found by this court, and (b)  this court correctly adopted an issue-based approach as to costs.

48.  On (a)  above, Mr Wang submitted this court in paragraph 277 of the Judgment found material non-disclosure in several key aspects for which P had no explanation, so this court was well justified to reflect such “misconduct” in the Cost Order Nisi. It was said that in such circumstances, D3, in exercising its statutory duty to scrutinise unmeritorious or inappropriate claims to ensure public funds would not be abused (see paragraph 42 above), was justified and duty bound to intervene and to expose such misconduct that caused the Yu Order to be granted upon “misleading and wrongful premise”.

49.  On (b)  above, Mr Wang submitted that out of 6 grounds in respect of the Gateways P relied upon, D3 successfully demonstrated 5 of them to be unfounded:

(a)	Gateway C was dismissed by the CA Judgment (see paragraph 59 thereof);
(b)	Sub-grounds 1-2 of Gateway D were dismissed by the Judgment (see paragraphs 122-129 and 130-131 thereof), and Sub-ground 3 of Gateway D was dismissed by the CA Judgment (see paragraphs 148-149 thereof);
(c)	the 1st Limb of Gateway F was dismissed by the Judgment (see paragraphs 148-149 thereof);
(d)	the 2nd Limb of Gateway F was allowed by the Judgment to be relevant to support a re-grant only (see paragraph 151 thereof), which was affirmed by the CA Judgment (see paragraph 52 thereof), and in respect of which the CFA granted leave to appeal (see paragraphs 12-13 above).

50.  On such basis, Mr Wang argued that D3 had been partially successful in dismissing the Yu Order and the original 5 grounds P relied on, and P only obtained new leave upon re-grant on a new basis (see (d)  above)  which was not raised at the ex parte stage.

51.  Further, the 2^nd Limb of Gateway F was a pure legal issue without any factual dispute. Mr Wang submitted that almost all evidence filed (with significant amount of translation)  and all factual issues argued arose because of (a)  the 5 grounds on which P did not succeed and (b)  P’s material non-disclosures. In such circumstances, it was said the significant increase in ambit, complexity, evidence, length and costs of the Hearing was self-evident.

52.  As for the observations in paragraph 77 of the CA Judgment (see paragraph 46(c)  above), Mr Wang submitted they concerned the circumstances set out in paragraph 47 of Wo Chun Wah that would justify a departure from the general starting point of no order as to costs, but did not support any suggestion that D3’s case was so “hopeless” to justify indemnity costs, especially when the 2^nd Limb of Gateway F allowed by this court and by the CA raised a highly arguable legal issue without binding authority in Hong Kong and with divided English juridical opinion. Mr Wang reminded that even the CA Judgment did not consider a higher basis of costs was appropriate.

53.  Mr Wang submitted that with the partial success by D3 and the need to deter interlocutory conduct in mind, the CA adopted an issue-based approach and expressly held in paragraph 74 of the CA Judgment that the costs order nisi under the CA Order was to reflect that D3 succeeded in relation to Gateways C and D. Mr Wang suggested that such approach should also be adopted for the Summons, so the Cost Order Nisi was just and appropriate.

54.  As regards P’s offer in the 16/1/19 Letter (ie the Yu Order that granted leave to issue and serve the CWoS out of jurisdiction and the D2 Judgment be set aside with costs of the Summons to be costs in the cause, “January Offer”), it was a Calderbank offer which Mr Wang submitted was just a factor to be considered by the court in the exercise of its discretion on costs under Order 62 rule 5(1)  of the RHC. Mr Wang reminded that the January Offer was premised on P’s intention to apply for new leave to serve a concurrent writ of summons on D2 outside the jurisdiction, so P did not do better than the January Offer in that “his leave pursuant to the original Yu Order is confirmed to be dismissed (according to the CA Judgment)  and he only obtained new leave by way of re-grant, something which was not the subject of the [January Offer]”. Mr Wang also submitted that the January Offer served no practical purpose other than to generate additional procedural dispute and costs, and as a result D3 rejected the January Offer by the 13/2/19 Letter on the basis that D3 would contest any fresh application on similar grounds which would only lead to delay and waste of time and costs, and that the January Offer was against the spirit of the CJR and amounted to an abuse of process.

55.  Discussion  As seen from paragraphs 45-46 above, P’s Costs Summons was premised on the contention that by the Judgment / CA Judgment D3 failed to do better than the April Offer (rather than the January Offer even though Mr Wang’s submissions appeared to be focused on the January Offer – see paragraph 54 above), and had D3 reasonably accepted the April Offer instead of rejecting it by the 17/4/19 Letter, P’s costs of and occasioned by the Summons as from 17 April 2019 (including all costs reserved if any)  would not have been incurred, so P considered he should recover 100% of such costs (to be taxed if not agreed)  on an indemnity basis.

56.  I note the April Offer was premised on setting aside the D2 Judgment (and implicitly on setting aside the leave granted under the Yu Order for the issuance and service of the CWoS on D2 out of jurisdiction), but (a)  on condition that leave for service of the CWoS on D2 out of jurisdiction be re-granted to P, and (b)  without concession on the issue of forum conveniens.

57.  In considering whether the Order/Judgment viewed in light of the CA Order / CA Judgment did better than the April Offer, it is necessary to first ascertain what had been decided by this court and the CA in respect of P’s Summons.

58.  Mr Wang submitted that out of the 6 grounds under Gateways C, D and F, P failed on 5 of them and succeeded on only 1 of them. Although this court found P had successfully established Gateway C (see paragraph 120 of the Judgment), the CA found this court had erred and Gateway C was not viable (see paragraph 59 of the CA Judgment). As for Sub-grounds 1-3 of Gateway D, this court found Sub-grounds 1-2 of Gateway D were not open to P (see paragraph 129 and 131 of the Judgment), but even though this court found P had established Sub-ground 3 of Gateway D (see paragraph 145 of the Judgment), the CA again found this court had erred and such sub-ground was not viable (see paragraphs 63-64 of the CA Judgment). As for the 1^st and 2^nd Limbs of Gateway F, this court held that the 1^st Limb of Gateway F was not applicable (see paragraph 148 of the Judgment), and that the Yu Order could not be supported by the 2^nd Limb of Gateway F since P did not raise this at the ex parte stage (see paragraph 151 of the Judgment). But there was no dispute there was a serious question to be tried (see paragraph 154 of the Judgment), and this court found Hong Kong was clearly and distinctly the more appropriate forum for the trial of P’s claim against D2 (see paragraphs 198 and 284-285 of the Judgment and upheld in paragraph 65 of the CA Judgment).

59.  Since the Order 11 jurisdictional gateways are disjunctive (see paragraph 120 of the Judgment), in view of this court’s holdings as to the applicability of Gateway C and Sub-ground 3 of Gateway D, this court by the Judgment considered it unnecessary to consider the applicability of the 2^nd Limb of Gateway F. But given the decision in the CA Judgment that Gateways C and D were not open to P, P would have to rely on the 2^nd Limb of Gateway F at the inter partes stage (despite the fact that he did not raise such gateway at the ex parte stage – see paragraph 58 above). In the Judgment, this court went on to hold that (a)  P was not precluded forever from relying on the 2^nd Limb of Gateway F at the inter partes stage (see paragraph 120 of the Judgment), and (b)  “had it been necessary, I would have maintained the Yu Order on the basis of the 2^nd Limb of Gateway F, but even if I were wrong and the Yu Order ought to be set aside for omission in the P 1^st/2^nd Affs to expressly rely on the 2^nd Limb of Gateway F, I would have no hesitation to re-grant leave to issue the CWoS and serve the same on D2 out of jurisdiction under the 2^nd Limb of Gateway F” (see paragraph 160 of the Judgment). The CA Judgment upheld this court’s decision on the applicability of the 2^nd Limb of Gateway F at the inter partes stage, stating that “[the] Judge was correct on Gateway (F)” (see paragraph 52 of the Judgment).

60.  Still, this court went on to consider whether the Yu Order ought to be set aside for material non-disclosure, and if so, to consider whether or not to exercise discretion to maintain the Yu Order, or if not, to re-grant leave for service out. Of the 4 areas of alleged material non-disclosures (see paragraph 262(a)-(d)  of the Judgment), this court found P failed to make material disclosures in 2 areas (see paragraphs 266, 271 and 277 of the Judgment and upheld in paragraph 72 of the CA Judgment). But notwithstanding such material non-disclosures, (a)  this court found it appropriate to continue the Yu Order at the inter partes stage (see paragraph 280 of the Judgment), but (b)  if such conclusion was incorrect, then this court would have re-granted leave for P to issue the CWoS and to serve it on D2 out of jurisdiction “on the basis that there was no deliberate or intentional breach of duty to make full and frank disclosure with a  view to deceive, and any re-application would be bound to succeed (ie the result with disclosure would have been the same)” (see paragraph 281 of the Judgment). The CA agreed with my views (see paragraphs 69-72 of the CA Judgment).

61.  In light of the above, the effect of the decisions of the Judgment and CA Judgment was as follows:

(a)	only the 2nd Limb of Gateway F was open to P, but P did not raise such gateway at the ex parte stage;
(b)	Hong Kong was the forum conveniens;
(c)	there were material non-disclosures by P in 2 areas at the ex parte stage;
(d)	notwithstanding (a)  and (c)  above, the court would exercise its discretion to continue the Yu Order at the inter partes stage.

62.  I note that in respect of (d)  above, this court (as upheld by the CA)  exercised its discretion to continue the Yu Order at the inter partes stage without need for re-grant of leave to issue and serve (on D2)  the CWoS out of jurisdiction (see paragraphs 59(b)  and 60(a)  above). This meant that the Yu Order (and hence the D2 Judgment as well)  was maintained without need for setting it aside and for making fresh re-grant of leave for issuance/ service of the CWoS.

63.  In light of the above analysis of the Judgment and the CA Judgment, P was the successful party, and the ultimate outcome of the Summons (see paragraph 61 above)  was better than the April Offer which was premised on the D2 Judgment being set aside (implicitly on the premise that the Yu Order would be set aside)  and the court re-granting leave for P to serve the CWoS on D2 out of jurisdiction with costs of the Summons to be paid by P to D3.

64.  Since P was the successful party, this court by the Costs Order Nisi awarded costs (including all costs reserved if any)  in favour of P against D3 (but with 30% discount to reflect P’s material non-disclosures). The issue at hand was whether for the period as from 17 April 2019 (ie the date of 17/4/19 Letter by which P refused the April Offer)  P was entitled to (a)  costs on an indemnity basis and (b)  100% instead of 70% of his costs. The fact that the final outcome in respect of the Summons in favour of P did not better the April Offer was a factor to be taken into account, but whether it would lead to any upward adjustment of the apportionment and scale of costs would depend on all the circumstances of the case, including the factors in Order 62 rule 5 of the RHC. After all, this court had wide discretion on costs.

65.  In my view, this was not a case in which 100% costs as from 17 April 2019 would be appropriate. Even though I have found P to be the successful party in respect of the Summons and D3 failed to better the April Offer, P’s conduct in resisting the Summons could not be ignored. P did not choose to resist the Summons on the tenor of the April Offer (ie the D2 Judgment be aside subject to re-grant of leave to serve the CWoS on D2 out of jurisdiction), or on the basis that whilst P failed to rely on any viable gateway and there were material non-disclosures at the ex parte stage, the Yu Order should nevertheless be maintained at the inter partes stage because (a)  the 2^nd Limb of Gateway F (which was not relied upon at the ex parte stage)  was applicable and (b)  there was no deliberate breach of duty to give full and frank disclosure. Had P been selective in raising issues to resist the Summons, there might have been some room to argue for 100% costs. The fact that the gateways were disjunctive might inform the outcome of the Summons, but was not a complete answer on costs. I see no particular reason why, even acknowledging P’s success over the Summons and D3’s failure to better the April Offer, an issue-based approach should not be adopted in relation to costs.

66.  Further, the reduction of 30% of P’s costs under the Cost Order Nisi was to reflect this court’s displeasure over P’s material non-disclosures (see paragraph 286 of the Judgment). When this court granted the Cost Order Nisi, this court found in favour of P on Gateway C and Sub-ground 3 of Gateway C, and on the basis that the gateways were disjunctive, this court did not make any discount on P’s costs of the Summons for Gateways C and D which eventually failed on appeal as the CA found this court had erred in relation to such gateways. The CA discounted 20% on P’s costs of the appeal “to reflect that [D3] succeeded in Gateway (C)  and Gateway (D)” (see paragraph 74 of the CA Judgment). The CA Order did not deal with the Cost Order Nisi, ie P’s costs of the Summons, which was then pending possible application to this court for variation.

67.  Thus, for reasons explained in the above paragraph, neither the Cost Order Nisi nor the cost order under the CA Order addressed P’s costs for the Summons on the basis that this court had erred and in fact P’s reliance on Gateway C, Sub-grounds 1-3 of Gateway D and the 1^st Limb of Gateway F (ie all the gateways that P relied on at the ex parte stage and continued to rely on at the inter partes stage)  totally failed. I find P’s such failures must also sound in costs in relation to the Summons. Since the Gateways were disjunctive, at the inter partes stage P could have focused on the 2^nd Limb of Gateway F rather than to also maintain the eventually doomed Gateways C and D. As Mr Wang pointed out, these gateways (rather than the 2^nd Limb of Gateway F that P raised at the inter partes stage but not at the ex parte stage)  generated factual issues that added affirmation evidence, complexity, length and costs to the Hearing of the Summons. Indeed, had P adopted a focused and selective approach by conceding (a)  his reliance of Gateways C and D and the 1^st Limb of Gateway F at the ex parte stage could not be supported and (b)  there had been material non-disclosures, and by maintaining (i)  Hong Kong was the forum conveniens and (ii)  the 2^nd Limb of Gateway F (which was essentially a pure legal issue)  was open to him at the inter partes stage (ie in line with the April Offer), the factual issues and evidence/submissions pertinent to (a)  above would have been quite unnecessary.

68.  Since P was not selective in raising issues for the Summons, and instead adopted broad-based resistance thereto by arguing for inter alia the applicability of Gateway C, Sub-grounds 1-3 of Gateway D, the 1^st Limb of Gateway F with no material non-disclosures, which resistance ultimately failed, upon careful consideration I do not see justifiable basis to exercise discretion to award P 100% of his costs of the Summons (including all costs reserved if any)  as from 17 April 2019.

69.  As regards P’s claim for indemnity basis in relation to his costs of the Summons (including all costs reserved if any)  as from 17 April 2019, again I am not persuaded this would be a case for indemnity costs.

70.  I do not agree with Mr Wang’s submissions that because there were material non-disclosures by P at the ex parte stage, D3 given its statutory role and the need to protect public funds was justified and duty-bound to intervene and expose such “misconduct” (see paragraph 48 above). In my view, D3 ought not have taken a blinkered approach to merely consider whether there were any material non-disclosures by P. The law is clear that even if there is material non-disclosure at the ex parte stage, it may but need not lead to the ex parte order being set aside (see paragraphs 69-75 of the Judgment). Thus, D3 should have gone on to consider whether the present case was one in which it would be an appropriate case to discharge the Yu Order, eg whether the non-disclosures had such sufficient materiality as to justify/require immediate discharge of the ex parte order, whether the non-disclosures were inadvertent/innocent or deliberate, whether there were practical benefits of setting aside the ex parte order (eg whether it was a suitable case for service out), and/or whether the punishment of discharging the ex parte order would be out of proportion. Where the non-disclosures were inadvertent/innocent without deliberate breach of duty to make full and frank disclosure, and where Hong Kong was the forum conveniens such that the case appeared to be a suitable one for service out (as I have found in paragraphs 278-280 of the Judgment and see paragraphs 66-72 of the CA Judgment), one could hardly see “misconduct” on the part of P (despite the material non-disclosures)  that would require D3, albeit a statutory body, to unnecessarily incur public funds to intervene and to expose.

71.  But that said, the court does not smile kindly on material non-disclosures as the court expects to be able to repose trust in a litigant (and justice to the other party requires such litigant)  to be careful in making full and frank disclosures for an ex parte application. For such reason, this court discounted P’s costs by 30%. I am unable to see why such discount should cease on or after 17 April 2019 when, despite the April Offer, P still maintained at the Hearing there were no material non-disclosures at all, which stance was rejected by this court (see paragraph 277 of the Judgment)  as upheld by the CA (see paragraphs 66-72 of the CA Judgment). Further, where there were material non-disclosures at the ex parte stage and the relevant party (as in the case of P here)  had to urge for the court’s indulgence to exercise its discretion in his favour at the inter partes stage either to maintain the ex parte order or to re-grant such order upon setting aside the ex parte order, I cannot see how it would be a suitable case for awarding costs to such party on an indemnity basis.

72.  As regards Mr Wong’s reliance on paragraph 77 of the CA Judgment (see paragraph 46(c)  above), I am again not persuaded it would justify P being awarded costs on an indemnity basis. As noted by Mr Wong, D3 by not seeking to vary the Cost Order Nisi had accepted its liability to pay 70% of P’s costs of and occasioned by the Summons (including all costs reserved if any), which already reflected a departure from the general starting point of no order as to costs in Wo Chun Wah. The 30% discount in respect of P’s costs of the Summons had not yet taken into account the ultimate failure of Gateway C and Sub-ground 3 of Gateway D as found by the CA (since this court erred in finding in favour of P on such gateways), which the CA took into account in reducing P’s costs of the appeal by 20% under the CA Order, so there was arguably room for D3 to contend for further discount in respect of P’s costs of the Summons that this court discounted merely for material non-disclosures. And yet, D3 did not seek variation of the Cost Order Nisi, which was consistent with departure from the general starting point of no order as to costs that already reflected the CA’s observations in paragraph 77 of the CA Judgment.

73.  Further, it must not be forgotten that this was a case in which (a)  P failed on all gateways relied on at the ex parte stage (even though he was able to establish that Hong Kong was the forum conveniens)  and (b)  there were material non-disclosures by P at the ex parte stage, so at the inter partes stage P had to seek the court’s indulgence to exercise its discretion to maintain the Yu Order or to re-grant leave for service out if the Yu Order were discharged. In such context, I cannot see the relevance or propriety of awarding P’s costs of the Summons as from 17 April 2019 on an indemnity basis.

74.  Still further, given that D3 argued against the applicability of the 2^nd Limb of Gateway F and failed in such contention in the context explained in paragraph 77 of the CA Judgment, the general starting point of no order as to costs was displaced (see paragraph 72 above), so D3 must be liable to P for costs of and occasioned by the Summons (including all costs reserved if any and subject to the 30% discount as explained above), but that was a far cry from a case for awarding such costs on an indemnity basis when such contention was a pure legal issue without binding authority in Hong Kong but with divided opinion in the UK Supreme Court in both Brownlie (SC) and Brownlie v FS Cairo (Nile Plaza)  LLC.[23] Indeed, whilst the CA in paragraph 77 of the CA Judgment opined that D3 had strayed from its proper statutory role, in awarding 80% of the costs of the appeal in favour of P, the CA did not see fit to award such costs on an indemnity basis even though D3 must already have been well aware of this court’s holdings on the 2^nd Limb of Gateway F and its impact at the inter partes stage at the time when it lodged/pursued its appeal.

75.  For all of the above reasons, I am not persuaded P was entitled to the Part B Relief.

VI.  CONCLUSION

76.  In the premises, the Cost Order Nisi is varied to the extent that in addition to the Cost Order Nisi (which is affirmed), there be an order that P’s own costs on or before 30 April 2019 be taxed in accordance with Legal Aid Regulations.

77.  I grant a further cost order nisi that P shall pay D3’s costs of and occasioned by the Costs Summons (including all costs reserved if any)  to be taxed if not agreed, and P’s own costs be taxed in accordance with Legal Aid Regulations.