CHANG WING KA JOHN v. CHANG WING DEE AND ANOTHER

CACV 47/2021

[2023] HKCA 1143

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 47 OF 2021

(ON APPEAL FROM HCMP NO 1790 OF 2016 AND

HCMP NO 1791 OF 2016)

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HCMP 1790/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1790 OF 2016

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AND

HCMP 1791/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1791 OF 2016

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(Consolidated by the Order of the Honourable Mr. Justice Chow

dated 31 August 2016)

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J U D G M E N T

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Hon Yuen JA (giving the Judgment of the Court):

1.  This is a summons for variation of a costs order nisi which this court gave in our Judgment handed down on 14 July 2023 (“the CA Judgment”)¹.

Background

2.  The CA Judgment was given on the appeal of Chang Wing Ka John (“John”) from a Judgment of DHCJ To (“the Judge”) given on 11 January 2021 (“the CFI Judgment”)² in which the Judge

(1)  dismissed John’s applications to (among other things) remove his brother Chang Wing Dee (“WD”) as administrator of the estates of their parents in Hong Kong, alternatively for an order for due and proper administration of the estates, and

(2)  (on the counterclaim of WD and their sister Esther), determined that the parties had agreed by a Mediation Agreement that WD be appointed the administrator of the parents’ estates in Canada.

3.  In John’s Notice of Appeal from the CFI Judgment, as an alternative to the orders sought in the main grounds of appeal, he sought specific directions in §4 that WD be directed not to pursue any claims against him in relation to (a) two Promissory Notes, and (b) three units in a building in Vancouver sold in 2004.

4.  For reasons set out in the CA Judgment, we dismissed John’s appeal but gave the directions sought in §§4(a) and (b) of the Notice of Appeal.  To reflect John’s partial success, we gave an order nisi that he pays 50% of the costs below and of the appeal on a party and party basis, with certificate for two counsel.

Summons to vary the costs order nisi

5.  On 28 July 2023, WD and Esther applied to vary the costs order nisi (“proposed variations”) so that:

(a)  they would be at liberty to recover the costs ordered against John from his share in the parents’ estates; and

(b)  the remaining 50% of their costs be paid out of their parents’ estates on an indemnity basis (or such other basis as decided by the court) with certificate for two counsel.

Discussion

6.  Written submissions were filed by both sides.  After the reply submission from WD and Esther’s counsel was filed on 10 August 2023, John’s solicitors wrote to the court the next day asking the court to ignore §§ 10 and 11 of that submission.  This was however followed by a letter from the solicitors for WD and Esther dated 14 August 2023 disputing the factual basis for the request from John’s solicitors.  As neither side has asked for leave to file further submissions, we have not taken the contents of these letters into account.

Proposed variation (a)

7.1.  Coming back to the written submissions, in relation to proposed variation (a), the more relevant considerations are that John resides in Canada and has no property in Hong Kong other than his share in the estates of his parents.  We accept that enforcement of the costs order against him would be more difficult than if he resided in Hong Kong or had property here. 

7.2.  However, John has objected to proposed variation (a) on the basis that it would lead to a delay in distribution to him, as taxation of costs may potentially take time.  We also understand that concern. 

7.3.  Accordingly, the court asked the solicitors for WD and Esther to provide a statement of costs below and in this court, not for summary assessment, but to enable us to consider what would be a fair sum to be withheld from John’s share pending taxation of or agreement on costs.  The statements of costs below and in the appeal were provided by the solicitors of WD and Esther on 26 September 2023 who also confirmed that no allocatur for the costs below has been issued as taxation was adjourned pending the appeal.

7.4.  Having considered those statements of costs, we consider that it would be appropriate to order that $1,700,000 be withheld (“the withheld sum”) from the Applicant’s share in the estates, and upon taxation of or agreement on costs, if the taxed or agreed costs are less than the withheld sum, the Respondents be at liberty to recover such taxed or agreed costs from the withheld sum, and the balance of the withheld sum be distributed to him within 7 days of such taxation or agreement.  Of course, if the taxed or agreed costs are more than the withheld sum, the Respondents would have to recover the balance from the Applicant by enforcement proceedings. 

Proposed variation (b)

8.  John has objected to the proposal that the remaining costs of WD and Esther be paid from the estates of the parents. 

9.1.  We agree that WD’s conduct in relation to:

-  the two promissory notes (changing his position from his original correct acceptance that the promissory notes had been waived: CA Judgment §§36.1 - 36.2, and then charging an unjustified rate and basis of interest: CA Judgment §37.2, which position we found to be not only incorrect but also unfair to John: CA Judgment §68) and 

-  his original insistence on audited accounts even though provided with certified accounts as per the 25.6.2010 Order (CA Judgment §§58)

cannot be said to be beyond reproach.  As we noted in §37.2, “the explanations he [WD] gave under cross-examination showed that his decision to make such substantial deductions was not properly considered as befits an administrator, let alone an administrator of substantial estates who had resources to obtain professional advice”.  To put it neutrally, those acts were injudicious on the part of an administrator.   

9.2.  Thus, we held (CA Judgment §69):

“Weighing those matters in the round, and in light of the fact that the judge found (and Mr Smith accepts) that WD had in substance completed administration of the Mother’s estate in Hong Kong, and that John accepted that there would be no need to remove WD as administrator upon his receipt of relevant bank statements and ledgers, we would dismiss the orders sought in the Notice of Appeal pertaining to WD’s removal”.

9.3.  It should be clear from the above that WD was close to being ordered to be removed had the administration been at an earlier stage.

10.  We note that there was no evidence that Esther participated actively in WD’s injudicious acts, and in fact, she had fairly sought the help of John’s solicitor as early as April 2009 in an attempt to confirm the correct position in relation to the promissory notes (CA Judgment §26.1).  Had she retained a different legal team from WD’s, we would have been inclined to order that her costs be paid out of the estates, but since they shared the same team and pursued the same positions at trial and on appeal, we see no reason to hive off her costs.   

11.  For the above reasons, we would not make proposed variation (b). 

Order

12.  Accordingly, the costs order absolute is as follows:

“The Judge’s order as to costs be set aside and there be a costs order that the Applicant pay 50% of the costs below and of this appeal on a party and party basis with certificate for two counsel (“the said costs”), the said costs to be recovered from the sum of $1,700,000 (“the withheld sum”) to be withheld from the Applicant’s share of the estates of the Father and the Mother pending taxation (or agreement) of the said costs, and that the Respondents be at liberty to recover the taxed (or agreed) costs from the withheld sum, with the balance (if any) of the withheld sum to be distributed to the Applicant within 7 days after taxation (or agreement).

For the avoidance of doubt, the remaining costs of the Respondents are not to be paid to them out of the said estates.

The costs of the application to vary the costs order nisi are treated as part of the costs of the appeal”.