YOE HAN YAUW v. YOE HAN HIAN AND OTHERS

HCMP 290/2020

[2020] HKCFI 2613

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 290 OF 2020

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DECISION

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1.  This is an application by the Applicant, Yoe Han Yauw, for leave to appeal against the costs order I made on 6 May 2020 upon disposal of the Originating Summons herein issued by him and filed on 17 March 2020 (“Originating Summons”).

2.  The Originating Summons was issued by the Applicant in his capacity as a shareholder of the 4^th Respondent, Alpha Tool. Com. HK Limited, pursuant to section 740 of the Companies Ordinance (Cap 622).  The 1^st to 3^rd Respondents, who are siblings of the Applicant, are the other shareholders and directors of the 4^th Respondent.  There is some suggestion in the papers that the parties were involved in disputes in other family companies, which are not relevant for present purposes.

3.  The Originating Summons seeks (i) disclosure and inspection of 4 classes of documents of the 4^th Respondent (“Documents”); (ii) an order for the Applicant to enter into the 4^th Respondent’s registered office or other business offices to search for the Documents; and (iii) costs of and incidental to the application be paid by the 1^st to 3^rd Respondents on a joint and several basis.

4.  The first hearing of the Originating Summons was fixed for 6 May 2020.  On 4 May 2020 (after office hours) solicitors for the Respondents faxed a Notice to Act to court and a letter to the Applicant’s solicitors (“1^st Letter”). In the 1^st Letter, the Respondents’ solicitors stated (i) the Respondents would not oppose the Documents sought in principle; (ii) it was inappropriate for the Applicant to seek a search order; and (iii) the Respondents proposed to vacate the hearing on 6 May 2020 on the basis of the following orders to be made: (a) an order in terms of paragraph 1 of the Originating Summons (the usual order for disclosure, inspection and taking copies); (b) an order for the Applicant to enter the registered office of the 4^th Respondent to inspect and copy the Documents; and (c) costs of the Originating Summons be paid by the 1^st to 3^rd Respondents on a joint and several basis, to be taxed if not agreed.

5.  By letter dated 5 May 2020, the Applicant’s solicitors rejected the offer in the 1^st Letter, insisted that there should be an order to search for the Documents and the Respondents should pay costs on an indemnity basis, and that the hearing on 6 May 2020 should go ahead since no agreement could be reached between the parties (“2^nd Letter”).

6.  The parties appeared by solicitors before me at 9.30am on 6 May 2020.  Neither party filed any skeleton submissions nor provided any update on their respective positions.  I was informed at the hearing that the parties had reached agreement over the Originating Summons save for 2 matters which required my determination, namely (i) the order to enter and search for the Documents; and (ii) costs.

7.  With respect to the search order, I raised with the Applicant’s solicitors whether it was within the scope of section 740 and what was the legal basis for the same.  The Applicant’s solicitor was unable to provide any legal basis for such an order and agreed that there is nothing in section 740 that would allow such an order to be made.  Accordingly I dismissed paragraph 2 of the Originating Summons.  There is no appeal against that part of my Judgment.

8.  I then turned to the question of costs.

9.  Solicitors for the Applicant submitted that the Applicant had made his requests through correspondence since August 2019 and the Respondents had failed to reply since 27 September 2019.  I note that the correspondence in August and September 2019 sent by or on behalf of the Applicant concerned a narrower request than that sought in the Originating Summons, to which the Respondents had sought time to consider as the mother of the Applicant and the 1^st to 3^rd Respondents had just passed away.  This was followed by a letter from the Applicant’s solicitors dated 5 February 2020 in which the present requests for Documents were set out, which was not responded to, and the issuance of the Originating Summons in March 2020.

10.  Solicitors for the Respondents drew my attention to the 1^st and 2^nd Letters and copies were handed up to me.

11.  Having perused the 1^st and 2^nd Letters, I took the view that:-

(1)  Although the Applicant obtained an order on paragraph 1 of the Originating Summons (for disclosure, inspection and taking copies of the Documents), he was unsuccessful in seeking a search order.

(2)  The search order was the only “live” substantive issue before the court.

(3)  The Respondents had made an offer to the Applicant in the 1^st Letter which fully reflected the order the Applicant eventually obtained, and it was the Applicant’s insistence on the search order that led to the hearing on 6 May 2020.

(4)  In the premises, I did not consider that the circumstances warranted a “split costs” order, and ordered that costs of an incidental to the Originating Summons be paid by the Applicant to the Respondents, to be taxed if not agreed.

12.  The Applicant now seeks leave to appeal against my costs decision.

13.  Leave to appeal against a costs order is required under section 14(3)(e) of the High Court Ordinance (Cap 4).

(1) For leave to be granted, it is necessary for the Applicant to establish his intended appeal has reasonable prospects of success or that there is some other reason in the interests of justice that the appeal should be heard. 

(2) Reasonable prospect of success involves the notion that the prospects of succeeding must be “reasonable” and therefore more than “fanciful”, without having to be “probable”: SMSE v KL [2009] 4 HKLRD 125, §17.

(3) Costs is very much a matter of discretion of the judge, and in order for the appellate court to interfere in an order for costs, it must be shown that the decision of the judge is either wrong in principle or plainly wrong. In the absence of a palpable error in the exercise of the discretion on costs, the mere fact that the appellate court may have exercised the discretion in a different manner is not a sufficient ground to warrant interference with the decision of the primary judge: Poon Ching Man v Lam Hoi Pun [2016] 3 HKLRD 815, §34.

14.  The Applicant does not contend that I have erred in law. The only ground of intended appeal is directed against my exercise of discretion, which he contends should have been exercised in his favour, given (i) he has to issue the Originating Summons to obtain the Documents and he has substantially obtained the relief sought; (ii) the Respondents had stated in the 1^st Letter that they would pay costs to the Applicant and they did not seek costs in their favour at the hearing (save to oppose the costs order sought by the Applicant); (iii) the hearing was necessary since the Respondents had filed an Acknowledgement of Service to the Originating Summons and they did not consent to all the reliefs sought in the Originating Summons and the 1^st Letter was only sent after office hours on 4 May 2020; (iv) there was no basis to award costs “incidental” to the Originating Summons to the Respondents; and (v) alternatively there should have been a “split costs” order such that the Applicant would get costs of and incidental to the Originating Summons and the Respondents would get costs of the hearing.

15.  I am not satisfied that the Applicant has met the threshold for the purpose of seeking leave to appeal against my costs order.

16.  First, none of the matters identified by the Applicant come close to demonstrating a palpable error in the exercise of discretion. Whilst it is correct that the Applicant has to issue the Originating Summons to obtain the Documents and he did obtain them, the fact remains he has insisted upon a search order in the Originating Summons (which he did not previously seek in correspondence) and persisted with such demand until the hearing on 6 May 2020, in circumstances where his solicitors accepted there was no legal basis for the same, and for which his application was dismissed and there is no appeal against the same.

17.  Further, it is clear from the 1^st Letter that immediately after solicitors for the Respondents came on record, the Respondents made an offer to provide disclosure and inspection of the Documents within the usual scope and pay costs in order to dispose of the Originating Summons and to avoid a hearing.  However that offer was rejected because the Respondents insisted on the search order and costs on an indemnity basis, neither of which succeeded in the end.  The Applicant’s reliance on the Respondents’ then offer to pay costs is misplaced, because that offer was made on certain conditions, and those conditions had been rejected by the Applicant.

18.  It was upon taking into account the above that I considered a “split costs” order would not be appropriate in this case and that the Respondents should have costs.  I do not consider that the Applicant has by his arguments shown there was any palpable error in my exercise of discretion, bearing in mind that just because a different judge may have exercised his or her discretion differently is not sufficient for such purpose.

19.  Second, I also take into account the limited amount of costs at stake and consider that leave would not be justified in this case by reason of de minimis non curat lex: Hong Kong Civil Procedure 2021, 59/0/35.  In this case, given the Respondents’ offer in the 1^st Letter and the outcome of the Originating Summons, there is no prospect of the Applicant obtaining all the costs, and his best case scenario would have been a “split costs” order.  As such, the amount of costs at stake in the intended appeal would, realistically, be quite minimal.  Granting leave to appeal in these circumstances would have been disproportionate and would not be consistent with the underlying objectives in Order 1A, rule 1 of the Rules of the High Court.

20.  Accordingly I will dismiss the application for leave to appeal against the costs order on 6 May 2020.

21.  As to costs of this leave application, costs should follow the event.  The parties have submitted their respective skeleton bills of costs for summary assessment.  I have considered the Respondents’ skeleton bill and would award a gross sum of HK$59,800 to the Respondents.