YIP LAI FONG AND ANOTHER v. SIN TUNG HING AND OTHERS

CACV 116/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CIVIL APPEAL NO. 116 OF 2003

(ON APPEAL FROM HCMP NO. 2423/2002)

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R U L I N G  O N  C O S T S

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1.  On 16 April 2004, we handed down our judgment in this appeal with a cost order nisi that,

(a)     the 3^rd and 4^th Respondents shall pay the 1^st Petitioner’s costs of the appeal;

(b)    the Petitioners shall pay the costs of the 3^rd to 5^th Respondents of the hearing below with certificate for two counsel.

2.  Both parties seek to vary that order and the matter was heard on 24 September 2004.  Mr Chain contended on behalf of the Petitioners that either the Petitioners should have the costs of the appeal and below or alternatively, the Petitioners should only be deprived of a percentage of the costs of the appeal.  On the other hand, Mr Leong SC contended on behalf of 3^rd to 5^th Respondents that order (a) should be varied to an order that the Petitioners shall pay the costs of the 3^rd to 5^th Respondents or alternatively there should be different orders in respect of different parties as to the costs of the appeal as follows,

(i)      the 2^nd Petitioner shall pay the costs of the 3^rd to 5^th Respondents;

(ii)     the 1^st Petitioner shall pay the costs of the 5^th Respondent; and

(iii)    no order as to costs between the 1^st Petitioner and the 3^rd and 4^th Respondents.

Mr Leong submitted that order (b) should stand. He also asked for directions in respect of the 1^st and 6^th Respondents’ costs occasioned by the adjournment of the trial pursuant to the order of Chu J of 2 May 2003. 

3.  Mr Chain sought to persuade us that the point we relied on to allow the appeal was not a new point taken on appeal.  We reject that submission.  It is quite plain to us that those appearing on behalf of the Petitioners at the court below had not canvassed the point mentioned in Paragraph 15 of our judgment of 16 April 2004.  We do not think whether the point is a new one should be tested by reference to the argument advanced by Mr Leong at the court below.  Rather the crucial question is how the Petitioners had responded to the Turquand point at the hearing before Chu J.

4.  We also reject the submission of Mr Chain that there is a general rule that even if an appellant succeeds on a new point, he should have his costs below whilst there should be no order as to costs for the appeal.  Whilst the authorities cited by him provided illustrations that such a costs order is a possible option, we are not persuaded that this is the only option or this should be the option adopted in the absence of special circumstances.  The question of costs is always a matter of discretion and how the discretion is to be exercised must depend on the circumstances of the case.  Whilst we recognize that the discretion must be exercised judicially and not arbitrarily, we consider it to be too rigid and mechanistic to say that generally in a case where an appellant succeeds on a new point, the only correct option is that suggested by Mr Chain.

5.  In the context of a successful appeal against an order of striking out, we note that the successful appellant was ordered to pay the costs below in Lo Ka Chun v Lo To [1985] 1 HKC 527 owing to the manner in which his case had been expanded or amended.  Although that was not a case of new point taken on appeal, that serves as an illustration that the conduct of the parties could lead to a costs order against him in respect of costs below even if he has succeeded in resisting an application for striking out.  Of course, there are differences between that case and ours and it could not serve as a precedent as to how we should exercise our discretion in the present circumstances.

6.  In fact, the cases cited by Mr Chain showed that different options are available. In Goddard v Jeffreys (1882) 46 LT 904, the Court of Appeal decided that the appellant ought not get his costs on appeal but left open the question whether he should pay the respondent’s costs for the determination of the judge below.  In Simpson v Crowle [1921] 3 KB 243, the Court of Appeal ordered that there be no order as to the costs of the trial and the costs of the appeal.

7.  In Take Harvest Ltd v George Liu [1994] 1 HKLR 32, another case where the appeal succeeded on a point not canvassed below, the Privy Council ordered each party to pay its own costs in respect of costs below as well as costs of the appeal.

8.  The cases showed that there is no fixed rule or formula for this type of situation.  The main consideration is that there is a certain element of unfairness if a successful party on a new point on appeal should get all the costs in respect of the hearing below as well as the appeal.  In our judgment, such unfairness can be mitigated either by depriving the successful party the whole or part of the costs of the appeal or the costs of the hearing below.  In some cases, it might even be appropriate to order the successful appellant to bear the other party’s costs below.  In the present case, we think it is appropriate to order the Petitioners to pay the costs below because not only did they succeed on a new point not raised in the court below, the way they argued the case before Chu J had to some extent misdirected the judge’s focus to some bad points which the learned judge quite rightly held against them.  Bearing in mind the circumstances leading to the application (including the abandonment of amendments for which leave had been granted on 28 April 2003).  We do not see fit to disturb the costs order made by Chu J.

9.  As regards the costs of the appeal between the 1^st Petitioner and the 3^rd and 4^th Respondents, given that we have already mitigated the unfairness to the Respondents on account of the appeal succeeding on a new point taken in the manner we dealt with the costs below, we see no reason why costs of the appeal should not follow event.  For reasons already given, we do not think our discretion should be fettered by a general rule that in this sort of situation, the successful appellant must be deprived of his costs here and below.  We think Mr Chain is correct in pointing out that for reasons set out in our judgment of 16 April 2004, the striking out application by the 3^rd and 4^th Respondents against the 1^st Petitioner could not succeed.  The 3^rd and 4^th Respondents had advanced arguments to resist the appeal based on the new point at the hearing of 31 March 2004.  We see no reason why they should not be liable for the costs consequence flowing therefrom.

10.  Mr Leong contended that the 3^rd and 4^th Respondents were successful in striking out the allegations of fraud.  Mr Chain submitted that he had made it clear at the hearing of the appeal that he did not rely on those allegations.  We took these into account when we decided that the Petitioners should pay the costs below.  Given that virtually no time was spent on the question of fraud at the hearing of the appeal (although there was reference to it in the skeleton submissions of Mr Leong), we do not regard this as a justification for varying our costs order nisi in respect of the costs of the appeal.  

11.  For these reasons, subject to what we shall say in the following paragraph we shall make an order absolute in the same terms as our costs order nisi.

12.  As regards the costs flowing from the abandonment of the appeal by the 2^nd Petitioner and the costs of the appeal against the 5^th Respondents, Mr Chain conceded that he could not resist an order for costs in favour of 3^rd to 5^th Respondents against the 2^nd Petitioner and an order for costs in favour of the 5^th Respondent against the 1^st Petitioner.  However, he submitted that there were very little additional costs incurred in the appeal flowing from that.  Mr Leong submitted that it is a matter for taxation.  Although the additional costs in those regards might be minimal, we are unable to say that they could safely be ignored.  We will therefore make an order in those terms and leave the matter for taxation.         

13.  As regards the costs of the 1^st and 6^th Respondents occasioned by the adjournment, Chu J’s order of 2 May 2003 in this regard specifically provided for the possibility of further directions being given by this court.  Of course, Chu J could not have envisaged the 1^st Petitioner succeeded on a point that had not been taken before her.  There is therefore room for revisiting the subject.  As Chu J would be more familiar with the circumstances and the reasons behind the adjournment and the 1^st and 6^th Respondents are not before us, we think it is more appropriate to remit the question back to Chu J for her decision in the light of our judgment on the merits of the appeal.

14.  As for the costs of the hearing on 24 September 2004, although Mr Leong succeeded in procuring a slight variation of our cost order nisi as per Paragraph 12 above, neither party won in the main contest.  In the circumstances, we will make a cost order nisi that each party bears his/her own costs for this hearing.