TSANG WOON MING v. LAI KA LIM also known as LAI KAI LIM AND OTHERS

HCCW 407/2016

[2020] HKCFI 2404

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO. 407 OF 2016

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D E C I S I O N

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1.  This is Tsang’s[1] application to vary the costs order nisi in the Judgment herein dated 10 July 2020. See paras 140 to 142 of the Judgment. The application is confined to the costs of the Petition which were awarded against him in accordance with the outcome of the trial.

2.  The ground for this application is that the Respondents had raised many counter-allegations of misconduct against Tsang, and lost on all of them with the exception of Tsang’s refusal to hand back the Share (see para 23 of the Judgment).

3.  It is right to point out that the allegation against Tsang that he had taken the petty cash of Centre without justification was a very serious one, which was rejected by the court (see Judgment, para 130).  Allegation of such kind tends to further antagonise the party under attack, who may feel the need to defend his honour in court. 

4.  Further, it was found by the court that some of the allegations made by the Respondents were not supported by evidence, but driven by Ms Li’s overzealous investigation of the affairs of the Group (Judgment, para 123).

5.  The costs of the trial were apportioned by the court amongst the 3 actions.  To some extent, the apportionment reflected the duplication of the issues in the Petition and Action 2.  However, the issues in the two proceedings were not identical (Judgment, paras 14-19).  This takes some wind out of the Respondents’ argument that to deny them of part of the costs of the Petition would amount to double counting in light of the duplication of issues between the Petition and Action 2. 

6.  It has been well-demonstrated by the volume of counter-allegations contained in the Re-Amended Points of Defence (some 14 pages of them) and the evidence adduced in support and in contradiction thereof that much of the costs of the trial of the Petition had been wasted by reason of the Respondents’ failed allegations. 

7.  It should be pointed out that some of the less serious allegations, eg, the receipt of director’s fees by Tsang, were not pressed by the Respondents (Judgment, para 112) because it was pointed out by the court in the course of the trial that the merits of these allegations were questionable. 

8.  Finally, in respect of the allegation which was upheld against Tsang, the transfer of the Share to Nobility, it was the subject matter of Action 3 and the costs of which had been awarded against him.

9.  In the circumstances, I am persuaded that the existing costs order in respect of the Petition does not fully reflect the justice of the case.  The costs of those proceedings had been inflated by the failed counter-allegations.  I bear in mind the principles set out in SNE Engineering Co Ltd v Hsin Chong Construciton Co Ltd, HCA 1466/2012, unrep, 23 June 2015, §§44-51.  I am satisfied that the normal order for costs to follow the event should be adjusted to do justice between the parties.

10.  As regards the appropriate adjustment, I take into account the Respondents’ point that one of the main counter-allegations, failure to provide a complete accounting record (Judgment, para 23), was made in response to Tsang’s case that the Respondents had not fulfilled their obligations to make monetary contributions to Nobility.  On the other hand, the Respondents continued to press the counter-allegation despite the fact that this part of Tsang’s case did not feature at the trial (Judgment, paras 22 and 104-111).

11.  Further, I agree with the Respondents that the court would take a reasonably board-brush approach on costs adjustment.

12.  For these reasons, the costs order nisi in respect of the Petition is varied such that Tsang is to pay 75% of the costs of the Respondents, to be taxed if not agreed.  In this revision, I have borne in mind the costs order made in Action 2 and Action 3 and the overlap of issues. 

13.  In respect of the costs of this application, Mr Cheung, who appeared for Tsang, had very fairly submitted that there are cases where an application to vary a costs order nisi were regarded as part of the costs of the trial.  Mr Yip, who appeared with Ms Lau for the Respondents, submitted that normally costs arguments are part of the costs of the trial.  If judgment were not reserved, costs arguments would have been dealt with.

14.  First of all, reserved Judgment is very much the norm now given the complexity of modern litigation, the length of submissions and the volume of authorities cited to the court.

15.  In this case, a normal order that costs follow the event had been made in the Judgment, albeit on nisi basis.  There was ample opportunity for the Respondents to consider the merits of this application before the hearing, and to make a counter-offer to Tsang to avoid a contested hearing.  No such attempt was made.  Tsang had to come to court to vary the order nisi and succeeded.  The court should encourage the parties to resolve their differences amicably.

16.  The circumstances before the court justify a costs order in favour of Tsang for this application, to be taxed if not agreed.  I so order.

17.  I am grateful to counsel for their assistance.