SUCCESS LANE DEVELOPMENT LTD v. FERGURSON HONG KONG LTD t/a NEW WORLD MILLENNIUM HONG KONG HOTEL

DCCJ 2191/2023

[2024] HKDC 1222

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2191 OF 2023

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BETWEEN

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DECISION

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APPLICATION

1.  By the Summons dated 16 April 2024 (“Present Summons”), the Plaintiff (“P”) seeks leave to appeal from the 3 summary assessments of costs made by this Court on 2 April 2024.

PROCEDURAL HISTORY

2.  The background and the procedural history of the present action has been concisely set out in the Injunction Decision[1], the Injunction VOC Decision[2] and the Leave Decision[3] (collectively, “Three Decisions”), which I should not repeat in details here. For convenience, the abbreviations used therein are adopted for this decision unless otherwise stated. For the present purpose, it may be convenient just briefly set out the relevant procedural history as follows.

3.  The dispute in the present action concerns the right of the defendant (“D”), the proprietor of a hotel, to detain, and thus has a lien, upon, the belongings brought by P through its directors into D’s hotel in respect of unpaid room rentals and/or storage fees.

4.  On 2 June 2023, P commenced the present proceedings. Ms Yung Mei Chun Jessie (“Ms Yung”) filed an affirmation for the purpose of conducting the present proceedings for P as its director under Order 5A of the Rules of the District Court, Cap. 336H (“RDC”).

5.  On the same day, Ms Yung made the first urgent ex-parte without notice application (“First Ex-parte Application”) for P for an injunction order. The application was dismissed by HHJ Harold Leong.

6.  On 12 July 2023, Ms Yung made another urgent ex-parte without notice application for P for an injunction order of almost identical terms of the First Ex-parte Application (“Second Ex-parte Application”). During the ex-parte hearing, HHJ E Yip ordered in terms of P’s draft order annexed to the ex-parte Summons, being the Ex-parte Injunction Order[4].

7.  After the Ex-parte Injunction Order was served on D on 16 July 2023, D then made the Stay Application (with notice to P) on 18 July 2023. This Court granted the Stay Order with costs be reserved[5]. P did not attend that hearing.

8.  On 19 July 2023, P applied for continuation of the Ex-parte Injunction Order by way of inter-parte Summons (“Injunction Application”).

9.  By the Injunction Decision, this court dismissed the Injunction Application with a costs order nisi in favour of D (“Injunction Costs Order Nisi”).

10.  By the Summons dated 9 October 2023 (“D’s Injunction VOC Application”), D applied to vary the Injunction Costs Order Nisi. By §36 of the Injunction VOC Decision, this Court made the Injunction Costs Order Absolute (“Injunction Costs Order”).

11.  By §37 of the Injunction VOC Decision, this Court ordered P to pay the costs of D’s Injunction VOC Application to D (“Injunction VOC Costs Order”).

12.  In parallel, P took out the Two Summonses[6] respectively for leave to appeal against the Injunction Decision and to adduce new evidence for the purpose of the appeal. By §89(2) of the Leave Decision, the Two Summonses were dismissed with costs to D (“Leave Costs Order”).

13.  On 15 March 2024, P took out three Summonses essentially to challenge the liability and/ or the mode of quantification of the Injunction Costs Order, the Injunction VOC Costs Order and the Leave Costs Order (collectively, “Three Costs Orders”).

14.  On 2 April 2024, this Court summarily assessed the amounts of the costs under the Three Costs Orders respectively as follows:-

(1) Pursuant to the Injunction Costs Order[7], D’s costs of the Injunction Application, of the Stay Application, including the costs of the hearing on 18 July 2023, the Return Hearing and the Substantive Hearing of the Injunction Application and all costs reserved, if any, with certificate for counsel, on an indemnity basis, were summarily assessed at HK$150,000 (inclusive of Counsel fees at HK$65,000) (“Injunction Costs”);

(2) Pursuant to the Injunction VOC Costs Order, D’s costs of the D’s Injunction VOC Application, including all costs reserved, on party and party basis, were summarily assessed at HK$23,000 (“Injunction VOC Costs”);

(3) Pursuant to the Leave Costs Order, D’s costs of the Leave Summons[8] , including all costs reserved, with certificate for counsel, on party and party basis, were summarily assessed at HK$32,000 (inclusive of Counsel fees at HK$20,000) (collectively, “Leave Costs”).

(Injunction Costs, Injunction VOC Costs, Leave Costs, collectively as, “Assessed Costs”)

15.  Dissatisfied with the Assessed Costs, P took out the present Summons to seek leave to appeal from the Assessed Costs.

LEGAL PRINCIPLES

16.  Leave to appeal on costs shall not be granted unless this court is persuaded that the intended appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard.

17.  Reasonable prospect of success connotes the prospect of success must be reasonable and more than fanciful, without having to be probable: SMSE v KL [2009] 4 HKLRD 125.

18.  The Appellate Court has stressed repeatedly that costs is very much a matter of discretion for the judge and the Court of Appeal would be very circumspect in intervening with the exercise of a judge’s discretion in the award of costs unless it was shown that the judge failed to exercise the discretion or exercised upon a false principle, or did not exercise it judicially, or the exercise of discretion was demonstrably flawed.

19.  The judge is the best person to exercise the discretion on costs because he is most familiar with the conduct of the case and the impact of the success and failure on each issue canvassed before him. The mere fact that the appellate judges might have exercised the discretion in a different manner is not a sufficient ground to warrant interference with the decision of the primary judge: see Progetto Jewellery Co Ltd v Lau Chiu Ying and Another [2022] 2 HKLRD 845 §§36-38.

20.  As regards summary assessment, the principles are laid down in Poon Shu Fan v Wong Tin Yan [2012] 5 HKLRD 512 as summarized in Hong Kong Civil Procedure 2024 at §62/9/10 as follows:

“First, the court will take a global approach, which will indicate if the total sum claimed is or appears disproportionate - if the costs as a whole are not disproportionate, then all that is required is each item of cost should be reasonably incurred. Where the costs as a whole appear disproportionate, the court will need to be satisfied that each item was necessary. … The conduct of the other party is also “highly relevant”, as by their co-operation, costs can be reduced, or if they are unco-operative, costs may be increased. In this context, it is acceptable for the paying party to have to pay for otherwise unnecessary expenses made necessary by their unco-operativeness.”

21.  With these principles in mind, I now turn to deal with P’s application.

INTENDED GROUNDS OF APPEAL

22.  The starting point is the Assessed Costs were confined solely to the quantum (amount) of the Three Costs Order.

23.  There was no draft Notice of Appeal submitted by P. Nor was there any submissions as to how and why the Assessed Costs were wrong in P’s submission in support of the Present Summons dated 13 May 2024. P failed to identify any error or unreasonableness in the figures (amounts) of the Assessed Costs. Thus viewed, the Present Summons should be dismissed.

24.  Indeed, all of the P’s criticisms therein were leveled against the costs claimed by D in the D’s Statement of Costs. P criticized those costs to be unnecessary, unreasonable and/ or excessive etc by essentially repeating its grounds of objection as set out in its Lists of Objections, which have already been considered by this Court in arriving at the Assessed Costs. P failed to show how the Assessed Costs were wrong.

25.  Despite D’s complaints of P’s failure in identifying any error of the Assessed Costs in P’s Supporting Submissions, P, in its Reply Submissions, still failed to specify its intended grounds of appeal other than just summarized the implication of the Assessed Costs in §2 as follows:-

(a) For the Injunction Costs, only 31.8% of the costs claimed by D was allowed by this Court (from HK$470,535.55 to HK$150,000);

(b) For the Injunction VOC Costs, only 30.4% of the costs claimed by D was allowed by this Court (from HK$75,635.55 to HK$23,000);

(c) For the Leave Costs, only 42.4% of the costs claimed by D was allowed by this Court (from HK$75,413.55 to HK$32,000).

26.  Premised on such “discount percentages” of 31.8%, 30.4% and 42.4%, P did not raise any solid challenge about the Assessed Costs. Instead, it went to criticize D to have excessively inflated the costs claimed by repeating its oppositions as stated in its Lists of Objections, and finally, merely resorted to some general principles to complain this Court to have misapplied those principles during the assessment process. However, such general complaints cannot amount to valid grounds of appeal.

27.  Plainly, the general complaints that this Court had failed to follow the second stage of the “two-stage approach” by proving that each item was necessary and that D failed to justify its inflated costs were not valid grounds for disputing the quantum of the Assessed Costs.

28.  It is beyond dispute that in arriving the final figures of the Assessed Costs, which have substantially reduced the costs claimed by D, this Court undoubtedly had gone through the second stage by assessing and cutting down the items and the amounts of costs claimed by D.

29.  Merely making references to some general principles does not assist P. Besides, plainly repeating its arguments on challenging the Injunction Decision does not advance P’s position any further. As P admitted, the Assessed Costs “is not a decision regarding liability” [9]. It only goes to quantum. To succeed the present application, P has to identify and justify why and how the amounts of the Assessed Costs were wrong. P has not.

30.  Much has been said about P’s other applications before another Judge subsequent to the Injunction Application as well as its applications for leave to appeal against some of the decisions of the Learned Judge. However, P failed to actually substantiate how such subsequent decisions of another Judge would have rendered the Assessed Costs wrong.

31.  I should not repeat P’s arguments on its preference for taxation rather than summary assessment and immediate payment, which were the subject matters of its other applications for leave to appeal or variation of costs orders. Suffice it to say that such arguments are plainly irrelevant to the present application for leave to appeal against the quantum of the Assessed Costs.

32.  As a last resort, P related back to its Lists of Objections to contend that the “final figures should accord with P’s list of objections lodged on 14 March 2024”. It contended that the Injunction Costs should be HK$46,974; the Injunction VOC Costs should be HK$8,000; the Leave Costs should be HK$10,000 (collectively, “Alleged Figures”).

33.  Such contention is hopeless. The Alleged Figures are unrealistic and apparently too low. P has apparently failed to take into account all the relevant circumstances in proposing the Alleged Figures.

34.  P should have been aware that D’s claim for the two fee earners respectively admitted in 2003 and 2017, with hourly rates of HK$3,860 and HK$2,600, were in accordance with the Guide for Solicitors’ Hourly Rates and, hence, should be accepted in full.

35.  No doubt, in assessing the costs pursuant to the Three Costs Order, the time spent and the efforts made by the two fee earners and the junior counsel should be considered by taking into account all the relevant circumstances including, the following factors : -

(a) The same two solicitors and the junior Counsel (admitted in 2022) have been engaged to represent D in this action no later than June or July 2023. Their familiarity with the law and the facts concerned in this case increased as the proceedings progressed;

(b) The nature and complexity of the relevant applications;

(c) All those applications before this Court were indeed originated from and premised on P’s Second Ex-parte Application for the Ex-parte Injunction Order. The extent of reused affirmations, submissions and authorities across the various applications in this action should be scrutinized to avoid duplication of work as well as overqualified personnel for the level of complexity of the work.

ASSESSMENT 1- INJUNCTION COSTS

36.  By a proper assessment, looking at all the relevant circumstances in the round, the Alleged Figures are excessively low for the following reasons.

37.  For the Injunction Costs, even though D’s claim for the costs in the sum of HK$470,535.33 (inclusive of Counsel fees at HK$175,000) was disproportionately high, P’s Alleged Figures of HK$46,974 was unrealistically low. P ignored the fact that D’s costs were to be assessed on an indemnity basis which would only disallow the costs that were unreasonably incurred or of an unreasonable amount. Thus, D’s costs should be allowed as follows :-

Section A : General Information :

The hourly rates of the two fee earners were in conformity with the Guide for Solicitors’ Hourly Rates and should be accepted.

Section B : Manual Work

The items claimed were mechanical or fixed costs. They left little room for adjustment save that the hearing bundle could be slightly trimmed down. A sum of HK$5,500 should be allowed.

Section C : Communications

Given the seniority of the two fee earners and the nature of the interlocutory application, the costs should be reduced to better reflect the time required for effective communication and proper delegation of work to LHY. That said, due consideration should be given to the fact that there were 3 hearings (2 of them were hotly contested), in between, there were amendments of pleadings giving rise to new arguments and exchange of correspondences. Hence, the costs should only be reduced to HK$18,000.

Section D : Professional Work

The costs should be adjusted downwards in view of the facts that Counsel was instructed to settle some of the documents and attend all those three hearings, that the complexity of the Injunction Application and the Stay Application did not warrant 2 fee earners performing the same tasks and better delegation of work to LHY was required, the costs claimed for general care and conduct should not be allowed for a short-lived interlocutory application.

On the other hand, due regards should be given to the fact that those were hotly contested applications involving three hearings and a number of arguments. A realistic assessment should be HK$61,500.

Section E : Disbursement

Counsels Fee should be adjusted to HK$65,000 in view of the seniority, expertise, and the complexity of the Injunction Application and Stay Application.

The total costs should be HK$150,000.

ASSESSMENT 2- LEAVE COSTS

38.  For the Leave Costs, D’s claim for opposing the Leave Application in the sum of HK$75,413.33 was disproportionately high whereas P’s Alleged Figures of HK$10,000 were too low. A realistic assessment of the costs on a party and party basis by allowing the costs that were necessary and proper should arrive at :-

Section A : General Information :

(same as above)

Section B : Manual Work

The items claimed were mechanical or fixed cost that should be accepted in the sum of HK$740.

Section C : Communications

A sensible assessment for the costs of communication for such an application for leave to appeal on papers would arrive at HK$4,500, giving due consideration for avoidance of duplication of work by the 2 fee earners and better delegation of work to the junior fee earner.

Section D : Professional Work

The costs claimed should be reduced to HK$6,760 due to the two fee earner’s familiarity with the case, the instruction of the same Counsel to handle the application and the complexity of the application. The costs claimed for general care and conduct should not be allowed for a short-lived application.

Section E : Disbursement

Counsel Fee should be adjusted to HK$20,000 in view of the seniority and expertise of the Counsel, who had handled the Stay Application and the Injunction Application, and the application was proceeded on papers without hearing.

The total costs should be HK$32,000, inclusive of Counsel fee at HK$20,000.

ASSESSMENT 3- INJUNCTION VOC COSTS

39.  For Injunction VOC Costs, D’s claim for making an application for variation of a costs order nisi in the sum of HK$78,635.33 was disproportionately high whereas P’s Alleged Figures of HK$8,000 were too low. A realistic assessment of the costs on a party and party basis by allowing the costs that were necessary and proper should be as follows :-

Section A : General Information :

(same as above)

Section B : Manual Work

The items claimed were mechanical or fixed cost and should be accepted in the sum of HK$612.

Section C : Communications

A sensible assessment for the costs of communication for such an application for variation of a costs order on papers would arrive at HK$2,915, giving due consideration for avoidance of duplication of work by the 2 fee earners and better delegation of work to the junior fee earner.

Section D : Professional Work

The costs claimed should be reduced to HK$19,473 due to the two fee earner’s familiarity with the case and the straight forward nature of the application. The costs claimed for general care and conduct should not be allowed for a short-lived application.

The total costs should be allowed at HK$23,000.

40.  Thus viewed, P’s Alleged Figures are excessively low and plainly unrealistic. It has no justified grounds for leave to appeal.

41.  Much reliance has been placed by P on the assessment of costs in several decided cases to argue that the amount of costs claimed by D should be so assessed accordingly. Such reliance was misplaced bearing in mind that assessment of costs are case-specific and fact-specific. It is unrealistic to draw direct comparison with the decided cases as the facts of each case was on its own.

42.  It is unfortunate that P seeks to overturn every single set of costs assessed by this Court in this intended appeal without actually elaborate how the figures have gone wrong, not to mention to justify how and why the Assessed Costs were disproportionate or unreasonable.

DISPOSITION

43.  Having considered all the submissions of both parties, I am not convinced that there is a reasonable chance that the appellate court would interfere with the discretion I exercised in arriving at the Assessed Costs. P plainly failed to put forward any solid intended grounds of appeal which have a reasonable prospect of success. There is no other reason in the interests of justice why the appeal should be heard. I refuse to grant P leave to appeal and dismiss its application accordingly.

44.  There is no reason why costs should not follow the event in this application. I order that P do pay D’s costs of this application, including all costs reserved, summarily assessed at HK$18,000, payable forthwith.