PEAK PERFORMANCE HEAD OFFICE SERVICES LTD AND ANOTHER v. CHEUNG PUI YEE DENISE

HCA 741/2021

[2022] HKCFI 3610

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 741 OF 2021

______________

BETWEEN

____________________

_______________________

REASONS FOR DECISION
AND SUMMARY ASSESSMENT OF COSTS

_______________________

A.    INTRODUCTION

1.  On 15 September 2022, I handed down a decision[1] whereby I:

(1) ruled that the Judgment was a regular default judgment;

(2) dismissed the defendant’s application to adduce further evidence on appeal;

(3) set aside the Judgment on the ground that the defendant’s case is supported by evidence which is potentially credible and carries some degree of conviction. I therefore allowed the appeal by the defendant from the Master who had dismissed her application to set aside the Judgment.

2.  In relation to the application to adduce further evidence, I said:[2]

“In light of the above, I am of the view that the application to adduce additional evidence on appeal must be dismissed. There is no need for me to address the other two conditions under Ladd v Marshall and I will not do so. I order that the Summons of 11 May 2022 be dismissed with costs to the plaintiffs, to be taxed if not agreed” (“the 1^st Costs Order”).

3.  In relation to the appeal from the Master, I said:[3]

“As for costs, since the Judgment was entered regularly, I make an order nisi that the costs of the appeal be paid by the defendant to the plaintiffs, to be taxed if not agreed. The costs order made by the Master shall remain” (“the 2^nd Costs Order”).

4.  By Summons dated 29 September 2022 but only filed on 30 September 2022 (“the Variation Summons”), the plaintiffs apply for a variation of the two costs orders I made, for the costs payable thereunder to be summarily assessed by me instead of taxation.

5.  It is to be noted that the Variation Summons was filed 15 days from the date of the Decision, and was therefore filed one day after the time provided for under Order 42, rule 5B(6), of the Rules of the High Court[4] had expired. In light of that, by another Summons dated 20 October 2022 (“the Time Summons”), the plaintiffs ask for an extension of time for them to file the Variation Summons.

6.  Further, while the 2^nd Costs Order is expressly said to be on a nisi basis, the 1^st Costs Order is not. Thus, the question arises as to whether that 1^st Costs Order can be varied, or is an order absolute which I cannot vary.[5]

7.  Thus, three issues arise before me:

(1) Whether I should allow the Time Summons;

(2) If so, whether the 1^st Costs Order is in fact an order nisi which is variable;

(3) Whether I should vary the 1^st Costs Order (if I answer both questions (1) and (2) in the affirmative) and the 2^nd Costs Order (if I answer question (1) in the affirmative).

8.  At the end of the hearing before me on 1 November 2022, I allowed the Time Summons and the Variation Summons, and gave directions for summary assessment. I said I would hand down my reasons for the decision at the same time as I summarily assess the costs. These are my reasons for allowing the Time Summons and the Variation Summons, and my assessment of costs.

B.    THE TIME SUMMONS

9.  It is fairly and correctly accepted by Ms Tina Mok, counsel for the defendant, at the hearing before me that, notwithstanding the expiry of the 14-day period referred to in Order 42, rule 5B(6), I have the jurisdiction to allow an extension of time under Order 3, rule 5, for the plaintiffs to apply for a variation under the Variation Summons. As Lisa Wong J said in Chainrai v Kushnir Family (Holdings) Ltd:[6]

“That the court may grant an application for an extension of time for an application to vary a costs order nisi made after the expiry of the 14 day period prescribed in Order 42, rule 5B(6) is made clear by Ma Wan Farming Ltd v Chief Executive in Council [1998] 2 HKLRD 314 (CA)”.

10.  In Ma Wan Farming Ltd v Chief Executive in Council,[7] Liu JA said:[8]

“The question for our consideration is, therefore, whether the time limit laid down by O.42 r.5B(6) should be extended by some six days to 17 April 1998 when the appellant purportedly applied pursuant to O.42 r.5B(6) for what it regards as a proper order for costs. Rule 5B(6) would implicitly authorise a party to apply to vary an order nisi as to costs within 14 days after a written judgment is handed down. Clearly, the period of 14 days is a time prescribed by the Rules of the High Court (Cap.4, Sub.Leg.) for the doing of an act in any proceedings. Order 3 r.5 and the inherent jurisdiction penned in by O.59 r.10 would allow such a time to be extended. Whatever consequences flowing from an extension are considerations for the exercise of discretion…

… If an extension were granted for making an application under O.42 r.5B(6), the order nisi would not become absolute because it shall become absolute ‘unless an application has been made to vary’ it within the time prescribed or extended. The order nisi may be made absolute if the application is dismissed or otherwise made final subject to some variation if the application succeeds. The order nisi may be altogether replaced”.

11.  In Tang Man Kit and Foo Tak Ching (suing as Managers of Wah Yan Mo Fan Heung),[9] Cheung JA[10] said:

“9. I am further of the view that Ma Wan Farming Limited was correctly decided. Liu JA held that Rule 5B(6) implicitly authorizes a party to apply to vary an order nisi within 14 days. As the 14 days is a time prescribed by the Rules for the doing of an act in any proceedings, Order 3, Rule 5 and Order 59, Rule 10 (inherent jurisdiction), would allow such a time to be extended.

10. I think the reasoning is sound and supported by the wording of Order 3, Rule 5(1) which provides that

‘5.(1) The Court may, on such terms as it thinks just, by order extend or abridge the period within which a person is required or authorized by these rules, or by any judgment, order or direction, to do any act in any proceedings.’ (emphasis added)

As Rule 5B(6) provides for 14 days for a party to vary the order nisi, Order 3 Rule 5(1) is engaged. Once there is jurisdiction to extend time, the application to extend time can be made either before or after the time prescribed by the rules. This is also clear from Order 3, Rule 5(2) which provides that

‘(2) The Court may extend any such period as is referred to in paragraph (1) although the application for extension is not made until after the expiration of that period.’

11. This reasoning is supported by authorities such as Manley Estates Ltd. v. Benedek [1941] 1 All ER 248 and Regina v. Bloomsbury & Marylebone County Court ex parte Villerwest Ltd [1976] 1 WLR 362. The fact that Rule 5B(6) provides for an eventual event, namely, the order becoming absolute is not a basis for excluding the jurisdiction. In terms of logic, it is no different from, for example, an order giving judgment or dismissing an action unless a party perform certain acts within a specified period. In such a case, the court still has jurisdiction to extend time for the act to be done after the period has expired. While I appreciate the requirement of finality of a decision, the rationale for making a provisional order on costs is that arguments have not been heard and hence the parties are given time to vary the order. This being the case it is inconceivable that the jurisdiction to vary the costs order can only be exercised if an application is made within the 14-day period but not otherwise. This being the case, Ma Wan Farming Limited is binding on this Court and hence the Court retains jurisdiction to extend time”.

12.  The next question is whether I should grant the time extension.

13.  The reason for the late filing of the Variation Summons is explained in the third affirmation of Mr Khatab Amar, a clerk employed by HFW. His evidence is that the Variation Summons was signed by Mr George Lamplough, the partner in charge of this matter, on 29 September 2022, the last day of the 14-day period under Order 42, rule 5B(6). However, when Mr Amar went to file the Variation Summons later that day, he mistakenly thought that the Summons was to be heard by a Master, so he went to the Master Clerks Office. When told there that the Summons was to be heard by me rather than a Master, Mr Amar then went to the Clerk of Court’s Office (Civil Registry), but it had already closed for the day. Mr Amar then filed the Variation Summons in the morning of 30 September 2022.

14.  This account is sensibly not challenged by Ms Mok and I accept it.

15.  In these circumstances, in my view I should exercise my discretion to allow the Time Summons. The delay is short, being less than 24 hours. The reason for the short delay is due to a rather unfortunate misunderstanding of those acting for the plaintiffs and should not be visited upon the plaintiffs. There is, again very sensibly, no serious challenge by Ms Mok at the hearing before me that, having correctly accepted that I do have the jurisdiction to extend time under Order 3, rule 5, that I should not grant it.

16.  I therefore allowed the Time Summons.

C.    IS THE 1^ST COSTS ORDER VARIABLE?

17.  The next question is whether the 1^st Costs Order is an order nisi so that I can vary it upon the application by the plaintiffs.

18.  The fact that a costs order is not expressly stated to be a nisi one does not necessarily mean that it is not. In Kung Kwok Wai David v Commissioner of Estate Duty,[11] Chow JA (sitting as an additional judge of the Court of First Instance) said:[12]

“In my view, a simple order as to costs made by the court, without more, should be regarded as an order absolute, and not an order nisi”.

19.  However, his Lordship did not seem to be suggesting that that is an inflexible rule. Rather:

(1) He referred inter alia to the decision of Mimmie Chan J in Re Leung Yat Tung[13] where her Ladyship said:[14]

“I agree with the OR, that the costs order in the Decision is an order nisi by virtue of the provisions of O 42 r 5B, without the need for express specification”.

Although Chow JA said that in that case both the creditor and the Official Receiver considered the costs order to be an order nisi, with no arguments to the contrary being made, and it is not clear if there was any indication by her Ladyship at the hearing when the costs order was made whether she intended the costs order to be absolute or nisi, he did not say that the quoted proposition is in itself wrong.

(2) Chow JA then said:[15]

“At §6.3.4 of Ms Wong’s Skeleton for the Commissioner dated 19 January 2022, she puts forward a slightly different proposition, namely, that as a general principle, ‘where the court makes a costs order in a decision handed down after the hearing, and before the issue of costs has been fully addressed, such an order is by nature provisional and subject to an application for variation within 14 days’. I have italicised the words ‘and before the issue of costs has been fully addressed’ because whether the parties have been given an opportunity to address the court on the issue of costs goes primarily to the question of whether it would be appropriate for the court to make a costs order absolute or a costs order nisi. If the court has not heard the parties at all on the issue of costs but proceeds to make an order which on its face is absolute, it may be that the court’s true intention is to make an order nisi, but whether that is so depends on the facts and circumstances of the case. I should also add that the extent of arguments which may properly be entertained by a court on an issue of costs is a case management matter. In many cases, it should be possible for counsel to address the court on the issue of costs briefly. Extensive citation of authorities or elaborate arguments on the facts or conduct of the parties to the litigation would normally not be necessary. The court, having read the papers and heard the case, should already have a fairly good grasp of where the justice lies in relation to the issue of costs”.

(3) Chow JA said[16] that in the case before him, it was clear that the Court did not intend the costs order to be an order nisi, as he had invited counsel to make submissions at the hearing.

20.  It would therefore seem to me that, according to Chow JA, whether a costs order which is “on its face” absolute should nevertheless be regarded as in substance an order nisi is a matter of intention of the Court, and an important factor is whether the Court has heard the parties at all on the question of costs. The fact that there is no express reference to the word “nisi” is not in itself fatal to an application to vary.

21.  In this case, I did not hear the parties on the question of costs for the application to adduce further evidence at all before I made the 1^st Costs Order, as I did not rule on the application at the time, but reserved my decision thereon together with the appeal from the Master itself. In the circumstances, I did not have any intention to shut out either party from making any submissions on costs once my decision on the application, and the reasons therefor, are known. To have intended otherwise would have been unjust.

22.  I therefore ruled that the 1^st Costs Order is an order nisi in substance which can be varied by me, if I consider appropriate to do so.

D.    SHOULD THE COSTS ORDERS BE VARIED?

23.  As to the merits of the Variation Summons, as I said above, the plaintiffs ask for summary assessment by me rather than taxation.

24.  Mr Lamplough submits that making an immediate costs order relating to interlocutory applications and making summary assessments achieve the underlying objectives stated at Order 1A, rule 1. He refers to the Final Report of the Chief Justice’s Working Party in Civil Justice Reform which states:[17]

“The court should, whenever appropriate (whether as a response to an unwarranted application or unwarranted resistance to an application, with a view to saving costs or otherwise), make a summary assessment of costs when disposing of interlocutory applications”.

25.  Mr Lamplough also refers to what was said by Coleman J in Predicine Holdings Ltd v Bianchi (Hong Kong) Ltd:[18]

“31. It also seems to me that, at least since CJR, the courts are more ready to deal with costs of interlocutory applications by making final orders, rather than putting them off to await the final outcome of proceedings. It might also be noted that the King Fung Vacuum case was decided before CJR (and the consequent amendment of the RHC), and I do not think there have to be ‘very special circumstances’ before a court might consider the particular circumstances of a case as justifying giving the successful party his costs in any event or an immediate order as to costs.

32. The words ‘very special circumstances’ are not to be found in (the new) Order 62 rule 5, and those words appear to fetter the otherwise broad discretion. Instead, the rule identifies what the court shall take into account, to such extent if any as may be appropriate in the circumstances. Amongst the matters that the court should take into account, perhaps being appropriate in every set of circumstances, are the underlying objectives set out in Order 1A rule 1. Those objectives include increasing the cost-effectiveness of any practice and procedure to be followed in relation to proceedings before the court, and promoting a sense of reasonable proportion and procedural economy in the conduct of proceedings, as well as ensuring fairness between the parties and facilitating settlement of disputes. One way of achieving those objectives is, when appropriate, making immediate costs orders relating to interlocutory applications (and making summary assessments), so that the parties know where they are on costs as the proceedings progress, rather than leaving matters ‘hanging over’ to the end, with the degree of uncertainty that entails.

33. Further, it is recognised that the lack of immediacy of orders to pay costs ‘in the cause’ or ‘in any event’ weakens costs as a sanction against unwarranted applications or resistance. If further authority is needed for such an approach, see for example Wing Fai Construction Co Ltd v Yip Kwong Robert (No 2) (2012) 15 HKCFAR 454 at §5, approving the approach adopted in Midland Business Management Ltd v Lo Man Kui (No 2) [2011] 2 HKLRD 667 at §9.

34. The court shall, to the extent appropriate, also take into account the conduct of the parties, including whether it was reasonable for a party to raise or pursue or contest a particular allegation or issue, and the manner in which the party has done so. In this case, it seems to me to have been entirely reasonable for P to have sought both forms of injunction as were sought”.

26.  In my judgment, it is appropriate to order summary assessment of the costs under the two costs orders, for the following reasons:

(1) The costs orders were made in discrete proceedings which the defendant is liable under. There is no reason to keep the plaintiffs from the costs for an uncertain period of time.

(2) In so far as the conduct of the parties is concerned, I note that, for the application to adduce further evidence, I have ruled that the defendant had failed to show that she could not have obtained the further evidence with the exercise of reasonable diligence, and thus the application was entirely due to her failure to marshal her defence properly before the Master.

(3) As for the appeal from the Master regarding the setting aside of the Judgment, the application to set aside was necessitated because the defendant, despite (as I have found) having notice of the Writ of Summons, in effect allowed the Judgment to be entered by default.

(4) As both the application to adduce further evidence, and the appeal (although allowed), can be said to have been necessitated by the defendant’s own fault, they are in the same category as “unwarranted” applications or oppositions in the sense that an immediate costs order should be made as sufficient sanction. In such circumstances, with no complaint as to the incidence of costs against her, I cannot accept the submissions of Ms Mok that to order summary assessment is to tilt the balance of fairness against her unjustly.

(5) Summary assessment in these circumstances is more conducive in achieving the underlying objectives, as explained by Coleman J.

27.  As Mr Lamplough notes, none of the scenarios stated at Order 62, rule 9C, disallowing summary assessment applies. Ms Mok does not suggest otherwise.

28.  Mr Lamplough also relies on the fact that the costs awarded by the Master on 11 February 2022 remain unpaid by the defendant, and he says this is also a factor in favour of ordering summary assessment. I am not sure if that is a relevant consideration and it is not necessary for me to rely on it.

29.  I therefore allowed the Variation Summons.

E.    DISPOSITION

30.  For the above reasons, I allowed the Time Summons and the Variation Summons.

31.  As for costs of those two Summons, while in principle the plaintiffs ought to pay the costs of the Time Summons and the defendant ought to pay the costs of the Variation Summons, to save further costs I will doing a broad brush netting off and order that the defendant do pay to the plaintiffs 60% of the costs of the Variation Summons and of the hearing before me on 1 November 2022, and there be no order as to costs of the Time Summons. Such costs are also to be summarily assessed at the same time.

32.  I have considered the bill of costs provided by the plaintiffs and the objections thereto by the defendant. Taking a broad brush approach, I summarily assess the costs under the 1^st Costs Order, the 2^nd Costs Order, and the costs referred to at [31] above at HK$350,000, to be paid by the defendant to the plaintiffs forthwith.

33.  I thank Mr Lamplough and Ms Mok for their assistance.