HUI SHU LEUNG v. WAH FUNG FOREST RESOURCES LTD AND ANOTHER

HCA 814/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 814 OF 2010

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REASONS FOR DECISION

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1.  This was an appeal from the order of Master K Lo dated 25 February 2013 staying the taxation of the plaintiffs bill of costs filed on 26 October 2012 until the conclusion of the action. At the conclusion of the hearing, the appeal was dismissed. The reasons appear below.

Background facts

2.  The first defendant (“the company”) is a company of which the sole shareholders and directors are the second defendant and a Mr Wong.  It was formed between the second defendant and Mr Wong to hold a property on Plantation Road purchased as a joint investment in 1991.

3.  In June 2010 the plaintiff commenced this action against the company asserting a beneficial interest in the property on the basis that he had advanced $500,000 between 2005 and 2009 but because Mr Wong (the only other director and shareholder of the company) took no steps about the action, on 11 February 2011, the second defendant obtained an order from Yam J that he “be authorised to act for on behalf of [the company] to deal with this action”.

4.  Master de Souza made two costs orders against the plaintiff in favour of the second defendant, on 23 September 2011 and 28 November 2011 respectively, arising out of summonses for further and better particulars and for dismissal of the action upon Mr Wong’s failure to comply with Master Levy’s order extending the time for providing the particulars sought. 

5.  On the plaintiff’s appeal against the costs orders on the ground that the second defendant, not being a party to the action, was not entitled to receive costs, by orders dated 25 June 2012 (“the June orders”), DHCJ Carlson allowed the plaintiff’s appeal and, in each case, awarded the costs of the appeal to the plaintiff but without identifying the payer.

6.  The plaintiff obtained an order on 31 July 2012 (“the July order”) joining the second defendant as the second defendant pursuant to Order 62, rule 6A of the Rules of the High Court for the purposes of costs only.  The second defendant was ordered to pay to the plaintiff the costs of awarded by the June orders and also the costs of the July order until 9 July 2012.

7.  Thereafter, the plaintiff sought to tax the costs payable by the second defendant under the July order by filing a notice of commencement of taxation on 25 October 2012.

8.  The second defendant applied to stay the taxation.  The summons came before the master who made the order staying the taxation leading to the present appeal.

9.  The action (HCA 814/2010) has not yet concluded.  Leave to set the case down for trial was granted on 4 July 2012.

The relevant provisions

10.  Order 62, rule 9D states:

“(1) Subject to paragraphs (2) and (4), the costs of any proceedings shall not be taxed until the conclusion of the action.

(2) If it appears to the Court when making a costs order that all or any part of the costs ought to be taxed at an earlier stage it may order accordingly.

(3) No order may be made under paragraph (2) in a case where the person against whom the costs order is made is the legally aided person.

(4) Where it appears to a taxing master that there is no likelihood of any further order being made in a cause or matter, he may order the person entitled to payment of the costs of any interlocutory proceedings which have taken place to commence taxation proceedings in accordance with rule 21.”

The issue

11.  The issue for determination was whether, in the present case, Order 62, rule 9D sub-rule (1) permits the taxation of interlocutory applications in the Court of First Instance prior to the conclusion of the action.

12.  Ms Lau, counsel for the plaintiff, informed the court at the outset of the hearing that she was not making any submissions on sub-rule (4).  Rather, it was said that her application was based solely on sub-rule (1).  It is to be noted that sub-rule (1) takes effect subject to sub-rules (2) and (4).  Sub-rule (2) is inapplicable in the present case since the relevant costs order did not provide for taxation forthwith.  In the circumstances, the fact that no submissions were being made on sub-rule (4) must be taken to mean that no reliance was being placed on sub-rule (4) either.  So, for present purposes, one has to consider the default provision of sub-rule (1), namely, that “the costs of any proceedings shall not be taxed until the conclusion of the action”.

13.  Ms Lau placed heavy reliance on the decision of the Court of Appeal in Do Ye Tong Doreen v Wai Hei Wan Wesley (No 2) [2011] 2 HKLRD 278.  That appeal concerned the costs of an interlocutory appeal from the Court of First Instance to the Court of Appeal.  The relevant passage from the judgment Rogers VP reads:

“5. Whatever might happen in the court below, in my view the practice in the Court of Appeal in respect of interlocutory appeals has always been that, if those are dealt with separately from the main action and if an appeal is brought to this court, in normal circumstances, once the appeal is disposed of, that would normally be the end of that particular aspect of the matter. The order for costs would follow and the parties would be entitled to tax their costs.

6. In my view, the new Order 62 rule 9D does not change that situation because it does not, in terms, deal with appeals and as far as I am concerned the same situation applies as it did before.   The appellant wishes to insert in the order the words ‘taxed forthwith’.   I see no objection to that.   But normally, if the words ‘taxed forthwith’ are used, that has a slightly pejorative connotation and would be avoided in order not to give offence.   Nevertheless, on this occasion, I am prepared to allow that to be inserted.”

14.  It was accepted that § 5 of the judgment in the Tong case was addressing interlocutory appeals from the Court of First Instance to the Court of Appeal only.  But as I understand it, Ms Lau submitted that the reasoning of Rogers VP in §§ 5 and 6 of his judgment in the Tong case, in particular, the statement that O.62 r.  9D “does not change the situation because it does not, in terms, deal with appeals … the same situation applies as it did before” is equally applicable to appeals from a master to a judge. 

15.  I do not consider that the judgment supports such a reading because, as accepted by Ms Lau, plainly § 5 was strictly confined to “an appeal brought to this Court” and’ in the context, that could only mean the Court of Appeal.  The judgment was not addressing and did not purport to address the practice in the Court below.  That is made clear from the opening phrase “[w]hatever might happen in the Court below”.  The focus of the entire judgment was on “an interlocutory appeal … dealt with separately from the main action” as the appeal that was brought to and disposed of by the court of appeal undoubtedly was.

16.  Again, in the context, the phrase “that situation” in the first sentence of § 6 is directly referable to the practice on interlocutory appeals to the Court of Appeal prevailing before the CJR brought in the new O 62, r 9D. The Vice-President opined that the new O 62, r 9D which “does not, in terms, deal with appeals” did not effect a change so that “the same situation” applies as it did before. 

17.  That the first sentence in § 6 was not a statement of principle applicable to appeals generally becomes clear when §6 is read with §4 of the judgment.  §4 shows that, based on the decision of Registrar Au-Yeung in Big Boss Investments Ltd v So Lai Kei [2010] 1 HKLRD 793), it had been argued in the Court of Appeal (of which I was a member) that “the amendments to O 62 r 9D, introduced by the Civil Justice Reform, had altered the way in which costs would be dealt with in [the Court of Appeal]”.  In § 6 of his judgment, the Vice-President sought to dispel any such misconception and made it clear that the practice in the Court of Appeal was unaffected by the new r 9D.  It was a riposte to the particular argument advanced, re-affirming that the amendment did not cause a change in the practice of the Court of Appeal.

18.  Mr Lam SC who appeared for the second defendant submitted that unless sub-rules (2) and/or (4) is/are applicable, sub-rule (1) is mandatory.  As Mr Lam rightly pointed out, had the plaintiff wished to have immediate taxation for the July order, he could have applied for a summary assessment of costs before DHCJ Carlson or for an order for taxation forthwith.  He did not.  Therefore the general rule in sub-rule (1) must apply.