LAM SIK SHI v. LAM SIK YING, ADMINISTRATOR OF THE ESTATE OF LAM TIM ALIAS STAN LAM TIM, DECEASED AND ANOTHER

HCA 1605/2004

[2019] HKCFI 1892

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1605 OF 2004

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REVIEW OF TAXATION

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Introduction

1.  This is a review of taxation.

Background

2.  Briefly, it is a family dispute involving administration of the estate of the deceased (the “Estate”).  There are 2 branches of family/beneficiaries:  

(a)  Tony and Susie

(b)  Mo Lin and Victor

3.  Tony and Susie belong to the Chan’s branch.

4.  Mo Lin and Victor belong to the Wong’s branch. Victor is the surviving sole administrator of the Estate.  Mo Lin and his son own a company called “APH”. 

5.  Tony and Susie commenced 2 actions in High Court, HCA 1605/2004 and HCA 894/2011 respectively against Victor and APH.  The main dispute among the parties lay in a purported sale regarding one of the landed properties in the Estate, namely, No.6 Sharp Street East (the “Property”) by Victor to APH.  Both Tony and Susie challenged the propriety of it. 

6.  All parties were separately represented by different firms of solicitors and counsel.  

7.  The 2 proceedings were heard before Hon Chow J for 23 days in April and May 2015 as well as May 2016.  In the middle of the trial, on 15 May 2015, APH submitted to judgment and as such, the sale of the subject property was set aside with account to be taken.  APH was also ordered to pay to Tony and Susie costs of the action on a common fund basis, to be taxed if not agreed, with certificate for two counsel. 

8.  After trial, by a judgment handed down on 3 October 2016, the learned Judge found Victor acted in breach of fiduciary duties in the said sale.  In HCA 1605/2004, Victor should pay costs of Tony, to be taxed if not agreed on common fund basis, with certificate for 2 counsel.  Then, in HCA 894/2011, Victor was also ordered to pay costs of Susie in the main action, to be taxed if not agreed on common fund basis.  

The Taxation

9.  Both Tony and Susie went on to try to recover their costs.  

10.  Tony filed 2 bills herein, bill no.8 and no.9.  In bill no.8, he sought to recover costs of over 6.3 million from both Victor and APH pursuant to the order of the Judge made on 15 May 2015 and 3 October 2016.  Regarding bill no.9, pursuant to the Judgment on 3 October 2016 and other costs orders having made, Tony asked Victor to pay him costs for about 1.6 million.  

11.  The 2 bills came before me for 2 days in November 2018.  Victor filed his lists of objections and attended the hearings, but not APH. 

12.  In relation to bill no.8, among others, Victor raised a preliminary argument regarding apportionment of costs.  He said that he should only be liable to pay: 

(a)  Tony’s costs incurred exclusively against him, and

(b)  Half of Tony’s costs in common as incurred against both APH and him.  

13.  At the taxation, both LCDs for the parties informed me that they could not resolved the said preliminary issue because they disagreed on the interpretation of the costs order dated 15 May 2015.  Tony said that it had been his case that Victor and APH conspired to take away the subject property from the Estate.  They should therefore be jointly and severally liable for his costs.  Victor disagreed.  He said that the costs order did not say so.  It was also not the way how Susie presented her bill in HCA 894/2011. 

14.  After consideration, I agreed with the position of Victor.  Taxation then went on and was finished in their usual way.  

The Review

15.  Tony did not agree with my ruling on the said preliminary issue and applied for a review under bill no.8.  It involved quite some items under the bill, but two broad grounds were relied upon.  

16.  First, Tony reiterated that Victor and APH should be jointly and severally responsible for the costs of the action.  The Judge did not make any specific order for apportionment.  On the one hand, the Judge found Victor acted in breach of his fiduciary duties.  On the other, he clearly formed the view that APH knowingly assisted Victor in the breach.  It therefore followed that Victor and APH were jointly and severally liable to pay costs of the action. 

17.  Second, there was no specific order in the 2 judgments that costs against Victor and APH were to be apportioned.  Hence, all those costs against and/or related to APH should be jointly and severally liable by both APH and Victor.  

18.  Victor disagreed.  In the absence of an order by the trial judge, the taxing master was entitled to apportion the costs between Victor and APH.  It would be unjust for Victor to bear costs of Tony relating to APH. Victor also said that the taxing master was entitled to decide that APH should be solely responsible for costs which, on face of it, were against it or related to it.  

Discussion

19.  Parties appeared before me on 24 May 2019 for the substantive argument.  I had the assistance from counsel on both sides for the occasion.  Mr Alan Yung acted for Tony and Mr Andrew Tse (together with Mr Barry Leung of LCD) represented Victor.  Upon hearing from parties, I reserved my decision to be handed down.  

20.  Here it is. 

21.  Mr Tse brought my attention to some authorities regarding some general principles of taxation.  It included that taxation is an item-by-item process whereby the court reached a decision on what amount of costs to allow on each item of costs claimed by the receiving party^[1], taxing master is under the duty to determine what sum in the way of costs is properly attributable to a party without causing injustice^[2], and taxing master also has the jurisdiction to access costs wholly attributable to steps taken in respect of one defendant against that defendant only^[3]. To these, I heard no disagreement from Mr Yung. In any event, I agree with the propositions made by Mr Tse and will bear them in mind throughout the present review.   

22.  Parties mainly disputed on how the Judge’s costs orders should be understood and interpreted.  

23.  At the taxation, I agreed with the LCD of Victor. In my view, it is not for a taxing master, but the trial judge, to decide whether Tony is not entitled to recover costs against Victor and APH jointly and severally.  If he did not say so on the costs orders, Tony would not be able to do so.  

24.  There is no argument that Victor is entitled to costs of the proceedings by 2 separate orders, against:

(a)  APH from writ to 15 May 2015, and

(b)  Tony from writ to 3 October 2016. 

There is also no argument that APH would not be responsible for any costs of the proceedings after it had conceded to a judgment.  When both Tony and APH were defending the proceedings, they were at all times separately represented.  The had their own legal teams, pleadings, discovery and so forth. In my view, the said general principles of taxation apply.  Victor and APH would be paying Tony for his legal costs incurred in dealing with defence and matters raised by each of them.  When it comes to common costs to both Victor and APH, an apportionment would be made. In the present instance, I found a 50%/50% sharing being appropriate in the circumstances as there were only 2 defendants and both of them ran their own case against 1 plaintiff at most of the time in the litigation.   

25.  At the review, Mr Yung said that the Judge did not couch his ruling in the terms that “D1 would only have to pay P only those costs in relation to Ds’ parts.”  Hence, the Judge clearly said that the plaintiff’s costs were to be paid by both the 1^st and 2^nd defendants.  I disagreed. By so submitting, Mr Yung was indeed putting words into the mouth of the Judge.  The costs orders made by the Judge are indeed usual ones wherein there are more than one defendants and they were separately represented.  The question of apportionment is always a matter for the taxing master after looking into details of the how the matters were handled.  

26.  Among the other authorities submitted by Mr Tse, I find Stumm v. Dixon (1889) 2 QBD 529 at p.534 particularly useful and directly relevant to the argument before me.  

“In my opinion the true rule is this: When an action is tried against two or more defendants, and any defendant separates in his defence, and the judgment is against all, the law is that each of them is liable for the damages awarded by the judgment, and each of them is liable to the plaintiff for all costs taxed on his behalf as properly incurred by him in the maintenance of his action, except as to costs caused to him by so much of the separate defence of any defendant as is, and can only be, a defence for that defendant as distinguished for other defendants. With regard to such costs so caused to the plaintiff, he is entitled by law to recover them against that defendant alone who has so caused him to incur them…”

Hence, in the apportionment, this court was doing justice to the parties by attributing costs that Tony should be recovered respectively from Victor and APH. 

27.  Mr Yung further referred me to a number of different paragraphs in the Judgment of the Judge, including: 

“133. In the present case, the evidence before the court clearly demonstrates that Victor acted in breach of the fiduciary duties which he owed to the Estate in relation to the sale of the Property to APH, in the following aspects.

…

138. Fifth, although I am not satisfied, on the evidence, that APH purchased the Property as Victor’s nominee, I believe it to be clear that Victor sold the Property on advantageous terms to APH…

152. In all, I find that Victor acted in breach of the fiduciary duties that he owed to the Estate in relation to the sale of the Property to APH. In view of the consent judgments against APH, it is not necessary for me to find whether APH knowingly assisted Victor in his breach of fiduciary duties. Had it been necessary to do so, I would have no difficulty in finding “knowledge” and “assistance” on the part of APH…”

It was said that the Judge ruled against both Victor and APH, and clearly found that they colluded.

28.  I had no argument with Mr Yung on the quotes from the Judgment.  However, I do not agree that they allowed Tony to recover costs against Victor and APH jointly and severally.  If Tony wanted the same, only the Judge had the jurisdiction and discretion to allow him. 

29.  Mr Yung relied, among others, on the decision of Deputy High Court Judge R Ismail SC in Excel Courage Holdings Limited & Anor v. Wong Sin Lai & Ors (HCCL 34/2014, 26 February 2016) and Master de Souza in PBM (Hong Kong) Limited v. Tam Kam Lun, Allan & Ors (HCA 12138/1997 & HCA 13316/1997, 28 August 2006). In the former, the Deputy Judge held^[4] that “D2 and D5 dishonestly assisted D1’s breach of fiduciary duty … and D2 and D5 are therefore jointly and severally liable with D1 to pay equitable compensation….”.  In the latter, the learned Master did not choose to apportion any costs. In my view, these authorities do not assist Tony because costs (including if apportionment should or should not be made, and if so, at what proportion) remains a discretion to be exercised with regard to the facts of each case.  

30.  At one stage, it did come to my mind if parties had missed such question at the material times because nobody would image that APH, having been able to acquire the subject property at over 10 million, took no further step in the matter after conceding the judgment.  However, Mr Tse referred me to paragraph 13 of the Judgement: 

“ In paragraph 1 of Mr Miu’s closing submissions dated 9 May 2016, Mr Miu submits that, in view of the consent judgment entered against APH in HCA 894/2011, all that remains for the court to determine in relation to Susie’s claim in that action is the question of costs as between Susie and Victor, in particular:-

(1) whether Victor should be held liable, jointly and severally (emphasis added) with APH, for Susie’s costs; or

(2) whether Susie should be held liable for Victor’s costs of her claim.

…”

With the above, the question of “joint and several” liability to pay costs of Susie (therefore including those of Victor) was a live issue at the trial but the Judge simply did not concede to it at the end when he made the costs order. 

Conclusion

31.  To conclude, for the above reasons, the review is dismissed.  

Costs

32.  I now move to costs of the review.  Costs usually follows event.  I see no exception to the present application.  I also see fit to adopt gross sum assessment to finalise the matter and the sum of $49,800 is appropriate in the circumstances.

	$
Counsel	30,000
Solicitor ($5,800 x 2)	11,600
LCD ($1,800 X 4)	7,200
Miscellaneous	1,000
	---------
	49,800
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Orders

33.  To sum up, I will make the following orders.

(a)  The review is dismissed.  

(b)  There is an order nisi that the plaintiff do pay the 1^st defendant costs of the review, including certificate for counsel for hearing on 24 May 2019 and costs reserved, in the assessed sum of $49,800.