V CAPITAL LTD v. MARGARET CHIU

CACV 497/2021, [2024] HKCA 413

On Appeal From [2021] HKCFI 3133

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 497 OF 2021

(ON APPEAL FROM HCA NO 1431 OF 2017)

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J U D G M E N T

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Hon Chow JA (giving the Judgment of the Court):

1.  On 18 December 2023, this Court handed down a written judgment (“the Judgment”) allowing the Debtor’s appeal against the Order of Master Lai dated 27 October 2021 that the Debtor be imprisoned for the period of 1 month under Order 49B, rule 1B(1)(c) of the Rules of the High Court, Cap 4A. The Court also ordered, inter alia, the Creditor to pay 50% of the Debtor’s costs of the appeal (including the costs of the application before Master Phoebe Man on 27 October 2021 for a stay of execution of the Order pending appeal), to be taxed if not agreed, with certificate for 2 counsel. The above costs order was an order nisi.

2.  The basic facts of this case and the Court’s reasons for its decision are fully set out in the Judgment and will not be repeated here. In this judgment, we shall adopt the expressions and abbreviations as defined in the Judgment.

3.  The Court ordered the Creditor to pay only 50% of the Debtor’s costs of the appeal notwithstanding the fact that the Debtor was the winning party in the appeal because: (i) the Debtor raised 2 grounds of appeal, but was successful on only 1 of them (ie Ground 2), and (ii) the Debtor’s substantial delay in advancing Ground 2, which was raised by way of re-amendment of the Notice of Appeal on 21 April 2023.

4.  On 22 December 2023, the Creditor applied by summons to vary the costs order nisi such that there be no order as to the costs of the appeal. In support of the application, Ms Lok refers the Court to Order 62, rule 5(1) of the Rules of the High Court, and submits that, in addition to the 2 factors mentioned above, the Court should also take into account the following matters in deciding the question of the costs of the appeal:

(1)  The Debtor’s conduct of the appeal prior to the last-minute insertion of Ground 2 to the Notice of Appeal had already wasted and escalated costs. On 17 March 2023, which was 2 years after the Notice of Appeal was filed, the Debtor abandoned all the original 6 grounds of appeal and replaced them with Ground 1 which was likewise without merit.

(2)  The Debtor’s conduct in these proceedings overall (including causing substantial adjournments and late filings of affirmations on numerous occasions) also escalated costs and offended the underlying objectives of the CJR.

(3)  The Debtor’s challenge of the Master’s jurisdiction by Ground 2 is not only contrary to her own submissions below, but wholly unrelated to the merits of the Master’s Decision.

(4)  The Debtor has wilfully failed to make full disclosure in breach of court orders dated 24 December 2018 (by Master Lui) and 15 April 2019 (by Master Ho), and the statutory requirements in Order 49B, rule 1A(2) of the Rules of the High Court.

(5)  The Debtor never sought permission, nor obtained any consent or approval, from the trustee in bankruptcy to use the bankruptcy estate or raise loan or finance to fund her appeal. The Debtor has no proper basis to incur any costs in the appeal, and on this ground alone it would be unjust to award the Debtor any costs.

5.  We are not persuaded by Ms Lok’s submissions that the costs order nisi should be varied.

(1)  The Court was well aware of the matters mentioned in point (1)[1], being part of the background as to how Ground 2 came before the Court, and they were already taken into account when the Court made the costs order nisi in the Judgment.

(2)  The matters mentioned in points (2), (3) and (4) are mainly relevant to the costs of the proceedings below, and the matters mentioned in points (3) and (4) were already taken into account when the Court ordered the Debtor to pay the Creditor’s costs of those proceedings up to 22 April 2020, with no order as to costs thereafter. To the extent that they are relevant to the costs of the appeal, we do not consider that they are sufficient to deprive the Debtor, who is ultimately the successful party in the appeal, of all of her costs incurred in prosecuting the appeal.

(3)  In respect of point (5), it is important to bear in mind the fact that the Order made by Master Lai affected the Debtor’s personal liberty, and she was entitled to appeal against the Order without any permission or consent of the trustee in bankruptcy. We do not accept that the Debtor has no proper basis to incur costs in the appeal. The Debtor’s source of the funding of her appeal is a separate matter, in respect of which there is no relevant evidence before the Court. We do not, however, see why it would be unjust to award to the Debtor any part of her costs as submitted by Ms Lok.

6.  For the above reasons, the Creditor’s summons dated 22 December 2023 is dismissed, and the costs order nisi is made absolute. The Creditor shall pay the Debtor’s costs incurred in resisting the application. The Debtor’s costs are summarily assessed in the sum of $42,000.