SUNNI INTERNATIONAL LTD (in liquidation) v. KAO WAI HO FRANCIS AND OTHERS

HCA 1884/2018

[2026] HKCFI 2669

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1884 OF 2018

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BETWEEN

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DECISION ON COSTS

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1.  On 1 August 2025, this court handed down a Judgment of the trial of inter alia this Action (“Judgment”). At paras 390 to 391 of the Judgment, this court ordered in favour of the Plaintiff against the 2nd Defendant Mr Michael Kao (“D2”):

(a) Equitable compensation in the sum of HK$26,580,881.95 (“Judgment Sum”).

(b) Compound interest at the prevailing judgment rate from 13 August 2018, the date of Writ in HCA 1884/2018, to the date of Judgment and thereafter until payment.

2.  At para 491 of the Judgment, this court gave a direction that with regard to D2, the parties were to exchange their written submissions on costs of the Action.

3.  On 17 November 2025, this court handed down a Decision on Costs between the Plaintiff and D2 (“Decision”) to the effect that:

(a) there shall be no Order as to costs between them.

(b) Regarding the costs of these submissions on costs, there shall be an Order nisi (“Costs Order Nisi”) that they shall be borne by the Plaintiff, to be taxed if not agreed, and paid to D2 forthwith, Certificate for 2 counsel.

4.  By Summons filed on 12 December 2025 (“Summons”), the Plaintiff applied for:

(a) Leave to apply out of time for variation of the Costs Order Nisi and relief from sanction (“Time Extension/Relief Application”); and

(b) Costs of the submissions be set off against the judgment sum of HK$26,580,881.95 (“Judgment Sum”) which D2 is ordered to pay the Plaintiff (“Set-Off Application”).

5.  Counsel for the Plaintiff points out correctly that under RHC O 42 r 5B(6), a costs order nisi shall become absolute 14 days after the decision is pronounced unless an application has been made to vary that order.

6.  Counsel for the Plaintiff also cites Balram Chainrai v Kushnir Family (Holdings) Ltd [2021] 4 HKC 345 for the proposition that this court may grant a time extension for an application to vary a costs order nisi after the expiry of the prescribed 14-day period: [14]-[15]. This court agrees. There is thus no need to consider the Plaintiff’s application for relief under RHC O 2 r 5.

7.  Counsel for the Plaintiff submits that the deadline to apply for variation of the Costs Order Nisi was 1 December 2025. This is not a case where the Plaintiff did nothing by the deadline. Its legal representatives applied by letter on 1 December 2025 for variation by requesting for a set-off. On 9 December 2025, the Court directed by letter that as a matter of law, they should make an application in the normal way ie by summons. The Summons was then filed on 12 December 2025 — 11 days from the deadline and about 3 days from the Court’s letter pointing out the irregularity of the earlier application by letter. Such delay is brief. There was no intentional fault on the part of the Plaintiff. Instead, the delay was a result of the legal representatives “inadvertently” making the application by letter, instead of by summons.

8.  Counsel for D2 submits that the Plaintiff’s attempt to lay the blame on its legal representatives is no answer. It waited until the final day and then, by letter, sought to vary the Costs Order Nisi. Nothing prevented a timely and proper application. It is trite that an application to vary costs order nisi should be made by summons. Any suggestion that the misstep was “inadvertent” is unsustainable. The delay is self-induced.

9.  This court agrees with Counsel for D2 that the delay is self-induced and there is no proper explanation for it — legal advisers’ ignorance of the law is not a proper explanation; otherwise, there will be no end to this sort of applications.

10.  Nevertheless, this court is here to do justice to the parties, not to discipline legal advisers, at least not as a first priority.

11.  In doing justice to the parties, this court can do no better than quoting from the distinguished Judge of the 19^th century Jessel MR in Pringle v Gloag (1879) 10 Ch D 676, 679 where the Judge said:

“If A. is ordered to pay costs to B., and B. is ordered to pay costs to A., the rule is that the Taxing Master may allow a set-off of the one set of costs against the other. But here A. is ordered to pay a sum of money to B., and B. is ordered to pay costs to A., the result being that, on balancing the payments one against the other, there is a balance payable from B. to A. But A. absconds and cannot pay what he is ordered to pay to B., and B. says, “Let there be a set-off of the one payment against the other and I will pay the balance which then remains due from me.” I should have thought set-off in such a case was a matter of common sense—a matter of course.” (emphasis added)

12.  Here, D2 has not absconded. But even so, the Plaintiff accepts that D2 may not have enough resources to pay the Judgment Sum and bear the Costs Order Nisi. Justice requires a set off.

13.  For these reasons, the Summons shall be allowed in terms except the relief from sanction which is redundant. However, since the Plaintiff is seeking an indulgence, there shall be costs to D2, to be taxed if not agreed, and paid forthwith, certificate for one counsel.