GEE FUNG YIN v. GEE FUNG KUEN AND ANOTHER

HCA 1940/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1940 OF 2015

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J U D G M E N T

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Introduction

1.  This is the plaintiff’s appeal against the costs decision (the “Decision”) made by Master Chow on 6 October 2016 ordering the plaintiff to pay the 1^st and 2^nd defendants’ costs of the action on an indemnity basis.

2.  By Notice of Appeal dated 19 October 2016, the plaintiff seeks an order that the Decision be reversed and that there be no order as to costs in this action.

Relevant Legal Principles

3.  In general, a judge in chambers will not allow an appeal from a master’s costs order unless it is unreasonable or the master erred in law.  The appellant must show that the master either failed to take into account proper matters or took into account matters that should not have been taken into account [see: Hoddle v CCF Construction Ltd [1992] 2 All ER 550; Practice Note 58/1/6 of the Hong Kong Civil Procedure 2017].

4.  Taxation of a successful party’s costs on an indemnity basis may be ordered where the proceedings were scandalous or vexatious, or had been initiated or prosecuted maliciously or for an ulterior motive or in an oppressive manner [see: Practice Note 62/28/2 of the Hong Kong Civil Procedure 2017].

Factual Background

5.  From a reading of the papers in this case, I agree with the defendants that this is a typical case of family feuds where the plaintiff sought to use litigation as a means of oppression to achieve her own goal.

6.  The plaintiff and the 1^st defendant are sisters.  The 1^st defendant is the sole shareholder of the 2^nd defendant.

7.  The Property (the subject matter of the underlying dispute) were purchased in the name of the 2^nd defendant in mid-2012, to be held on trust for the plaintiff and the 1^st defendant equally at all times, and that all expenses and liabilities relating to the Property and a related carpark were to be borne equally by the plaintiff and the 1^st defendant.

8.  Significantly, on 26 February 2015, the plaintiff emailed the 1^st defendant (the “26/02/15 Email”) and agreed that the Property could be sold immediately at HK$3.25 million or above without any need to seek further consent from her.

9.  The 1^st defendant caused the 2^nd defendant to enter into a provisional sale and purchase agreement to sell the Property for HK$3.28 million on 14 March 2015, followed by a formal agreement dated 17 March 2015.  The completion date was 28 August 2015.

10.  The 1^st defendant kept the plaintiff informed of the progress throughout the sale.  In June/July 2015, the plaintiff repeatedly requested the 1^st defendant to distribute the deposit from the purchaser of HK$328,000.  The 1^st defendant explained that that was not possible since the plaintiff’s share of the deposit was not sufficient to cover the plaintiff’s liability for the mortgage redemption (which the 1^st defendant had pay for her in advance).

11.  Without any fore-warning, whether by pre-action letter or otherwise, the plaintiff issued the writ of summons in this action and caused the same to be registered as a lis pendens against the Property at the Land Registry on 25 August 2015, 3 days before the scheduled completion of the sale of the Property.

12.  The plaintiff’s claim was premised upon the unauthorised sale of the Property and the 1^st defendant’s denial of her beneficial interest in the same.  This is patently false.  The 26/02/15 Email puts it beyond doubt that the Property was sold with the plaintiff’s authorisation, and the 1^st defendant had never done anything which indicated that she intended to deny the plaintiff’s 50% beneficial ownership of the Property.

13.  In a letter dated 25 August 2015 addressed to the purchaser’s solicitors, the plaintiff’s solicitors explained that the writ was registered because the sale was entered into by the defendants without the plaintiff’s “knowledge and authorization”.  This is a blatant untruth in light of the 26/02/15 Email.

14.  The parties negotiated for the removal of the registration of the writ.  The registration was eventually removed on 11 September 2015, and the sale of the Property was completed on the same day.

15.  The defendants duly paid the plaintiff’s portion of the sale proceeds on 25 September 2015.  An account had been provided.

16.  The parties subsequently negotiated on how to dispose of this action.  However, the plaintiff insisted on not paying costs, or paying only a nominal amount of HK$5,000, which the defendants rejected. Given that the plaintiff’s claim was wholly unmeritorious and without basis, the defendants insisted on having the costs of the action.

17.  Eventually, the defendants were left with no choice but to take out the summons on 14 December 2015 to strike out the plaintiff’s action, which the defendants ultimately succeeded.

No unreasonableness or error of law in the Decision

18.  In this appeal, the plaintiff has failed to point out any error of law or unreasonableness in Master Chow’s decision on costs.  I agree that the plaintiff’s submissions are basically a re-run of her arguments before the master, and this is not the correct approach on an appeal on costs.

19.  The plaintiff submitted that “… the Master held that [the plaintiff] acted oppressively in issuing the writ without any or sufficient reason”.  This is incorrect.  Master Chow had stated the reasons for her costs order clearly.  In the oral reasons for her decision on costs given on 6 October 2016, she said: –

“There can be no dispute that the alleged unauthorised sale of the property was not unauthorised. There was also no reason for the 2^nd defendant to be drawn into the action at all. The action was commenced for the purpose of putting pressure on the 1^st defendant to distribute the deposits prior to completion.

…

… But looking at whole scheme of things, there can be no other finding but that the plaintiff had acted oppressively.”

(Emphasis supplied)

20.  I agree that the master’s reasoning was entirely correct in light of the factual background of this case as summarised above. An order for costs of the action to be paid by the plaintiff on an indemnity basis is clearly appropriate having regard to the oppressive conduct of the plaintiff.

Conclusion and Disposition

21.  For the reasons set out above, the plaintiff’s appeal is dismissed.

22.  The parties agree that costs of the appeal should follow the event.  Accordingly, I order that the costs of the appeal be paid by the plaintiff to the defendants.

23.  I further order that the costs of the appeal are to be taxed on the party and party basis if not agreed.  My provisional view is that the plaintiff’s conduct in the appeal itself is not such as would make it “appropriate” to order taxation on an indemnity basis.

24.  The above order as to the basis of taxation of the costs of the appeal is nisi and shall become absolute in the absence of any application within 14 days to vary the same.

25.  Lastly, I express my gratitude to counsel on both sides for their helpful assistance in this matter.