RE SNG ALLAN, also known as SNG HOCK SENG

CACV 465/2018

[2022] HKCA 1132

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 465 OF 2018

(ON APPEAL FROM HCB NO 3651/2018)

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FURTHER DECISION ON COSTS

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Hon Barma JA (giving the Further Decision on Costs of the Court):

1.  On 6 June 2019, this court (Kwan VP, Cheung JA and Barma JA) dismissed the debtor’s appeal against the judgment of G Lam J (as he then was) dated 27 August 2018 by which the debtor was adjudged bankrupt on the petition of the petitioner, indicating that our reasons for doing so would be handed down subsequently. We also ordered the debtor to pay the petitioner’s costs of the appeal, and gave directions to enable (1) the potential liability for such costs of an alleged third party funder of the debtor’s appeal to be determined, and (2) for the costs to be assessed on a gross sum basis.

2.  On 10 December 2021, we handed down our Reasons for Decision and Judgment on Costs ([2021] HKCA 1847), in which we set out the underlying facts and issues in the substantive appeal, and our detailed reasons for dismissing it.  It is not necessary to repeat them here.

3.  We dealt with the question of costs in [38]-[42] of our Reasons.  As there had been no submissions from the funder, and as it was unclear whether the funder (who was identified by the debtor’s solicitors on 10 June 2019 as a Ms Wong Ching Yee) had been served with the order of 6 June 2019, or the petitioner’s statement of costs, we dealt only with the assessment of costs as between the petitioner and the debtor, and we did not deal with the question of the funder’s liability for costs, or the assessment of costs as between her and the petitioner, leaving that aspect of the matter on the basis that further directions should be sought by the petitioner if it still wished to pursue the funder for the costs of the appeal. 

Developments after the handing down of our Reasons

4.  On 15 December 2021, the petitioner wrote to inform the court that it had in fact served the 6 June 2019 order and its statement of costs on the funder, and sought directions to enable the question of the funder’s liability for costs to be determined.  Such directions were given by the court’s letter to the parties and the funder dated 20 December 2021, by which we indicated that the application for costs against the funder could be pursued, and gave directions for the lodging of written submissions by the petitioner and the funder, following which the matter would be dealt with on paper.

5.  The petitioner duly lodged written submissions on 3 January 2022, submitting that the court should be cautious about over-complicating the exercise of its discretion to order costs against a non-party, and that the only immutable principle was that the discretion must be exercised justly.  Relying on Fulton Motors Ltd v Toyota (GB) Ltd [2000] CP Rep 24, the petitioner submitted that where a person is prepared to fund litigation by an insolvent litigant, that person can properly be made liable in costs, particularly when that person has a personal interest in the litigation and is aware of the risk.

6.  The petitioner went on to submit that while the precise relationship between the funder and the debtor, as well as the motive for Ms Wong to fund the debtor’s appeal, were unknown, it was “fanciful to suppose that [she] is a pure funder without any interest or control over the appeal”.  On this basis, it was submitted that the funder should be ordered to pay the petitioner’s costs of the appeal.

7.  Thereafter, on 21 January 2022, Messrs David Fenn & Co on 21 January 2022 filed a Notice to Act for the funder.  By a letter to the court also dated 21 January 2022, Messrs David Fenn & Co, on the instructions of Ms Wong, denied that she was a funder of the debtor and indicated her opposition to the petitioner’s claim for costs against her.

8.  By a summons dated 11 February 2022, supported by her first affirmation of the same date, in which she explained her position and denied having funded the debtor’s appeal, Ms Wong applied for leave to file evidence in opposition to the petitioner’s claim for costs against her.  As the petitioner did not oppose the application, leave was granted for her to do so, and she filed her second affirmation pursuant to such leave on 7 March 2022.

9.  In her first affirmation Ms Wong deposed that:

(1)     from around 1990 onwards, she was employed by the debtor as his secretary, being employed by different companies of his at different times, but her employment as the debtor’s secretary came to an end in 2018 due to the bankruptcy order made against him (see [4]-[8] of the affirmation);

(2)     in around 1991, she was made a shareholder and director of one such company known as Global Investment Nominee Limited (“GINL”) at the debtor’s request.  The purpose of these appointments was for corporate convenience, and she had no beneficial interest in GINL or its assets.  Her role was to issue company cheques as and when instructed to do so by the debtor (see [9] to [11] of the affirmation);

(3)     in around July 2018, she issued a GINL cheque (drawn on GINL’s account) in the sum of HK$60,000 to the debtor’s solicitors upon the debtor’s request.  She did not enquire with the debtor as to the purpose of the payment, as it was not her practice to do so.  To her recollection, this was the only instance that she had signed a cheque payable to the debtor’s solicitors (see [12] to [13] of the affirmation);

(4)     she had never issued any cheques or made any payments to the debtor’s solicitors on her own account, was never personally a funder of the debtor or his appeal, and she was unrelated to any company which involved the debtor (see [13], [15], [21] and [29] of the affirmation);

(5)     she also stated her intention to make inquiries of the debtor’s solicitors with a view to ascertaining why she had been named as a funder of the debtor’s appeal.

10.  On 7 March 2022, Ms Wong filed her second affirmation in which she confirmed that Messrs David Fenn & Co had served her summons and first affirmation on the debtor’s and petitioner’s solicitors, but that the debtor’s solicitors had not responded to her allegations.  She exhibited correspondence from which it appeared that the debtor’s solicitors had simply passed the documents on to the debtor, and also to the Official Receiver as the debtor’s trustee in bankruptcy.

11.  On 6 May 2022, the debtor’s solicitors’ ceased to act for the debtor.

12.  The petitioner did not file any evidence in response to Ms Wong’s affirmations (it seems unlikely that the petitioner was in a position do so).  On 31 May 2022, the petitioner’s solicitors wrote to request that the matter be dealt with on the basis of the papers lodged by the parties to date.

Disposition and further decision on costs

13.  Ms Wong’s affirmations (which have not been controverted by any party) make it clear that she did not in her personal capacity make any payment to the debtor’s solicitors for the purpose and/or with the intention of funding the debtor’s appeal, and such evidence is unrefuted by the debtor and the petitioner.  It is pertinent to note that her identification as an alleged third party funder was by the debtor (through his solicitors), who simply asserted this without any supporting evidence to establish that Ms Wong was in fact such a funder.

14.  Absent any evidence to suggest otherwise, we are bound to conclude that Ms Wong was not in fact a funder of the debtor’s appeal.  She did not, in her personal capacity, provide any funding for the debtor’s appeal, and the only cheque signed by her in favour of the debtor’s solicitors was drawn on GINL’s account, and signed in her capacity as a director of that company, which she has said was beneficially owned by the debtor, and in which she had no interest.  She also appears to have been unaware of the purpose of the payment, and it cannot be said to be at all likely that she had any interest or control over the appeal.  It follows that it would not be just to hold her liable for any part of the petitioner’s costs.

15.  In the circumstances, we dismiss the application for costs against the funder. The debtor will, of course, remain liable for such costs, as ordered in our Reasons for Judgment and Decision on Costs.

16.  So far as the costs of this application are concerned, including the reserved costs of Ms Wong’s summons dated 11 February 2022 (which were reserved by this court’s order dated 25 February 2022), in the light of our decision, the delay on Ms Wong’s part in responding to the application, and the fact that it was the debtor who asserted (untruthfully, in the light of our conclusions) that Ms Wong was the funder of his appeal, we think that the appropriate order to make would be a costs order nisi that both the petitioner’s and Ms Wong’s costs of this application be paid by the debtor to the petitioner and Ms Wong respectively, to be assessed on a gross sum basis.

17.  To enable such costs to be assessed, the petitioner and Ms Wong should lodge their respective statements of costs with the court, and serve the same on the debtor within 21 days from the date of this decision.  The debtor should then file any objections within 21 days thereafter, following which the assessment will be conducted on paper, without a hearing.