FAMEWAY FINANCE LTD v. JOY RICH DEVELOPMENT LTD (In liquidation)

HCA 510/2012 and HCA 1497/2022
(Heard together)

[2024] HKCFI 3610

HCA 510/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 510 OF 2012

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AND

HCA 1497/2022

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1497 OF 2022

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(Heard Together)

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DECISION ON COSTS

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1.  Introduction

1.1  By a decision handed down on 28 August 2024 (“Decision”)[1], I allowed the Order 13 Application, dismissed Lau’s Application and did not accede to Fameway’s Application. This is my decision on the issues of costs arising from the disposition of the 3 applications.

2.  Lau’s Application

2.1  At Decision §7.4, I made a costs order nisi that Lau is to pay Joy Rich the costs of Lau’s Application with a certificate for 2 counsel to be summarily assessed.

2.2  The only difference between the parties is whether the nisi order should be varied to the extent that the receiving party should be the Chen Sisters instead of Joy Rich.

2.3  At Decision §1.3, I recorded the fact that leave was granted by Harris J to the Chen Sisters to use the name of Joy Rich to bring HCA 1497/2022 against Fameway and Lau. As pointed out by Joy Rich’s counsel, the order of Harris J also provides that the Chen Sisters be solely responsible for their costs and any adverse costs order for bringing the intended action (ie HCA 1497/2022) and defending HCA 510/2012 in the name of Joy Rich.

2.4  I agree with the submissions advanced by Joy Rich that the receiving party should be varied to the Chen Sisters as (1) were it otherwise, Joy Rich would be reimbursed with costs which it has not incurred and (2) as a corollary, it would be unfair to the Chen Sisters were they unable to recover costs paid by them in successfully resisting Lau’s Application. I make an order to that effect.

3.  Fameway’s Application

3.1  Although I had acceded to Mr Man’s suggestion that no order was required to be made on Fameway’s Application (Decision §7.1), it is plain that I had rejected Fameway’s Application.

3.2  There is no real dispute that costs should follow the event. I make an order that Fameway is to pay to the Chen Sisters the costs of Fameway’s Application with a certificate for 2 counsel to be summarily assessed.

4.  The Order 13 Application

4.1  As noted at Decision §4.1, it is common ground that the Default Judgment which was set aside had been obtained regularly. The relevant principles are not in dispute and are summarized in Lu Shaoping v Wu Lianmo [2020] HKCFI 944:

“[5] Generally, the costs of setting aside a regular judgment should be awarded to the plaintiff. In Ko Sin Yau v Chan Chuen & Another [2007] 1 HKLRD 324, Cheung JA at §21 said:

‘21. Generally speaking if an irregular judgment is set aside then the plaintiff should be ordered to bear the costs of the setting aside of the default judgment because the judgment was not properly obtained in the first place. However, where a judgment was set aside not because of it being irregular but because of a meritorious defence the general rule is that the defendant should bear the costs of the application to set aside the default judgment. As an alternative the costs of the application can be in the cause of the action.’

[6] The Court can exercise its discretion to depart from the general rule but it must do so with good reason.

[7] Where the plaintiff continues to resist a setting‑aside application when the basis of the defendant’s defence has been revealed, the costs for resisting the setting-aside application should follow the event. (See Harbour Hero Enterprises Ltd v Chau Nung Tai [2019] 3 HKLRD 174 (CA) which applied Chung J’s judgment in Welson International Limited v Jebson Investments Limited, unreported, HCA 2620/2008, 29 June 2010 at §16)”

4.2  Joy Rich seeks an order that the costs of the Order 13 Application incurred after 19 January 2023 be paid by Fameway to the Chen Sisters with a certificate for 2 counsel to be summarily assessed.

4.3  The principal argument raised by Fameway is in relation to the “start date” of its costs liability. Fameway says that it should be afforded an appropriate time to consider the Order 13 Application made on 18 January 2023. Fameway says that it should only be ordered to pay costs incurred by the Chen Sisters from 17 February 2023 instead. Fameway further says that the costs of the evidence in support of the Order 13 Application should not be allowed in any event, as any proper consideration of the Order 13 Application could not be carried out without considering the affirmation in support.

4.4  I agree with Fameway. Whilst it is true (Joy Rich emphasizes) that the Statement of Claim in HCA 1497/2022 predated the Order 13 Application, the evidence in support of the Order 13 Application relied on further matters and included (in my view rather indiscriminately) affirmations (including exhibits) filed in various other proceedings.

4.5  I therefore make an order that the costs of the Order 13 Application incurred after 17 February 2023 be paid by Fameway to the Chen Sisters with a certificate for 2 counsel to be summarily assessed.

5.  Summary assessment of the costs orders

5.1  The Statements of Costs lodged by Joy Rich in respect of the 3 applications are in the total sum of [HK$630,596 (Order 13 Application and Fameway’s Application) + HK$569,171 (Lau’s Application) =] HK$1,199,767. The foregoing is prepared on the basis that (1) the costs incurred for the 2 strike-out applications (ie Lau’s Application and Fameway’s Application) are to be apportioned equally and (2) the costs of the Order 13 Application and the Fameway Application are to a very large extent dealt with together (Items C, D and E)

5.2  I take into account (1) the comments made by Lau and Fameway on the duplication of materials, (2) their observations that some of the items claimed are on the excessive side, (3) the commonality of the arguments ventilated between the 3 applications (4) the adoption of evidence previously prepared in various other proceedings and (5) the appropriate apportionment between Lau and Fameway. On a broadbrush basis, I assess the costs to be as follows:

(1)  The costs in respect of the Order 13 Application and Fameway’s Application are assessed at HK$500,000;

(2)  The costs in respect of Lau’s Application are assessed at HK$200,000.

5.3  For completeness, I record that the parties have not separately asked for costs in relation to the determination of the issues dealt with in this costs decision and no order is made in relation thereto.