MAN LEUNG AND OTHERS v. MAN YUET KWAI AND OTHERS

HCMP 2270/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 2270 OF 1998

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DECISION ON COSTS

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1. On 9 April 2013, I handed down judgment in this action, directing that the parties’ submissions on costs, if any, should be made to me in writing, having regard to the fact that the 1^st and 2^nd defendants live overseas. I have since received written submissions on costs from the plaintiffs, the 1^st and 2^nd defendants, the 3^rd and 4^th defendants, and the 5^th and 6^th defendants. This is my decision on costs.

2. The plaintiffs submit that they should have their costs out of the money paid into court on an indemnity basis.  They base that submission on RHC O. 62 r. 6(2).

3. RHC O. 62 r. 6(2) provides:

“(2) Where a person is or has been a party to any proceedings in the capacity of trustee, personal representative or mortgagee, he shall, unless the Court otherwise orders, be entitled to the costs of those proceedings, in so far as they are not recovered from or paid by any other person, out of the fund held by the trustee or personal representative or the mortgaged property, as the case may be; and the Court may otherwise order only on the ground that the trustee, personal representative or mortgagee has acted unreasonably or, in the case of a trustee or personal representative, has in substance acted for his own benefit rather than for the benefit of the fund.”

4. I do not consider that this principle applies to the plaintiffs in the present case.  First, the proceedings were not an application for the court’s direction in the sense that the plaintiffs were faced with a question of discretion in the administration of the trust, in respect of which they surrendered the decision to the court having placed the court in possession of all the relevant information: see Marley v Mutual Security Merchant Bank and Trust Co Ltd [1991] 3 All ER 198. 

5. In fact the evidence put in by the plaintiff was scant.  No explanation of the history of the Wui was given.  The 3^rd plaintiff who had been a manager since 1949 failed to provide any personal evidence on the issues that arise.  I am not satisfied at all that the plaintiffs have made sufficient effort to provide the court with all the relevant information and evidence that should be within their power.

6. Moreover, the plaintiffs had ceased to be managers of the Wui since 2005.  They were no longer trustees.  It is stated in the plaintiffs’ skeleton on costs that the plaintiffs’ solicitors were only informed in mid October 2010 that the plaintiffs were no longer managers of the Wui and that new managers had been appointed to replace them.  If so, then the plaintiffs had only themselves to blame for not telling their solicitors earlier.

7. The plaintiffs have also been guilty of inordinate delay in bringing these proceedings to a proper conclusion. Nothing was done from 2000 onwards for a decade.  Steps were not taken again until the court warned the parties that the money paid into court might be forfeited.

8. The plaintiffs have also failed to apply to have the new managers substituted for themselves in the proceedings even though the 3^rd plaintiff died and 2^nd plaintiff had apparently lost mental capacity.

9. As regards the 1^st plaintiff, based on what I was told at the trial he had simply ignored these proceedings and had even failed to make himself available to his own solicitors to give them information and instructions.

10. If the plaintiffs had taken the view that they need not take steps because the proceedings were essentially a contest between the 1^st, 2^nd, 3^rd, 4^th and 7^th defendants on the one hand and the 5^th and 6^th defendants on the other over the proceeds of sale of the Fuk Ma share in the Wui, then they should have acted like a person who interpleads and asked to be excused from further attendance and should not have incurred further costs in respect of the trial.

11. For these reasons, I conclude that the plaintiffs should have their costs on a party and party basis only up to and including 2000, but not thereafter, to be paid out of the money paid into court.

12. As for the costs between the two camps of defendants, I take into account the following matters:

(1)   The dispute amounted to hostile litigation between adversarial parties.

(2)   The 5^th and 6^th defendants put forward a factual case which I rejected.

(3)   The 5^th and 6^th defendants made allegations of forgery and fabrication of documents against the other defendants which I rejected as baseless.

(4)   The 5^th and 6^th defendants put forward a contention which led to the plaintiffs issuing these proceedings.  It would appear that, but for their claim, the plaintiffs would have paid the balance of the relevant share of proceeds of sale to the 1^st, 2^nd, 3^rd, 4^th and 7^th defendants in the same way as the plaintiffs paid out the sum of $1.5 million in November 1997.  The 5^th and 6^th defendants’ contention has eventually been rejected by me after a contested trial.

13. I conclude that in these circumstances the 5^th and 6^th defendants should pay the 1^st, 2^nd, 3^rd, 4^th and 7^th defendants’ costs on a party and party basis.  The costs should be relatively modest given that the 3^rd, 4^th and 7^th defendants have acted in person throughout and the 1^st and 2^nd defendants were only legally represented at an early stage.  The costs are to be taxed if not agreed.

14. For the avoidance of doubt, the costs relating to the submissions on costs are to be treated as part of the costs of the action.