ZHANG YUYAN v. TO NGAN HO

HCA 1298/2024

[2026] HKCFI 4440

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1298 OF 2024

____________

____________

__________________________

DECISION ON COSTS

__________________________

1.  By Summons dated 13 April 2026, Madam To Ngan Ho (“Madam To”) applies for variation of the Costs Order nisi made by this Court that Madam Zhang Yuyan (“Madam Zhang”) is to pay the costs of and occasioned by Madam To on a party-to-party basis (“Costs Order nisi”).

2.  In support of the Summons, Madam To encloses a set of relevant correspondence (“Correspondence”), including relevant Calderbank letters.

3.  Madam To seeks that her costs should be summarily assessed on an indemnity basis; and she should also be given costs of the Summons.

4.  The parties have since filed written submissions, and the Court will dispose the Summons on paper.

5.  First, this Court has no difficulties in coming to the view that the costs should be assessed summarily. I agree that “[T]he current practice of the court is to treat interlocutory applications as being discrete, and there is a greater readiness to make orders that the costs of an interlocutory application are paid immediately”: see Re Jessop & Baird (Hong Kong) Ltd (No. 2) [2017] 5 HKLRD 314 at §26 per Harris J, with similar sentiments shared by this Court in Lam Wai Kong v. Lam Ying Kit [2024] HKCFI 3181 at §§19-20.

6.  I agree that Madam Zhang’s interlocutory application was standalone and self-contained. Madam To’s costs can readily be identified. The event was clear. Madam To succeeded in her opposition.

7.  I also take into consideration that Madam To is an elderly lady in her late 90s. There should not be any delay in payment of the costs incurred by her.

8.  I also agree that Madam To had made reasonable attempts to settle this case, including (a) pre-action open offers to return the Properties to Madam Zhang, which this Court considered to be most reasonable: see Decision of Mr. Recorder William Wong SC dated 31 March 2026 (“Decision”) at §§39-40; and the Calderbank offers during the course of the case.

9.  Secondly, as far as the basis for assessment of costs is concerned, I am of the view on the special facts of this case, indemnity basis is justified. First, whilst this Court rules that the substantive disputes on the common intention constructive trust should proceed to trial, it is Madam Zhang who sought a summary judgment on her claims which does not prevail.

10.  I agree that itself does not justify a costs order on an indemnity basis as Mr Yau quite rightly pointed out the fact that a litigation exercised his or her judgment to apply for a summary judgment, albeit wrongly, is no ground for subjecting him or her to a costs order on an indemnity basis. However, this Court’s main concern is Madam Zhang’s unreasonable attitude to indemnify Madam To which if offered would, in my view, have avoided the application. I note in the Correspondence, Madam To’s solicitors issued a Calderbank letter dated 29 May 2025. In that letter, Madam To’s solicitors suggested on behalf of Madam To to transfer the legal title of the Properties back to Madam Zhang and invited Madam Zhang to withdraw her claim and interlocutory application with no order as to costs, whilst leaving the counterclaim to be litigated. In my view, this is a sensible offer.

11.  I accept Mr Lau’s submission that had this offer been accepted, the legal title to the Properties would revert to Madam Zhang immediately. The costs of the preparation of opposition affirmations could also have been saved.

12.  Instead, by a responsive Calderbank letter dated 3 June 2025, Madam Zhang’s solicitors insisted on having Madam To withdraw her counterclaim. They suggested that the “indemnity terms can be considered…subject to detailed particulars being provided and agreed upon”.

13.  Mr Lau submitted that in good faith, Madam To’s solicitors responded on 12 June 2025 on a Calderbank basis and provided details of the indemnities sought. However, Madam Zhang’s solicitors did not engage further with Madam To on the settlement offer.

14.  As it turns out, Madam To’s proposal (i.e., to transfer the legal title back whilst leaving the counterclaim to be litigated) was similar to what the Court had in mind when the case first returned before this Court on 28 August 2025.

15.  The Court had expressed its “hope that the parties could amicably and sensibly settle this matter without incurring further legal expenses”: see Decision at §7. However, Madam Zhang insisted on her stance; and in the event, a second substantive hearing was held, eventually resulting in the Decision.

16.  I agree that in such circumstances, Madam To should not be prejudiced by having to pay the costs occasioned by Madam Zhang’s unreasonable conduct.

17.  I note Mr Yau’s submission that the offer cannot be said to have been more generous than the outcome of the Decision. The scope of the indemnity remains undecided by this Court. Whether Madam Zhang’s position would prevail remains to be and can only be determined at trial. There is no basis to say that Madam Zhang has failed to beat the offer.

18.  However, in my view, the issue here is not strictly speaking whether Madam Zhang has failed to beat the offer. The issue is whether Madam Zhang has acted reasonably in the circumstances such that costs could be saved. I am of the view that had Madam Zhang acted reasonably in this case; the substantive hearing could have been avoided. I have specifically and usually adjourned this case so that sensible course could be adopted but to no avail.

19.  In the circumstances, I make the following orders:

(1)  The Costs Order nisi set out at paragraph 82 of the Decision of Mr. Recorder William Wong SC dated 31 March 2026 be varied as “costs of and occasioned by the Plaintiff’s summons dated 24 March 2025 (“Plaintiff’s Summons”) (including all costs reserved) be to the Defendant, to be summarily assessed on an indemnity basis”;

(2)  Costs of and occasioned by the Defendant’s Summons dated 13 April 2026 (including all costs reserved) be to the Defendant, to be summarily assessed;

(3)  Within 7 working days of the Order herein, the Defendant do lodge and serve her Statement of Costs with regards to the Plaintiff’s Summons and her Statement of Costs with regards to the Summons herein;

(4)  Within 7 working days thereafter, the Plaintiff do lodge and serve her lists of objections, if any;

(5)  The Defendant’s costs be summarily assessed on paper; and

(6)  The costs as summarily assessed be payable forthwith upon assessment.