LAM SIK SHI v. LAM SIK YING

HCMP 1464/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1464 OF 2004

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J U D G M E N T

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Introduction

1.  This is an appeal from an order for costs made by Master Hui on 24 September 2005 [page 212 Pleading’s Bundle] whereby he ordered the Plaintiff to pay the Defendant’s costs in any event in respect of the Defendant’s summons to strike out the Plaintiff’s re-amended Originating Summons notwithstanding that he had dismissed that summons.  There is also an appeal against the second part of his order by which he ordered the Plaintiff to pay the Defendant’s costs in any event in respect of the Plaintiff’s summons to re-amend the amended Originating Summons, both in respect of costs of and occasioned by the re-amendment and of the costs thrown away by reason of the re-amendment as from 13 January 2005, he having allowed the re-amendment.

2.  It is helpful to first consider the basis upon which an appeal from a Master’s decision for costs can succeed, this not being a re-hearing of the matter which is the usual basis of an appeal from a Master to the Judge in Chambers.

3.  The approach of Morland J. in the Queen’s Bench Division in England in the case of Hoddle v. CCF Construction Limited (1992) 2 All ER 550 is that which has been adopted in our courts.  The relevant passage in his judgment is at 550H-551B which is in this terms:

“In my judgment it would be highly undesirable as a matter of general principle that a judge in the position that I am in today should intervene and make different orders as to costs from that made by a master, unless it can be shown by the appellant that the master demonstrably erred in the exercise of his discretion in the order that he made.  If it can be shown that the master took into account matters that he should not have taken into account or failed to take into account matters that he should have taken into account, in those circumstances the judge in chambers would be entitled to vary the order made by the master, but in my judgment it would not be in the interests of justice if judges in chambers entered into detailed examination of all the matters that were before the master in order to decide whether they would have come to the same decision as the master.  Generally speaking, in my judgment, judges in chambers should not allow appeals against costs orders by masters, unless it can be shown that the order made was unreasonable or erred in law or, as I have indicated, either failed to take into account proper matters or took into account matters that should not have been taken into account.”

In Hong Kong see Paul Y-ITC Construction Ltd v Kin Shing Co Ltd (1999) 1 HKC 511 @515A-C and Lessy SARL v Pacific Star Development Ltd [1996] 2 HKC 326@327G-328B.  It follows therefore that the burden which the appellant carries is not an easy one.

The litigation

4.  In order to understand the Master’s reasoning, to which I will presently come, it is necessary to say something about the nature of the dispute.  These matters are concerned with the death of Mr Lam Tim intestate (“the deceased”) some 23 years ago on 6 January 1983.  The main contestants, if I can so describe them, are his sons Victor (the Defendant) and Tony (the Plaintiff) who are half-brothers.  Both of them are now in their 50’s.  Apart from them there are two other beneficiaries, Mary, an adopted daughter of the deceased, and their sister Suzie.  This litigation originally goes back to 1987 when Victor and his mother brought proceedings against Tony for the proper administration of the Estate because it was then said that Tony had taken control of the assets comprising the Estate which included an air-conditioning and refrigeration business, some residential properties and a valuable, but old, commercial building in Sharp Street, Causeway Bay.  That action was compromised by means of a Tomlin Order which provided for Victor and Tony applying for Joint Letters of Administration.  In fact, no Joint Application was made and in March 1999 Victor and his mother became Administrators of the Estate.  Victor’s mother died later on in 1999 leaving Victor as sole Administrator.

5.  The winding up of the Estate and its distribution has been plagued by animosity and dispute ever since the death of the deceased.  Tony (the Plaintiff) now complains that there has been a combination of mal- and non-administration of the Estate.  In June 2004 he took out an Originating Summons (HCMP 1464 of 2004), inter alia, for directions as to the administration of the Estate, but did not serve this until December 2004.  Then, in about July 2004, he learnt that Victor, together with his sister Suzie were in the process of selling the building at Sharp Street at a considerable undervalue and so he started the action HCA 1605 of 2004 with a view to obtaining an injunction to stop the sale.  The writ was registered against the title which had that effect.

6.  The Originating Summons was then served on Victor and amended to include an application for Victor’s removal as administrator of the Estate.  Another application included in the Originating Summons was to have the position of Mary determined as to whether she should be regarded as one of the beneficiaries of the Estate, she, it will be recalled being the deceased’s adopted daughter.

7.  In the course of discovery in the Action (HCA 1605/2004) more information became available to Tony as to the administration of the Estate with the result that much of what was sought in the Originating Summons became otiose.  As a result, three summonses came before the Master.  Firstly, Tony sought to re-amend the Originating Summons in order to reduce its scope to a consideration of Mary’s position, to an account of the circumstances of the anticipated sale of the Sharp Street property and for the removal of Victor as Administrator.  He also sought an order for consolidation of the Originating Summons with the Action or, alternatively, the trial of one to immediately follow the other.  Victor countered with an application under Order 18 rule 19 of the Rules of High Court to strike out the Originating Summons as an abuse of process because the Originating Summons was said to cover the same ground as the Action, with the effect with Victor would be “vexed” twice by two proceedings which covered the same ground.

The Master’s order

8.  The learned Master heard long and, at times, heated argument over two days.  He agreed with Mrs Dora Chan’s (Victor’s counsel) that the Originating Summons substantially overlapped the Action.  In those circumstances she won that important argument before him.  He gave a judgment to that effect [317-321 Pleadings Bundle] from which there is no appeal.  He decided that the matter should be treated as a case management exercise and directed that Mary should be joined in the Originating Summons.  But for that order he would have struck out paragraph 1 of the Originating Summons, which related to her.  He also had to address the position of the 2^nd Defendant in the Action.  The 2^nd Defendant is the prospective purchaser of Sharp Street.  He felt that he could not consolidate the Originating Summons with the Action.  That is why he directed that they should be tried one immediately after the other. 

9.  When one reads his ruling, it is perfectly clear that his sympathy laid with Mrs Chan’s submission that the Originating Summons effectively covered the same ground as the Action but felt that rather than strike it out he could mitigate its potential for adding to the overall costs by giving the directions that he did.

10.  When it came to costs, it is plain that he considered that everything could have been done under the umbrella of the Action and that the Originating Summons was unnecessary.  Although he refused to strike it out, he decided to reflect his overall view of the merits of the arguments before him by giving Mrs Chan her costs.  As to the amendment, he made the usual order and required the addition of Mary as a party to the Originating Summons.

11.  Mr Andy Hung, in a series of very persuasive submissions, says that the Master failed to have regard to the principle that costs should usually follow the event.  He has cited from the judgment of Nourse L.J. in the Elgindata (No.2) 1 WLR 1207@1214A-C.  He was correct to do so.  This is what was said by Nourse LJ:

“The principles are these.  (i) Costs are in the discretion of the court.  (ii) They should follow the event, except when it appears to the court that in the circumstances of the case some other order should be made.  (iii) The general rule does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or cost of the proceedings he may be deprived of the whole or a part of his costs.  (iv) Where the successful party raises issues or makes allegations improperly or unreasonably, the court may not only deprive him of his costs but may order him to pay the whole or a part of the unsuccessful party’s costs.  Of these principles the first, second and fourth are expressly recognised or provided for by rules 2(4), 3(3) and 10 respectively.  The third depends on well established practice.  Moreover, the fourth implies that a successful party who neither improperly nor unreasonably raises issues or makes allegations on which he fails ought not to be ordered to pay any part of the unsuccessful party’s costs.”

12.  Mr Hung submits that Mrs Chan had singularly failed to strike him out, this had been the real argument, this is where most of the costs before the Master have gone and he should not therefore have to pay costs despite his success.

Conclusion

13.  In my judgment, the Master was correct to have regard to the matter in the very broad way that he did.  Contrary to Mr Hung’s submission, the Master came to the view that there was very great overlap between the Originating Summons and the Action and that the subject matter of the Originating Summons could have found its way into the Action.  In this regard he was absolutely right.  Mr Hung says that there were separate features between the Originating Summons and the Action but, in my view, all of these could have been sub-sumed into the Action.

14.  The Master then made orders to try and put the matter overall into some form of efficient shape, which what he did.  As to costs he had a broad discretion to reflect what had, in substance, occurred before him.  I am afraid that Mr Hung has not been able to show that the Master’s order on either of the effective summonses before him was unreasonable or that the Master had erred in law in the way that Morland J. supra has identified.  Accordingly, the appeal must stand dismissed with costs and certificate for counsel.  This order for costs will be an order nisi.