CHAN CHUN CHUEN v. KAO, LEE & YIP (a firm)

HCA 597/2015

[2018] HKCFI 1933

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 597 OF 2015

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D E C I S I O N

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1.  By my decision handed down on 12 October 2017 (the “Decision”), I partially allowed the defendant’s striking-out application and made a costs order nisi that costs of the striking-out application be to the defendant with certificate for two counsel, to be taxed if not agreed (the “Costs Order Nisi”).

2.  On 24 October 2017, the defendant took out two summonses respectively asking this court to vary the Costs Order Nisi and to grant leave to the defendant to appeal against the substantive order made in the Decision.   I will now deal with these applications in turn.

3.  Unless otherwise stated or the context otherwise requires, the abbreviations used in this decision shall bear the same meanings as defined in the Decision.

Variation of Costs Order Nisi

4.  The defendant seeks to vary the Costs Order Nisi in two respects: (1) the defendant asks for costs to be taxed on indemnity basis; and (2) further or alternatively, the defendant invites this court to order such costs to be summarily assessed and paid forthwith.

5.  In relation to indemnity costs—

(a)  The applicable principles do not appear to be in dispute.   There is no dispute that where there is an abuse of process of the court, the court may award costs on indemnity basis: Overseas Trust Bank Ltd v Coopers & Lybrand [1991] 1 HKLR 177 at 182G–183C; Re Hyundai Engineering & Construction Co Ltd [2002] 2 HKLRD 71 at para 7.  That said, the ultimate consideration is whether an award of costs on indemnity basis is “appropriate” in the particular circumstances of a case: Hong Kong Civil Procedure 2018, at para 62/App/12.

(b)  Mr Lam, counsel for the defendant, submits that given my ruling (at para 80 of the Decision) that it is plainly an abuse of process for the plaintiff to advance and rely on the alleged oral agreement to support his breach of duties claim against the defendant, this court should order costs on indemnity basis.

(c)  With respect, I cannot accept Mr Lam’s submission.

(d)  Mr Lam’s submission ignores the fact that I rejected some of the defendant’s arguments and only partially allowed its striking-out application.  Taking a global view of the matter, I in the exercise of my discretion consider that it is fair, just and appropriate to award costs on party-and-party basis: Re  King’s Glory Educational Centre Limited (unrep, HCCW 456/2016, 21 September 2017) at paras 34–38.

6.  In relation to summary assessment and payment of costs forthwith—

(a)  Mr Lam refers me to the decision of Lam J (as he then was) in Midland Business Management Ltd v Lo Man Kui (No 2) [2011] 2 HKLRD 667, which was approved by Ribeiro PJ in Wing Fai Construction Co Ltd v Yip Kwong Robert (No 2) (2012) 15 HKCFAR 454.

(b)  In the above decisions, it is said that considerations relevant to deciding whether or not to make an order for immediate taxation in interlocutory applications included (1) the extent to which the proceedings on taxation were severable and self‑contained from the rest of the action, (2) the justice of making such an order having regard to the effect on the respective parties’ cash flow, (3) whether the amount at stake on taxation was sufficient to justify the expense of a separate taxation for it rather than bringing it on the final taxation, and (4) the possibility that there might be no trial.  It is also emphasized that the lack of immediacy of orders to pay costs “in the cause” or “in any event” weakens costs as a sanction against unwarranted applications or resistance, although this must not be taken as saying that an immediate costs order should be made against every unsuccessful party in an interlocutory application: Midland Business (supra) at paras 7­–12; Wing Fai Construction (supra) at paras 4–8.

(c)  Mr Li does not dispute the above principles.  He, however, submits that the defendant’s striking-out application is not severable and self-contained, since it is making an application for leave to appeal against my order partially allowing the striking-out application. 

(d)  With respect, I am unable to see how the fact that the defendant is now making an application for leave to appeal can be relevant to the question as to whether the striking-out application is itself a severable and self-contained application.  In my judgment, I accept Mr Lam’s submission that the striking-out application is severable and self-contained.

(e)  Mr Li further submits that since the defendant is a renowned law firm in Hong Kong and the plaintiff is currently in custody, an immediate costs order would seriously prejudice the plaintiff.  

(f)  In my judgment, there is before me no evidence of the parties’ respective cash position.  Without such evidence, I am not in any position to speculate on the effect of an immediate costs order on the parties’ respective cash flow.  However, I observe that the defendant has engaged a senior counsel (together with a junior counsel) to represent it in the striking-out application.  It appears that substantive costs have been incurred in the striking-out application.  Thus, I am of the view that there is some degree of unfairness if the defendant is to be deprived of the recovery of such costs in the meantime.

(g)  In all the circumstances, I consider that it is fair and just for me to order costs to be summarily assessed and paid forthwith by the plaintiff.

Application for Leave to Appeal

7.  In this application, the defendant seeks leave to appeal against my order partially allowing its striking-out application.  It appears to be not in dispute that the intended appeal is one against an interlocutory order such that pursuant to section 14AA of the High Court Ordinance (Cap 4), the defendant has to demonstrate that the intended appeal has a reasonable prospect of success, or there is some other reason in the interests of justice why the intended appeal should be heard.

8.  Mr Lam submits that the intended appeal involves a discrete point of law.   He submits that “the content of the Amended Form 86[1] is also inconsistent with the Plaintiff’s case that there was an agreement inferred from conduct, i.e. the rest of para 4 of the Statement of Claim”, and that “it is fundamentally inconsistent for the Plaintiff to expressly denounce the existence of any retainer with the Defendant, and subsequently claim that there was in fact an implied retainer with the Defendant”.  He goes on to submit that “given that the Plaintiff expressly denounced the existence of any retainer with the Defendant in the JR Application, the Plaintiff must now be debarred from advancing a claim in this Action to bind the Defendant to the alleged retainer, whether oral or implied by conduct”.[2]

9.  At the hearing, I drew Mr Lam’s attention to para 17 of the 5^th Affidavit of Yeung May May, Betty, filed by the defendant in support of the striking-out application (the “Defendant’s Supporting Affirmation”).  There, it is expressly stated that—

“In this regard, I set out the relevant pleas in the Statement of Claim (signed with the Plaintiff’s statement of truth) which run contrary to the Plaintiff’s case in the judicial review proceedings:-

(a) Paragraph 4: “By an agreement between the Plaintiff and the Defendant (in particular via Mr. Yip Wan Tak) concluded orally in or around mid-1993 … the parties agreed on the following terms (“Agency Agreement”) …

(b)  …”

Notably, as I pointed out to Mr Lam at the hearing, the defendant in its supporting affirmation only says that “an agreement… concluded orally” pleaded in para 4 of the Statement of Claim is inconsistent with the plaintiff’s case in the JR Application. It, however, does not suggest that “an agreement… to be inferred from conduct between the Plaintiff and the Defendant” pleaded in the same paragraph is also inconsistent with the plaintiff’s case in the JR Application.  In fact, the latter plea is deliberately omitted from para 17 of the Defendant’s Supporting Affirmation.

10.  In fact, as stated in para 43 of my Decision, Ms Eu SC (who appeared at the substantive hearing of the striking-out application for the defendant) does not suggest that the plea in para 4 of the Statement of Claim that an agreement “to be inferred from conduct between the Plaintiff and the Defendant” runs contrary to the plaintiff’s case in the JR Application, and that she is right not to do so in view of the reference to the Informal Arrangement in the JR Application.

11.  It is of great significance that this striking-out application is not mounted on the basis that the agreement allegedly inferred from conduct is also inconsistent with the plaintiff’s case in the JR Application. 

12.  As it was held in my Decision, the basis of the striking-out application is abuse of process.  Even assuming that a “diametrically inconsistent” case is run by the plaintiff in this action, this court has to assess various factors and balance competing interests in order to determine whether it is an abuse of process in the circumstances.  This means that any inconsistencies relied upon by the party seeking to strike out have to be fairly and squarely brought up, such that the party resisting the striking out would know the case that he has to meet and would be given sufficient opportunity to offer his explanation as to why there is no abuse of process. 

13.  In this regard, it is pertinent to observe that in his skeleton argument, Mr Lam submits that “in the absence of any plausible explanation for the Plaintiff’s inconsistent stance, it is respectfully submitted that it is clearly an abuse of process for the Plaintiff to maintain the plea of agreement to be implied by conduct”.[3]  This submission duly underlines the importance of putting the alleged inconsistencies fully and squarely to the party resisting the striking out such that he can be given sufficient opportunity to explain the alleged inconsistencies. 

14.  In the present case, it is not suggested in the Defendant’s Supporting Affirmation that the agreement allegedly inferred from conduct is also inconsistent with the plaintiff’s case in the JR Application. Without making such suggestion, it is in my judgment not open to the defendant to strike out on the basis that the plaintiff’s case concerning the agreement inferred from conduct is “diametrically inconsistent” with his case in the JR Application and the same constitutes an abuse of process.

15.  For the above reasons, I must dismiss the defendant’s application for leave to appeal.

Disposal of the Summonses

16.  In relation to the defendant’s summons dated 24 October 2017 seeking the variation of the Costs Order Nisi—

(a)  I would vary the same to the extent that costs of the striking‑out application be to the defendant be summarily assessed on paper with certificate for two counsel, and be paid by the plaintiff forthwith.

(b)  For the purpose of making the summary assessment on paper, I direct that (1) the defendant do within seven days from the date of this decision lodge and serve its statement of costs for the striking out application in such format as per Appendix A to Practice Directions 14.3, and (2) the plaintiff do within 14 days thereafter lodge and serve its statement of objection.

17.  As to the defendant’s summons dated 24 October 2017 seeking leave to appeal from my order, I would dismiss the same.

18.  As far as the costs are concerned, I regard the defendant to be the party substantially successful in its application for variation of the Costs Order Nisi.  At the same time, I regard the plaintiff as the successful party in resisting the defendant’s application for leave to appeal. Bearing in mind that both applications were heard at the same hearing, I would adopt a broad-brush approach and make an order nisi that there be no order as to costs in relation to these applications.