KONG KING ONG ALEXANDER v. KAN HEUNG WING AND ANOTHER

DCCJ 3724/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3724 OF 2008

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REASONS FOR RULING

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Introduction

1. This is about the application by the defendants (by Original Action) and the plaintiffs (by Counterclaim), who I will simply refer to as “the Vendors”, to vary the order nisi on costs relating to their application for summary judgment under Order 14 of the Rules of the District Court against the plaintiff (by Original Action) and the 1^st defendant (by Counterclaim), who I will simply refer to as “the Purchaser”. 

2. On 12 April 2013, I granted the Purchaser unconditional leave to defence and made an order nisi that the Purchaser’s costs for the application, if any, be paid by the Vendors in any event, to be taxed if not agreed.  The aforesaid order nisi, however, was made without the benefit of submissions from the parties.  On 10 May 2013, upon hearing the submissions from the respective solicitors of the Vendors and the Purchaser, I granted the Vendors’ application and varied the order nisi as follows:-

(a)  costs of the hearings dated 6 November 2009, 27 August 2010, 26 August 2011, 17 January 2012, 13 April 2012 and 26 June 2012 be in the cause;

(b)  costs of the hearing dated 8 January 2013 before Deputy District Judge S Lo be to the Vendors in any event;

(c)  costs of the hearing on 12 April 2013 and of this application before me be in the cause; and

(d)  the Vendors’ own costs be taxed in accordance with legal aid regulations.

I said that the reasons for the above would be handed down.  This I now do.

3. The facts of the case are as stated at paragraph 4 of my decision dated 12 April 2013 which I will not repeat. 

Submissions of the Vendors on variation

4. At the hearing for the application to vary the order nisi on costs, Mr Liu, solicitor acting for the Vendors, outlined to me the protracted history of the Vendors’ Order 14 application.  In short, the summons for the application was taken out on 21 October 2009 against the Purchaser and his former solicitors (the 2^nddefendant by Counterclaim).  However, shortly after the summons was taken out, it was discovered that the Purchaser had just been declared a bankrupt.  Therefore, the application was automatically stayed and could not be proceededwithout the leave of the High Court. Afterwards, the Vendors were informed that the Purchaser was arranging an Individual Voluntary Arrangement (“IVA”) with his creditors.  As a result, a number of mention hearings took place between November 2009 and June 2012 as set out in paragraph 2(a) above before various masters and judges, the purpose of which was for the Purchaser to inform the Court of the progress of his IVA.  On all those occasions, the question on costs were reserved. 

5. Eventually, the Order 14 application could be proceeded with and was listed before Deputy District Judge S Lo for hearing on 8 January 2013.  Counsel for the Vendors then prepared a lengthy written submission and made extensive oral submission to the learned judge.  Unfortunately, the matter as between the Vendors and the Purchaser had to be adjourned again.  It was because the Purchaser, who then acted in person, informed that the Vendors had entered into the IVA with him and was receiving payment thereunder.  If that was true, then it would not be proper to proceed with the application against the Purchaser and therefore the learned judge adjourned the Vendors’ application against the Purchaser so that the matter could be clarified.  The Vendors’ application against the Purchaser’s former solicitors, however, went ahead and was subsequently dismissed.  See the decision of Deputy District Judge S Lo dated 18 January 2013. 

6. Later, it was clarified that the information provided by the Purchaser to the learned judge was incorrect.  It was confirmed that the Vendors’ claim against the Purchaser is only categorized as “contingent” and the distribution to the Vendors under the IVA has been held up pending the outcome of the case.  The Vendors’ Order 14 application was then heard before me on 28 March 2013 which led to my decision on 12 April 2013.

7. Based on the above, Mr Liu submitted that the adjournments prior to the hearing before Deputy District Judge S Lo on 8 January 2013 were through no fault of the Vendors’ but were due to the Purchaser’s bankruptcy and IVA.  As regards the hearing before Deputy District Judge S Lo, Mr Liu submitted that the Order 14 application could have been dealt with there and then, but for the wrong information.  Mr Liu therefore asked for costs of that hearing in any event.  As to the previous adjournments and the hearing before me, Mr Liu submitted that the general rule is that there be costs in the cause when a defendant is granted unconditional leave to defend: see Hong Kong Civil Procedure 2013, Volume 1, §14/7/13.  Mr Liu further submitted that there were features in the present case that it was apt to follow the general rule.  Mr Liu emphasized that there had been no material issues of facts and that the Purchaser, who had acted in person throughout, had not made any reply to the law points by the Vendors in the Order 14 application.

Submissions of the Purchaser on variation

8. Mr Ho, solicitor now acting for the Purchaser, indicated that the Purchaser did not insist on obtaining costs up to and including the hearing before Deputy District Judge S Lo.  He submitted that in relation to all those hearings there should either be no order as to costs or costs in the cause.  On the other hand, Mr Ho submitted that the Purchaser should be given costs for the hearing before me.  It was because the Vendors, after the dismissal of their application against the Purchaser’s former solicitors, should have reviewed all the material available, including the pleadings and the decision of Deputy District Judge S Lo.  Had the Vendors done so, they should have come to the view that there were triable issues in the case against the Purchaser.  As the Vendors had chosen to pursue the application against the Purchaser regardless, it was appropriate that the Purchaser should be awarded costs now that he has been granted unconditional leave to defence. Reliance was placed on Alviero Martini SPA v Bubble Retail Management Ltd and Anor, HCA 1937/2008. 

Consideration of the submissions

9. The parties are in agreement that I could and should deal with the costs of the previous hearings pertaining to the Order 14 application against the Purchaser which had not been dealt with.

10. I agree with Mr Liu that had it not been for the incorrect information that the Purchaser provided to Deputy District Judge S Lo, the application against the Purchaser would have been dealt with by the learned judge on 8 January 2013.  Although there is no suggestion that the Purchaser knowingly or deliberately provided the incorrect information to the learned judge, the fact remains that an adjournment was occasioned which was avoidable and wholly unnecessary.  As such, I am of the view that it is just that the Purchaser should bear the costs of that hearing in any event. 

11. As regards the hearing before me on 28 March 2013, with respect I am unable to agree with Mr Ho’s submissions that the decision of Deputy District Judge S Lo should have caused the Vendors to change their position vis-à-vis the Purchaser.  I note that the learned judge dismissed the application in respect of the Purchaser’s former solicitors on grounds which were not related to the Vendors’ claim against him.  Therefore, the learned judge’s decision, in my judgment, would not have assisted the Purchaser in his case.  Moreover, the Purchaser had not filed any documents which might have caused the Vendors to review their position against him.

12. I agree with Mr Liu’s submissions that the Vendors’ case against the Purchaser is mainly about issues of law in relation to title and requisition.  I agree with Mr Liu that the Purchaser, who then acted in person, had been unable to make any meaningful reply to the Vendors’ submissions or to assist the Court on the legal issues.  I am persuaded by Mr Liu that as regards the hearings prior to the one before Deputy District Judge S Lo on 8 January 2013 that the general rule should apply that there be costs in the cause.  I am also persuaded that the general rule should also be followed as regards the hearing before me on 28 March 2013 as well as the present application forvariation of the order nisi. 

Conclusion

13. The order nisi on costs is varied to the extent as stated in paragraph 2 above.