CHAN KWOK KUEN v. LAI YAT HO AND OTHERS

HCMP 300/2025

[2026] HKCFI 502

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 300 OF 2025

________________

________________

________________

____________________

DECISION ON COSTS

____________________

I.  INTRODUCTION

1.  In my Reasons for Decision handed down on 20 October 2025 ([2025] HKCFI 4942) (the “Reasons for Decision”), at §37, I made a costs order nisi that the 1^st to 5^th Defendants (collectively, the “Defendants”) costs of and occasioned by the Summons (including all costs reserved) should be paid on an indemnity basis, to be summarily assessed on paper. By Summons filed by the Plaintiff on 3 November 2025 (the “Costs Summons”), the Plaintiff applies to vary the costs order nisi to become:-

(1)  As regards taxation basis, party-and-party basis; and

(2)  As regards the mode of taxation, (i) taxation under Order 62 rule 9A(1)(c) or (ii) alternatively, summary assessment under Order 62 rule 9A(1)(b) subject to the parties’ right to taxation.

2.  In support of the Costs Summons, Affirmation of Li Hao Nan Christopher was filed on 3 November 2025 (the “Affirmation of Li Hao Nan Christopher”). Li Hao Nan Christopher is the handling solicitor of the case. No affirmation from the Plaintiff himself has been filed.

II.  TAXATION BASIS

3.  There is no presumption that an indemnity basis should be ordered upon discharge of an ex parte order for material non-disclosure, although indemnity basis would usually be ordered where the non-disclosure was deliberate or seriously culpable: see Hong Kong Civil Procedure 2026 Volume 1 §29/1/55. I also agree with the written submissions of Ms Sezen Chong, counsel for the Plaintiff, that each case depends on its own fact.

4.  The grounds in support that the taxation basis should be party-and-party are set out in Ms Chong’s written submissions at §10. I shall consider them in turn.

5.  First, Ms Chong submits that the Plaintiff did not know that the Ex Parte Order was obtained on an erroneous legal basis. With respect, I do not accept this ground:-

(1)  There is no evidence from the Plaintiff himself that he had no such knowledge.

(2)  Even in the Affirmation of Li Hao Nan Christopher, the deponent, being the handling solicitor, does not say that the Plaintiff had no such knowledge.

(3)  In any event, as pointed out in Gee on Commercial Injunctions (7^th edition) §9-001, cited by Mr Lavesh Kirpalani, counsel for the Defendants:-

“Once breach [of duty to make full and frank disclosure] is established it will normally be irrelevant to investigate where culpability lies between the claimant and his legal team or to distinguish between the advocate’s own responsibility to the court and the collective responsibility of the claimant and his team. The policy of enforcing scrupulous fairness should not be diluted or undermined by allowing a client to blame his legal team. If there has been material non-disclosure the court should normally not engage in, or permit, an enquiry as to whether this was one person’s fault or another. Such an enquiry is inappropriate because it could be expected to concern privileged communications. Investigations in apportioning blame between solicitor and counsel, on the one hand, or between themselves and their client, on the other, would be ‘almost impossible’ to conduct. Such a procedure would place a legal team in a situation of conflict of interest both to have to defend its professional reputation and to defend its client from criticism… the claimant proceeds on the basis that he is responsible for both his own conduct and that of his legal team.”

(4)  As a footnote, the above comments, with which I agree, applies to the Defendants vis-à-vis the Plaintiff here. The comments, of course, do not apply to whether the Plaintiff’s own solicitors should be personally liable for the Plaintiff’s own costs and the costs which the Plaintiff is ordered to pay the Defendants.

6.  Second, Ms Chong submits that “[t]he Plaintiff’s and/or the Company’s case stated in the OS was not wholly devoid of merits or so doomed to fail”. With respect, I disagree:-

(1)  First, it is wrong to use the phrase “and/or the Company’s case”. The Originating Summons was commenced solely in the name of the Plaintiff. The Plaintiff has never purported to commence the proceedings on behalf of the Company. The “case” in the Originating Summons is the Plaintiff’s case only.

(2)  Second, given the erroneous legal basis, the Plaintiff’s case in the Originating Summons is wholly devoid of merits and doomed to fail, as I explained in the Reasons for Decision. Insofar as Ms Chong would mean to say that the Plaintiff’s case of the Defendants’ misappropriation was meritorious, this might be so, but one assesses the merits of the proceedings not only on facts but on the results of the legal application of the relevant legal principles to the facts. If the legal principles invoked would lead to the failure of the claim, the claim is unmeritorious and doomed to fail. The facts may merit some other remedies under some other legal principles, but the Plaintiff would have no sympathy from the Court if he chose the wrong principles, a fortiori when the Plaintiff had been reminded or warned by the Defendants at least twice of the wrong principles, as explained in §21 of the Reasons for Decision.

7.  Third, Ms Chong submits that the Plaintiff did not seek the Ex Parte Order with ulterior motive or with malice. Mr Kirpalani submits that the Plaintiff made use of the application for Ex Parte Order to obtain control of the Company. However, bearing in mind that I saw fit to grant a limited injunction despite the discharge, on the evidence, I am not satisfied that any serious allegation that the Plaintiff had ulterior motive or with malice is made out.

8.  Fourth, Ms Chong submits that the Plaintiff was forced to come to the Court to seek to restrain the 1^st Defendant from drawing Company cheques for the sum below HK$30,000, which Ms Chong refers to as “D1’s Wrongful Practice” in her submissions. With respect, I disagree:-

(1)  The Plaintiff never sought any injunction limited to D1’s Wrongful Practice. Nor did he seek any injunction including any terms limited to D1’s Wrong Practice. The Plaintiff came to the Court to seek an injunction far beyond D1’s Wrongful Practice, namely Mareva injunction and an order restraining all the Defendants from participating in the management of the Company. The limited injunction now granted was granted on my own volition having considered the evidence.

(2)  Even if the Plaintiff was forced to come to the Court to seek some remedy in the light of the situation as perceived by the Plaintiff, it does not follow that the Plaintiff could choose a wrong legal basis for his claim, even worse when without disclosing to the Court the problem about the legal basis and when continuing the application without any attempt to amend the application while repeatedly warned of the wrong legal basis (see §21 of the Reasons for Decision).

9.  Fifth, Ms Chong highlights that D1’s Wrongful Practice remains restrained by the Court. As mentioned above, the restraint, if any, is the result of the grant of the limited injunction on my own volition. Further, Mr Kirpalani draws my attention to the parties’ correspondence that the Plaintiff has never agreed to give undertaking as to damages which is part of the sealed Order.

10.  Sixth, Ms Chong submits, in summary, that the 1^st Defendant substantially misappropriated the Company’s assets, he gave money to his wife without proper basis, he has yet to return cash belonging to the Company, and his conduct was a blatant breach of trust and fiduciary duties to the Company. I note that such submissions are limited to the 1^st Defendant only, and so these submissions cannot at any rate exonerate the Plaintiff vis-à-vis other Defendants. In any event, the 1^st Defendant may or may not be a “bad guy”, but again, even if he were a “bad guy”, this does not mean that the Plaintiff could choose a wrong legal basis to make the application, even worse when without disclosing to the Court the problem about the legal basis and when continuing the application without any attempt to amend the application while repeatedly warned of the wrong legal basis.

11.  Seventh, in relation to the security of HK$30,000,000 (see 35 of the Reasons for Decision) Ms Chong submits that the Plaintiff genuinely believes that the amount would come up to HK$30,000,000. However, there is no evidence from the Plaintiff at all as to this alleged “genuine belief”. Also, even if there were such belief, the Court should have been drawn to the fact that this sum was yet to be substantiated by evidence or at least the fact that this sum was based on the Plaintiff’s belief, better with some basis to explain why there was such belief. However, the Plaintiff has never attempted to draw the Court to any such matters.

12.  Eighth, Ms Chong draws my attention to the 1^st to 3^rd Defendants’ failure to comply with the Ex Parte Order by producing books, accounts, business records and the like of the Company, and to the fact that such records have apparently been “wiped out”. A court order, before it is discharged, is still a court order to be complied with. It may or may be that the 1^st to 3^rd Defendants’ conduct pointed out by Ms Chong is culpable. But the Ex Parte Order was eventually discharged, meaning that the Plaintiff would not be entitled to these documents in the first place and thus that the Plaintiff has not suffered any prejudice. Further, the 1^st to 3^rd Defendants’ failure (which I assume) to comply with the Ex Parte Order does not mean that the Plaintiff could choose a wrong legal basis to make the application without proper disclosure to the Court. Therefore, if this failure (assumed) is relevant at all, this would be an insignificant consideration in the overall scheme of things.

13.  Lastly, Ms Chong submits that if it is found out that the erroneous reliance on sections 728-730 was deliberate, the Plaintiff’s legal team would be penalised by a wasted costs order, and if not, the Plaintiff’s should not be penalised by the legal team’s error. However, as I explained in §5(3)-(4) above, in determining the taxation basis, it is a matter between the Plaintiff and the Defendants, and the responsibility of his own legal teams is a matter to be considered separately when considering any personal costs order against the Plaintiff’s legal team. I think at least in the present circumstances, for clarity, I should exercise strict mental discipline in the costs matter between the Plaintiff and the Defendants, as opposed to the costs matter concerning the Plaintiff’s legal team personally.

14.  In my view, the material non-disclosures about the erroneous legal basis and the Plaintiff’s conduct of the application was, regrettably, egregious in the present case given that:-

(1)  As I pointed out in §14 of the Reasons for Decision, the Court of Appeal’s judgment in Re L& A International Holdings Limited [2020] 4 HKLRD 544 goes direct to the point which would show clearly that the Plaintiff’s application was premised on a wrong legal basis. So, the legal error here was not something caused by some novel, arguable legal points. Instead, the legal point involved has been well settled at least since 2020.

(2)  Even assuming that the Plaintiff (legally represented) did not know this well-settled legal point during the ex parte stage, as I pointed out in §21 of the Reasons for Decision, Mr Kirpalani raised this point three times. The Plaintiff would have at least checked up this point and there would be no difficulty in finding out Re L& A International Holdings Limited, supra. However, instead, the Plaintiff insisted upon continuation of the whole Ex Parte Order, without any attempt to amend the application or the Ex Parte Order.

(3)  No disclosures were made to the Court on this point. Despite being alerted three times about this clear legal point, the Plaintiff still thought he was right in pursuing the application all the way, without any attempt to explain how the matter could proceed with on such legal basis.

(4)  Put mildly, this borders on failure on the Plaintiff’s part to discharge the duty to fairly and properly address the Court on legal questions. Such duty on legal questions has to be observed not only at ex parte stage but also inter partes stage.

(5)  The failure to make disclosure in relation to the security of HK$30,000,000 (see §35 of the Reasons for Decision) has been addressed in §11 above. I still see no answer for that.

15.  Having considered Ms Chong’s written submissions and the matters in §14 above, I am of the view that indemnity basis should be ordered.

III.  TAXATION INSTEAD OF SUMMARY ASSESSMENT

16.  The Plaintiff’s reason advanced in support of taxation instead of summary assessment is that the total costs in the Plaintiff’s statement of costs is very substantial, amount to HK$1,590,281.

17.  The amount being substantial is a consideration. However, this does not automatically mean that there must be taxation. I should also consider other factors such as whether the matter is self-contained enough, whether taxation is a proportional means, whether there are any legal points involved in the taxation or assessment that have to be argued: see Seridom Servicios Integrados Idom S.A.U. v Heng Wen Trade Co., Limited [2019] HKCFI 761 at §§17, 28 and 29 per Marlene Ng J.

18.  As the judge seized of the matter since the call-over hearing of the Plaintiff’s application to continue the Ex Parte Order, I am in a position to say that the matter is self-contained enough. There is no legal point involved for taxation or summary assessment. While the amount is substantial, having considered the matter in the around, I think that summary assessment is more appropriate.

IV.  ORDERING THE PLAINTIFF TO CONFIRM WHETHER OR NOT TO GIVE UNDERTAKING

19.  From the correspondence produced before me and the parties’ written submissions, there seems to be dispute over whether the Plaintiff would give the usual undertaking for the limited injunction I granted in §31 of the Reasons for Decision, I order that the Plaintiff shall confirm in writing to the Court and the 1^st Defendant within 3 days from today that he gives the undertaking as to damages. If the Plaintiff fail to do so, the limited injunction shall be discharged automatically.

V.  CONCLUSION

20.  In the circumstances, I dismiss the Costs Summons, and make the costs order nisi absolute, with a costs order that the Plaintiff shall pay the Defendants the costs of the Costs Summons summarily assessed at HK$59,630.

21.  I also order that the Plaintiff shall confirm in writing to the Court and the 1^st Defendant within 3 days from today that he gives the undertaking as to damages for the limited injunction I granted in §31 of the Reasons for Decision.

22.  For the purpose of deciding whether to order the Plaintiff’s solicitors to be personally liable to pay costs and what costs, following §37 of the Reasons for Decision, I remind the Plaintiff’s solicitors to file and serve affirmation within 28 days from today, with written submissions within 14 days thereafter, to show cause why they should not be personally liable.

23.  Lastly, I thank counsel for their assistance.