CHU KONG (suing on behalf of himself and all other shareholders in (i) Ocean Sino Ltd (except LAU WING YAN) and (ii) PBM Asset Management Ltd) v. LAU WING YAN AND OTHERS

CACV 373 /2023, [2026] HKCA 1297

On appeal from [2023] HKCFI 2703

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 373 OF 2023

(ON APPEAL FROM HCA NO 1885 OF 2021)

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Hon Kwan VP (giving the Decision on Costs of the Court):

1.  On 29 May 2026, we handed down our judgment ([2026] HKCA 1004; “CA Judgment”) dismissing the appeal of Chu and the Stay Summons and the New Evidence Summons taken out by him. Having heard submissions on costs of all the parties (except in one respect as mentioned below) at the conclusion of the proceedings on 30 April 2026, we ordered Chu to pay the costs of Lau, Yen and Greenwood of the appeal and the two summonses and on an indemnity basis (at §§100 to 105).

2.  We assessed summarily the costs payable to each of Lau, Yen and Greenwood regarding the appeal and the summonses on a global basis.  We assessed the costs recoverable by each on an indemnity basis at: $1,450,000 (Lau), $848,000 (Yen) and $1,630,000 (Greenwood) (at §107).  The gross sum assessment was made on a nisi basis such that it would become absolute if no application in writing to vary the assessment was made within 14 days of the CA Judgment (at §99).

3.  On 12 June 2026, Chu lodged in court an 8-page document in Chinese to seek variation of the gross sum assessment and other reliefs.  We treated this document as his submissions for the application.  On 23 June 2026, we declined to grant leave to him to file an affirmation to deal with the matters as proposed in §7 of this document.

4.  The orders Chu sought are set out in §4 of this document:

(a) to reduce substantially the costs assessed by the court on an indemnity basis; or

(b) to vary the indemnity basis for assessing costs to party and party basis[1]; or

(c) to stay the gross sum assessment and order instead a detailed taxation of costs by a taxing master; and/or

(d) to make other “just and suitable changes” to the gross sum assessment including allowing deferred payment, payment by instalments, exemption of part of the costs taxed.

5.  Chu also sought stay of execution of the order in §108 of the CA Judgment (that the amount paid into court by him as security for costs of the appeal with interest accrued be paid out to Lau, Yen and Greenwood) until the Court of Appeal has ruled on the present application to vary the costs assessment and until his application for leave to appeal to the Court of Final Appeal against the CA Judgment has been determined.

6.  The entire application is opposed by Lau, Yen and Greenwood.

7.  We decline to deal with the reliefs sought in (c) and (d).

8.  In respect of (c), Lau, Yen and Greenwood had submitted their statements of costs in advance to facilitate the court making an assessment of costs on a gross sum basis with the award of costs.  At the conclusion of the hearing, Kwan VP had explained to Chu that this court would assess costs summarily instead of asking a taxing master to tax the costs, as we are familiar with the case and would have a fair idea of the work involved. Chu did not make any dissent about this at the time.  Costs below were also assessed summarily by Au-Yeung J.  This is clearly an appropriate case for gross sum assessment[2].

9.  As for (d), the reliefs Chu sought are simply outside the ambit of the application for variation that he is permitted to make under the CA Judgment.

10.  This leaves (a) and (b).

11.  On the matter of indemnity costs in (b), the opposing parties had made submissions on this at the hearing on 30 April 2026, but Chu did not address this at the time.  When the court raised this with him at the conclusion of the proceedings, it was left on the basis that he could respond to this after he has read the judgment to be handed down[3].  This being the case, he should be permitted to make submissions to vary the basis of taxation.  §99 of the CA Judgment stated that “the assessment made on a summary basis is nisi”.  This should cover the basis of the assessment for which the court had not received submissions from all the parties.

12.  We do not propose to repeat the reasons given in §§102 to 105 of the CA Judgment in assessing costs on an indemnity basis.  In his submissions, Chu contended that indemnity costs should not be ordered as this case involves important public interest and important development in the principles of company law, and an indemnity costs order would hinder seriously the exercise of his constitutional right of appeal, and is contrary to the principles of a fair trial.  Besides, as a litigant in person who has to handle a number of legal proceedings against Lau at the same time in several jurisdictions, the court should treat him with indulgence.  He reiterated that he did not seek to abuse the process of the court and the steps he took in the proceedings were based on objective facts and positions and his sincere and genuine wishes to protect his interest in PBM.

13.  We reject all his submissions.

14.  This case does not involve important public interest or important development in the principles of company law or any constitutional right of appeal.  This is not a public interest litigation, and the principles on the lack of locus standi to bring derivative action where a company is in liquidation are well established.  The fact that Chu has been acting in person and has to handle a number of legal proceedings across jurisdictions at the same time is not an excuse for pursuing applications that are plainly misconceived and totally devoid of merits.  We are wholly unpersuaded that his litigation conduct should not be regarded as an abuse of the process of the court to justify indemnity costs.

15.  We turn to the quantum of costs.

16.  Pursuant to Order 62 rule 28(4A) of the Rules of the High Court, on a taxation of costs on the indemnity basis, all costs shall be allowed except insofar as they are of an unreasonable amount or have been unreasonably incurred and any doubts which the taxing master may have as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved in favour of the receiving party.  There is a large measure of discretion left to the court conducting the summary assessment using a broad-brush approach[4].

17.  Chu contended that the amounts of costs recoverable by Lau, Yen and Greenwood ought to be reduced to 30% to 50%.  He asserted that even though the costs were taxed down in the gross sum assessment, they are still too high.  He further contended that the legal teams of the opposing parties should not need to spend too much time (and costs) on the legal question of locus standi.  Moreover, the legal teams of Lau and Greenwood have been deeply involved in the core disputes between him and Lau in legal proceedings in Hong Kong and other jurisdictions since 2014 and should be familiar with the issues.  Costs should be assessed in a detailed scrutiny and based on the time and expenses objectively required.

18.  Chu did not identify any specific items or amounts incurred by the receiving parties that are unreasonable or have been unreasonably incurred such that they should be excluded or reduced.  The arguments on locus standi were not the only point of contention raised by Chu in the proceedings.  He raised other grounds of appeal, put forward a very substantial quantity of documents, and made late interlocutory applications that had a disruptive effect on the preparation of the appeal. All these needed to be addressed in submissions and responded to in evidence, which Lau and Chu did in their additional affirmations.  In these circumstances, we do not think the amounts of costs incurred by the opposing parties are unreasonable or have been unreasonably incurred.  There is no scope to argue that the amounts as assessed do not fall within the generous ambit allowed on an indemnity basis.  We see no ground to reduce the costs to 30% to 50% or any other percentage.

19.  There is one other matter, this concerns a stay of execution of the order of payment out of the amounts paid into court by Chu as security for costs of the appeal of the opposing parties with accrued interest.  Strictly speaking, this application is not before this court.  Any application for stay of execution should be by summons, not by a letter to the court.  In any event, even if the stay application were properly before us, we would have refused it.  Having considered Chu’s submissions of 8 pages, it seems that the reason for the stay is to avoid causing financial strain on him as he wishes to pursue his intended appeal in the Court of Final Appeal and an immediate enforcement of the costs order may hinder the public interest litigation.  As we have mentioned, this is not a public interest litigation. The pursuit of an intended further appeal for which leave is yet to be granted is hardly a reason for delaying the payment out of amounts paid into court for the protection of the respondents.  Last but not least, if the amounts paid into court as security for costs are to remain in court, this could not possibly alleviate the financial strain of Chu.

20.  For all the above reasons, we dismiss Chu’s application to vary the gross sum assessment.

21.  Costs of this application should follow the event.  Lau, Yen and Greenwood all seek costs of this application, in the respective sums of $70,940, $86,704 and $91,562.

22.  We see no reason to depart from the principle that costs of the application should follow the event.  We order Chu to pay the costs of the opposing parties of this application.  We assess costs to them on party and party and a gross sum basis at $54,640 (Lau), $71,904 (Yen) and $69,562 (Greenwood).

23.  The costs order and gross sum assessment for this application are orders nisi.  They will be made absolute if there is no application by summons to vary within 14 days of this decision.

[1]  Chu seems to have misunderstood what “party and party” basis is, he called this in Chinese「逐項及逐項」基準, which translates as “item by item” basis.

[2]  Order 62 rule 9C(1); Beyonics Technology Ltd & Anr v Goh Chan Peng & Ors, CACV 244/2014, 13 October 2015, at §§6 to 7

[3]  We have checked this with the recording of the proceedings.

[4]  Success Lane Development Ltd v Fergurson Hong Kong Ltd [2024] HKCA 926 at §15