CHIU TAK KWONG AND ANOTHER v. TAN YUFANG

[English Translation – 英譯本]
HCAP 9/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO. 9 OF 2006

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BETWEEN

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DECISION

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1.  This is my decision as to whether I should, pursuant to section 52A of the High Court Ordinance, order the 2^nd, 3^rd and 4^th plaintiffs to jointly and severally bear the defendant’s costs together with the 1^st plaintiff.

Background

2.  Chiu Tak Shing (“Tak Shing”) signed an agreement with the defendant, Tan Yufang (“Tan”) over the distribution of the estate of the deceased, Chiu Lin Chau’s (“Chiu”). Tan also signed a Renunciation of Probate.  Tak Shing was born to Chiu and his first wife, and Tan was Chiu’s second wife.  Tak Shing signed the agreement on behalf of himself and his full siblings, while Tan did so on behalf of herself and the daughter she has by Chiu, Chiu Nga Yee (“Nga Yee”).

3.  Tak Shing is the elder brother of the 1^st plaintiff, Chiu Tak Kwong  (“Tak Kwong”). Therefore Tak Kwong was also a party to the agreement.  In the present case Tak Kwong sought a declaration from the court that both the agreement and Tan’s Renunciation of Probate were binding.  He also asked for an order to appoint him as the administrator of Chiu’s estate.

4.  Although the agreement was signed by Tak Shing on behalf of himself and his four full siblings, this action was brought against Tan by Tak Kwong only and none of his full siblings was a party to these proceedings before 5 March 2010.

5.  I gave judgment in favour of Tan on 5 March 2010 and made a costs order nisi requiring Tak Kwong to pay Tan’s costs, to be taxed on the indemnity scale. Tak Kwong did not apply to vary the order within 14 days of the order nisi, hence it automatically  became absolute after that period.  Both Tak Kwong and Tan were legally aided.

6.  Although this action was instituted against Tan by Tak Kwong only, his full siblings would have received the same benefits if Tak Kwong had won the case.  Further, his two sisters and elder brother cooperated fully with him in this action and testified for him.  Their evidence also showed that the five of them full siblings took a common stance when negotiating with Tan over the distribution of Chiu’s estate.  In fact when counsel on both sides were handling this trial they proceeded on the basis that the claim belonged to all of the five siblings.  Consequently I added Tak Kwong’s elder sister, elder brother and younger sister, namely, Chiu Yuk Lan (“Yuk Lan”), Tak Shing and Chiu Yuk Chun (“Yuk Chun”) as the 2^nd, 3^rd and 4^th plaintiffs in my judgment so as to consider whether they should be ordered to jointly and severally bear Tan’s costs with Tak Kwong, the 1^st plaintiff.

7.  I did not add Chiu Tak Ming (“Tak Ming”) as a plaintiff because he took no part in these proceedings, nor did he assist Tak Kwong by testifying for him.

8.  I instructed those representing Tan that they should give the plaintiffs notice of hearing of not less than one month, so that they would have sufficient time to seek legal advice and prepare their submissions.

9.  I also pointed out in my judgment that the High Court shall have power to make an order awarding costs against a person who is not a party to the relevant proceedings pursuant to section 52A(1) and (2) of the High Court Ordinance. Order 62, rule 2(4) and rule 6A(1) of the Rules of High Court further set down the procedures for exercising such powers.  The English and Chinese versions of section 52A(1) and (2) of the High Court Ordinance and Order 62, rule 2(4) and rule 6A(1) of the Rules of the High Court are as follows:

“High Court Ordinance

52A. Costs in Court of First Instance and Court of Appeal in its civil jurisdiction

(1)  Subject to the provisions of rules of court, the costs of and incidental to all proceedings in the Court of Appeal in its civil jurisdiction and in the Court of First Instance, including the administration of estates and trusts, shall be in the discretion of the Court, and the Court shall have full power to determine by whom and to what extent the costs are to be paid.

(2)  Without prejudice to the generality of subsection (1), the Court of Appeal or the Court of First Instance may, in accordance with rules of court, make an order awarding costs against a person who is not a party to the relevant proceedings, if the Court of Appeal or the Court of First Instance, as the case may be, is satisfied that it is in the interests of justice to do so.

The Rules of the High Court

Application (O. 62 r. 2)

(4)  The powers and discretion of the Court as to costs under sections 52A…to which this Order applies shall be exercised subject to and in accordance with this Order.

Costs orders in favour of or against non-parties (O. 62, r. 6A)

(1)  Where the Court is considering whether to exercise its power under section 52A or 52B of the Ordinance to make a costs order in favour of or against a person who is not a party to the relevant proceedings-

(a)  that person must be joined as a party to the proceedings for the purposes of costs only; and

(b)  that person must be given a reasonable opportunity to attend a hearing at which the Court shall consider the matter further.”

“高等法院條例

52A. 原訟法庭及行使民事司法管轄權的上訴法庭的訟費

（1）  除法院規則的條文另有規定外，所有行使民事司法管轄權的上訴法庭的法律程序及原訟法庭的法律程序的訟費及附帶費用，包括遺產管理及信託管理的費用，均須由法庭酌情決定，法院並有全權決定該等訟費須由何人支付及須支付訟費的範圍。

（2）  在不損害第（1）款的一般性的原則下，如上訴法庭或原訟法庭（視屬何情況而定）信納作出命令，判並非有關法律程序一方的人支付訟費屬秉行公正，則上訴法庭或原訟法庭可按照法院規則如此作出命令。

高等法院規則

（第62號命令第2條規則）適用範圍

（4）  法庭根據本條例第52A…而具有的權力和酌情決定權，須在本命令的規限下按照本命令而行使。

（第62號命令第6A條規則）有利於或針對並非訴訟一方的訟費命令

（1）  凡法庭正在考慮是否行使它在本條例第52A或52B條下的權力，以作出有利於或針對並非有關法律程序一方的人的訟費命令——

（a）  該人必須僅為訟費目的，而加入成爲該法律程序的一方；及

（b）  該人必須獲得合理機會，出席法庭將進一步考慮有關事宜的聆訊。”

Defendant’s submissions

10.  Tan was of the view that I should order Yuk Lan, Tak Shing and     Yuk Chun to jointly and severally bear Tan’s costs with Tak Kwong.  Mr Ho on behalf of Tan first submitted that this was a defended action and hence the costs should not be paid out of Chiu’s estate but rather by the losing party (See: Nina Kung v Wang Din Shin (No. 2) (2006) 9 HKCFAR 800, para. 10-12).  I do not intend to discuss this matter as it is not in conflict with the costs order nisi that has become absolute.

11.  Mr Ho further submitted that in a case where there were special circumstances, the court could order that costs be taxed on an indemnity basis.  I do not intend to discuss this matter either since it likewise does not conflict with the costs order nisi that has become absolute.

12.  As a matter of fact, Mr Shum on behalf of Tak Kwong, Yuk Lan, Tak Shing and Yuk Chun did not challenge that in the present case costs should follow the event and they should be taxed on the indemnity basis.  These two points were therefore not in dispute in these proceedings.

13.  Mr Ho further submitted that Yuk Lan, Tak Shing and Yuk Chun were all parties to the agreement and should be joined as plaintiffs in this action.  He relied on Hong Kong Civil Procedure 2010, para. 15/4/12 to support his argument. As noted above, Tak Shing signed the agreement with Tan on behalf of his full siblings.  Under the agreement, Tan agreed to give up her rights in Chiu’s Hong Kong home so that Chiu’s children ( including Nga Yee) could share the rights equally, while Tak Shing on behalf of himself and his full siblings transferred to Tan their rights in a mainland property that Chiu owned.  If Tak Kwong had been successful in this case, his full siblings would have received the same benefits.  Yuk Lan, Tak Shing and Yuk Chun also fully cooperated with Tak Kwong and testified for him at trial.

14.  In addition, Tak Kwong applied to serve on all of his siblings (including Nga Yee) notice of the action pursuant to Order 15, rule 13A(1) of the Rules of the High Court, so that all of them shall be bound by any judgment given in the action as if they were a party thereto as per Order 15, rule 13A(4).  His application was granted by a master on 9 May 2007.

15.  The English and Chinese versions of Order 15, rule 13A(1) and (4) of the Rules of the High Court are as follows:

“The Rules of the High Court

Notice of action to non-parties (O. 15, r. 13A)

(1)       At any stage in an action to which the rule applies, the Court may, on the application of any party or of its own motion, direct that notice of the action be served on any person who is not a party thereto but who will or may be affected by any judgment given therein.

…

（4）  A person may, within 14 days of service on him of a notice under this rule, acknowledge service of the writ or originating summons and shall thereupon become a party to the action, but in default of such acknowledgement and subject to paragraph (5) he shall be bound by any judgment given in the action as if he was a party thereto.”

“高等法院規則

（第15號命令第13A條規則）向並非訴訟一方的人發出訴訟通知書

（1）  在本條規則適用的訴訟的任何階段，法庭可應任何一方的申請或主動指示，向並非該宗訴訟一方但會或可能會受在該宗訴訟中作出的任何判決影響的人，送達有關該宗訴訟的通知書。

…

（4）  如有通知書根據本條規則送達任何人，該人可在送達14天内對令狀或原訴傳票作送達認收並隨即而成爲有關訴訟的一方，但如並無作此送達認收，則除第（5）款另有規定外，該人須受在有關訴訟中作出的任何判決約束，猶如他是訴訟一方一樣。”

16.  With the master’s approval, solicitors for Tak Kwong served a notice on his siblings, who however did not acknowledge service of the originating summons as per Order 15, rule 13A(4).  They therefore did not become a party to the action.  Nevertheless, since the notice had been served on them, and pursuant to the stipulation of rule 13A(4), they would be jointly bound by any judgment given in the action and if Tak Kwong had won the case, they would have jointly owned the rights in respect of the agreement.  Even if Tak Kwong was unsuccessful, they would not have to bear the costs consequences.  Since Tak Kwong was legally aided, the costs that he had to bear in the event of losing his case was limited.  Mr Ho submitted that this arrangement showed that Yuk Lan, Tak Shing and Yuk Chun were ill-intentioned and meant to evade the liability to pay costs.

17.  In my view, whether Tak Kwong and Tan or any of the parties were legally aided is irrelevant to the decision that I have to make.  If it is in the interests of justice that Yuk Lan, Tak Shing and Yuk Chun should bear Tan’s costs, then regardless of whether Tak Kwong and Tan were legally aided, I will have to make an appropriate order for them to bear the costs.

18.  However, I agree that not only did the three of them actively assist Tak Kwong in proceeding with the case, they also hoped to jointly receive the benefits if Tak Kwong was successful in the action.  Yet they did not apply to be joined as plaintiffs, nor did they acknowledge service of the writ of summons after receiving the notice from Tak Kwong’s solicitors.  Their purpose was to avoid the liability to pay costs if the case was lost.  Evidence in the case also showed that before the proceedings were begun, the three of them had actually sought legal advice regarding the inheritance of Chiu’s estate.

19.  Mr Ho further submitted that all three of them would be entitled to a share of Chiu’s estate, but I do not think that is a reason why they should be made to bear the costs.

20.  Mr Ho also mentioned that in my judgment of 5 March 2010, I held that the 3^rd and 4^th plaintiffs had orally threatened Tan and that none of the four brothers and sisters was telling the truth in their evidence.  I agree that this point is worth considering.

Plaintiffs’ submissions

21.  Mr Shum on behalf of Tak Kwong did not express any views at the hearing.

22.  Yuk Lan, the 2^nd plaintiff, claimed in her written submission that she and her husband had limited education and were earning a low income.  They were between the grassroots to lower middle levels of society.  Although their three children were all in employment their income was meagre.  They lived in public housing and led a frugal life, so they were able to build up a little savings. However, her husband had recently suffered a relapse of his heart disease.  In order to raise funds for the operation, they had to dig into their savings and borrow money from their brothers and sisters.  She therefore had no means to pay Tan’s costs.  If I were to order her and her brother and sister to pay the costs, she would not be able to afford her husband’s operation fees.  Hence she hoped that I would not make such an order.

23.  Tak Shing, the 3^rd plaintiff, stated in his written submission that he used to work in a hotel kitchen for many years, but the hotel was wound up in late February of this year and he was currently unemployed.  Although both his son and daughter were working, they did not earn much because of their limited education. He was living a lower class life and despite many years of toil, he was only able to save up a few pennies.  He therefore asked me not to order him to bear Tan’s costs.

24.  In her written submission, Yuk Chun, the 4^th plaintiff, said that  she was just an ordinary clerk while her husband worked in a fast food chain store.  Their income was limited and what little savings they had would have to be used as education funds for their children and to meet the family’s occasional needs.  Her daughter having completed her first year at university, in the next two years she would still have to pay for her tuition, boarding and overseas exchange, etc, which would amount to hundreds of thousands of dollars each year.  And her daughter intended to pursue a master’s degree.  Her son was now studying at Form 4 and he would have to be put through university for four years.  If I were to make her pay Tan’s costs, her children’s bright future would be destroyed and her son might be deprived of his university education. She therefore urged me not to order her to pay Tan’s costs.

Decision

25.  In my judgment, Yuk Lan, Tak Shing and Yuk Chun were all parties to the agreement.  All of them testified in court to assist Tak Kwong in proceeding with the case.  When negotiating with Tan for a settlement, they took the same stance as Tak Kwong and the roles they played were not materially different from Tak Kwong’s.  All of them had vested interests in this case in that if Tak Kwong had won, they would have received the same benefits.  Although they were not parties to this action before 5 March 2010, their status was effectively the same as that of Tak Kwong.  They did not join as parties only because they wanted to avoid the liability to pay costs to the winning party in case they lost. In my view, it was correct to join them as plaintiffs in this action so that I can exercise the powers conferred by section 52A of the High Court Ordinance.  I have also referred to Hong Kong Civil Procedure 2010, paras. 62/6A – 62/6A/5 cited by Mr Ho.

26.  I have further considered the submissions of Yuk Lan, Tak Shing and Yuk Chun. Save for explaining their financial difficulties, they did not give any reasons as to why I should not order them to bear Tan’s costs.  In my view, personal financial circumstances can have no bearing on my decision as to whether I should make them bear the costs.  I should only consider whether the principle of justice will require me to make such an order.

27.  Based on the above analysis, in order to be fair to Tan, I hereby order the four plaintiffs to jointly and severally pay Tan’s costs.

28.  I will also make a costs order nisi as follows: Yuk Lan, Tak Shing and Yuk Chun shall jointly and severally pay costs of these proceedings to Tan, including counsel’s fees, to be taxed by a taxing master on the party and party scale. Tak Kwong, on the other hand, is not required to pay such costs and I make no order as to costs regarding Tak Kwong’s participation in these proceedings.  As for the respective costs of Tak Kwong and Tan, they shall be taxed in accordance with the Legal Aid Regulations.  The costs order nisi shall become absolute unless either party applies to vary it within 14 days of today.