方燕卿 v. 方坤培,BY HIS GUARDIAN AD LITEM FONG WING YEE

CACV 57/2017

[2018] HKCA 248

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 57 OF 2017

(ON APPEAL FROM HCA NO 1964 OF 2011)

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DECISION ON COSTS

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

1.  This appeal came on for hearing on 12 September 2017. At the hearing, this Court raised with the parties that both parties seemed to have advanced arguments on the false premise that the court below had made an order for assessment of damages. In the perfected order as sealed, there was no provision for assessment of damages. At the highest, there had been an invitation by To J at the last paragraph of his reasoned judgment to the parties to apply for direction for assessment of damages. That invitation had not been taken up and no application had been made in that regard.

2.  This Court also referred to the court file below.  Though the draft order prepared by the Plaintiff’s solicitors included a provision for assessment of damages, it had been crossed out in the approved version.  Hence, it should have been very clear to the solicitors for the Plaintiff that no provision for assessment of damages was included in the finalized version of the order which was subsequently sealed.  

3.  After the point was raised, Counsel took time to take instructions from their respective clients.  Having done so, they made a joint application for the appeal to be adjourned to have further negotiation.

4.  Despite efforts by the parties (which have not been communicated to us), they could not reach full agreement on the disposal of the appeal.  In a joint letter of 9 February 2018, solicitors for the parties informed the Court that it was agreed that the appeal be withdrawn.  However, the parties could not agree on costs. 

5.  The Court gave directions for filing of submissions on costs and the determination of that question on the papers. Submissions were filed accordingly.  In the submissions of Mr Shum, the Plaintiff asked for costs of the appeal.  On the other hand, in the submissions of Mr Cheung, the Defendant invited this Court to make no order as to costs for the appeal.

6.  The Court will not generally permit an appeal to be withdrawn, see para 59/0/19 of the Hong Kong Civil Procedure 2018. Notwithstanding the agreement of the parties, in light of the clear position on the record (as reflected in the sealed order) that no order for assessment of damages had actually been made, we are of the view that the appeal should be dismissed.  In this connection, we do not accept Mr Cheung’s submission that the judge had already decided that there should be an order for assessment of damages.  Notwithstanding what had been said in the last paragraph of the reasoned judgment, it was perfectly open to the judge to decide on reflection not to make such order.    

7.  Though the appeal is brought by the Defendant and the starting point is costs should follow event, in the special circumstances of this appeal we do not think the Plaintiff should have the full costs of the appeal.  To start with, up till the time when this Court raised the query regarding the false premise on which the appeal was brought the Plaintiff’s legal team had been resisting the appeal on the same false premise as the Defendant’s legal team.  A respondent’s notice was filed on 2 May 2017 seeking to “affirm the assessment of damages” on some additional grounds. Skeleton submissions were also prepared on that false premise.

8.  As we said above, this is rather surprising in light of the fact that solicitors for the Plaintiff were responsible for the preparation of the draft order and sealing of the order as approved.  In light of the fact that the sole challenge by the Defendant in the appeal was in respect of the purported order for assessment of damages, we fail to see any reason why the Plaintiff’s solicitors did not bring it to the attention of counsel that the court below had deliberately refrained from including a provision for assessment of damages in the approved order.   These were matters only known to the Plaintiff’s solicitors but not to the Defendant’s solicitors.

9.  Had the Plaintiff’s solicitors acted more diligently and in line with their duty under Order 1A Rule 3, it should not be difficult to persuade the Defendant to abort the appeal.  At any rate, the Plaintiff could probably succeed in resisting the earlier application by the Defendant for leave to appeal out of time in HCMP 3386/2016.  Unfortunately, the sealed order was not produced to the court in HCMP 3386/2016.  We note that solicitors for the Plaintiff initially did not act for the Plaintiff in that application.  Notwithstanding that, in their capacity as solicitors for the Plaintiff in HCA 1964/2011, the solicitors should have advised the Plaintiff that no order for assessment of damages had been made by the court below.  The solicitors came on the record in HCMP 3386/2016 by a notice to act filed on 18 January 2017 and signed a consent summons for extension of time filed on 20 February 2017.  The court granted extension pursuant to such consent on 21 February 2017.  Solicitors for the Plaintiff did not draw it to the court’s attention that no order for assessment of damages had been made throughout the course of HCMP 3386/2016.     

10.  As it transpired, much work had been done on a false premise.  Had those acting for the parties been more vigilant in paying attention to the sealed order, it is quite possible that substantial costs could have been avoided.  We are of the view that the legal teams on both sides are responsible for such mishap.

11.  Unfortunately, by now each party has incurred substantial costs on an abortive issue.  On the abortive issue which formed the substantive arguments of counsel placed before us (up to the Court’s reference to the absence of an order for assessment of damages), we have not reached any determination on their merits and it would not be fair to impose the burden of such costs on the Defendant. 

12.  In the circumstances, bearing in mind the considerations in Order 62 Rule 5, we consider it just to depart from the starting point.  As between the parties we shall order that the Defendant pay the costs at the initial stage of the appeal up to 2^nd May 2017 (the date on which the Respondent’s Notice was filed) but excluding from that the costs of the preparation of the Respondent’s Notice (which should not be allowed as it was, like the Notice of Appeal, putting forward arguments on the false premise).  By that stage, the Plaintiff should have spotted that the appeal had been brought on a false premise and all subsequent work was actually wasted.  Such initial costs should be minimal and parties should be able to agree on the same, failing which such costs will have to be taxed.

13.  Both parties are on legal aid.  Mindful of the effect of legal aid charge, and in light of what we have said above, there may be a conflict of interests between the lawyers and their respective clients. We direct counsel to explain the position to their respective clients and the solicitors should inform the Director of Legal Aid of the situation.  We give the parties another opportunity to lodge submissions to us within 28 days before we grant legal aid taxation of their own costs.  The Director may also lodge written submissions within 28 days.

14.  This appeal illustrates the importance of paying attention to the terms of the order against which an appeal is brought.  Those advising a party who intends to bring an appeal and those responsible for drafting a notice of appeal should read the sealed order carefully before giving advice and drafting.  The decision or judgment of the court below should be encapsulated in the sealed order or formal judgment.  By reason of Order 59 Rule 5(1)(a), an appeal cannot be set down without a sealed order or formal judgment.  If there are doubts or ambiguities on the terms of the approved order or formal judgment, they should be resolved by seeking clarifications with the court below before the lodging of the sealed order or formal judgment for setting down an appeal.