MOK MEI LING REKEI v. LAU MUK FAT

CACV 339/2019

[2022] HKCA 1619

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 339 OF 2019

(ON APPEAL FROM HCMP NO 944 OF 2018)

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BETWEEN

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D E C I S I O N

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Hon Au JA (giving the Decision of the Court):

A. INTRODUCTION

1.  These are the plaintiff’s and the defendant’s respective applications to vary the costs order nisi we made in our judgment dated 14 May 2021 (“the CA Judgment”). This decision should be read together with the CA Judgment and we adopt herein the abbreviations used in the CA Judgment unless otherwise stated.

2.  By way of the CA Judgment, we allowed the defendant’s appeal against the judgment of Recorder Linda Chan SC (as she then was) (“the Judge”) dated 28 June 2019 (“the CFI Judgment”).

3.  As a recap, in these proceedings, the plaintiff (as the registered owner of the 9 Lots) applied by way of the OS to have the 2013 Memorandum, the 2011 Writ and the 2017 Writ registered by the defendant against the properties in the Land Registry withdrawn or vacated. By the CFI Judgment, the Judge determined the OS summarily and ordered the withdrawal or vacating of those registrations. The defendant appealed against the CFI Judgment with seven grounds of appeal.

4.  In allowing the appeal on Ground 5 (and without determining all the other grounds of appeal), we set aside the CFI Judgment and remit the OS to the Court of First Instance for trial to determine all the issues arising under the OS, including the issue on the plaintiff’s locus. We further ordered the OS to continue as if the cause had begun by writ.

5.  We further made a costs order nisi that (a) the plaintiff do pay the defendant’s costs of the appeal, with certificate for two counsel, and (b) the costs of the court below be in the cause of the OS.

6.  By way of a summons[1] (“the plaintiff’s summons”), the plaintiff sought to vary the costs order nisi to the extent that the costs of the appeal should be in the cause of the OS.

7.  On the other hand, the defendant also took out a summons (“the defendant’s summons”)[2] seeking to vary the costs order nisi to the extent that the plaintiff should pay the defendant all the costs of and occasioned by the substantive hearing on 16 May 2019 before the Judge with certificate for two counsel. These costs include (a) the costs of the affirmations filed by the defendant in opposition to the OS, and (b) the wasted costs of taxation proceedings of the OS.

8.  Both parties agreed that the two summons could be disposed of on paper. They have since filed their respective written submissions[3].

9.  This is our decision on the summonses.

B. THE CA JUDGMENT

10.  We refer to the summary of the material facts and issues on appeal stated at [6] - [33] of the CA Judgment.

11.  Whilst the defendant advanced seven grounds of appeal before us, we decided that Ground 5 was sufficient to dispose of the appeal as it related to the plaintiff’s locus to bring the OS, which could determine whether the Judge’s summary determination of the substantive issues relating to the registration of the 2011 Writ and the 2017 Writ must also be set aside[4]: [33] of the CA Judgment.

12.  In gist, we allowed Ground 5 for the following reasons[5]:

(1) Under section 20 of the LRO, the plaintiff must be a person “interested” in the 9 Lots to give her the necessary locus to bring the OS application seeking to vacate the relevant lis pendens.

(2) The plaintiff’s interest as a paper and/or beneficial owner of the 9 Lots is founded (as the Judge appeared to have concluded[6]) on (a) the SPA and the Assignment in purportedly conveying the 9 Lots to her, and / or (b) Wong’s purported selection made by way of the SPA and the Assignment or the Selection Letter.

(3) However, given the various factual unusual features relating to the SPA and the Assignment as identified by the defendant, the court is satisfied that it is at least triable as to whether the SPA and the Assignment were sham transactions as contended by the defendant. These matters cannot be properly resolved summarily in the absence of oral evidence, as sought to be done by the Judge.

(4) Similarly, the validity and effect of the Selection Letter as a valid form of selection made by Wong under the Development Agreement is also a subject matter under serious dispute in the 2019 Action. This also cannot be disposed of summarily.

(5) Under the well-established principles, there is therefore a triable issue on locus which should have been (but was not) decided first at a hearing where viva voce evidence can be taken before the OS could be properly disposed of.

(6) In the premises, the Judge erred in summarily rejecting the defendant’s contention that the plaintiff has no authority or locus to bring the OS proceedings, and then went on to summarily determine the other substantive issues under the OS and gave judgment in favour of the plaintiff.

C. THE PRESENT APPLICATIONS

C1. The plaintiff’s summons – costs of the appeal

13.  Mr Alfred Cheng for the plaintiff invites this Court to depart from the principle of “costs should follow the event” because he argued that the defendant was not the “winner of the appeal”. He elaborates that, since this Court did not adjudicate most of the defendant’s grounds of appeal on merits which have been deferred to the OS for trial, the fair and just order for the costs of the appeal should be in the cause of the OS.

14.  We do not agree.

15.  The Judge decided the OS summarily and gave judgment in favour of the plaintiff for all the reliefs sought under the OS. However, as we concluded in the CA Judgment, she had erred in so doing as she was wrong in proceeding to determine the substantive issues under OS after wrongly rejecting the locus issue summarily.

16.  In succeeding on Ground 5, the defendant has therefore also successfully set aside all the reliefs granted by the Judge. He is only able to achieve this by bringing this appeal. In substance, the defendant is successful in the appeal substantively and is the ultimate winner. There is no reason why costs should not follow the event.

17.  We therefore dismiss the plaintiff’s summons.

C2. The defendant’s summons - costs below

18.  The defendant now seeks the costs of the court below, including the costs of the affirmations filed by the defendant in opposition and the wasted costs of taxation proceedings of the OS.

19.  The defendant’s submissions in support are in substance these:

(1) Under Order 62, rules 3(2)[7], 5(1)[8] and 5(2), if the court is of the view that a party has been unreasonable in its conduct of the proceedings, it can exercise its discretion to depart from the “costs follow the event” principle and to award costs against that party;

(2) In this respect, Order 62, rule 5(2) provides relevantly as follows:

“For the purpose of paragraph (1)(e), the conduct of the parties includes—

(a) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(b) the manner in which a party has pursued or defended his case or a particular allegation or issue;

(c) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim; and

(d) conduct before, as well as during, the proceedings.”

(3) The plaintiff’s conduct in continuing with the OS application before the Judge was unreasonable. This is so as she was made aware of the defendant’s contention at the call-over hearing before Deputy Judge To that the OS should be directed to continue as if the cause had begun by writ given the various substantial factual disputes in this case and under the various other actions (including the sham transactions contentions).[9]

(4) In the premises, the court should exercise its discretion to award the costs below to the defendant.

20.  In opposition, Mr Cheng for the plaintiff has submitted as follows:

(1) When the OS first came before Deputy Judge To, the defendant, by way of written submissions, stated that cross examination of deponents would be necessary, and the court should order the OS be continued as if it was begun by writ.

(2) But given the Order given by Deputy Judge To at the call-over of the OS, it is clear that the defendant did not insist on (a) arguing for an order under Order 28, rule 8(1) to dispose of the OS; and / or (b) subjecting the deponents to cross examination, even if the court was to hear the OS.

(3) Indeed, at no time during the first instance proceedings did the defendant formally apply for an order under Order 28, rule 8(1), or for an order that the deponents do appear at court to be cross examined. Despite the alleged insistence that the plaintiff did not have the locus to maintain the OS, the defendant simply let the OS proceed to a substantive hearing.

(4) Thus, it lies ill in the defendant’s mouth to suggest that the plaintiff ought to be penalised for the defendant’s decision not to persist with his requests.

(5) The defendant’s submissions also mischaracterised the plaintiff’s submissions on the urgency of the OS. As the plaintiff’s submissions before the Deputy Judge show[10], such submissions were to ask for a direction that the hearing should be fixed without consultation of counsel’s diaries. This did not prevent the defendant from making his own applications for the disposal of the OS in the way he saw appropriate.

21.  We agree with Mr Cheng. In particular:

(1) Although the defendant in his skeleton lodged before the Judge did ask, alternatively, that the OS should be continued as if the cause or matter had begun by writ “should this Honourable Court form the view that the present OS is not suitable for resolving parties’ dispute”, the primary submission was that, in light of the various factual disputes, the OS should be dismissed summarily[11].

(2) Similarly, in the Amended Notice of Appeal filed in this appeal, the primary relief asked by the defendant is also for the summary dismissal of the OS.

(3) In the premises, the principal contentions raised by the parties before the Judge were whether the factual disputes raised under the various affidavit evidence filed by the parties per se were of such nature that the OS should be disposed of summarily either way. This is noteworthy since the existence of issues of facts does not always render the originating summons procedure inappropriate as under Order 28, rules 4(3) and (4), the court has power to direct the taking of oral evidence and the attendance of deponents to be cross-examined on their affidavits. See Hong Kong White Book 2022, paragraph 28/8/2.

22.  In the premises, when viewed under the above context, we are not convinced that the plaintiff’s conduct in continuing to proceed with the OS application before the Judge after the call-over hearing was so unreasonable to make it fair and just to order her to pay the costs below. In this respect, it is pertinent to note that it is not the defendant’s submission in this application that he should have the costs below as he was in substance the successful party.

23.  For the same reason, it also cannot be said that the defendant should have the costs of the taxation as wasted costs, in particular given that (as submitted by Mr Cheng) the defendant never applied for stay of execution of the CFI Judgment pending appeal.

24.  In the premises, we would also dismiss the defendant’s summons.

D. DISPOSITION

25.  For the above reasons, we dismiss both applications and hereby make the costs order nisi absolute.

26.  As both sides have failed in their respective applications, we think it just and fair to make no order as to costs in both summonses.