TSUI PING SUM AND ANOTHER v. CHAN KA LOK AND OTHERS

HCA 432/2021

[2026] HKCFI 3584

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 432 OF 2021

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RULING ON COSTS

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1.  There are 3 Summonses before this Court:

(i)  the Plaintiffs’ summons dated 16 April 2026 to vary the costs order nisi for costs incurred below to be paid by the Defendants to the Plaintiffs (the “1^st Summons”);

(ii)  D1-D3 & D7’s summons dated 23 April 2026 (the “2^nd Summons”) to cap their liability to 20% of the Plaintiffs’ appeal costs; and

(iii)  D4 & D6’s summons dated 23 April 2026 (the “3^rd Summons”) for the appeal costs to be borne by the Defendants severally and in equal shares.

2.  On 9 April 2026, this Court allowed the Plaintiffs’ appeal against the Order of Master Isaac Chan dated 18 November 2025 and ordered nisi that (i) costs of the amendments be to the Defendants; and (ii) costs of the appeal be to the Plaintiffs, applying the usual order where an application for amendment is resisted but allowed: Lessy SARL v Pacific Star Development Limited & Anor [1996] 2 HKLR 1 at p.2C and 2E.

3.  D5 appeared in person but did not make any submissions.

The 1^st Summons

4.  At the hearing below, the Plaintiffs were unsuccessful in their application on the disputed amendments. As the Master considered the preparation for the hearing by both sides highly unsatisfactory, he made no order as to the costs of the hearing before him.

5.  The Plaintiffs succeeded on appeal and this Court allowed the substantial amendments refused below which the Defendants actively opposed. The Plaintiffs seek to vary the costs order nisi for costs incurred below to be paid by the Defendants to the Plaintiffs.

6.  Mr Samuel Leung, counsel for the Plaintiffs submitted that the starting point is that costs follow the event and it is for the party seeking to depart from that general rule to prove otherwise: Vasily Trubnikov v Evgeny Volosov [2025] HKCFI 3051 at §6.

7.  The general rule applies on appeal with the result that the Court of Appeal will normally allow a successful appellant the costs of the appeal as well as the costs below: see Hong Kong Civil Court Practice (“HKCCP”) 2025 at §59.10.17, and Zhang Rui Kang v Tunghsu Group Co Ltd [2026] HKCFI 954 at §§37 and 39.

8.  Mr Stony Chan, counsel for D1-D3 and D7, submitted that the Master made no order as to costs and his order should not be varied because of the Master’s dissatisfaction with the preparation of the hearing, highlighting various aspects in his written submissions.

9.  However, what is clear from the transcript is that the Master’s criticisms on preparation were directed at both sides. That fact of itself does not necessarily justify a departure from the general rule where the appeal results in a different outcome.

10.  A further complaint was that as regards the amendment to the constructive trust issue, the Plaintiffs failed to cite any authority in their written submissions before the Master. At the hearing, counsel orally mentioned the Westdeutsche case which did not feature on appeal. It was submitted that the Court should not condone the Plaintiffs’ ‘lack of arguments’ on this point.

11.  However, the criticism appears misplaced as at the appeal hearing, the Plaintiffs cited a Hong Kong case, Guaranty Bank and Trust Co v ZZZIK Inc Ltd, unrep., HCA 1139/2016, 18 July 2016 at §28 which applied the principles in Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669.

12.  Mr Brian Tsui, counsel for D4 and D6, submitted that this is not an appropriate case for the Court to interfere with the Master’s discretion on the costs below notwithstanding outcome of the appeal. He did not explain why the outcome should be ignored. In his written submissions, he referred to the case of Paul Y-ITC Construction Ltd v Kin Shing Co Ltd [1999] 1 HKC 511 at 515.

13.  I do not see how that authority assists D4 and D6 since the Paul Y case concerned an appeal against a costs order rather than an application to vary. Moreover, the judge in fact applied the general rule that costs should follow the event.

14.  In their written skeletons[1], the Plaintiffs offered a 50% reduction on bundle costs[2].

15.  Having considered the Master’s criticisms, a costs sanction is clearly warranted. However, to deprive the Plaintiffs (who succeeded on appeal) of the costs below altogether would be disproportionate. Doing the best that I can, to mark the Court’s disapproval of the unsatisfactory preparation for the hearing before the Master, there should be a 50% reduction to the amount of costs recoverable in respect of the costs below.

Apportionment

16.  D1-D3 and D7 seek to cap their liability at 20% (2^nd Summons) and D4 and D6 seek an equal shares order (3^rd Summons).

17.  Where a costs order is against more than one paying party and is silent on the parties’ liabilities, the applicable principles for apportionment were considered by Acting Registrar King Wah Wong in his judgment in Securities and Futures Commission v Yiu Hoi Ying Charles (No. 2) (2021) 24 HKCFAR 382 at §32(ii)-(iv)[3]:

“(ii) the general rule is that the liability to pay the winning party’s costs under such order should be joint and several, except in respect the separate case/cause raised by one of the losing parties, and in that case, that losing party alone is solely liable for the costs incurred by the winning party in meeting the separate case/cause…

(iii) the general rule referred to in para (ii) above is a starting point only and is not be elevated to the status of a hard and fast legal principle… It is an application of a more general principle of costs, namely, it being a discretion of the court taking into consideration of all circumstances including, inter alia, who is the winner and the parties’ conduct. The Hong Kong costs regime also provides for the same governing principles… The requirement of justice and fairness should always dictate the exercise of discretion… The general rule, i.e. the joint and several liabilities of the parties is no more than a summary of the general observation of how the court normally exercises its discretion on costs when two or more parties run a ‘common’ cause or defence against their adversary and fail; and

(iv) When considering whether the ‘starting point’ is established or the special circumstances shown, what is important is whether the losing parties are pursuing a common cause/defence/case or raising separate issues independent of each other. The facts that the losing parties are separately represented, or that their cases were not consolidated, or that one is less active than the others … are not determinative in deciding whether special circumstances or exception have been shown. Parties are to be held jointly and severally liable for the costs of their adversary if they have acted in a coordinated and concerted manner, or each supporting each other’s case until they are no longer mutually supportive…; or when they press on their common cases despite raising different grounds…; or they being real and justifiable (as against nominal) defendants but seeks to obtain benefit from the active resistance of the other defendant, though itself less active and even willing to abide by any judgment of the court… Parties are not so held liable when one party raises a separate cause/defence of his own that can be distinguished from the others…; or when the parties are truly divorced one from another or evidence falling into real compartments…”[4]

18.  For present purposes, the following matters are pertinent:

(i)  the starting point is joint and several liability;

(ii)  it is not a hard and fast legal principle but an exercise of the Court’s costs discretion;

(iii)  in determining whether the “starting point” is established or the special circumstances shown, it is relevant to ascertain whether the losing parties advanced a common cause or case, or whether they were genuinely separate cases or causes;

(iv)  the fact that the losing parties (D1-D3 and D7 on the one hand and D4 and D6 on the other) are separately represented, or that one is less active than the others is not determinative in deciding whether special circumstances or exception have been shown;

(v)  parties may remain jointly and severally liable if they have acted in a coordinated and concerted manner, pressed on with a common case despite different grounds, or stood to obtain the benefit of another party’s active resistance.

19.  Neither Mr Chan nor Mr Tsui challenged the principles set out in SFC v Yiu.

The 2^nd Summons

20.  D1-D3 & D7 seek to limit their liability to 20% of the Plaintiffs’ appeal costs. At the hearing, there were 3 main areas of contention between the Plaintiffs and the Defendants, namely, constructive trust, conspiracy and misrepresentation. The remaining issues such as amendments to the Police Report were peripheral issues classified under the ‘miscellaneous’ category which did not impinge on the outcome of the Plaintiffs’ appeal.

21.  D1-D3 & D7’s grounds for capping their liability at 20% of the appeal costs are that they made limited objections, confining their submissions to 2 areas, namely “Constructive Trust Amendments” and “Police Report Amendments”. By the time of the hearing, the Police Report Amendments were not pursued.

22.  D1-D3 & D7 lost on the Constructive Trust Amendments. Mr Chan submitted that oral submissions on those amendments took up no more than 25% of the hearing’s time. Further, D1-D3 & D7 took a neutral stance on the other 2 main areas of contention (concerning conspiracy and misrepresentation) which took up substantially more time. Nevertheless, one should not lose sight of the fact that the conspiracy amendments were also allowed against D1-D3 & D7.

23.  Section D of the supporting affirmation of Yeung Po Lam Terry contains a list of criticisms and complaints about the Plaintiffs’ conduct. However, the relief sought in the 2^nd Summons concerns apportionment.

24.  An applicant is not permitted to enlarge the scope of the application beyond what is pleaded: Chow Kwan Yee v Leung Mei Yin May [2021] HKCA 832 at §3. I therefore do not propose to address those criticisms and complaints given the scope of the 2^nd Summons.

25.  Having regard to the matters in §18 above derived from SFC v Yiu, I find that the “starting point” is established in the present case which D1-D3 & D7 have failed to displace. I agree with the Plaintiffs’ submission D1-D3 & D7 were real respondents to the appeal and stood to benefit from the defence mounted by D4 and D6. There is no basis for capping D1-D3 & D7’s liability to 20%. They remain jointly and severally liable to the Plaintiffs for the appeal costs.

The 3^rd Summons

26.  D4 and D6 submitted that as all the Defendants are separate and distinct parties, a party should not be held responsible for the costs liability of another party who fails to discharge his costs liability and sought an order that liability should be several in equal shares rather than joint and several.

27.  The Plaintiffs as the successful appellants should not be concerned with or drawn into any internal allocation dispute between the Defendants. There is nothing to prevent the Defendants from agreeing, inter se, how the appeal costs are to be apportioned.

28.  D4 and D6 actively opposed the appeal together with the other Defendants on the main issues. It is not a case where they raised a distinct successful issue that gave rise to a discrete body of costs. I see no basis for making an equal shares order as regards D4 and D6 when they opposed the same appeal against the same amendment summons.

Disposition

29.  I make an order that

(1)  The order nisi as to costs made at §77(2) of the Decision be varied to read as follows:

“costs of this appeal hearing and 50% of the costs below be paid by the Defendants to the Plaintiffs, such costs to be summarily assessed and payable forthwith”.

(2)  The 2^nd Summons be dismissed.

(3)  The 3^rd summons be dismissed.

(4)  Costs of the Summonses be to the Plaintiffs to be summarily assessed and payable forthwith.

30.  I further direct that (i) the Plaintiffs do lodge their statement of costs within 7 days of this Ruling on Costs; (ii) D1-D3 & D7 and D4 and D6 do lodge their respective lists of objections (if any, limited to two pages) within 14 days thereafter; and (iii) the Plaintiffs do lodge their reply (if any, limited to one page) within 7 days thereafter for assessment in Chambers.