HKMC MORTGAGE MANAGEMENT LTD v. TSE WING IP AND OTHERS

HCMP 348/2014

[2019] HKCFI 2391

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 348 OF 2014

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(By Original Originating Summons)

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(By Order to Carry On Proceedings dated 23 September 2016)

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DECISION
(on application to vary costs order nisi)

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1.  On 26 July 2019, the 2^nd defendant, Mr Luk Tsan Chuen, applies by summons for the costs order nisi of my Judgment dated 11 July 2019 be varied that the plaintiffs’ (Ms Lee Chau Fa and Ms Wong Suet Yiu) costs of the proceedings herein to be taxed if not agreed between the plaintiffs and the 2^nd defendant be at the District Court scale and that the 1^st defendant (Mr Tse Wing Ip) be liable for ⅓ and the 2^nd defendant be liable for ⅔ of the costs. 

2.  On 6 August 2019, I directed that the summons be disposed of on papers.

3.  In his reply written submissions, the 2^nd defendant’s counsel further applied for an amendment of the said summons, asking for a further variation that the plaintiffs should be entitled to 80% of their costs incurred from the Order of Deputy High Court Judge Marlene Ng (as she then was) dated 23 September 2016.

4.  Having considered the written submissions of the 2^nd defendant’s counsel and the plaintiffs’ counsel, I do not consider the 2^nd defendant’s application has any merits.

5.  In the Judgment, I have explained and concluded that the plaintiffs have an equitable lien over the subject property for their loss and damage suffered by reason of the 1^st defendant’s breach of the formal agreement for sale and purchase.  I then set out the items of loss attachable to the balance of the sale proceeds of the subject property by the mortgagee (“the Balance of Proceeds”) in paragraphs 34, 55 to 56 of the Judgment,and make the order accordingly in paragraph 57 of the Judgment.

6.  I did not make any order nisi in paragraph 57 of the Judgment. This being so, the Court has no jurisdiction to vary the order made in that paragraph.  The 2^nd defendant is misconceived in issuing the summons, which must be dismissed (as well as the purported application for amendment of the summons).

7.  In any event, assuming the Court does have jurisdiction to vary the order I made in paragraph 57 of the Judgment, I would still dismiss the summons (as well as the application for amendment of the summons), for the following reasons:

(1)  The present interpleader proceedings are a competition between the plaintiffs and the 2^nd defendant for the Balance of Proceeds.  The 2^nd defendant argued that the plaintiffs did not have any right in the Balance of Proceeds.  He failed.  The Plaintiffs succeeded.  They should have the costs of the proceedings.

(2)  The plaintiffs succeeded in all the issues before this Court.  There is no basis of depriving them of a portion of their costs.

(3)  As already explained in the Judgment, the scope of the equitable lien should cover, among other items, the plaintiffs’ costs of the present proceedings, as well as their costs incurred in HCMP 2804/2013 against the 1^st defendant for breach of the formal agreement for sale and purchase.

(4)  The mortgagee action was commenced in the High Court.  The Balance of Proceeds was in the amount of HK$1,938,258.05.  The interpleader proceedings for this amount should be, and properly were, litigated in the Court of First Instance.  I see no reason why the costs should be taxed on the District Court scale instead.

(5)  The 1^st defendant has never participated throughout the interpleader proceedings.  The competition for the Balance of Proceeds was entirely between the plaintiffs and the 2^nd defendant.  I can see no basis why the 1^st defendant should be held liable for the costs of these proceedings.

(6)  Other arguments of the 2^nd defendant, such as the plaintiffs’ alleged failure to sue the 2^nd defendant in HCMP 2804/2013 and the alleged actual or constructive notice of some occupier’s interest in the subject property, had in fact been raised by him during the trial, and were already dealt with and rejected in the Judgment.

8.  The 2^nd defendant’s summons is dismissed.

9.  As to costs of this application, many of the arguments are preposterous or were already made during the trial and rejected in the Judgment and should not have been raised again.  More importantly, not only that the application is devoid of any merits, it should not have been taken out in the first place because it is so abundantly clear in the Judgment that the order was not made on a nisi basis.  Therefore, I am satisfied that I should exercise the Court’s discretion to allow the plaintiffs’ costs on indemnity basis. 

10.  For the above reasons, I order that the costs of the 2^nd defendant’s summons shall form part of the plaintiffs’ costs of the present proceedings and be taxed on indemnity basis if not agreed between the plaintiffs and the 2^nd defendant,and that such costs shall be paid to the plaintiffs out of the Balance of Proceeds.

11.  The plaintiffs ask for summary assessment of their costs.  As the rest of the plaintiffs’ costs of these proceedings shall have to be taxed, if not agreed, in accordance with paragraph 57 of the Judgment, I consider relatively more time and costs will be saved if all the costs could be taxed (or agreed) in one go.