SUCCESS LANE DEVELOPMENT LTD v. FERGURSON HONG KONG LTD trading as NEW WORLD MILLENIUM HONG KONG HOTEL

CAMP 146/2024 & CAMP 154/2024
(Heard together)

[2024] HKCA 926

CAMP 146/2024

On Appeal From [2024] HKDC 44

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS ACTION NO 146 OF 2024

(ON AN INTENDED APPEAL FROM DCCJ NO 2191 OF 2023)

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CAMP 154/2024

On Appeal From [2024] HKDC 25

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS ACTION NO 154 OF 2024

(ON AN INTENDED APPEAL FROM DCCJ NO 2191 OF 2023)

________________________

________________________

(Heard Together)

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J U D G M E N T

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Hon G Lam JA (giving the Judgment of the Court):

1.  There are two applications brought by the plaintiff before this court for leave to appeal.

2.  The underlying dispute and the procedural history in the action below have been described in §§2 to 17 of this court’s recent judgment dated 30 August 2024[1] (“30.8.24 Judgment”)  whereby we dismissed four applications for leave to appeal also brought by the plaintiff, and will not be repeated here.  The action has arisen out of a dispute about the room rate chargeable to the plaintiff company for the stay of its two directors, Ms Yung and her husband Mr Cheung, in the hotel run by the defendant.  Certain chattels broug7ht by them to the hotel room had been kept by the defendant who asserts a lien for unpaid room charges.

CAMP 146/2024

3.  As referred to in §9 of the 30.8.24 Judgment, after the hearing of an application for interlocutory injunction before Deputy District Judge M Lam, on 22 September 2023 the plaintiff made another application to the District Court for interlocutory injunction.  By another ex parte summons dated 28 September 2023, the plaintiff applied for a “stay” of Deputy District Judge M Lam’s decision of 25 September 2023.  Both applications were heard inter partes and dismissed by Judge H Leong on 29 September 2023.  At the conclusion of the hearing, the judge made an order nisi that the plaintiff do pay the defendant’s costs on an indemnity basis with certificate for counsel, that the order nisi be made absolute within 7 days, and that for the purpose of summary assessment, the defendant shall within 7 days serve a bill of costs and the plaintiff a list of objections within 7 days thereafter.

4.  The defendant lodged and served its statement of costs on 10 October 2023 and the plaintiff lodged and served its list of objections on 17 October 2023.

5.  In relation to Judge H Leong’s costs order made on 29 September 2023, the plaintiff subsequently issued 3 summonses in the District Court dated 17 October, 5 December and 8 December 2023 respectively.

(1)  The 17 October 2023 summons sought an order that the defendant’s filing of its statement of costs on 10 October 2023 be set aside, and that the plaintiff’s list of objections should not be determined due to the setting aside of the defendant’s statement of costs.

(2)  The 5 December 2023 summons sought leave to amend the 17 October 2023 summons by (i) deleting the prayer that the defendant’s filing of its statement of costs be set aside, and (ii) amending the second order sought to an order that the plaintiff’s list of objections should not be determined pending the determination of the plaintiff’s application to vary the costs order nisi.

(3)  The 8 December 2023 summons sought an order, inter alia: (i) that the costs order nisi of 29 September 2023 has not become absolute as the plaintiff has applied for its variation by letter dated 6 October 2023, and (ii) that the costs order nisi be varied to an order that the costs order be stayed and that the defendant shall pay the plaintiff’s costs on an indemnity basis, to be summarily assessed and paid forthwith.

6.  On 6 February 2024, based on written submissions received, Judge H Leong issued his decision in writing[2] (“6.2.24 Decision”)  on the plaintiff’s 3 summonses.  In that decision, the judge:

(1)  dismissed all 3 summonses;

(2)  ordered the plaintiff forthwith to pay the defendant’s costs of the 3 summonses summarily assessed on an indemnity basis at $28,908.33;

(3)  summarily assessed (i) the defendant’s costs regarding the plaintiff’s summons dated 22 September 2023 (payable by the plaintiff under the order of 29 September 2023)  in the sum of $253,265.00; (ii) the defendant’s costs regarding the plaintiff’s summons dated 28[3] September 2023 (also payable by the plaintiff under the order of 29 September 2023)  in the sum of $57,261.33, and ordered both sums to be paid forthwith to the defendant.

7.  By summons filed in the District Court on 20 February 2024, the plaintiff sought leave to appeal from the 6.2.24 Decision.  On 19 July 2024, based on written submissions, Judge H Leong issued his decision in writing refusing leave to appeal, with costs to the defendant to be summarily assessed.[4]

8.  By summons dated 2 August 2024 filed in the Court of Appeal (numbered CAMP 146/2024), the plaintiff has renewed its application for leave to appeal against the 6.2.24 Decision.  This summons also seeks an order that it be heard together with the plaintiff’s application for leave to appeal in CAMP 51/2024 and the appeal in CACV 303/2024.  We refuse this request because the application in CAMP 51/2024 has already been dismissed in our 30.8.24 Judgment and the appeal in CACV 303/2024 concerns what in our view is a discrete matter that ought not to be heard together with the present application.

9.  Further, despite the plaintiff’s request for an oral hearing, we are satisfied that it is appropriate pursuant to RHC Order 59 rule 2A(5)  for this application to be determined on the basis of written materials without an oral hearing.

10.  We are satisfied that leave to appeal should be refused as the intended appeal has no merits.  The draft Notice of Appeal runs to 20 pages and contains 65 paragraphs put forward as grounds of appeal.  It includes rambling criticisms of the 6.2.24 Decision many of which are wholly irrelevant or relate to the substantive merits of the plaintiff’s application for interlocutory injunction which is not the subject matter of the 6.2.24 Decision.  It is surprising and a matter of concern that solicitors have seen fit to put their name to such a document.  It fails to comply with §§20 and 22 of Practice Direction 4.1, which stipulate that a notice of appeal “should be a concise document setting out clearly and succinctly the reasons why the Court should interfere with the judgment of the court below” and “must not be prolix, unfocused or canvass evidence or submissions at length.”  This alone is a sufficient ground for rejecting the application.

11.  In any event, we are satisfied that the grounds that can be deciphered from the draft notice of appeal read in conjunction with the plaintiff’s written statement in support of the application for leave to appeal have no reasonable prospects of success.

12.  So far as the dismissal of the plaintiff’s 17 October 2023 summons is concerned, as the judge held, contrary to the premise of the plaintiff’s argument, the defendant’s statement of costs was actually not filed late, since under RDC Order 3 rule 2(5), in calculating time for a period of 7 days or less, certain days are to be excluded.  In any event, the judge took the view that even if the statement was late by 4 days, he did not think that would be a proper basis to set it aside.[5]  There is no prospect for challenging the judge’s decision not to “set aside” the filing of the defendant’s statement of costs.

13.  As to the plaintiff’s 5 December 2023 summons and 8 December 2023 summons:

(1)  The judge was entitled not to accept the plaintiff’s letter dated 6 October 2023 as an application for variation of the costs order nisi.  As the Court of Appeal stated in PCCW-HKT Telephone Ltd v Telecommunications Authority (CACV 274/2003, 7 September 2004)  at §11, it is not correct to make an application to vary a costs order nisi by letter to the court.  It should be done by a summons.  Further, the plaintiff’s letter in this case was, quite improperly, issued to the court without being copied to the other side.  There is in our view no prospect of impugning the judge’s decision in this regard.

(2)  There being no proper application made to vary it, the costs order nisi became absolute after 7 days (excluding certain days pursuant to RDC Order 3 rule 2(5)).  As such, the 5 December 2023 summons was misconceived because there was no pending application by the plaintiff to vary the costs order nisi.  No arguable ground has been advanced to show how the Judge erred in so deciding and in consequently dismissing that summons.

(3)  Likewise, the judge was entitled to reject the 8 December 2023 summons as an application, filed almost 2 months out of time without any accompanying explanation for its lateness, to vary a costs order nisi.  The plaintiff complains that the 8 December 2023 summons was dismissed without giving directions for the parties to make submissions.  But it is not a stand-alone application but was preceded by two other summonses as well as correspondence on costs from the plaintiff.  As stated in §§12, 18 and 24 of the 6.2.24 Decision, 8 December 2023 was in fact the deadline for the parties to lodge submissions on the 17 October 2023 summons.  On that date the plaintiff filed the 8 December 2023 summons which, inter alia, the judge considered to be an abuse of process.  The judge directed that the 3 summonses be dealt with together and that there be no leave for filing further affirmations and submissions.  In the history and circumstances of this case we do not see anything arguably wrong in the procedures adopted.  In any event, the plaintiff has failed to show what it is that it had no opportunity of placing before the judge.

(4)  In fact the judge did not simply reject the application for variation based on its lateness but went further and held that there was no substantive basis made out for varying the costs order nisi: see §§25-27 of the 6.2.24 Decision. 

(5)  It was the plaintiff who failed in its application for interlocutory injunction before Judge H Leong (and leave to appeal has been refused by this court in CAMP 51/2024 in the 30.8.24 Judgment).  It is impossible to see on what basis the plaintiff could seek a variation of the costs order – as it did by the 8 December 2023 summons – to one that makes the defendant pay the plaintiff’s costs on an indemnity basis.

(6)  Costs are matters for the broad discretion of the court making the award, and the Court of Appeal would be very circumspect in intervening in such decisions with a high discretionary content.  It will only interfere when it is satisfied that the decision of the judge is either wrong in principle or plainly wrong.  See Poon Ching Man v Lam Hoi Pun [2016] 3 HKLRD 815, at §34; Chan Shun Kei v Hong Kong Construction (HK)  Ltd (CACV 192/2014, 7 March 2016), at §22.  We are not satisfied that there is any arguable ground established in that regard by the plaintiff here.

(7)  Accordingly there is no reasonable prospect of success in the intended appeal against the dismissal of the 5 and 8 December 2023 summonses.

14.  The plaintiff also seeks to challenge the judge’s summary assessments of the costs of its summonses of 22 and 28 September 2023 in the total sum of $310,526.33.  Refusing leave to appeal, the judge said this in his decision dated 19 July 2024:

“ 29. The plaintiff also sought to re-argue the quantum of costs awarded. Much of these are another re-argument of matters already raised in the plaintiff’s list of objections which were already considered by the court in the summary assessment of the [defendant’s] bill. ‘A second bite at the cherry’ should not be allowed.

30. It is of note that the court awarded the costs on an indemnity basis due to the fact that the plaintiff has abused the process by repeatedly taken out related but baseless applications (often accompanied by substantive documents)  despite repeated warnings of such conducts by the court. The plaintiff only has itself to blame for having to pay all the [defendant’s] costs ‘except in so far that they are unreasonable and/or have been unreasonably occurred’.

   31.  It is trite that the award of costs is at the discretion of the court and that the threshold of reversing such cost order is high.  There is nothing raised by the plaintiff that show any palpable error the [defendant’s] costs was ‘unreasonable and / or unreasonably occurred’ given the arguments that some work might be repetitive.  It was the plaintiff which commenced repetitive related applications, it was not unreasonable for any prudent legal representative to conduct all related legal research etc. for each application despite its outwardly similarity, especially when faced with substantive amounts of materials advanced by the plaintiff.”

15.  We agree with the judge.  There being an order for assessment on an indemnity basis, the judge proceeded on the correct threshold.  There is a large measure of discretion left to the court conducting the summary assessment, using a broad brush rather than carrying out a mini-taxation.  The Court of Appeal will not interfere with the quantum of assessment unless there is something that strikes one as clearly outside the wide range of acceptable outcomes.  The judge heard the arguments and saw the written evidence filed below and accordingly has a distinct advantage over this court in deciding whether there were costs that were unreasonable or unreasonably occurred.  The plaintiff alleges that the defendant’s solicitors “admitted” they “overcharged” hours but this is a mere assertion.  It is also said that 90% of the defendant’s affirmation, submissions and authorities were substantially reused from the previous hearing before Deputy Judge M Lam.  In our view this is simply a regurgitation of the arguments before the judge and does not begin to show any reasonably arguable ground for intervention by this court. 

16.  For the foregoing reasons the plaintiff’s summons must be dismissed. 

17.  As the plaintiff’s application is wholly without merit, pursuant to RHC Order 59 rule 2A(8)  we make an order that no party may request this determination to be reconsidered at an oral hearing inter partes.

18.  There will be a costs order nisi that the plaintiff do pay the defendant’s costs on the indemnity basis, to be summarily assessed, and that the plaintiff may within 14 days lodge a list of objections (limited to 2 pages)  to the defendant’s 2-page statement of costs dated 2 September 2024.

CAMP 154/2024

19.  As referred to in §7 of our 30.8.24 Judgment, the plaintiff’s application for interlocutory injunction was dismissed by Deputy Judge M Lam in her decision dated 25 September 2023.[6] In that decision, the judge made an order nisi that the plaintiff pay the defendant’s costs on an indemnity basis with certificate for counsel. 

20.  By a summons dated 9 October 2023, the defendant applied for variation of the costs order nisi. This was granted in part by Deputy Judge M Lam in her decision dated 1 March 2024 (“1^st 1.3.24 Decision”)[7] whereby the judge:

(1)  extended the costs order to cover all costs reserved and further ordered the costs payable to be summarily assessed (with directions for the lodging of statement of costs and statement of objections)  and paid forthwith; and

(2)  ordered the plaintiff to pay the defendant’s costs of the defendant’s summons for variation, on the party and party basis, to be summarily assessed and paid forthwith after the assessment.

21.  For its part, the plaintiff had applied for leave to appeal against the substantive decision of Deputy Judge M Lam of 25 September 2023.  By another decision dated 1 March 2024 (“2^nd 1.3.24 Decision”),[8] the judge refused leave to appeal and made a costs order nisi that the plaintiff pay the defendant’s costs, with certificate for counsel, to be assessed summarily on the party and party basis.

22.  On 2 April 2024, Deputy Judge M Lam summarily assessed the costs payable by the plaintiff (1) for the plaintiff’s failed injunction application as referred to in §§19 and 20(1)  above; (2) for the defendant’s application for variation of the costs order nisi referred to in §20(2)  above; and (3) for the plaintiff’s failed application for leave to appeal referred to in §21 above.  The costs were assessed in the respective sums of $150,000, $23,000 and $32,000.

23.  By summons dated 15 March 2024, the plaintiff sought leave to appeal from the 1^st 1.3.24 Decision.  This was refused by Deputy Judge M Lam in her decision dated 26 July 2024.[9]

24.  By summons dated 16 April 2024, the plaintiff sought leave to appeal against the summary assessments of costs dated 2 April 2024.  This was refused by Deputy Judge M Lam in another decision also handed down on 26 July 2024.[10]

25.  By summons filed in the Court of Appeal on 9 August 2024, the plaintiff has renewed its application for leave to appeal against the 1^st 1.3.24 Decision and the 3 summary assessments made on 2 April 2024.

26.  The plaintiff’s draft Notice of Appeal contains 5 grounds, which we shall deal with in turn. Ground 1 contends that costs should not have been awarded on the indemnity basis.  We agree with the defendant’s submission that this ground is not open to the plaintiff, since the basis of taxation was not determined in the 1^st 1.3.24 Decision but in the original decision of 25 September 2023.  There was no cross-application by the plaintiff to the judge for variation of the order for indemnity costs in the 25 September 2023 decision.

27.  Ground 2 contends that costs should not have been made payable forthwith.  The intended appeal is hopeless.  This kind of decision is very much a matter of discretion for the court ordering costs.  The plaintiff has referred to the injunction application before Judge H Leong but we do not think it is relevant to the question here. The plaintiff has raised a number of further arguments trying to justify the steps it took in the litigation, but they do not assist the plaintiff on the present question.  Orders for costs forthwith in interlocutory proceedings are not at all uncommon and do not need to be justified by exceptional circumstances.  Some of the pertinent considerations in making costs immediately payable were set out by Coleman J in Predicine Holdings Ltd v Bianchi (Hong Kong)  Ltd [2021] HKCFI 631, including the concern not to weaken costs as a sanction against unwarranted applications or assistance. There is no argument here with any reasonable prospect of success that the judge was wrong to make costs payable forthwith.

28.  Ground 3 contends that costs should have been ordered to be taxed or reserved to the trial judge rather than summarily assessed.  Again, this is a matter that falls within the broad discretion of the court ordering costs.  RDC Order 62 rule 9A(1)  empowers the court to make a summary assessment “if it considers it appropriate to do so”, subject to the exceptions in rule 9C including, under rule 9C(1)(a), where “the paying party shows substantial grounds for disputing the sum claimed for costs that cannot be dealt with summarily”.  The plaintiff’s arguments that there was overlap among multiple related applications and that the claimed amounts are substantial do not even arguably cross the threshold for appellate intervention in the order for summary assessment.  The plaintiff’s contention that there should be only one set of costs for the applications before Deputy Judge M Lam and Judge H Leong is entirely baseless.

29.  Ground 4 complains that the judge failed to take into account all relevant circumstances, in particular, the irreparable harm caused to the plaintiff’s chattels held by the defendant.  There is no substance in this ground.  The plaintiff seems to have failed to grasp the principle that each interlocutory application has to be judged on its own merits.  Its submission reflects a misconception that because it believes it has a justifiable grievance in the underlying dispute, it can bring as many interlocutory applications as it desires with impunity irrespective of their individual merit.  The sooner it is disabused of this the better.

30.  Ground 5 attacks the summary assessments.  It is said that the judge did not initially give reasons and only did so in her decision refusing leave to appeal.  This is not a ground for giving leave to appeal.  The judge has given very detailed reasons in the leave decision for her costs assessment.  Anyhow there is no general duty to give reasons for summary assessment.  Any reasons given are in practice invariably brief.  The whole point of summary assessment is to avoid a detailed process of taxation.  Whether it is appropriate to give some explanation and if so the extent of reasons to be given are matters for the court’s discretion in the particular case.  In the present case the 3 assessed sums only ranged between 30.4% and 42.4% of the amount of costs claimed by the defendant.  There is no basis to allege that the judge failed to consider the relevance of duplication.

31.  For these reasons, we consider that there is no reasonably arguable ground of appeal and accordingly dismiss the summons for leave to appeal.

32.  As the plaintiff’s application is wholly without merit, pursuant to RHC Order 59 rule 2A(8)  we make an order that no party may request this determination to be reconsidered at an oral hearing inter partes.

33.  There will be a costs order nisi that the plaintiff do pay the defendant’s costs on the indemnity basis, to be summarily assessed, and that the plaintiff may within 14 days lodge a list of objections (limited to 2 pages)  to the defendant’s 2-page statement of costs dated 2 September 2024.

Restricted Application Order

34.  The defendant has through counsel pointed out that the plaintiff’s director, Ms Yung, was the subject of a restricted application order in previous litigation,[11] and invited this court to make such an order against the plaintiff.  We have decided not to do so in the context of the present applications, though the plaintiff should beware that this does not mean this court or another court will not do so in future.  In particular, we draw attention to §64 of this court’s 30.8.24 Judgment in which we made comments on the litigation conduct of the plaintiff relating to the four applications dismissed therein, which are equally applicable to the present applications.