LICKSUN COMPANY LTD v. OCCUPIERS OF LOT NO. 552 IN D.D. 85, NEW TERRITORIES, HONG KONG AND ANOTHER

DCCJ 2300/2023

[2025] HKDC 1287

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2300 OF 2023

-------------------------

BETWEEN

-------------------------

-------------------------

DECISION

-------------------------

Introduction

1.  By a Notice of Appeal to Judgment in Chambers dated 16 June 2025, the Plaintiff lodged the present appeal against the costs order made by Master Y H Chan on 3 June 2025 ordering the Plaintiff to pay costs to the 2^nd Defendant in the sum of HK$116,634, an amount summarily assessed by the Master (“Costs Order”).

2.  The Plaintiff is represented by its director, Mr Yeung Hon Keung Larry, at the appeal hearing (“Yeung”). By Yeung’s Affidavit dated 28 August 2023, he confirmed that he has been duly authorized by the board of directors of the Plaintiff to attend court proceedings for and on behalf of the Plaintiff. A board resolution of the Plaintiff to that effect has also been exhibited and produced.

3.  As a preliminary matter, in the written submissions lodged by the Plaintiff, the Plaintiff has referred to and attached 7 authorities to this Court. At the hearing, the solicitor for the 2^nd Defendant pointed out that 6 of these authorities do not actually exist (“Suspicious Authorities”). Upon a brief reading of these 6 authorities, I find that they are suspiciously incomplete. Upon enquiry with Yeung at the hearing, he did not seek to contradict that suggestion but merely said that he did not prepare these authorities himself. He said that the list of authorities was prepared by another employee of the Plaintiff who is not legally trained. The Plaintiff explained that it did not intentionally or deliberately mislead this Court. The Plaintiff also abandoned any reliance upon these authorities at this hearing.

4.  As submitted by the 2^nd Defendant, this is a serious matter as it has the effect of misleading the Court. I will deal with this matter further below.

Background

5.  In this action, the Plaintiff claims to be the tenant of Lot No 552 in DD 85, New Territories, Hong Kong (“Lot 552”) and of Lot No 553 in DD 85, New Territories, Hong Kong (“Lot 553”). The 2^nd Defendant claims that she has an interest in Lot 552 by way of adverse possession.

6.  The Costs Order was made in the context of a security for costs application made by the 2^nd Defendant (which was later withdrawn).

7.  By a letter dated 30 October 2023 from the 2^nd Defendant’s solicitors to the Plaintiff, it was stated that:- “according to our company search and BR search, there exists no company known as “Licksun Company Limited” in Hong Kong. Kindly enlighten as to your identity and the reason thereof within 3 days”.

8.  No reply was received by the 2^nd Defendant from the Plaintiff to this letter.

9.  At a hearing before Master Vienne Luk on 3 November 2023, the Plaintiff’s representative informed the Court that the Plaintiff was registered overseas. That explains why no result was found when a company search and a BR search were performed in Hong Kong.

10.  On 18 January 2024, further inquiries were made by the 2^nd Defendant in respect of this revelation by the Plaintiff. However, the Plaintiff has failed to respond to the 2^nd Defendant’s enquiries.

11.  Despite being a company registered overseas, in the Amended Writ of Summons, the Plaintiff gave an address for service in Hong Kong at No 6A, G/F, San Shing Avenue, Sheung Shui, New Territories, Hong Kong. Upon a visit by the 2^nd Defendant’s representative, it was discovered that this address was occupied by another business.

12.  On 4 June 2024, the 2^nd Defendant sent a letter to the Plaintiff asking it to provide security for costs. The Plaintiff disagreed and claimed that it had sufficient assets to meet the 2^nd Defendant’s costs if it loses the claim. However, this reply is nothing but a bare assertion by the Plaintiff.

13.  By Summons dated 27 August 2024, the 2^nd Defendant took out an application demanding the Plaintiff to pay into court security for costs in the sum of HK$968,088 on the basis that the Plaintiff is resident out of jurisdiction. In the 2^nd Defendant’s 3^rd Affirmation dated 27 August 2024, she deposed to the basis of her application as follows:-

“9…In the absence of any evidence that the Plaintiff has involvement in actual business activities nor credible source that demonstrate the Plaintiff is one which possesses assets or funds of a significant amount, I verily believe that the Plaintiff is no more than a shelf company used as a vehicle for commencing litigation, with no track record of business transactions or goodwill, and no operating business, revenue or meaningful assets of its own as the address of the Plaintiff is not the regular business office.”

14.  In the Affidavit in opposition by Yeung dated 22 November 2024, the Plaintiff alleged that it had actual investments within the jurisdiction. It referred for the first time to a land in Hong Kong known as Lot No 2130 in DD 83. (“Lot 2130”). The Plaintiff suggested that it became the registered owner of Lot 2130 on 16 September 2024 and that the said piece of land was valued at HK$2.5 million.

15.  Lot 2130 was acquired by the Plaintiff only after the 2^nd Defendant had taken out the security for costs application.

16.  The Plaintiff suggested that it had informed the 2^nd Defendant of the existence and the value of Lot 2130 on 27 September 2024 and asked her to withdraw the security for costs application.

17.  In the reply Affirmation of the 2^nd Defendant, the 2^nd Defendant adduced evidence from a registered valuer on the marketability of Lot 2130. Her valuer assessed that, assuming that there is a right of way granted to it, the value of Lot 2130 was only about HK$178,000. The 2^nd Defendant suggested that in these circumstances it was highly doubtful whether Lot 2130 was sufficient security.

18.  In the 2^nd Affidavit of Yeung dated 7 May 2025, the Plaintiff applied for leave to further adduce counter valuation evidence suggesting that the value of Lot 2130 should be worth HK$2.1 million.

19.  Further, the Plaintiff revealed for the first time that it, on 28 April 2025 (without obtaining loan of any kind and without encumbrances), purchased another house at Lot No 2191 in DD 83, North, NT for HK$3.68 million (“Lot 2191”). Yeung further said that the said purchase was a gift from him to the Plaintiff as the Plaintiff’s director and that he retains no beneficial interest in this property.

20.  After this development, on 26 May 2025, the 2^nd Defendant applied for leave to withdraw her security for costs application. She explained by affidavit evidence that her decision to withdraw was due to the recent purchases of landed properties by the Plaintiff: “since the Plaintiff has recently acquired 2 pieces of land and the 2^nd Defendant may have some part of security of costs if the Plaintiff loses its case, the 2^nd Defendant has decided to withdraw the said Summons”.

21.  Leave was granted by Master at the hearing on 3 June 2025 allowing the 2^nd Defendant to withdraw her security for costs application. I understand from the parties that at that hearing before Master, the Plaintiff had no objection to the said proposed withdrawal.

22.  In light of the chronology outlined above, the learned Master made the Costs Order against the Plaintiff.

Discussion

23.  The present appeal is a costs-only appeal against the discretion of the Master. Such application should not be allowed unless it can be shown that the order made by the master was unreasonable or erred in law, ie if he either failed to take into account proper matters or took into accounts matter that should not have been taken into account: Hong Kong Civil Procedure 2025 (“HKCP 2025”) §58/1/6.

24.  At the hearing, the Plaintiff submits that the general rule is that costs should follow the event. The Plaintiff should not be liable to pay costs to the 2^nd Defendant when it was the 2^nd Defendant who withdrew her security for costs application at the last minute. Further, the Plaintiff suggests that had the 2^nd Defendant not withdrawn the application, the Plaintiff would have had a good chance in resisting the same. Hence the Plaintiff should be treated as the winning party. Also, the Plaintiff relies upon its alleged strong merits in its underlying claim against the 2^nd Defendant.

25.  In my judgment, I do not consider that the Master was unreasonable or has erred in law in making the Costs Order:-

(a) The Plaintiff has adopted an evasive attitude in the correspondence with the 2^nd Defendant’s solicitors. The Plaintiff has refused to engage with the 2^nd Defendant substantively to answer her enquiries as to the Plaintiff’s place of incorporation. There was a persistent refusal/failure on the Plaintiff’s part to provide basic information about its identity and its financial standing to the 2^nd Defendant. This persisted even after the 2^nd Defendant had indicated that she was minded to take out a security for costs application. In short, the Plaintiff failed to disclose any information about its assets, save and except by making a bare assertion that it had sufficient assets.

(b) When the security for costs application was taken out, the two landed properties had yet been purchased by the Plaintiff. At that point in time, given that the Plaintiff was admittedly registered overseas and given the lack of substantive responses from the Plaintiff, the 2^nd Defendant was entitled to and was acting reasonably in taking out the security for costs application.

(c) In circumstances where a defendant was reasonable in issuing a security for costs summons, which was subsequently withdrawn after the plaintiff deposed that it had sufficient assets to meet a costs claim, the proper costs order should be costs to the defendant: HKCP 2025 §21/6/1.

(d) Upon being informed of the purchases of the two landed properties by the Plaintiff, the 2^nd Defendant took out the summons seeking leave to withdraw her security for costs application. The Plaintiff complains about the time taken by the 2^nd Defendant to apply to withdraw her Summons. I do not see that period of time (ie 7 May 2025 to 26 May 2025) as unreasonable, bearing in mind that the 2^nd Defendant has been legally aided and relevant approvals were required to be sought before any proposed withdrawal. Further, the Plaintiff cannot specify or pinpoint what costs could have been saved if she had applied earlier. There is no merit in this complaint. I find that the 2^nd Defendant has been acting reasonably all along.

(e) As for the other points raised by the Plaintiff, “costs follow the event” is just the default rule. The Court is entitled to take into account the conduct of the parties in the exercise of its discretion on costs: see Order 62 rule 5 of the Rules of the District Court, Cap 336H. That the Plaintiff might have been the winning party is entirely speculative, which even if correct, is only due to the purchases of the two landed properties after the taking out of the application. The underlying respective strengths of the parties’ case is also irrelevant on the question of costs and in this appeal. I express no view on such matters.

26.  In these circumstances, I do not consider that the Master was unreasonable or has erred in law in making the Costs Order.

27.  As for the quantum ordered, that is within the reasonable range. I see no reason to disturb the same.

28.  It follows that the Plaintiff’s appeal shall be dismissed.

Costs

29.  As for costs of this appeal, I enquired with the parties at the hearing and both agreed that costs should follow the event and that an order nisi is not necessary. Thus, I order that the Plaintiff do pay costs of and occasioned by this appeal to the 2^nd Defendant forthwith, the amount of which is to be summarily assessed. The 2^nd Defendant’s own costs should be taxed in accordance with the Legal Aid Regulations.

30.  Regarding the Plaintiff’s lodging of the Suspicious Authorities, the 2^nd Respondent invites this Court to order indemnity costs against the Plaintiff. At the hearing, I invited submissions from the Plaintiff as to why indemnity costs should not be ordered. Yeung suggested that indemnity costs should not be ordered because the Plaintiff had no intention to deliberately mislead this Court and the Plaintiff already abandoned its reliance upon these authorities at the hearing causing no prejudice to the 2^nd Defendant.

31.  The Plaintiff is not legally represented. But that provides no excuse for its lodging the Suspicious Authorities with this Court. A litigant in person is still under the duty not to mislead the Court. Regardless of the Plaintiff’s subjective intention, its conduct has the effect of misleading this Court. Further, unnecessary time was spent by the 2^nd Defendant in researching and further dealing with this matter and spent by this Court in reading cases which do not even exist. I disagree that the Plaintiff’s conduct has caused no prejudice or that it could be remedied by its sudden abandonment of its reliance on those cases.

32.  I agree with the 2^nd Defendant that this Court should mark its disapproval of the Plaintiff’s conduct in ordering that the Plaintiff should pay costs of this appeal to the 2^nd Defendant on an indemnity basis.

33.  Statements of costs should be lodged and served by the 2^nd Defendant within five days, limited to two pages. List of objections is to be lodged and served by the Plaintiff within three days thereafter, in bullet point form, limited to two pages.