LEUNG LAI KWAN v. LO KAI WING AND ANOTHER

HCMP 1554/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 1554 OF 2015

(ON AN INTENDED APPEAL FROM HCA NO. 1158 OF 2011)

________________________

________________________

________________

REASONS FOR
JUDGMENT
________________

Hon Lam VP (giving the Reasons for Judgment of the Court):

1. On 31 July 2014 Deputy High Court Judge Saunders [“the Judge”] gave judgment for the Defendants and dismissed the Plaintiff’s claim after trial. In the judgment, the Judge made an order nisi for costs in favour of the Defendants on party and party basis. The Defendants applied for the variation of such costs order nisi based on several settlement offers put by them to the Plaintiff. There were altogether 3 offers on 3 different dates: (a) 12 Sept 2013; (b) 19 June 2014; and (c) 7 July 2014.

2. After hearing submissions from counsel, on 18 May 2015 the Judge varied his order for costs and ordered costs up to 25September2013 be paid by the Plaintiff on party and party basis; from 26 September 2013 to 17 July 2014, costs shall be paid by the Plaintiff on common fund basis; from 18 July to end of the trial on 31 July 2014, costs shall be paid by the Plaintiff on indemnity basis.

3. The Plaintiff sought leave to appeal against the final costs order made by the Judge. The Judge refused leave on 11 June 2015.

4. The Plaintiff now applied to this court for leave to appeal against the final costs order. After hearing counsel, we refused leave. Here are our reasons.

5. An applicant seeking to appeal against a costs order faces a high threshold, see Ho Shu Kwong v Chiang Chun Yuan [2002] 3 HKLRD 419. This is because costs are very much a matter for the trial judge who inevitably had a greater familiarity with the case than the appellate court. However, if a judge awarded costs against established principle or took irrelevant matter into account or failed to consider relevant matter, this court could intervene.

6.  In the present application, Mr Lam raised 3 grounds to challenge the Judge’s exercise of discretion. It is quite plain to us that the first 2 grounds have no merit.

7. The offers to settle are not simply payment of money by the Defendants to the Plaintiff. They involved the Plaintiff agreeing that she had no interest in the property (under the offer of 12 Sept 2013) or she agreeing to sell the property within 6 months (under the offer of 19June2014) or she co-operating in the valuation process and agreement to accept her interest being limited to half of the assessed value or $1,550,000. All the offers were made on the basis of no order as to costs, which cannot be accommodated in the sanctioned payment or sanctioned offer regime in view of O 22 r 20(1), see Wealthy Plus Ltd v Lai Man Ho [2001] 4 HKC 691. The Judge was clearly right in holding that this is not a case where the Defendants could have protected their position by means of a sanctioned payment, and as such not within the scope of Order 62 rule 5(1)(d).

8. The Judge was also plainly right in holding that despite his view that none of these offers were valid sanctioned offers, they could still be taken into account as a matter of discretionary consideration in light of Order 22 rule 2(4). Mr Lam’s submission that the court cannot take account of offers other than sanctioned offers is plainly unarguable in light of this provision. Further, as we held above, this is not a case within the exclusionary rule of Order 62 rule 5(1)(d). It does not therefore matter whether the offers of 19 June 2014 and 7 July 2014 can in law be regarded as sanctioned offers. The Judge proceeded on the basis that these offers were not sanctioned offers. Notwithstanding that, Order 22 rule 2(4) gives him a discretion, see Eiles v London Borough of Southwark [2006] EWHC 2014 (TCC) (28 July 2006), as recently discussed by Deputy High Court Judge M Ng in Chen Tek Yee v Chan Moon Shing HCA 954 of 2010, 11 June 2015. This approach was consistent with the decision of the Court of Final Appeal in Ming An Insurance Co v Ritz-Carlton Ltd (No 3) (2009) 12 HKCFAR 745 though, unlike that case, we are not dealing with open offers. This was also the approach adopted by Poon J in Montrio Ltd v Tse Piong Shun David [2012] 2 HKC 392 which was upheld on appeal in CACV 291 of 2011, 28 Dec 2012. The Judge was entitled to make his order on costs in the exercise of that discretion.

9. Whether the exercise of the discretion should attract the same consequences as if a valid sanctioned offer has been made is not raised in Mr Lam’s grounds of appeal and we do not need to discuss that in this decision. The Judge did not equate the offers with sanctioned offers. He did not award indemnity costs based on the offers of 12September 2013 and 19 June 2014. Though he awarded costs on indemnity basis for the trial, the Judge did so primarily due to the Plaintiff propounding false evidence given at the trial than the offer of 7July 2014.

10. This brings us to the third ground of Mr Lam. Quite properly, Ms Kei for the Defendants does not dispute that she did not rely on the propounding of false evidence as a ground for seeking indemnity costs though she contended the Judge was entitled to do so. But the problem is that the Judge did not hear arguments on this ground and this can give rise to a reasonably arguable challenge by Mr Lam that the Plaintiff was deprived of the opportunity to deal with the same.

11. Bearing in mind that even if this ground were established, this court would have to exercise the discretion afresh, we directed the parties to address us on the question whether the propounding of false evidence by the Plaintiff (as found by the deputy judge) warrants the imposition of costs of the trial on indemnity basis or, if not, on common fund basis. We also drew the attention of counsel to these authorities: Maysun Engineering v International Education and Academic Exchanges Foundation [2011] 2 HKLRD 844; Chinachem Charitable Foundation v Chan Chun Chuen HCAP 8 of 2007, 16 April 2010; Dr Koo Chih Ling Linda v Dr Lam Tai Hing [1992] 1 HKC 193; Cheung Wei Man Vivien v Centaline Property Agency Ltd HCA 286 of 2000, 15 December 2006.

12. After hearing submissions, if we were to exercise the discretion afresh, we would not be minded to impose costs on indemnity basis. However, costs on common fund basis would in any event have been justified in light of the offers.

13. Ms Kei told us that the Defendants are agreeable to costs from 18 July to end of the trial on 31 July 2014 be taxed on common fund basis.

14. In view of that, on the undertaking by the Defendants that they would not seek to enforce the order for costs from 18 July 2014 to end of the trial on 31 July 2014 beyond costs on common fund basis, we do not see any further need for an appeal on costs to be conducted (with its attendant costs and time implications).

15. In the circumstances, as a matter of discretion (see Tiong King Sing v Sam Boon Peng Yee HCMP 1129 of 2015, 21 July 2015) we refuse to grant leave to appeal.

16. We would record the undertaking given by the Defendants and we direct that taxing master (if the costs of the action have to be taxed) that the costs from 18 July 2014 to end of the trial on 31July2014 shall be taxed in accordance with that undertaking.

17. As for the costs of this application, as Mr Lam failed on his two major grounds of appeal and the Defendants acted reasonably in accepting costs on common fund basis, we would order the Plaintiff to be pay to the Defendants in respect of the application before us at $45,000. As regards the costs of the application for leave below, we are not minded to re-visit the same (assuming we have jurisdiction to do so when leave is refused) and the order of the Judge still stands. We also order the Plaintiff’s own costs be taxed in accordance with the Legal Aid Regulations.