LAU WAI YIN AMY AND ANOTHER v. POON CHUNG KWONG PETER AND OTHERS

HCMP 152/2019

[2020] HKCFI 1235

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 152 OF 2019

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DECISION

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1.  This is the Petitioners’ application for leave to appeal against this Court’s Decision on Costs dated 19 March 2020 (the “Decision on Costs”).

2.  On 31 March 2020, the Petitioners took out a summons (“the Summons”) to seek leave to appeal against the Decision on Costs on various grounds as set out in the draft Notice of Appeal annexed to the Summons.

Applicable Legal Principles

3.  First, it is well established that the threshold for reversing a discretionary decision on costs is a high one.  As the Court of Appeal in Poon Ching Man v Lam Hoi Pun [2016] 3 HKLRD 815 at §34 pointed out that:

“ 34. This court has stressed repeatedly that costs is very much a matter of discretion for the trial judge and the Court of Appeal would be very circumspect in intervening with such a decision with high discretionary content: see Ho Shu Kwong v Chiang Chun Yuan [2002] 3 HKLRD 419; IO of King Yip Factory Building v Kwun Wah Flower and Plant Manufactory Ltd CACV 128 of 2003, 13 Nov 2003; Hung Fung Enterprises Holdings Ltd v Agricultural Bank of China [2012] 3 HKLRD 679; Bonnie Blair Ltd v Witmore Ltd HCMP 1546 of 2015, 7 Aug 2015; Chan Shun Kei v Hong Kong Construction (HK) Ltd CACV 192 of 2014, 7 March 2016. In the last case, the court said at §22:

‘  22. It must be stated at the outset that this court should acknowledge that costs is very much a matter of discretion of the judge and we should be circumspect in interfering with the same.  The established approach is that this court will only interfere when it is satisfied that the decision of the judge is either wrong in principle or plainly wrong, see Ho Shu Kwong v Chiang Chun Yuan [2002] 3 HKLRD 419.  The rationale for this approach was explained by Woo JA (as he then was) in Ho Shu Kwong.  The trial judge is the best person to exercise the discretion on costs because he is most familiar with the conduct of the case at the trial and the impact of the success and failure on each issue canvassed before him.  In a way it is like an appeal against findings of fact.  As explained in numerous judgments (see e.g. China Gold Finance Ltd v CIL Holdings Ltd CACV 11 of 2015, 27 November 2015), an appellate court is institutionally disadvantaged from re-assessing a decision of this nature as if it is hearing the matter in the first instance.  Thus, this court should examine whether a primary judge committed any palpable error in the exercise of the discretion on costs.  In the absence of such an error, the mere fact that the appellate judges might have exercised the discretion in a different manner is not a sufficient ground to warrant interference with the decision of the primary judge.’”

4.  The burden is on the applicant to demonstrate that the Court’s exercise of discretion on costs was plainly wrong.  The Court of Appeal is unlikely to interfere with the exercise of a judge’s discretion on costs unless it could be shown that the judge failed to exercise the discretion, or exercised it upon a false principle, or did not exercise it judicially.

5.  Secondly, the test as to whether leave to appeal should be granted under section 14AA(4) of the High Court Ordinance, Cap 4 is clear.  In SMSE v KL [2009] 4 HKLRD 125 at §17, Le Pichon JA said:

“ 17. Leave to appeal under O.59 r.2B is not lightly granted. The relevant test appears in s.14AA(4) of the High Court Ordinance (Cap.4). In granting leave, the Judge must have considered that the test set out in s.14AA(4) had been met. The section requires that the court be satisfied that the appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard before granting leave. Reasonable prospects of success involves the notion that the prospects of succeeding must be ‘reasonable’ and therefore more than ‘fanciful’, without having to be ‘probable’.”

6.  To meet the “reasonable prospect of success” test, an applicant is required to show more than just an arguable case, but an appeal that has merits and ought to be heard, although he does not have to demonstrate that the appeal will probably succeed.  (See Wynn Resorts (Macau) SA v Mong Henry [2009] 5 HKC 515 at §19 per Chu J (as she then was).

Analysis

7.  The Petitioners’ first ground of appeals is that this Court erred in failing to articulate any basis or reason for its award of costs against the Petitioners from 30 April 2019 onwards (paragraph 1(1) of the draft Notice of Appeal).  I must say that I fail to see any merits in this ground of appeal.  In paragraph 8 of the Decision on Costs, this Court made it clear that that at least since 29 April 2019 when the Petitioner has regained control of the subject company, it is not appropriate for the Petitioner to continue with the Petition.  Mr Wong for the Petitioners, at the hearing, fairly agreed that the reason set out in paragraph 8 of the Decision on Costs is a reason for costs against the Petitioners.

8.  In paragraph 9, this Court also stated that the overriding consideration in determining the issue of costs is fairness taking into account all the relevant circumstances of the case.  This Court then proceeded to analyse all the factors submitted by the parties when exercising its discretion.  Hence, it is difficult to see how the Petitioners could have argued that this Court failed to articulate any basis or reason for its award of costs against the Petitioner.

9.  This Court has made it clear that it is not appropriate to continue an unfair prejudice petition to seek for monetary compensation for the company when the Petitioner was in full control of the company.

10.  Secondly, the Petitioners argued that the Petition presented on 31 January 2019 has been substantively heard and decided on 24 December 2019 (paragraph 1(3) of the draft Notice of Appeal).  That is not entirely correct.  This Court has not heard or determined the substantive merits of the Petition on 24 December 2019 as the Petitioners withdrew the Petition upon a clarification and an undertaking from the 2^nd Respondent that the sum of HK$2.5 million would be returned to the Petitioners.

11.  The Petitioners made the decision then to withdraw the Petition.  It is important to note that the Petitioners then did not seek any order against the 1^st Respondent.  Hence, this Court accepted the 1^st Respondent’s submission that the starting point in relation to costs upon withdrawal of the Petition with leave of the Court is that, in general, the withdrawing party should pay for the costs of the opposing party.  (See paragraph 4 of the Decision on Costs).

12.  I accept Mr Lo’s submission on behalf of the 1^st Respondent that save and except that leave was granted to the Petitioners to withdraw the Petition, no decision was made on the Petition.  Hence, there are no merits in arguing that the starting point of any costs order should be costs to follow the event.  The event is the withdrawal of the Petition.  The Petitioners obtained no orders vis-à-vis the 1^st Respondent.

13.  Further, I also agree with Mr Lo for the 1^st Respondent that the line of argument that the Petitioner is the wholly successful in the Petition was not previously advanced in their submissions on costs.  It is only in their application for leave to appeal that they for the first time introduced it.  The Flywin v Strong & Associates (2002) 5 HKCFAR 356 applies.  The Petitioners are not allowed to reargue on costs by raising a new point on appeal.

14.  Thirdly, the Petitioners argued that this Court made a material factual error and a material factual omission.  It is correct that there is a typographical error in that the reference to the 1^st Respondent in paragraph 16 of the Decision on Costs should read the 2^nd Respondent. But it is neither here nor there.  The Court set out the post hearing events for the sake of completeness.  The fact that the 2^nd Respondent subsequently dishonoured a cheque and the Decision on Costs did not mention it is again neither here nor there.  It is not a factor that the Court could take into account in deciding costs between the Petitioners and the 1^st Respondent given that the Petitioners obtained no orders vis-à-vis the 1^st Respondent.

Disposition

15.  For all the reasons stated above, I am of the view that there is no reasonable prospect that the Petitioners can demonstrate that this Court’s exercise of its discretion on costs is plainly wrong.

16.  Accordingly, the Summons dated 31 March 2020 is dismissed.

17.  I also make an order that the costs of and occasioned by the Summons dated 31 March 2020 is to be paid by the Petitioners to the 1^st Respondent.  I summarily assessed the same at HK$83,900.00.

18.  Finally, it remains for this Court to thank Mr Wong for the Petitioners and Mr Lo for the 1^st Respondent for their helpful assistance.