WONG TAT LUN EDDIE AND OTHERS v. WONG CHI HO JIMMY AND OTHERS

HCMP 2391/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2391 OF 2013

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D E C I S I O N
(Leave to Appeal)

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Introduction

1. This is D1’s application for leave to appeal against this court’s  costs order made on 16 February 2015 (“Costs Order”) whereby I ordered that, notwithstanding that Ps did not succeed with their application under section 33 of the Probate and Administration Ordinance Cap 10 to remove D1 as executor of the Estate :

(i) D1 to pay Ps’ costs up to D1’s 2^nd affirmation, to be taxed on a party and party basis if not agreed with certificate for two Counsel; and

(ii) The costs of Ps and D1 for the period after D1’s 2^nd affirmation, including the costs of the Leave Application[1], shall be paid out of the Deceased’s Estate, to be taxed on a solicitor and client basis if not agreed, with certificate for two Counsel.

2. After the Costs order, D1 changed his entire legal team, and instructed Senior Counsel Mr Whitehead leading Mr Richard Yip for the present application, while Senior Counsel Mr Paul Lam and Counsel leading Mr Jonathan Wong continued to represent Ps.

General Legal Principles

3. Section 14(3)(e) of the High Court Ordinance provides that no appeal shall lie against a costs order without the leave of the court making the costs order or the Court of Appeal.

4. Generally, leave to appeal should not be granted unless the court hearing the application for leave is satisfied that the appeal has a reasonable prospect of success.  As Le Pichon JA had said in SMSE v KL [2009] 4 HKLRD 125, reasonable prospects of success involved the notion that the prospects of succeeding must be ‘reasonable’ and therefore more than ‘fanciful’, without having to be ‘probable’[2].

5. Further, as stated by DHCJ Le Pichon, as she then was, in Tang Chung Wah Alan and Chen Yung Ngai Kenneth, unrep, HCMP 113/2013, 7/5/2014, that courts would be reluctant to allow appeals on costs only, and the CJR has not relaxed the high hurdle that an applicant faces in making such applications[3].

6. The Court of Appeal will not interfere with the exercise of a judge’s discretion in the award of costs unless it was shown that (i) he failed to exercise the discretion, or (ii) he exercised it upon a false principle, or (iii) he did not exercise it judicially or (iv) the exercise of discretion was demonstrably flawed[4]. These principles were reiterated recently by the Court of Appeal in Pfeiffer GmbH v Cheung Hay Kit, unrep, CACV 245/2013, 29/10/14.  

7. The relevant provisions in the Rules of the High Court governing the exercise of discretion as to costs are Order 62 rules 3(2), 5 and 7, which contain amendments introduced as a result of the Civil Justice Reform.  Kwan JA in Pfeiffer GMBH had quoted from what was said by Cheung JA in Wong Kam Tong v Tin Shing Court, Yuen Long (IO) (No 2) [2012] 2 HKLRD 1128[5]:

“… In our view, one can say with equal confidence that after 2 April 2009, while the “follow the event principle” will still play a significant role in Hong Kong, it will nonetheless only be a starting point from which the Court can depart, the rationale being that a mechanistic adoption of the ‘follow the event principle’ may result in parties incurring unnecessary costs in civil litigation. We do not consider the provisions of O 62 r 7(1) (which enable the Court to disallow a party’s costs or order it to pay the other party’s costs if there is anything done or omitted which is improper or unnecessary) will by itself curtail the power of the Court under the new regime. The amendment to r 7 (2) had specifically added the new (aa), namely, regard to the underlying objectives set out in O 1A, r 1. In our view O 62 r 7 enables the Court to address the costs issue when there are improper or unnecessary acts or omissions but it does not confine the Court’s power only to such situations.”

8. There was no dispute by Mr Lam SC to the above general principles.

Grounds of Appeal

9. As set out earlier, there were two parts of the Costs Order, namely the period up to D1’s 2^nd affirmation, and the period thereafter. 

10. There were three grounds of appeal put forward on behalf of D1, namely:

(i) This court erred in principle in making an extreme and exceptional order of ordering D1 to pay the unsuccessful Ps’ costs.  This ground was in relation to the first part of the Costs Order;

(ii) The court had failed to take any or any sufficient account of Order 62 rule 6(2), which was also in relation to the first part of the Costs Order;

(iii) This court erred in law in finding that the continuation of the Removal Application fell within the second class of cases referred to in Re Buckton, and should, as a matter of law found that it fell within the third class.  This ground was in relation to the second part of the Costs Order.

11. Mr Whitehead had referred this court to a number of cases where the court had repeatedly emphasized that awarding costs against a successful party was an “extreme” and “exceptional” sanction.

12. There was no dispute that the court has jurisdiction to award costs of proceedings against a successful defendant, and that the court should only exercise its discretion to do so in exceptional circumstances.

13. The starting point is that costs should follow event, and a party seeking departure from that bears the burden of showing a departure is justified, and  further how the discretion is to be exercised in each case depends very much on the particular circumstances of the case[6].

14. Those 4 cases cited by Mr Whitehead SC, namely items 3 to 6 on his List of Authorities were not cited to this court by either side in their respective written submissions on costs. However, as pointed out by Mr Lam SC, those cases turned on their own facts.

15. Although I did not use the actual word “exceptional” in my Decision on Costs, in the present case, I had found there were delay and deficiencies including not being forthcoming on the part of D1, and D1 only took remedial action by filing his 2^nd affirmation shortly before the hearing notwithstanding various letters from Ps including a pre-action letter.  Having said this, my decision in relation to the first part of the order did involve a departure from the general rule and was further an order which had been described in Gupta v Kilto (Transcript No 1063 of 1989) 07.11.89 as an “extreme sanction”[7].

16. Having considered the respective Senior Counsel’s submissions, it appears that an argument may be mounted on behalf of D1 providing a reasonable prospect of success on appeal in relation to the first part of the order.  I will therefore grant D1 leave to appeal against the Costs Order on the first ground.  In the circumstances, I need not consider the other two grounds.  

17. Costs be in the cause of the appeal.

[1] As defined in the Decision on Costs, 16.02.15

[2] At para 17

[3] At para 6

[4] See para 62/2/11 of the Hong Kong Civil Procedure 2015

[5] At paras 11-13

[6] per DHCJ M Ng, at para 36, Kinetics Medical and Health Group Company Limited and others and Dr Tse Ivan Cheong Yau, unrep, HCA 1115/2010, 07.04.14

[7] At p 9D-E