MAK NGUN TAI AND OTHERS v. FUNG MING IP AND OTHERS

HCMP 197/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 197OF 2017

(ON AN INTENDED APPEAL FROM HCAP NO 37 of 2015)

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BETWEEN

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JUDGMENT

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

1.  This is an application for leave to appeal out of time in respect of the decision on costs of Recorder Lisa Wong SC on 21 December 2016. By that decision, the Recorder ordered the 1^st and 2^nd Defendants to pay for the costs of the Plaintiff in the application for appointment of administrator pendente lite [“APL”]. No leave had been sought from the Recorder because it was brought out of time and a judge in the Court of First Instance has no jurisdiction to grant leave out of time. The application for leave was made by a summons of 25 January 2017.

2.  The explanations offered by the 1^st and 2^nd Defendants for the delay were as follows.  First, it was said that the Recorder did not give reasons for her decision on costs.  Solicitors for the Defendants wrote to enquire about the reasons on 28 December 2016 and the clerk of the Recorder replied on 5 January 2017.  By then, the 14-day period had expired.  Second, after the reasons became available, the lawyers had considered the matter with the 1^st and 2^nd Defendant.  In view of the high threshold for bringing an appeal on costs, it took them some time before a decision was made to go ahead with the application for leave to appeal.

3.  We do not find the explanations adequate.  The Recorder gave a careful and lengthy judgment on 14 October 2016 regarding her decision on the appointment of APL notwithstanding objections from Mr Lai.  Those objections were not confined to the identity of the persons to be appointed.  Instead they went to the fundamental question as to whether APL should be appointed.  Though submissions on costs were lodged afterwards, it is tolerably clear that the Recorder considered it was appropriate that costs should follow event.  Whilst it is desirable that the Recorder should give some brief reasons for her order on costs, in the present circumstances we do not find the course adopted by the Recorder difficult to understand.  Having read Mr Lai’s submissions on costs of 6 November 2016, we do not find it surprising that they were rejected by the Recorder.

4.  It is notable that some of the points now raised in the draft grounds of appeal were not advanced in the submissions of 6 November 2016.  We shall come back to this aspect later.

5.  The brief reasons set out in the letter of 5 January 2017 were as follows:

“ 1. Costs should usually follow the event. The Defendants opposed, and the Plaintiffs succeeded in, the APL Application.

2. In particular, the Plaintiffs demonstrated the need for an administrator pendente lite to be appointed despite the 1^st and 2^nd Defendants’ argument to the contrary.

3.  Although Mr Billy Ma was not the Plaintiffs’ primary candidate, his appointment had been raised by the Plaintiffs with the 1^st and 2^nd Defendants in the inter partes correspondence and evidence well before the hearing.  The 1^st and 2^nd Defendants opposed the idea.  It was therefore necessary for the Plaintiffs to come to Court.”

6.  As we said, even without such letter, it should not have been difficult for those advising the Defendants to understand that the Recorder adopted the course of costs following event and Mr Lai’s submissions on costs were rejected. 

7.  In any event, it would appear that the main cause for the delay was the time taken by the Defendants in assessing whether to appeal against such costs order.  But that cannot by itself be a good reason for extension of time.  In the present case, it took the Defendants 20 days after the letter of 5 January 2017 to lodge the summons seeking leave to appeal.  

8.  This Court repeatedly reiterated that there is a very high threshold before we would interfere with an order for costs made by a judge.  There are very good reasons for that approach and they were discussed in Ho Shu Kwong v Chiang Chun Yuan [2002] 3 HKLRD 419, Hung Fung Enterprises Holdings Ltd v Agricultural Bank of China [2012] 3 HKLRD 679, Chan Shun Kei v Hong Kong Construction (Hong Kong) Limited CACV 192 of 2014, 7 March 2016 and Poon Ching Man v Lam Hoi Pun [2016] 3 HKLRD 815.

9.  We have read the draft grounds of appeal exhibited as “WKF-9” in the affirmation of Wong King Fai of 24 January 2017. With respect, subject to what we shall say regarding the position of the 2^nd Defendant, Mr Lai failed to persuade us there is a reasonable prospect of we finding there is sufficient ground for intervening with the judge’s costs order.  On the contrary, we are of the view that the judge was plainly right in making an order for costs in favour of the Plaintiffs in the application for APL.  The facts of the case cried out for some immediate action and appointment of APL was clearly appropriate.  Contrary to the arguments of Mr Lai, we do not find any justification for his clients’ opposition to the application.  We do not accept that the Plaintiffs’ conduct in relation to the summons on the joinder of the Official Administrator should have any impact on the costs of the application for APL.  The judge already ordered costs against the Plaintiffs in respect of the joinder summons.  Apportionment of costs attributable to the APL summons is a matter for the taxing master.  The non-compliance by the solicitors for the Plaintiffs with the Practice Direction is regrettable.  However, it is well within the generous ambit of reasonable exercise of discretion for the judge to attach less weight to it in the present circumstances.  The terms of the summons can never fetter the court’s exercise of discretion on costs. 

10.  We do not see any merit in the intended appeal by the 1^st Defendant and we refuse to grant leave to him.  We consider his application to be totally without merit and we make a further order pursuant to Order 59 Rule 2A(8) that no party may request this determination to be reconsidered at an oral hearing inter partes. 

11.  The only matter which we have some concern is the liability of the 2^nd Defendant.  Mr Lai submitted that the 2^nd Defendant adopted a neutral stance regarding the appointment of APL.  He certainly said so in his written submissions of 25 August 2016 at para 8.  However, we do not know how the arguments were developed before the judge at the hearing.  We noted that in her judgment of 14 October 2016 the judge only directed the 1^st Defendant to file submissions on costs in the APL application.  In the submissions of costs of 6 November 2016 filed on behalf of both the 1^st and 2^nd Defendants (somewhat strangely as submissions on Costs on “O.15/4(1) summons” in respect of which the judge did not direct for any submissions to be filed), Mr Lai did not advance the contention that the 2^nd Defendant did not participate in the opposition of the appointment of APL.  From the brief reasons set out in the letter of 5 January 2017, the judge apparently was under the impression that the 2^nd Defendant also opposed the appointment of APL.

12.  We do not know if there had been some misunderstanding with regard to the position of the 2^nd Defendant. If she had been neutral in respect of the application for appointment of APL, we can readily see why she should not be held liable for the costs in relation to the same.

13.  In the present instance, we are handicapped by the fact that no submission has been filed by the Plaintiffs in this application.  Under Order 59 Rule 2A(4), a party who intends to resist an application for leave shall file a statement as to why the application should not be granted within 14 days after the application is served on him.

14.  It is open to a putative respondent in an intended appeal to adopt a wait and see approach and leave it to the court to decide whether to grant leave to appeal, and then take an active part to resist an appeal only after leave is granted.  However, it is also open to the Court to give directions to a putative respondent to set out his position when doing so is consistent with the underlying objectives in Order 1A Rule 2.  A putative respondent and his lawyers have a duty to assist the court under Order 1A Rule 3.

15.  It would be disproportionate for substantial costs and time to be incurred in a full-blown appeal if the question as to the liability of the 2^nd Defendant can be resolved by a simpler course. On several occasions, leave to appeal was refused upon undertakings given by a putative respondent which can provide satisfactory redress, see Leung Lai Kwan v Lo Kai Wing HCMP 1554 of 2015, 20 August 2015; Tang Shek Kiu v Tang Lim Kwong HCMP 2643 of 2015, 25 November 2015; Speed Sourcing Ltd v Rainbow State Investments Ltd HCMP 1839 of 2015, 13 April 2016.  Judicial resources could be better deployed in other cases when an unnecessary appeal is obviated by suitable undertakings.

16.  In the present context, it is in line with the underlying objectives in Order 1A Rule 2 for this court to direct the Plaintiffs to state their position regarding the liability of the 2^nd Defendant in light of her stance in the APL application.  If the Plaintiffs accept that she had been neutral, the 2^nd Defendant should not be held liable for costs of that application.  In that event, the Plaintiffs should consider giving an undertaking to this court that they would not enforce the costs order of 21 December 2016 against the 2^nd Defendant.

17.  On the other hand, if the Plaintiffs do not accept that the 2^nd Defendant had been neutral, or for some other reasons refuse to give the undertaking, it would not be possible to resolve the matter by undertaking and parties might have to go to a full blown appeal.  Someone would have to bear the costs consequences of such an appeal.

18.  In the circumstances, before we decide on the application by the 2^nd Defendant, we direct the Plaintiffs to file and serve a statement by 17 March 2017 stating if they accepted the 2^nd Defendant adopted a neutral position in the APL application and whether they would give an undertaking as indicated at paragraph 16 above.