CHUNG HOI YIN AGGIE v. THE GENERAL OF THE SALVATION ARMY

HCLA 16/2023

[2026] HKCFI 365

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO 16 OF 2023

(ON APPEAL FROM LABOUR TRIBUNAL CLAIM NO 2803 OF 2022)

________________________

________________________

________________________

DECISION ON COSTS

________________________

I. INTRODUCTION

1.  I made a costs order nisi in the judgment handed down on 21 August 2025 ([2025] HKCFI 3680)  (the “Judgment”)  that the Claimant shall pay the Defendant costs of the appeal (including the costs of the application for leave to appeal).  This is the Defendant’s application by Summons filed on 3 September 2025 (the “Summons”)  to vary the costs order nisi that, among others:-

(1)  The Claimant do pay the Defendant (i)  costs of the appeal (including the costs of the application for leave to appeal)  with certificate for counsel; (ii)  costs thrown away by the adjournment of the appeal dated 12 June 2024 (the “First Adjournment”); and (iii)  costs thrown away by the adjournment of the appeal dated 12 November 2024 (the “Second Adjournment”, with certificate for counsel; and

(2)  All costs shall be summarily assessed on paper and to be paid forthwith.

2.  While it is not stated in the Summons, in his written submissions dated 5 December 2025, Mr Earl Deng, counsel for the Defendant, submits that the taxation basis should be indemnity basis.  In his written submissions dated 19 December 2025, Mr Jason Kung, counsel for the Claimant, points out that the variation of the taxation basis is not stated in the Summons.  In his reply submissions dated 2 January 2026, the Defendant made a late application by way of submissions with a draft amended summons annexed thereto to vary the Summons to include indemnity basis.  I shall consider all these below.

II.  STARTING POINT ON COSTS

3.  While in general civil litigation, costs follow the event, it has been held that “appeals from the Labour Tribunal… [stand] out from other civil litigation as a special class of their own”: see Ali Shoukat v Hang Seng Bank Limited, HCLA 112/2004, 20 June 2005 at §22 per DHCJ To.  His Lordship explained as follows:-

“22. … The purpose of the Labour Tribunal and the MECAB is to provide a speedy, efficient and cheap means of adjudication of employment claims. Usually, the disputes are resolved with no order as to costs. If costs are awarded, they are not substantial as the parties are not legally represented. Litigants have a reasonable expectation that their disputes will be resolved on a low-costs basis both at first instance and on appeal. In my view, this benefit of low-cost employment dispute adjudication should be extended to appellate proceedings if in all the circumstances it is just to do so. However, it is impossible to set out the circumstances when it would be just to exercise the discretion of making no order as to costs as each case depends on facts of its own. I think the following considerations should usually be taken into account in the exercise of this discretion. The primary consideration is whether the unsuccessful party has been guilty of unmeritorious conduct in the litigation both at first instance and on appeal. Of secondary importance are whether the unsuccessful party is legally represented in the appeal, whether he is the appellant or the respondent and balance of hardship the order of costs may have to the parties.

23. If the unsuccessful party to an appeal has not put forward a claim or a defence in bad faith and has not misbehaved himself in the conduct of the litigation, the appellate court should be slow in ordering costs of the appeal against him. Bad faith in this context means putting forward a false, frivolous or vexatious claim or defence and giving false evidence which is disbelieved. On the other hand, if he misled the Presiding Officer and obtained a judgment in his favour which led to the appeal, there is no reason why he should not bear the consequence of costs, even if such costs far exceeds his claim or the value of the claim against him. He only has himself to blame for his misfortune. Generally the discretion to make no order as to costs should lie in favour of the unsuccessful party who cannot afford legal representation. This is because if a party is legally represented on appeal, he knows of the consequence of costs and he no longer litigates with the expectation of low-costs adjudication. Likewise, the discretion should also be exercised in favour of the unrepresented respondent as he is a passive party to an appeal, provided that he has not been guilty of any unmeritorious conduct in the litigation.

24. The instant appeal is a special one. The appeal was fought solely on points of law, which the Presiding Officer in the tribunal below should not have erred. The Claimant had not put forward a claim in bad faith. He had not put forward evidence which was disbelieved. He had not challenged the Defendant’s evidence. He had not misconduct himself in the litigation before the Labour Tribunal and on appeal. He simply asked for his claim to be adjudicated on the basis of the law. Had the Presiding Officer properly directed his mind to any of the three issues raised in this appeal, he would have dismissed the Claimant’s claim with no order as to costs. It would cause the Claimant undue hardship if costs are awarded against him on appeal. On the other hand, the Appellant is a party of substantial means, being one of the major banks in Hong Kong. Such legal costs are insignificant and could have been easily absorbed in its operational expenses. In the circumstances, I think this is an appropriate case in which I should exercise my discretion in favour of the unsuccessful party and make no order as to costs of the appeal as if this appeal were an extension of the proceedings in the Labour Tribunal.” (emphasis added)

4.  In other words, in making costs orders, the Court should recognise that in general, in Labour Tribunal appeals, unrepresented litigants have an expectation that in the absence of any bad faith or misbehaviour on his part, there should be no costs order against him.

III.  ANALYSIS ON THE WHOLE

5.  In the present case, as regards the Claimant’s legal representation in the Labour Tribunal and in the present appeal, the Claimant had all along been unrepresented until 11 February 2025, the date of the grant of the certificate of legal aid.  She had in fact been refused legal aid on 9 July 2024, and her legal aid appeal was allowed on 11 November 2024, the day before the Second Adjournment on 12 November 2024.

6.  The present Labour Tribunal appeal was on a legal question of contractual construction.  In my view, the contractual terms in questions were not straightforward.  In the present case, I had to consider the context and purpose in order to ascertain the meaning (see §§15-25 of the Decision), as opposed to those cases where the texts themselves are unequivocal enough that any other construction would smell of “arguing for the sake of arguing”.  I would go so far as to say that the Employment Contract could have been drafted in a better way to avoid the argument below and in the appeal, and to avoid any trouble which Mr Deng in his written submissions (not in evidence)  says had been hovering over the Defendant as an employer in general before their appeal was allowed by me.

7.  Against this backdrop, the Claimant’s rejection (whether before or after she became legally represented on legal aid)  of the Calderbank offer issued by the Defendant to the Claimant on 30 April 2024 (as clarified on 16 May 2024)  cannot be said to be unreasonable at all.  The rejection certainly cannot be so unreasonable as to warrant any indemnity basis as Mr Deng applies for in his written submissions.

8.  That said, I agree with Mr Deng that I should still consider the fact that the Claimant failed to beat the offer in the Calderbank offer.  However, in the absence of unreasonableness, this should in my view go to the liability to pay costs rather than the taxation basis.

9.  Another matter I should consider is that during the period until 12 November 2024, the Claimant, not legally aided, should have the reasonable expectation that the costs of her opposition to the appeal should be low.  In this regard, I note Mr Deng’s written submissions that the Claimant had been able to instruct lawyers in other proceedings during the period, and this certainly should be a consideration I should have in mind.  However, I also note that Mr Kung, for the Claimant, is, rightly in my view, not seeking a costs order that there should be no order as to costs, but instead, effectively agrees to my costs order nisi that she has to pay the costs of the appeal (including the application for leave to appeal)  to the Defendant, a costs order already departing from the starting point as explained above.  I further note that this costs order nisi also means that the Claimant has to pay costs incurred even before the Calderbank offer was issued when she was not legally represented.

10.  In his written submissions, Mr Deng sets out various conduct of the Claimant which he submits was unreasonable, so as to warrant a departure from the starting point and an indemnity basis. 

11.  First, he submits that the Claimant’s manner in dealing with the legal aid application and appeal caused the last-minute First and Second Adjournments.  However, for the First Adjournment, one must be forgiving that it was the process of the legal aid application that took quite some time, not due to any fault on the part of the Claimant.  For the Second Adjournment, the Defendant well knew that the Claimant’s appeal on legal aid was ongoing, which to be heard on 11 November 2024, and the Defendant should have an expectation that there would be the Second Adjournment.  In any event, the Second Adjournment was, in my view, not a result of any conduct on the part of the Claimant, but a result of the reality that an appeal on legal aid would take time.  

12.  Second, Mr Deng submits that the Claimant’s rejection of the Calderbank offer was unreasonable.  For the reasons I explained in §§6-7 above, I disagree.

13.  Third, Mr Deng submits that the Claimant’s ability to instruct lawyers in other proceedings and her failure to disclose the same to the Court was unreasonable.  With respect, I cannot see why this could amount to unreasonable conduct.  I do not see why one has to disclose to the Court that she has been able to instruct lawyers in other proceedings.  The fact that she was able to instruct lawyers, if relevant at all, is relevant to whether there should be no order as to costs or whether costs should follow the event, but as I mention above, the Claimant agrees to pay the costs.   

14.  Mr Deng has other submissions on the Claimant’s conduct like her failure to comply with deadlines.  I do not need to go into the details, and suffice to say that I do not consider them to be so unreasonable as Mr Deng submits.

15.  Having analysed the matter on the whole, I shall deal with the Defendant’s application specifically.

IV.  COSTS THROWN AWAY BY THE FIRST ADJOURNMENT

16.  The Defendant seeks that the Claimant should pay the Defendant’s costs thrown away by the First Adjournment.  The Court ordering the First Adjournment did not make any costs order and did not reserve any costs.  No parties thereafter sought any clarification from the Court.  This should mean that there was no order as to costs of the First Adjournment.  The present application is an application to vary my costs order nisi, but not an application to review or appeal the costs order of the First Adjournment (no order as to costs)  out of time.  This is sufficient for me to decline the Defendant’s application for the costs thrown away by the First Adjournment.

17.  In any event, considering that the Claimant was not legally represented at that time and she was applying for legal aid, I do not see any ground to order the Claimant to pay the costs thrown away by the First Adjournment.

V.  COSTS THROWN AWAY BY THE SECOND ADJOURNMENT

18.  The Court ordering the Second Adjournment expressly made a costs order that costs be in the cause.  Despite that, Mr Deng submits that (i)  the costs order was not absolute; (ii)  the “cause” had yet to be determined; and (iii)  that Court had not been addressed on any costs issue.

19.  With respect, (i)  an order without being labelled as nisi is an absolute order, and in any event, if that order was meant to be a nisi order, it would have become absolute by lapse of the 14 days period long ago; (ii)  the “cause” had now been determined by the Decision, and thus costs are in the cause; if Mr Deng were right, then any costs order of costs in the cause would be meaningless but could be reopened for arguments during taxation; and (iii)  while that Court had not been addressed on any costs issue, the parties did not raise this immediately to that Court and instead remained silent.  Therefore, given that the present application is an application to vary my costs order nisi, but not an application to review or appeal the costs order out of time, I decline the Defendant’s application for the costs thrown away by the Second Adjournment.

20.  In any event, I note that the most substantial sum of costs that are alleged to have been thrown away by the Second Adjournment probably would be the counsel’s brief.  However, the arguments for the appeal would not have changed substantially and substantively since the Second Adjournment, and thus not much of the brief (if an)  would have been wasted.  Reading time may be necessary for the adjourned hearing to refresh the counsel’s mind, but it is another matter to say that the previous brief had been completely or substantially wasted.  In the circumstances, having considered that at that time the Claimant was not legally represented and she was appealing on legal aid, I do not see any ground to order the Claimant to pay the costs thrown away by the Second Adjournment.

VI.  INDEMNITY BASIS

21.  As mentioned above, the Summons does not include any application for indemnity basis.  The first time the Defendant has sought indemnity basis is in Mr Deng’s written submissions.  In his reply submissions, Mr Deng submits that indemnity basis should be sought at the conclusion of a taxation hearing, relying on Hong Kong Civil Procedure 2025 §62/24/2 that “a letter offering to settle costs written for the purpose of being referred to on taxation of costs should be referred to at the conclusion of a taxation review hearing”.  With respect, his reliance is misplaced.  The commentary there simply refers to an offer to settle costs (as opposed to an offer to settle the action), and therefore, in that context, one would understand why such an offer should be referred to only at the conclusion of the taxation hearing.  If the Defendant follows this commentary, and according to the Defendant’s logic, the Defendant should not be seeking indemnity now, but wait until I dispose of the application to vary the costs order nisi.  This clearly is wrong. 

22.  In the present appeal, after I disposed of the appeal, in applying to vary the costs order nisi, the parties must produce all relevant without prejudice materials at the outset of the application in support of the application.  This is one of the purposes of making a costs order nisi, thereby giving parties a chance to produce all relevant without prejudice materials which the Court should not consider in determining liability.  The Defendant should have made it clear in the Summons that it is seeking indemnity basis.

23.  As mentioned above, in his reply submissions, the Defendant applies to amend the Summons to include indemnity costs.  However, as I analysed above, I fail to see any conduct that would warrant any indemnity costs.  Therefore, even though the Claimant has diligently dealt with the Defendant’s submissions on indemnity costs and thus it may be said that there would be no prejudice to the Claimant in allowing the amendment, given that the amendment is unmeritorious, I dismiss this late application made in the reply submissions.

VII.  MISCELLANEOUS

24.  For the sake of completeness, “certificate for counsel” is apparently deliberately added in the Summons.  This phrase is unnecessary, given that the default position in the Court of First Instance hearing is that there shall be certificate for one counsel.

25.  In the Summons, the Defendant also seeks that the Claimant’s own costs from 11 February 2025 shall be taxed in accordance with Legal Aid Regulations.  I have already provided in the costs order nisi that the Claimant’s own costs shall be taxed in accordance with Legal Aid Regulations.  The only difference is that the date 11 February 2025, being the date of the grant of the legal aid certificate, would be added.  I do not see the necessity in doing so.

VIII.  CONCLUSION

26.  In the circumstances, I dismiss the Summons, and also the application by way of the Defendant’s reply submissions dated 2 January 2026 to amend the Summons.  I make the costs order nisi absolute. 

27.  Further, I order the Defendant to pay the Claimant costs of the Summons (and for the avoidance of doubt, the costs should include costs in relation to submissions on indemnity costs), to be summarily assessed, and that the Claimant’s own costs shall be taxed in accordance with the Legal Aid Regulations.

28.  For the summary assessments of the costs of the appeal and of the costs of the Summons, I order that:-

(1)  The respective receiving parties shall lodge and serve a statement of costs within 7 days from today;

(2)  The respective paying parties shall lodge and serve a list of objections within 7 days thereafter; and

(3)  The costs assessments shall be disposed of on paper.

29.  I thank counsel for their assistance.