WOO KWOK PING v. THE INCORPORATED MANAGEMENT COMMITTEE OF TSUEN WAN TRADE ASSOCIATION PRIMARY SCHOOL

HCA 1523/2013

[2020] HKCFI 688

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1523 OF 2013

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DECISION ON COSTS

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1.  By a decision dated 14 January 2020 (“the Decision”), I held that this court had jurisdiction over the claim. The appeal against the Master’s costs order was set aside. On a nisi basis I held that costs of the Striking-Out Application including the hearing before Master Yip be borne by the Defendant (IMC), summarily assessed at $120,000; costs of the appeal and the jurisdiction issue were summarily assessed at $65,000 to be borne by IMC.

2.  This is IMC’s application to vary the costs order nisi to one of no order as to costs.  The abbreviations in the Decision will be adopted here.

Legal principles

3.  In general, for interlocutory applications, the court may order costs to follow the event: Order 62, rule 3(2A), RHC.

4.  To begin with, the successful party (Plaintiff) is assisted by the rule of costs to follow the event.  The unsuccessful party (IMC) bears the evidential burden to show that some other order for costs is appropriate.  In the absence of evidence or convincing argument to the contrary, the successful party would also have discharged the legal burden.  Costs to follow the event would be the appropriate order to make. If the unsuccessful party succeeds in discharging the evidential burden, the legal burden will rest on the successful party to show that she is entitled to the costs order which she seeks.  In reality, having heard the interlocutory application, it would be quite obvious to the court what costs order would best serve the justice between the parties without relying on the burden of proof: Melvin Waxman v Li Fei Yu [2013] 6 HKC 424, §20, To J.

5.  The court is entitled to take into account all the circumstances of the case, including the parties’ conduct and the underlying objectives: Melvin Waxman, Hong Kong Civil Procedure 2020, Vol 1, §62/0/2.

Application of the legal principles

6.  I have read the written submissions on both sides and will not set out the arguments in detail here.  Suffice to say that, as pointed out by Mr Li SC and Mr Miao, counsel for IMC, the Strike-out Summons has taken an unfortunately tortuous route.  Neither party considered there to be a jurisdiction issue whereas Masters on their own volition looked at the substance of the claim to raise that issue.

7.  I will consider each party’s conduct respectively.

IMC’s conduct

8.  IMC did not actively seek to litigate the striking-out because:

(1)     At the 2^nd CMC, IMC had drawn to Master Ho’s attention that the Plaintiff was seeking reliefs of injunction and declaration.  Master Ho nonetheless directed the parties to argue the jurisdiction issue.  Master Ho further commented that, given that IMC had not voluntarily taken out a striking out application, IMC might not be entitled to recover costs for steps incurred hitherto in this case.

(2)     The Strike-out Summons was taken out only afterwards, to properly frame the issue for argument and for IMC to protect its own costs position.

Ms Wong, counsel for the Plaintiff, submits that it remains IMC’s own decision to take out the Strike-out Summons and so it has to bear the consequences when the striking-out fails.  It cannot shift the blame to the Master.  I am unable to agree.  The parties were obliged to argue the issue.  The Strike-out Summons was in the simplest of terms.  It would not have caused the Plaintiff to do more than she had to do in compliance with the Master’s direction to argue the jurisdiction issue.

(3)     Soon after it was served with the re-amended statement of claim (“rasoc”), IMC withdrew the Strike-out Summons.

(4)     In the Plaintiff’s appeal on costs before me, which depended on the view of the Court as to the jurisdiction issue, IMC properly informed this Court in its written submission that the claim in the rasoc might well fall within the Court’s jurisdiction: §§4(3) and 48 of IMC’s skeleton submission dated 26 November 2019.

9.  This was a case where IMC constantly reviewed its position and acted properly to address concerns of the Master.  It turned out that what IMC drew to Master Ho’s attention was accepted by this Court on the jurisdiction issue.

10.  Ms Wong submits that IMC could have taken a neutral stance.  With respect, IMC’s stance was more than reasonable in not resisting the rasoc and not wasting Master Yip’s time on a hearing based on the amended statement of claim (“asoc”).  Although IMC did not state that it was neutral, having disclosed the view that it might not be plain and obvious for striking-out, IMC should not be blamed for arguing the jurisdiction issue before me in compliance with the letter and spirit of Master Ho’s direction.

The Plaintiff’s conduct

11.  The Plaintiff had no reason to delay her preparation of the rasoc because:

(1)     She specifically represented to Master Ho that her claim fell within the jurisdiction of the High Court. 

(2)     The April Hearing was fixed for the Plaintiff to resist the Strike-out Summons on its asoc.

(3)     There had been no indication of re-amendment until after IMC has filed its skeleton submission for the April Hearing. 

(4)     There was no explanation at all for her substantial delay in seeking re-amendments.

(5)     It was the Plaintiff’s substantial delay which caused IMC to waste all the preparation work in relation to the Strike-out Summons. She should in principle bear the wasted costs of the April hearing.

12.  However, the Plaintiff was equally innocent in the sense that she was obliged to litigate on the jurisdiction and it turned out that her counsel’s initial advice on jurisdiction was correct.

13.  Ms Wong submits that IMC should bear costs for 2 reasons:

14.  Firstly, that no additional costs were incurred because of the unsuccessful party’s involvement was not a reason to spare him costs: Chan Chi Shing v The Revising Officer Mr Simon Wong, HCAL 132/2010, 24 June 2011, §10, Au J (as he then was).  In that case, the 100^th Interested Party applied to vary the costs order nisi on the ground that no additional costs were incurred because of his involvement since the hearing of the application would have to proceed in any event.  Au J rejected such argument and held that the 100^th Interested Party should be fully conscious of the potential consequences of an adverse costs order against him if he fails in an adversarial system.  It reflected the notion that a successful party should be compensated for the costs incurred in successfully pursuing or defending a claim.

15.  With respect, that was a case where the 100^th Interested Party “hotly opposed” the judicial review (§9 of the Decision) despite the fact that he was not a respondent.  IMC stood in a different position as it was the only defendant but it was never its intention to take the jurisdiction issue but for the Masters’ direction to seek an affirmative ruling.

16.  Secondly, a party could have taken a neutral stance or even assisted the court on the law: Mok Charles Peter v Tam Wai Ho & ors, FACV 8 of 2010, 24 February 2011.  Instead IMC took on the opportunity to strike-out the claim and even instructed senior counsel to argue for striking-out.

17.  In Mok’s case, the Court commented that instead of adopting a neutral stance, R1 argued against the petitioner on a constitutionality issue. This was despite the presence of the Secretary for Justice as intervener.  That was distinguishable from IMC’s stance as set out in paragraph 8 above. 

18.  IMC was a necessary party and had to address the concerns of the Masters.  Despite the Decision, it could not be said that the Masters were unreasonable in raising the issue because the Plaintiff had indicated to Chung J when she sought the injunction that she did not intend to seek reinstatement. Inclusion of her prayer for injunction squarely raised the issue of utility of the injunction and hence whether the claim should have been within the jurisdiction of the Tribunal in the first place.

Conclusion on the liability for costs

19.  Neither party was at fault in trying to address the concerns of the Masters.  It would be unfair to make no order as to costs. I am satisfied that the order nisi should be varied such that costs below should be costs in the cause of the action. 

20.  Should that be the order of the Master, the appeal on costs would have been spared but the jurisdiction issue would still have to be argued.  For the reasons given above, costs of the appeal should likewise be costs in the cause of the action.

Quantum on costs

21.  It is not necessary for me to decide the quantum now because costs would be taxed after trial if not agreed.  However, IMC takes issue with costs claimed by the Plaintiff.  I need to set the record straight to enable the taxing master to come to a fair decision on quantum. 

22.  At §38 of her skeleton submission on costs dated 19 July 2019 presented to Master Yip for the July hearing, Ms Wong represented that the Plaintiff was a retired principal with no income.  The Plaintiff’s counsel was acting on pro bono basis in the April hearing due to the Plaintiff’s impecuniosity.  The purpose of the representation was to ask the Court not to order her to pay costs forthwith.

23.  Upon being challenged by IMC in the present application to vary the order nisi, Ms Wong now informs the Court in §27 of her submission that in fact there had been 2 counsel who represented the Plaintiff at the April hearing.  It was Mr Erik Shum who acted on pro bono basis but not herself.  She has produced her brief for attendance at the April hearing to show that she was validly briefed.

24.  In my view, it was wholly improper to represent to the court that counsel was acting on pro bono basis to seek indulgence of the court and yet seek counsel’s fees when there was an order (though nisi) for costs in favour of the Plaintiff.  There was no explanation why Ms Wong overlooked (to say the least) her own fees for the April hearing.

25.  In any case, there was no order for certificates for 2 counsel before the Master.  Given the value of the claim and counterclaim, I only grant certificate for one counsel at both levels.  In the case of IMC, it would be one hypothetical junior counsel.

26.  Accordingly, in respect of counsel’s fees of the Plaintiff:

(1)     For the April hearing, based on Ms Wong’s representation in her written submission, the costs upon taxation shall not include counsel fees; and

(2)     For the July hearing, only $10,000 was charged by counsel to argue on costs.  I see no reason for reducing that.

27.  In respect of solicitors’ costs, given the impecuniosity of the Plaintiff, I doubt if she had ever agreed to pay her solicitors as much as $129,547.33 as stated in the costs statement for the April and July hearings.

28.  I therefore set aside the summarily assessed sum of $120,000. 

29.  For the hearing before me, I would only give certificate for one counsel as, without disrespect, I do not see any justification for engaging senior counsel to make a re-run of the arguments below when the value of the claim was not high:

(1)     For the Plaintiff, since Ms Wong has only charged the Plaintiff $30,000 (admittedly a charitable rate) for the April hearing, I see no justification for charging more than double for re-running the arguments (although with the rasoc) before me.  Again, I doubt if the impecunious Plaintiff had agreed to pay her solicitors $77,968 as stated in the costs statement dated 3 January 2020.

(2)     For IMC, it would be the costs of one hypothetical junior counsel.

I therefore also set aside the summary assessment of $65,000 for the appeal and jurisdiction issue heard before me.

30.  IMC is successful in varying the costs order nisi.  But for the impropriety of the Plaintiff as set out in paragraph 24 above, I would also have ordered costs in the cause.  I order instead that IMC’s costs of this variation application (with certificate for one junior counsel only) shall be in the cause.

31.  There will be legal aid taxation of the Plaintiff’s own costs for the period after 14 November 2019 (date of notice of commencement of legal aid certificate).

32.  I thank counsel for their assistance.