BEATRICE TSANG SAU HING AND ANOTHER v. YEUNG MAN LOONG MAXLY AND OTHERS

HCCW49-52/2006

HCCW49/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO. 49 OF 2006

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D E C I S I O N

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1.  The issue before me today is as to whether or not the Petitioners' costs of employing Mr Dennis Chan Ming-ying and Mr Raymond Lo Cheung-kwong in these proceedings should be recoverable on taxation of the costs of these proceedings which were awarded, following argument as to costs, to the Petitioner, to be paid by the Respondents.

2.  Mr Lo and Mr Chan are both professionally qualified.  Mr Chan is a chartered accountant and Mr  Lo a certified public accountant.  Their involvement in these proceedings is as follows.  Initially they were put forward as candidates to take up employment as financial controller and a senior executive, respectively, of the group of companies with which these petitions were concerned.  When their appointment was resisted by the Respondents, they were employed by the Petitioners as personal consultants or personal assistants to assist them in relation to the affairs of the companies, and when those affairs led to litigation, to assist them in the course of preparing for and dealing with the litigation.

3.  In the event, both Mr Chan and Mr Lo gave evidence at the trial.  At the trial I expressed my views as to the evidence that they gave in paragraphs 77 to 79 of my judgment on liability.

4.  So far as Mr Chan was concerned, I indicated that his evidence at the trial was confined largely to evidence of factual matters, and on those factual matters I did not find his evidence to be of particular utility or relevance for the purpose of the proceedings.

5.  So far as Mr Lo was concerned, the position was slightly more complicated in that although he did speak to certain matters of fact, he did, I think, bring some professional expertise to bear on the assembling and marshalling of those facts and their presentation to the court.  The evidence that he gave went to two main issues.

6.  The first related to accounting entries in a number of ledger accounts that were maintained within the companies by the senior Mr Tsang.  These were the subject of some of the main complaintsmade against the Tsangs by the Respondents, members of the Yeung family.

7.  On this aspect of the matter I found that although Mr Lo’s evidence was, at the end of the day, relatively uncontroversial, the presentation of the evidence and its assembly was a matter that was helpful to the court in understanding the situation in relation to the accounts.

8.  So far as the other part of his evidence is concerned, this consisted of a reconstruction of hypothetical financial statements for the four companies on the basis that they might be regarded as a single entity, and restating such accounts to show what was said to be the true financial position of the companies.  This was a matter which I found to be of relatively little assistance or relevance for the purposes of determining liability at the trial.

9.  Neither Mr Chan nor Mr Lo were called as expert witnesses.  There was indeed no direction for the calling of expert evidence in these proceedings.  But it is now fairly well established that notwithstanding that expert evidence is not called, it may in some circumstances be appropriate to allow some recovery on taxation for the costs of a witness who has professional qualifications where those qualifications have been brought to bear in preparing the evidence in the proceedings.

10.  In this particular case, it seems to me that the necessity for professional evidence of the nature that was put forward to be called stemmed to a large extent from the unfortunate fact that Mr Tsang Senior was in very poor health and was unable to come forward to give evidence himself.

11.  That said, however, it does not seem to me that that is necessarily a reason for disallowing recovery of such part of the costs of employing the professional witnesses in question as may be proper in the circumstances of the case.  Although it is unfortunate that this situation should have arisen, it seems to me that if one looks at it from the point of view of inquiring whether or not the costs were reasonable or necessary, or proper costs to be incurred, it seems to me that where an important witness is unable to give evidence and it becomes necessary for the evidence that he would have given to be presented to the court with the assistance of a witness who has professional qualifications, it would be open to the court to allow some part of the costs of that witness on taxation.

12.  In this case, however, I have to say that as far as the costs associated with Mr Chan are concerned, given that Mr Chan’s evidence was not of any great assistance in resolving these proceedings, I do not think that it would be appropriate to allow any part of the costs of Mr Chan on taxation in this case.

13.  This point can also be put in a slightly different way – from the point of view of a taxation, I do not see that it was necessary or proper to have two professional witnesses essentially dealing with the same matter and to the extent that their roles overlapped, this is not a matter for which the Respondents should be penalised.

14.  That view is reinforced by the fact that Mr Chan’s evidence, at the end of the day, did not in any significant way touch on matters involving any professional accounting expertise and were, at the end of the day, of little relevance.

15.  So far as Mr Lo is concerned, however, I think the position is slightly different.  It seems to me that insofar as his evidence dealt with the various ledger accounts which I have described in paragraph 77 of my judgment on liability, the costs that are properly attributable to his assistance in relation to those matters are costs that were necessary and properly incurred by the Petitioners in this case, given the unfortunate situation in which Mr Tsang Senior found himself.

16.  However, I do make it clear that it is in relation to that aspect of Mr Lo’s evidence only that it would be proper for recovery of the costs attributable to his employment to be recovered on taxation.  It will be a matter for the taxing master to assess the quantum of those costs, and that, no doubt, will be done by reference to the cost of employing Mr Lo and the amount of time and effort expended by Mr Lo in relation to this aspect of the matter, subject to such adjustment as may be made to reflect what the taxing master thinks is a proper or appropriate amount of time to have been spent on these matters.

17.  I would therefore say that as a matter of principle, the costs associated with Mr Lo are recoverable, but only to the extent that they relate to the matters relating to the ledger accounts such as the joint account, K Kwok account and the Kwok Kee account.

(Submissions on costs)

18.  As far as the costs of today are concerned, it seems to me that although the Respondents have been largely successful, they have not been completely successful.  The application sought the disallowance on taxation of the costs of both Mr Chan and Mr Lo.  The costs relating to Mr Chan have been disallowed.  The costs relating to Mr Lo have been allowed in part, subject to certain parameters which I have expressed in the ruling that I have just given.  In all the circumstances, I would be inclined to award some costs to the Respondents since I think they have been rather more successful than not in this application, and I think a fair order would be that the Respondents should have half their costs of this application, such costs to be taxed on a party and party basis if not agreed.