CHOW LILY v. CHOW WAI WAI VIOLET AND ANOTHER

CAMP 202/2021

[2023] HKCA 1230

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 202 OF 2021

(ON AN INTENDED APPEAL FROM HCAP NO 22 OF 2019)

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D E C I S I O N

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1.  This was the Plaintiff’s appeal from the Order of Master Dick Ho dated 9 June 2023 discharging the Garnishee Order nisi made by Master Rita So on 27 April 2023. Developments between 28 September 2023 and the hearing on 10 October 2023 resulted in the lodging of the Plaintiff’s Reply Submissions and a supplemental bundle but which failed to reach the court prior to the hearing itself. Accordingly, the decision had to be reserved which I now give.

Background facts

(A)  Pre-28 September 2023

2.  The procedural history prior to 28 September 2023 may be summarized as follows:

(a)  On 30 July 2020, DHCJ Leung dismissed the Plaintiff’s application for the appointment of administrators pendente lite for her late father’s estate in HCAP 22/2019 (“the APL order”).

(b)  The Plaintiff applied to the Court of Appeal (“CA”) for leave to appeal from the APL order in CAMP 202/2021.

(c)  Before ruling on that application, the CA raised on its own initiative the preliminary issue as to whether the Plaintiff had renounced her right to executorship (“the Issue”).

(d)  On 16 May 2022, the CA handed down its judgment on the Issue with a costs order nisi that the Defendants pay the Plaintiff’s costs of the Issue.

(e)  On the Defendants’ application to vary the costs order nisi, on 26 July 2022, the CA ordered (“the 2022 costs order”), inter alia, that:

“2. The costs of the Renunciation Issue be the Plaintiff’s costs in the cause of the application for leave to appeal.

3. The Plaintiff’s costs be summarily assessed at HK $510,000.”

(f)  On 8 February 2023 the CA handed down its judgment in the “rolled-up” hearing of the application for leave to appeal and the appeal (“the 2023 CA Judgment”), granting the Plaintiff leave to appeal from the APL order but dismissed the appeal. It further made a costs order nisi that the Plaintiff pay the Defendants 50% of their costs of the appeal, including costs for the application for leave to appeal, with certificate for 2 counsel (“the 2023 costs order nisi”).

(g)  On 22 February 2023, the Plaintiff applied to vary the 2023 costs order nisi (“the variation summons”), seeking an order that:

“the Plaintiff/Appellant do have 50% of the costs of the appeal (including 50% of the Plaintiff’s/Appellant’s costs for the application for leave) with certificate for 2 counsel or alternatively that there be no order as to costs of the appeal including costs for application for leave.”

(h)  On 27 April 2023, the Plaintiff, on an ex parte application, obtained a garnishee order nisi.

(i)  Master Dick Ho discharged the garnishee order nisi on 9 June 2023 (“the Master’s order”).

(j)  On 21 July 2023, Master Dick Ho dismissed the Plaintiff’s application dated 6 July 2023 for a stay of execution of the Master’s order (“the stay application order”).

(k)  Following the dismissal of the stay application and prior to 15 September 2023, the Garnishee released the fund withheld upon service of the garnishee order nisi.

(B)  Post 27 September 2023

3.  On 28 September 2023, the CA handed down its judgment (“the CA costs judgment”), dismissing the Plaintiff’s summons for variation of the 2023 costs order nisi which became absolute (“the 2023 costs order”).

4.  §8 of the CA costs judgment read as follows:

“For the reasons above, we would dismiss the summons for variation of the costs order nisi which order is now absolute. The costs of the [Plaintiff’s] application to vary the 2023 Costs Order nisi] are to be treated as part of the costs of the appeal. For the avoidance of doubt, since we have given leave to appeal, the plaintiff is entitled to the summarily assessed costs of $510,000 she incurred for the Renunciation Issue which was discrete from the issues to the “rolled-up” hearing of the application for leave to appeal and the appeal. In other words, the plaintiff is entitled to the said $510,000 incurred for the Renunciation Issue, but she is to pay the defendants 50% of their costs of the rolled-up” application for leave to appeal and the appeal, with certificate for two counsel.” (Emphasis added)

5.  The day after the 2023 costs order, on 29 September 2023, the Defendants’ solicitors, (“PCW”) wrote to the Plaintiff’s solicitors (“LFP”) requesting that the present hearing be vacated on the terms set forth in that letter.

6.  The Schedule attached to that letter set out the various costs orders awarded to date in CAMP 202/2021 and HCAP 22/2019 (respectively “CAMP 202” and “HCAP 22”) as well as a calculation of interest payable in respect of each of the orders made. After netting off the amounts payable by the parties inter se, a net amount of $34,073.13 was found due to the Plaintiff. PCW therefore enclosed a cheque for that amount with the letter.

7.  On 3 October 2023, a week prior to the present hearing, LFP wrote to PCW but not in response to PCW’s letter of 29 September 2023. In fact, LFP’s letter made no mention of PCW’s letter nor of the cheque that had been sent. Rather, it put forward its reading of an extract[1] from §8 of the CA costs judgment, maintaining that the Plaintiff is entitled to payment of the $510,000 from the Defendants (being the 2022 costs order), that the Master had misinterpreted that order and that the Defendants should pay the Plaintiff the costs of the 2 hearings[2] before the Master.

8.  LFP enclosed a draft Consent Summons to that effect, proposing that the hearing be vacated.

9.  PCW replied the same day inviting attention to the omission of the words shown in italics in §4 above from the extract LFP relied on for LFP’s understanding of the order made in the CA costs judgment. PCW also put on record that LFP had returned their cheque with a bare allegation that the calculation of the costs payable was not agreeable to them but without providing their revised calculation.

10.  PCW explained that as their calculations had already taken into account the $510,000 payable to the Plaintiff, the appeal had become academic and proposed to LFP that the hearing be vacated with costs of the appeal to be paid by the Plaintiff to the Defendants, to be summarily assessed by the court.

11.  As no agreement was reached, the hearing took place as scheduled. However, as the additional papers did not reach the court prior to the hearing, this Decision was reserved.

12.  On 12 October 2023 which was 2 days after the hearing, LFP provided the court with a copy of the 2^nd letter dated 10 October 2023 to PCW setting out the Plaintiff’s calculation of the liquidated amounts due and owing to her by the Defendants in the 2 sets of proceedings mentioned in PCW’s letter of 29 September 2023. It showed a sum of $90,000 payable by the Defendants to the Plaintiff in respect of costs orders awarded, and a net amount of $18,966.10 due from the Plaintiff to the Defendants in respect of interest.

13.  10 October 2023 was the date of the hearing itself. Although the time the 2^nd letter was provided to PCW is not apparent, it is unlikely to have been prior to the hearing as it was not produced in answer to Mr Simon Tang (of PCW)’s observation[3] to the court that while LFP disagreed with PCW’s calculation of interest on costs, they did not provide a revised calculation.

The Plaintiff’s appeal

14.  Mr Nelson Shum of LFP submitted that the Plaintiff was entitled to a garnishee order absolute when the matter came before the Master on 9 June 2023. His submission is premised on the 2022 costs order being a totally separate and freestanding matter.

15.  The Plaintiff’s position may be summarised as follows:

(a)  her entitlement to the costs of the Issue became absolute upon the CA granting leave to appeal on 8 February 2023, that being the only condition that had to be satisfied;

(b)  on that basis, on 9 June 2023 (the date of the Master’s hearing), the garnishee order nisi should have been made absolute;

(c)  had that been done, the Plaintiff would not have had to incur costs for the stay application made in July 2023 nor would this appeal have been necessary;

(d)  since the fund subject to the garnishee order nisi has been released, there is no longer any possibility for the garnishee order to be made absolute;

(e)  as regards the Defendants’ proposal made in PCW’s letter of 29 September 2023, it was rejected because prior to that date, the Defendants never recognised the Plaintiff’s entitlement to the costs of the Issue.

16.  To substantiate the Defendants’ refusal to recognise the Plaintiff’s entitlement to the costs of the Issue, Mr Shum referred to LFP’s offer made on 20 March 2023 to set off the $510,000 due to the Plaintiff against outstanding costs payable to the Defendants in HCAP 22 which the Defendants rejected.

17.  Mr Simon Tang submitted that the Plaintiff has slightly simplified the situation about the Defendants not agreeing or accepting the renunciation costs as such. As is apparent from PCW’s reply letter of 30 March 2023, one of the reasons put forward was that the 2023 costs order has not been made absolute because of the Plaintiff’s variation summons. Pending determination of that application, whether the Plaintiff will be entitled to any costs of the application for leave to appeal remains unknown. On that basis it was said that no liability on the part of the Defendants had arisen to pay the Plaintiff any costs of the application for leave to appeal.

18.  By 28 September 2023, the 2023 costs order had become absolute. PCW’s acknowledgement of the Plaintiff’s entitlement to the costs of the Issue is evident from the Schedule to their letter of 29 September 2023 which plainly took that amount into account.

19.  Mr Tang submitted that before the Plaintiff can apply for the various costs being sought, she must first succeed in this appeal by showing that a garnishee order absolute would have been made on 9 June 2023.

20.  It would be appropriate at this juncture to consider whether this court would have made the garnishee order absolute on the basis of matters prevailing on 9 June 2023.

21.  Proceeding on the basis that the Plaintiff’s entitlement to costs of the Issue became absolute when the CA granted leave to appeal from the APL order on 8 February 2023, the effect of the 2023 costs order nisi meant that the Plaintiff was liable to pay the Defendants 50% of their costs of the appeal, including costs for the application for leave to appeal.

22.  The fact that the Plaintiff is able to show that she is absolutely entitled to an amount of costs under a particular costs order does not does not automatically translate into her having an absolute right to have the garnishee order nisi made absolute. Order 49, rule 1 (1) of the RHC in pertinent part, provides as follows:

“…the Court may, subject to the provisions of this Order and of any written law, order the garnishee to pay the judgment creditor the amount of any debt due or accruing due to the judgment debtor from the garnishee, or so much thereof as is sufficient to satisfy that judgment or order and the costs of the garnishee proceedings.” (emphasis added)

23.  As stated in 2023 HKCP at §49/1/5, the word “may” imports a discretion, though of course a judicial one. A garnishee order nisi will be made absolute unless the garnishee is able to show “reasonable ground” to the contrary. The order will be refused where it would be inequitable.

24.  The costs awarded to the Defendants under the 2023 costs order are unliquidated and would remain so pending determination of the Plaintiff’s variation summons. In my view, having regard to the 2023 CA Judgment, the likelihood of the CA acceding to the variation sought or depriving the Defendants (who were the successful parties) of all their costs is nothing short of wishful thinking.

25.  At the hearing, the Plaintiff submitted that as those costs are unliquidated, there can be no set off. While that may be true as regards a legal set-off, equitable set-off is permissible for unliquidated claims but requires that the cross-claim to be between the same parties and to be sufficiently connected: Qiyang Ltd & Ors v Mei Li New Energy Ltd & Ors, HCA 420/2011, 5 March 2013, at §§ 20, 22 and 53. The cross-claim should flow from the dealings and transactions which gave rise to the subject matter of the claim: Townearn and Industrial Limited v Golden Globe Holdings Limited [2003] 1 HKC 186. Set-off depends upon showing some equitable reason for protection against the plaintiff’s demand: Hanak v Green [1958] 2 QB 9. See generally 2023 HKCP at §18/17/2.

26.  In the present case, the costs of the Issue and the costs awarded to the Defendants by the 2023 costs order nisi arise out of the same set of proceedings. Mr Tang submitted that the amount of costs awarded to the Defendants on a nisi basis (which encompasses both the costs of the appeal as well as the costs of the application for leave to appeal) would far exceed the costs of the Issue. I agree.

27.  In those circumstances, I do not consider it either just or equitable if the court were to exercise its discretion to make absolute the garnishee order nisi on 9 June 2023.

Conclusion

28.  For the reasons set out above, I would dismiss the appeal.

29.  It follows that the Plaintiff is not entitled to any of the costs that it seeks. In any event, in so far as the costs of the stay application are concerned, the Plaintiff, not having appealed the stay application order, is in no position to seek costs.

Order

30.  Accordingly, the Plaintiff’s appeal is dismissed.

31.  There is to be an order nisi of costs of the appeal in favour of the Defendants, such costs to be summarily assessed and payable forthwith.

32.  It is directed that (a) the Defendants’ statement of costs be lodged within 14 days of this order; (b) the Plaintiff’s statement of objections (limited to 3 pages) be lodged within 14 days thereafter; and (c) Defendants’ reply (limited to 2 pages) be lodged within 7 days thereafter.