YAN MEI and YAN DONG, the Joint and Several Administrators of the Estate of FONG LAP CHUNG GEORGE, Deceased AND ANOTHER v. FONG LAP SHAN

HCA 1562/2022 & HCA 104/2023

(Consolidated)

[2026] HKCFI 2963

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NOS 1562 OF 2022 AND 104 OF 2023

_________________

(Consolidated pursuant to the Order of Master David Chan dated 15^th May 2023)

______________

_______________

DECISION ON COSTS

_______________

1.  By Decision dated 3 March 2026 ([2026] HKCFI 1339), I dismissed D’s summons dated 16 February 2026 to enter judgment on his counterclaim against Ps and to strike out Ps’ counterclaims. I made a costs order nisi that D is to pay Ps’ costs of the application (including costs of the hearing on 25 February 2026), to be summarily assessed on papers, with half of the assessed costs to be apportioned to P1 and be set off against the assessed costs payable by P1 to D under the Unless Order (as defined in the Decision), and the remaining half to be apportioned to P2 and payable forthwith by D.

2.  As directed in the Decision, Ps have lodged their statement of costs and D has lodged his list of objections, which I have considered.

3.  This is my Decision on Costs.

4.  D raised four general grounds of objections.

5.  First, D contended that despite D having lost the application, P1 should pay D’s costs in any event. D’s summons was brought because of P1’s breach of the Unless Order. The application formed part of the procedural steps taken by D following P1’s non-compliance with the Interim Payment Order, the Payment Order and the Unless Order. P1 should therefore pay D’s costs in any event in light of the “contumelious and subsisting breaches of 3 court orders” by P1. This is to maintain the sanctity and efficacy of the Court’s process, and not to allow Court Orders become “paper tigers”.

6.  I reject the argument. For the reasons set out in my Decision, D’s application was an abuse of process, and in any event based on D’s misunderstanding of the effect of the Unless Order and misconceived. There is no reason why P1 being the party successfully resisting D’s summons should be ordered to bear costs. P1’s non-compliance with the Unless Order has already been met with the sanction imposed under the Unless Order itself, debarring P1 from defending D’s counterclaim against P1. There is no justification to penalize P1 further when D’s summons has no merits.

7.  Second, D contended that an equal apportionment of costs as between P1 and P2 “would violate the indemnity principle, resulting in an impermissible windfall profit”. There is no evidence to substantiate an equal split. Ps “might be trying to double-recover costs for the same work paid by the same individual in different capacities”.

8.  I decided to apportion costs between P1 and P2 because there are outstanding costs which P1 has not yet paid D under the Unless Order. Apportionment would enable a set off of the costs payable by D to P1 in this application and the costs payable by P1 to D under the Unless Order. This is to prevent P1 benefitting from not paying costs under the Unless Order and to achieve fairness to P. An equal apportionment between P1 and P2 is fair for taxation purposes. There is no foundation for D’s claim of possible double recovery. Whether the costs claimed by Ps are excessive is a matter of assessment rather than apportionment.

9.  Third, D contended that a summary assessment at this stage is “premature” and “would violate the indemnity principle”. The Court must first conduct a more comprehensive inquiry into whether P1 is “merely a veil for P2”. Until the true positions, arrangements and actual financial liabilities are established, any summary award risks granting an impermissible windfall profit. Awarding costs now would be particularly inequitable given P1’s persistent breaches of Court Orders, which the Court should not condone.

10.  The argument could not be understood. P1 is the estate of the Deceased, represented by P2 and her elder brother as the joint and several administrators. P2 is sued in her personal capacity. Whilst P2 appears in this action in dual capacities, it is difficult to understand how P1 could be said to be the “veil” of P2 such that their interests (and costs exposures) should be treated as one single unit.

11.  The fact that P1 has not paid D the assessed costs under the Unless Order has been reflected in my costs order, by way of setting off P1’s costs of D’s summons against the assessed costs payable by P1 to D under the Unless Order.

12.  Fourth, D contended that an order for payment forthwith is fundamentally at odds with the procedural history in this case, when the two lump sums ordered to be paid by P1 under the Interim Payment Order (to meet the mortgage payments and Government rates and rent for House 10) have been outstanding since 29 November 2024.

13.  A forthwith costs order is appropriate where a standalone application has been made and adjudicated upon by the Court, as in the present case. P1’s non-compliance with the Interim Payment Order has already been met with the sanctions under the Unless Order. Any further recourse or enforcement action against P1 lies elsewhere.

14.  For the above reasons, I see no reason to vary my costs order and the appointment as between P1 and P2 set out in [25] and [27] of the Decision. The costs order nisi is now made absolute.

15.  Ps claimed a total costs of HK$305,433. This is plainly excessive. There is only a handful of documents in the hearing bundle, comprising the pleadings, Court Orders, a previous affirmation made by D’s solicitors, and D’s witness statement, all of which were lodged before D’s summons. The only new document relating to D’s summons is the supporting affirmation made by a litigation clerk of D’s solicitors which ran through 15 pages and set out the procedural history and basis for the application. Ps did not file any affirmation in opposition to D’s summons. The background facts and procedural history are fully set out in previous Court Decisions in this case, and the focus of the hearing was on legal arguments. It is difficult to see how Ps’ handling solicitor could claim to have spent 27 hours on “preparation of documents” (item D1) and 21 hours on “perusal of documents” (item D2). I will only allow 5 hours for each item (factoring in the time for Ps to prepare their written submissions and to peruse D’s). Taking a broad brush approach, I assess costs payable by D to Ps at HK$70,000, with half (HK$35,000) apportioned to each of P1 and P2 and to be applied in accordance with [27] of the Decision.