LAM MUI as the lawful administratrix of the estate of WONG SHING, deceased AND ANOTHER v. FRONTRICH INVESTMENTS LTD AND OTHERS

HCA 34/2021

[2024] HKCFI 3367

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 34 OF 2021

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BETWEEN

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DECISION ON COSTS

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1.  This is D1’s application by summons dated 10 September 2024 (the “Costs Summons”) to vary the costs orders nisi made by this Court in its Decision dated 30 August 2024 (the “Decision”) at §§84-85.

2.  D1 seeks orders that the costs awarded in

(a) the 2024 Summons be on an indemnity basis; and

(b) the Injunction Application be varied such that the costs incurred by the Defendants from 15 May 2021 (the date of P1’s passing) be borne by P2 solely on an indemnity basis.

3.  Pursuant to an order made by consent on 25 September 2024, the parties filed their respective skeleton submissions. D2-D4 support D1’s proposed variations in the terms set out in the Costs Summons and seek that they be applied mutatis mutandis to D2-D4’s costs of the 2024 Summons and the Injunction Application.

4.  The Defendants seek the variations based on the strength of this Court’s adverse findings against P2 and submit that there are “special and unusual features” that justify the variations sought.

5.  The relevant background and procedural history are fully set out in the Decision to which reference should be made. The nomenclature used in the Decision will be adopted below.

Legal principles

6.  The principles governing the exercise of the Court’s discretion to award indemnity costs are well-established. For present purposes, the following are relevant:

(a) The discretion of the Court to order indemnity costs is not fettered or circumscribed beyond the requirement that indemnity costs must be “appropriate”: Town Planning Board v Society for Protection of the Harbor Limited (No 2) (2004) 7 HKCFAR 114 at §4; Yu Jiang & Anor v Cheng Wai Lin Rosalind & Ors HCA 2562/2005 at §4.

(b) An order for costs on an indemnity basis is only considered where the case has some “special or unusual feature”: Town Planning Board at §§13-15; Libertarian Investments Limited v Thomas Alexej Hall, FACV No 14/2012 at §6.

(c) The Court’s discretion may be exercised in relation to (but is not limited to) cases brought with an ulterior motive or for an improper purpose or where there is some deception or underhand conduct on the part of the losing party. However, such improper conduct generally relates to the conduct of litigation rather than conduct which constituted the cause or matter giving rise to the litigation: Town Planning Board at §§15-18; Libertarian Investments at §6.

(d) Where the proceedings in question should never have been brought or defended but the party nevertheless unreasonably and unjustifiably persisted, he may well be visited with indemnity costs: Huge Dragon Corp Ltd v Lung Mun Oasis [2014] 3 HKLRD 286 at §13.

(e) Indemnity costs may be appropriate when, after commencing a claim or application, a reasonable claimant would have concluded that the claims were so speculative or weak or so that they should no longer be pursued: Burgess and another v Lejonvarn [2020] 4 WLR 43 at § 54.

(1) The 2024 Summons

7.  I dismissed the 2024 Summons because (a) P2 failed to provide a sufficient and credible explanation for his breach of the April 2023 Order; and (b) of inordinate delay on P2’s part in seeking retrospective leave to apply for a carry-on order.

8.  P2’s ‘explanation’ was nothing more than pinning blame on his former solicitors (MKL) for failing to advise him (a) on the need to apply for a carry-on order upon the death of P1 as well as (b) of the contents and effect of the April 2023 Order.

9.  P2 even sought to attach some blame for the delay to his present solicitors (YSYM) for advising him that it was preferable to obtain his siblings’ consent to the carry-on application before proceeding with the 2024 Summons. He supposedly acted on that advice which caused more delay as his siblings’ consent was only given verbally on 24 July 2023.

10.  I held that to be blatantly untrue since P2 took out an ex parte summons for a carry-on order on 20 July 2023[1].

11.  I found that P2’s non-disclosure and deliberate concealment of P1’s death alone belied P2’s integrity and honesty and merited the refusal of his application for retrospective leave:

(a) not only was P2 dishonest in not coming clean about P1’s demise when he made P2 3^rd on 7 June 2023[2], he was actively concealing P1’s demise and deceiving any reader of P2 3^rd into thinking that P1 was alive on that date; and

(b) P2’s suggestion that he was not aware of the contents and effect of the April 2023 Order until 14 July 2023[3] was equally dishonest.

12.  I considered P2’s litigation conduct “cavalier[4]”, finding such conduct to be wholly unacceptable and meriting “the strongest judicial disapproval”[5].

13.  D2-D4 invited attention to the fact that P2 took advantage of the Undertakings offered by D1-D3 as interim-interim relief pending the resolution of the Injunction Application by sitting on the Undertakings for over 3 years without prosecuting the Injunction Application or the substantive claim. I agree that it shows P2’s “opportunistic approach” to litigation.

14.  P2 opposed the Defendants’ application to vary the costs orders nisi by raising various objections directed to show that his conduct does not warrant an award of indemnity costs.

15.  First, he submitted that he had been sufficiently penalized by costs orders made against him (i) upon the adjournment hearing on 14 April 2023, (ii) at the summons hearing on 30 January 2024 and (iii) at the substantive hearing on 19 August 2024. However, he had earlier submitted to the contrary, namely, that “costs inter partes are not imposed as a punishment[6]”. The point sought to be made is muddled and incomprehensible and is of no assistance.

16.  Attached to P2’s skeleton are 2 screenshots depicting correspondence between P2 and his former solicitors MKL (the “new evidence”). The Defendants quite rightly took exception to P2 seeking to adduce the new evidence in this manner without first obtaining leave to do so. It is inadmissible and falls to be disregarded.

17.  It evidences the mindset of P2 to litigation. In my view, his conduct falls far short of what is reasonably expected of litigants.

18.  Next, P2 alleged that he learnt that MKL had not informed the Court of P1’s demise on 14 July 2023 and “therefore decided” to change solicitors implying that that was his reason for changing solicitors from MKL to YSYM.

19.  Not only is there no admissible evidence to support the allegation that he did not know until 14 July 2023 (of MKL’s failure to apprise the Court of P1’s death in a timely manner), P2 appears to have forgotten when making that submission that YSYM had filed a Notice of Change of Solicitors some 2 months earlier, on 3 May 2023. It is yet another instance of his duplicity.

20.  P2 then criticized D1 (for making (through Counsel) a “submission/allegation/assumption” that “was totally false” in suggesting that the Mr Wong described in the 4 March 1989 newspaper article was Wong Senior. P2 had adduced that article as evidence somehow showing that he and his family lived in the Occupied Area. He did so without adducing evidence as to who the Mr Wong described in the article referred to or his relationship to Wong Senior. In the circumstances, that D1 should make an educated guess in trying to comprehend P2’s evidence is understandable and D1 cannot be criticized for making it.

21.  In short, the points raised in P2’s skeleton do not remotely impinge on the force and validity of the grounds the Defendants rely on as meriting an award of indemnity costs in respect of the 2024 Summons. I consider it appropriate for the reasons stated above to award costs on an indemnity basis.

(2) The Injunction Application

22.  P2 did not make any submissions in opposition to §2 of the Costs Summons (that he should be solely liable for any costs incurred after P1’s death).

23.  I dismissed the Injunction Application on the basis that P’s evidence does not meet the threshold of a serious issue to be tried. Being the unsuccessful party, the Plaintiffs would have to bear the costs.

24.  The Defendants do not seek to disturb the costs order for the period prior to P1’s demise on 14 May 2021, acknowledging that the Injunction Application itself did not constitute an abuse of process.

25.  It is not P2’s case that he himself (as opposed to his parents) had adversely possessed the Occupied Area given that the Injunction Application was made expressly for the “exclusive purpose of maintaining P1’s use and enjoyment of the Occupied Area”.

26.  With P1’s death, the basis of the Injunction Application had fallen away. P2 was fully cognizant of this issue plaguing the Injunction Application in as much as in late January 2024 P2 represented to the Court that he would apply to amend his pleadings to include a claim by himself for adverse possession of the Occupied Area. Although P2 never carried this through, it did not prevent or deter him from repeating this suggestion in his skeleton for the substantive hearing in August 2024.

27.  Applying the principles stated in Huge Dragon and Burgess, it is as plain as a pikestaff that P2 should not have persisted with the Injunction Application after P1’s demise. Despite various opportunities to withdraw the Injunction Application, P2 pressed ahead regardless.

28.  Although P2 abandoned his claim[7] against D4, P2 only did so on the day before the deadline for him to file his written submissions for the substantive hearing and without any explanation for this change. By then, D4 had already incurred substantial costs.

29.  P2’s decision to abandon his claim against D4 obviously had nothing to do with P1’s demise since the Injunction Application was taken out more than 3 years earlier. It is another manifestation of P2’s callous attitude in conducting litigation which should not be condoned.

30.  In conclusion, P2’s litigation conduct is abusive and vexatious. His callous approach to litigation is unacceptable and merits an award of indemnity costs to mark the Court’s disapproval.

31.  Accordingly, the Defendants’ costs incurred in resisting the Injunction Application after it should have been properly withdrawn are awarded on an indemnity basis.

Orders

32.  I make the following orders:

(1) The order nisi of costs set out in §84 of the Decision varied as follows:

“The 2024 Summons is dismissed with an order of costs in favour of the Defendants, with certificate for counsel, such costs to be summarily assessed on an indemnity basis and payable forthwith.”

(2) The order nisi of costs set out in §85 of the Decision be varied as follows:

“The Injunction Application be dismissed with an order of costs in favour of the Defendants, with certificate for counsel, such costs to be summarily assessed and payable forthwith. The costs incurred prior to 14 May 2021 are to be borne by P1 and P2 jointly and severally on a party and party basis, and the costs incurred since 15 May 2021 are to be borne by P2 solely on an indemnity basis.”

33.  The costs of this application be paid by P2 to the Defendants, with certificate for counsel, such costs to be summarily assessed and payable forthwith.

34.  I further direct that (i) the Defendants serve their respective statements of costs on the P1 and P2 within 14 days hereof; (ii) P1 and P2 lodge their respective lists of objections limited to 3 pages (if any) within 14 days thereafter; and (iii) the Defendants lodge their respective Replies limited to 2 pages (if any) within 7 days thereafter.