TIN LIK v. DEUTCHE BANK AG AND OTHERS

CACV 145/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 145 OF 2016

(ON APPEAL FROM HCCL NO 17 OF 2011)

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DECISION ON COSTS

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Hon Kwan JA (giving the decision on costs of the Court):

1.  On 23 June 2017, we handed down our judgment dismissing Tin’s appeal and allowing the Manager’s cross-appeal. In §183 of the judgment, we made an order nisi that Tin is to pay the costs of the Manager and the Trustee in the appeal and the costs of the Manager of the cross-appeal, and such costs are to be taxed (in the case of the Manager, with certificate for two counsel) if not agreed.

2.  On 7 July 2017, the Manager applied to vary the costs order made in the court below and our costs order nisi.  On 11 July 2017, we refused leave to vary the costs order made in the court below and gave directions for the disposition of the application to vary our costs order nisi on paper.

3.  The variation sought by the Manager is for the costs of the appeal and the cross-appeal made in its favour to be taxed on a common fund basis.  In respect of the costs of the appeal, the Trustee requested the same variation by letter on 11 July on the basis that no distinction was drawn in the judgment between the basis upon which the costs of the Manager and of the Trustee should be taxed, and the reasons for which the Manager considers taxation should be on a higher basis would apply equally to the Trustee.

4.  Under Order 42 rule 5B(6) of the Rules of the High Court, where a costs order nisi is made in a written decision, unless an application has been made to vary that order, it shall become absolute 14 days after the decision is pronounced.  The Trustee did not make an application to vary the costs order nisi by the deadline of 7 July.  So Tin took objection to the Trustee’s application as having been made out of time.

5.  Only one costs order nisi was made in the judgment, and as the Manager’s application to vary that order was made within time, the order does not become absolute until the application is dealt with (Ma Wan Farming Ltd v Chief Executive in Council (No 2) [1998] 2 HKLRD 314 at 317H).  Further, this court has jurisdiction to extend time for making an application to vary a costs order nisi, under Order 3 rule 5 and the inherent jurisdiction penned in by Order 59 rule 10 (Ma Wan Farming Ltd at 317B to C and I).  We think it appropriate to extend time to the Trustee, despite the lack of explanation from the Trustee why it had not made the application within time.  We have taken into account that the delay was just four days, that the order nisi has not become absolute because of the Manager’s application, and that the reasons of the Manager for varying the costs order nisi would apply equally to the Trustee.

6.  Two broad grounds were advanced by the Manager and the Trustee for varying the costs order to provide for taxation on a common fund basis.  First, the appeal of Tin was wholly without merit and he failed on all the grounds of appeal.  Second, on 12 April 2017, a Calderbank offer was made on behalf of the Manager and the Trustee, and no reply was made by Tin in respect of the offer.

7.  Mr John Hui submitted on behalf of Tin the fact that the appeal was dismissed per se is not a ground for seeking costs to be taxed on a higher basis.  We have no quarrel with this as a general statement.  It depends on how unreasonable a party is in pursuing an appeal.  Tin has failed on all the grounds advanced, held by this court to be wholly without merit in quite a number of instances.  His counsel repeated the written closing submissions in the court below instead of identifying palpable errors of the trial judge.  A substantial issue (Tin’s entitlement to repayment of $278,526,708) was abandoned only in the course of the appeal hearing.  And a new point was sought to be raised for the first time in oral submissions which was disallowed by this court.  The conspicuous lack of merit and the unsatisfactory manner in which the appeal was conducted are matters that can properly be taken into account in considering whether taxation on a higher scale is warranted, see Order 62 rule 5(1)(aa), (e) and (2).

8.  The Court of Appeal may take into account a Calderbank offer under Order 62 rule 5(1)(d) as the regime in Order 22 does not extend to appeal proceedings (CEP Ltd v Wuxi Jiacheng Solar Energy Technology Ltd [2016] 1 HKLRD 960 at §64).

9.  The Calderbank offer made to Tin was to this effect.  The Manager and the Trustee offered to accept a total of $15 million in respect of their costs below and Tin was to consent to the dismissal of his appeal with no order as to costs.  Tin was also to withdraw any other related proceedings, claims or complaints and to waive, abandon and undertake not to bring any future claim or complaint against any of the defendants, their present or former officers or employees in respect of the Trust.

10.  Mr Hui made two broad points about the Calderbank offer.

11.  First, he submitted that the Calderbank offer was not just relating to the appeal proceedings, it was also for the resolution of the proceedings below.  And its terms went further than the scope of the appeal proceedings and below in that it required Tin to withdraw and abandon related proceedings against the defendants’ present or former officers or employees in respect of the Trust.

12.  We see no good reason why the Calderbank offer should not be considered just because the offer also covered the costs of the proceedings below.  As for requiring Tin to withdraw and abandon related proceedings against all related parties, this is typical of a settlement offer to resolve all the outstanding matters arising from the disputes between the parties.  As stated in the offer letter, the settlement proposal was made because the Trust is a publicly listed entity, which remains listed only because of this litigation and it is in the best interests of the unitholders of the Trust to explore “final resolution of this litigation and to enable the final distribution of the Trust assets.”  There is no suggestion from Tin that this requirement of withdrawing and abandoning related proceedings would be unduly burdensome or unwarranted.

13.  Second, Mr Hui submitted there is yet to be taxation of the costs below and one does not know if the amount of $15 million would be lower than the taxed costs.  It cannot be said that Tin has unreasonably refused to accept the Calderbank offer insofar as its terms fall within the scope of the proceedings below.  So little weight should be placed on the fact that the offer was not accepted by Tin.

14.  The trial judge ordered Tin to pay 70% of the costs on an indemnity basis and for the remaining 30%, he was to pay 80% on a party and party basis.  The Manager had commenced taxation proceedings claiming a total of $25.3 million. In addition, the Trustee has claimed $6.5 million. So the total amount of costs claimed was $31.8 million.  The offer of the Manager and the Trustee was to accept about half of the costs claimed, in lieu of taxation.  We do not think it reasonable for Tin not to accept the offer.

15.  Taking all the above matters into consideration, it would be appropriate to order Tin to pay costs to the Manager and the Trustee on a common fund basis, as they have sought.  We vary the costs order nisi accordingly.

16.  As for the costs of the application to vary, we make an order nisi that Tin should pay the costs of the Manager and the Trustee, also on a common fund basis.