Foo Tak Ching the Manager of "Wah Yan Mo Fan Heung" v. Tang Man Kit Otherwise Known As Tang Man Kit, Terry

HCMP 3361/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 3361 OF 2014

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DECISION

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1.This is an application of Mr Tang for a variation of the costs order nisi made in the Judgment handed down on 11 September 2015 (“the Judgment”) by his summons dated 24 September 2015 (“the Summons”).  I refer to the Judgment for the background facts and in this decision I adopt the abbreviations used therein.

2.By the Judgment, this court dismissed the OS and ordered on a nisi basis that Mr Tang’s costs of the OS be paid by Mr Foo. This court also made it clear that no certificate for two counsel should be granted.  

3.By the Summons, Mr Tang asks for certificate for two counsel and/or that Mr Foo be made personally liable for costs of this action on an indemnity basis. Mr Foo opposes this application.

4.Mr Szeto, appearing for Mr Tang again, confirms that he only insists on certificate for two counsel and indemnity costs.

Certificate for two Counsel

5.In the Judgment, this court acknowledged the helpful assistance rendered by the leading counsel and his junior appearing for Mr Tang. This court was also aware of the fact that Mr Foo was represented by two counsel, one senior junior counsel Mr KM Chong and Mr Alvin Chong, another junior counsel having started his practice not long ago. This court was of the view that this matter was not complicated in terms of fact and law and hence concluded that it was inappropriate to grant  certificate for two counsel.

6.In fact, before coming to that conclusion, this court had gone through the basket of relevant factors set out in O.62 r.38A, Rules of the High Court. I am aware that the list therein is not meant to be exhaustive and all the particular circumstances of this matter have to be taken into account. I was, and still am, not convinced that the instruction of two counsel was reasonable or proper despite the able submission of Mr Szeto.

7.One important consideration of this court, as indicated to Mr Szeto, is that I find Mr Szeto to be experienced enough to handle this litigation on his own. He alone made an interlocutory application in these proceedings well before the substantive hearing of the OS and he showed his in-depth knowledge of this matter. As rightly pointed out by Mr Chong, for Mr Foo, Mr Szeto is an active and senior practising member of the bar. I am not persuaded that it was necessary to engage a senior counsel in addition to Mr Szeto to oppose Mr Foo’s straightforward application.

8.Mr Szeto impresses upon this court that this matter is not as simple as it may appear and indeed it could bring serious consequences to Mr Tang in his capacity as the statutory manager of the Heung. He points out that if Mr Foo’s application were to be accepted, Mr Tang, after delivery up of all the documents and chattels of the Heung, would be unable to fulfil his duty as the statutory manager of the Heung under section 15 of the New Territories Ordinance, Cap.97 (“the NTO”). As a result, the entire welfare of the Heung would be jeopardised as well.

9.I am unable to accept this submission. I am not convinced of the dire consequences allegedly following from the grant of Mr Foo’s application. Under section 15 of the NTO, a clan, family or t’ong holding any land from the Government under lease or other grant, agreement or licence in its name is obliged to appoint a manager. Such an appointment has to be reported to the relevant authorities for approval. If the approval is granted, the manager so appointed will be registered as the statutory manager. After registration, the manager will have full power to dispose of or in any way deal with the land so held as if he were the sole owner thereof subject to the consent of the Secretary for Home Affairs and shall be liable for payment of all rents and charges and for the observance of all covenants and conditions in respect of the land.

10.If an order were to be made in favour of Mr Foo, it must be made on the basis that the Delivery up Resolution, predicated upon a previous valid removal of Mr Tang as manager of the Heung, was valid. Under section 15 of the NTO, the Heung could change its manager and prove a new appointment to the relevant authorities. Such a newly appointed manager would then be registered in place of Mr Tang if his appointment is approved. It should be noted that the Heung could also remove Mr Tang without any replacement if there are other managers.

11.Thus, after the removal of Mr Tang as manager of the Heung implicit in the Delivery up Resolution, unless the Heung fails to inform the relevant authorities, Mr Tang will soon be deregistered as the statutory manager under section 15 of the NTO. I fail to see how he can complain about or be accused of being unable to carry out his duties as the statutory manager of the Heung.

12.Next Mr Szeto submits that Mr Foo has adduced expert evidence of Chinese customary law in his application and this has complicated the matter.  He stresses that Chinese customary law is a specialised area and there are only a handful of counsel having this expertise. He submits that it is hence reasonable and/or proper for Mr Tang to instruct a senior counsel equipped with this expertise to deal with the expert evidence.

13.As stated in paragraphs 19 and 20 of the Judgment, Mr Tang has not filed any contrary expert evidence and the expert report of Wejen Chang adduced by Mr Foo is actually relied on by both parties. Mr Szeto explains that it was only with the benefit of the expertise of his leader that Mr Tang decided to adopt this position in regard to the evidence relating to Chinese customary law.

14.I have no doubt about the contribution of the leading counsel of Mr Tang. However, the material question is whether two counsel should be instructed to conduct the defence before this court at the hearing on 13 July 2015. Given the position of Mr Tang in light of the advice of his senior counsel, in the absence of any contrary evidence, no argument was ever raised about the applicable Chinese customary law at the hearing. I fail to see why the engagement of senior counsel for the purpose of the hearing was still necessary.

15.For the reasons given, I am not persuaded that it was necessary or proper for Mr Tang to instructed two counsel for the purpose of the hearing.  Accordingly, I refuse to grant certificate for two counsel as a matter of principle.

Indemnity costs 

16.Mr Szeto submits that Mr Foo should be ordered to pay costs on an indemnity basis for various reasons. First, he argues that Mr Foo’s application was made with ulterior motives, trying to seize control of the Heung and oust Mr Tang from the management of the Heung. In this connection, he relies on an averment of Mr Tang in his opposing affirmation to the similar effect, which was not traversed by Mr Foo.

17.It is true that Mr Foo did not deal with the averment in his reply affirmation but it does not follow that he accepts the accusation. It is not relevant in the first place in his application, which was made on the simple basis that the Delivery up Resolution was validly passed. Mr Foo asked this court to enforce it after Mr Tang’s refusal to comply with the same.

18.In the Judgment, this court did not accept the validity of the Delivery up Resolution for want of the requisite notice to all the members of the Heung. On this basis, this court refused Mr Foo’s application. If the Delivery up Resolution had been a valid one, this court would have made an order to ensure its compliance regardless of whether there was a power struggle within the Heung.

19.For completeness, I am not convinced that Mr Foo made his application with ulterior motives on the evidence. After all, he is also the manager of the Heung and it was his duty to enforce the resolutions of the Heung. Mr Szeto submits that Mr Foo did not have any genuine belief as to the validity of the Delivery up Resolution. This is not the conclusion I am able to draw on the evidence.

20.Mr Szeto goes on to complain about the way the application was made and argued at the hearing by Mr Foo’s counsel. He highlights the false factual basis and the arguments made on unpleaded matters which were rejected by this court in the Judgment. Suffice it to say I find little merits in such complaints. I do not think Mr Foo should be penalised on that basis.

21.However, I am displeased with Mr Foo’s failure to respond, let alone accept the proposal of Mr Tang in paragraph 26 of his opposing affirmation, which was dated 9 April 2015. There, Mr Tang proposed to resolve the dispute between the parties in the following terms:

a. On the undertaking of Mr Foo that any and all documents/chattels that were delivered to Mr Foo shall be kept and used solely by Mr Foo in his capacity as co-manager of the Heung and for the purposes of the Heung, Mr Tang is prepared to within 42 days on condition that Mr Foo do pay reasonable photocopying costs deliver to Mr Foo copies of all documents of the Heung that are currently in his possession;

b. On the same undertaking and condition, Mr Tang is prepared to continue and deliver to Mr Foo copies of documents of the Heung that come into his possession until further order or final disposal of this matter;

c. Mr Tang shall within 7 days deliver all cheque books and chops of the Heung to his solicitors to stakehold the same on condition that either Mr Foo or Mr Tang can obtain and use the same by giving not less than 7 days’ prior written notices to their respective solicitors giving full particulars for the purpose of such use;

d. Mr Tang states that he is not aware of any other chattels of the Heung that are in his possession and of significance in light of Mr Foo’s application.

22.Mr Chong submits that the proposal is neither a sanctioned offer nor a “without prejudice save as to costs” offer. In any event, it is unreasonable that Mr Tang asked for photocopying costs. Mr Chong also points out that this application was made against the backdrop of two other actions between the parties and the parties could not trust each other. Mr Foo could not accept a complete delivery up in the absence of a verifying affirmation as sought in the OS.

23.I am not persuaded by Mr Chong’s submission. As rightly pointed out by Mr Szeto, the proposal is an open offer and whether it is a sanctioned offer is irrelevant. Their differences on photocopying charges could well be ironed out. Mr Foo, legally represented throughout and himself being a practising solicitor, should have due regard to the underlying objectives of CJR. The proposal made in the opposing affirmation sounded serious and sensible enough.  It is regrettable that Mr Foo did not see fit to start negotiation with Mr Tang in light of his proposal at all.

24.To mark my disapproval of Mr Foo’s failure to work on the reasonable proposal and his insistence on his unmeritorious application, taxation on common fund basis is in my view appropriate: Golden Eagle International (Group) Limited v. GR Investment Limited [2010] 3 HKLRD 273 at §46. I thus allow Mr Tang’s costs incurred after 30 April 2015 to be taxed on common fund basis.

Conclusion and order

25.In summary, I vary the costs order nisi to the extent that Mr Foo should pay Mr Tang’s costs of the OS on party and party basis until 30 April 2015 and thereafter on common fund basis, to be taxed if not agreed. There be no certificate for two counsel.

26.As regards costs of this application, I am persuaded that the costs order nisi should be varied albeit to a limited extent. Mr Tang should still be entitled to have his costs of this application to be borne by Mr Foo, to be taxed if not agreed, on common fund basis. I so order.

27.Lastly, I thank both counsel for their assistance.

Mr Alvin Chong instructed by Au, Thong & Tsang for the plaintiff

Mr Patrick Szeto instructed by Shum Wong & Co. for the defendant