Tin Wan Tung v. Wong See Yin and Others

HCA 167/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 167 OF 2011

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AND

HCA 1801/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1801 OF 2010

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D E C I S I O N

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A. INTRODUCTION

1.The following applications by the defendants are before the court for determination: –

(1)   A Summons filed on 1 February 2016 (the “Stay Summons”) to stay the execution of the Costs Orders made by Master K Lo (the “Taxing Master”).

(2)   A Notice of Appeal to Judge in Chambers filed on 3 February 2016 (the “Appeal Notice”) to appeal against “All Costs Orders and the Orders of the Costs of the Taxation Review Applications” made by the Taxing Master in respect of the Costs Orders made by L Chan J on 26 April 2013 (the “Taxation Appeal”).

2.In support of the Stay Summons, the 1^st defendant filed his 15^th Affirmation on behalf of the defendants on 1 February 2016.

3.On 8 March 2016, Ms Maria F C Da Luz (“Maria”) filed her 4^th Affirmation on behalf of the plaintiffs in opposition to the Stay Summons and the Taxation Appeal, pursuant to the order of Master Chow dated 23 February 2016.

4.The defendants did not file any affidavit evidence in reply.

5.It should be noted that the defendants never appealed against the Costs Orders made by L Chan J on 26 April 2013.

6.The taxation of the said Costs Orders made in HCA 167/2011 and HCA 1801/2010 took a large amount of effort, time and costs for all parties concerned, with the taxation bundles running up to some 10 box files.  This lengthy process is due largely to the defendants challenging each and every item in the plaintiffs’ taxation bills.

7.Again, the defendants’ wholesale approach of appealing “All” costs orders made by the Taxing Master in the Taxation Appeal is effectively challenging each and every item, “including those items withdrawn by the plaintiffs and also of those items where the rulings accord with what the defendants seek for in their list of objections” (as commented upon by the Taxing Master in paragraph 97 of her Decision dated 29January 2016).

8.In opposing the defendants’ applications, the plaintiffs contend that (i) the defendants’ Taxation Appeal is entirely misconceived and should not be heard; (ii) alternatively, if the court sees fit to hear the Taxation Appeal, the court should dismiss the same; and (iii) the Stay Summons should also be dismissed.

B.   THE TAXATION APPEAL IS ENTIRELY MISCONCEIVED

9.As submitted by the plaintiffs, I agree that the defendants were misconceived from the beginning in having taken out the Taxation Appeal under Order 58 of the Rules of the High Court, Cap 4A (“RHC”), as if it were an ordinary appeal against a master’s decision.

10.Further, I agree that the review procedures under Order 62, rules 33, 34 and 35 of the RHC must be exhausted before bringing an appeal against the decision of the Taxing Master dated 29January 2016 (the “Decision”).  As held by Cheung JA in CKF v LLL [2003] 3 HKC 190, at 193 E-GH: –

“13. As to the challenge against the taxation of 27 June 2002, the proper procedure is laid down in O62 rr 33, 34 and 35 of the Rules of the District Court. The petitioner should first of all apply for a review of the taxation to the taxing master under O 62 rr 33 and 34. If he is further dissatisfied with the decision of the taxing master on review, then he may apply to a judge in the District Court to review the taxation under O62 r 35. There is no general right of appeal against an allocator ie the certificate issued by the master after the taxation.

14. The review mechanism clearly has a purpose to serve. Taxation of costs may involve numerous items and various amounts of costs. They should clearly be dealt with by the taxing master and the District Judge who may review the taxation with assessors. The Court of Appeal is not the appropriate forum to go into the details of the bills of costs.” (emphasis supplied)

11.Furthermore, the challenge to the taxation brought by the defendants clearly comes within the review mechanism, and so there is no room to challenge these matters under the inherent jurisdiction of the court [see: CKF v LLL (Ibid), per Cheung JA at paragraphs 17 and 18].

12.These principles were echoed by Poon J (as he then was) in Leong Yuet Wah v Wong Wei Lin,HCMP 428/2006 (Decision dated 6/02/2009), where the learned judge dismissed the appeal for the same reason.

“5. ... Order 62, rule 2(4) provides that the powers and discretion of the court as to costs shall be exercised subject to and in accordance with Order 62. The powers and discretion as to costs covered by that rule must include the powers and discretion exercisable by a taxing master on review of his own decision on taxation and the court on review of the master’s decision. It follows that a party who wishes to challenge a decision made by the taxing master must follow the specific review mechanism in rules 33 to 35. He cannot avail himself of his general right to appeal to a judge in chambers under Order 58.” (emphasis supplied)

13.Poon J went on to explain at paragraph 9 of that decision why a failure to follow the review mechanism in Order 62 of the RHC cannot be cured: –

“9. The second point taken by Mr Lam is this. He submitted if there is any procedural irregularity in not following the review mechanism in Order 62, the court can still exercise the discretion under Order 2 to cure the defect. He submitted that the error made by the taxing master involved a simple point of law. The master had already given his reasons. The petitioners will not suffer any prejudice if the appeal is to be heard now. I disagree. As I have pointed out in the course of the submissions, there exists a very good reason for the review mechanism. When the matter is brought before the master again on review, he can revisit his decision with the benefit of further submissions. If persuaded, he may change his mind. If that happens, the reviewing party will achieve what he wants there and then. If the master confirms his decision and the reviewing party brings the matter further, the master will have to give full reasons for his decision made on review, which will be placed before the judge when the matter goes before him. When the review mechanism is not followed, the taxing master will be deprived of the opportunity of re-considering his decision and the court, his full reasons for the decision that he made on review. This deficiency cannot be remedied by the court’s exercising the discretion under Order 2.” (emphasis supplied)

14.If the defendants are permitted to proceed in this case with the Taxation Appeal, the Taxing Master will be deprived of a second review of her decision pursuant to Order 62, rule 35 of the RHC before any appeal.  Moreover, under this review procedure, the judge in chambers is only required to consider the reasons for the Taxing Master’s decision on her review and not required to conduct a taxation de novo [see: Chan Yin Na v Union Medical Centre Ltd [2011] 5 HKC 158, at paragraph 26].

15.For the reasons stated above, I agree with the plaintiffs that the Taxation Appeal is wholly inappropriate and should accordingly be dismissed.

C.   CAN THE TAXATION APPEAL BE HEARD AS A REVIEW

C1.   The scope of the Taxation Appeal is beyond Ord 62, r 35 RHC

16.First of all, I agree that even if the court does decide to hear the Taxation Appeal, then it should proceed under the rules and procedures set out in Order 62, rule 35 of the RHC (instead of Order 58).

17.With reference to Order 62, rule 35(1) specifically, the defendants have wrongly adopted a “wholesale” approach in the Taxation Appeal.  In particular: –

(1)   The defendants can only apply to “review the taxation as to that item or part of an item”, which means that the defendants should only be permitted to ask the judge to review the items reviewed by the Taxing Master in her decision.  Therefore, paragraphs 1 and 2 of the Appeal Notice are not within the scope of review by the judge.

(2)   In fact, paragraph 4 of the Appeal Notice should not be considered either, as the defendants are asking the judge to review the costs of the taxation review, and not the Taxing Master’s decision “to allow or to disallow any item in whole or in part on review under rule 34, or with the amount allowed in respect of any item by a taxing master on any such review”.

(3)   Thus, only paragraph 3 of the Appeal Notice is proper and may be considered, as the defendants are not entitled to “appeal” the other items.

18.This is further supported by the fact that under Order 62, rule 35(1) of the RHC, the defendants may apply to a judge to review each item “if, but only if, one of the parties to the proceedings before the taxing Master requested that officer in accordance with rule 34(4) to state the reasons for his decision in respect of that item or part on the review” (emphasis supplied).

19.Thus, the defendants are required to request the Taxing Master to state the reasons for her decision in respect of the items they want to review.  Without the specific reasons for each item, the defendants are unable to properly set out their grounds of “review”, effectively forcing the judge to rehear the arguments heard by the Taxing Master, contrary to the position that this court is not required to conduct a taxation de novo.

20.The Taxing Master was obviously aware of this problem, as she expressed her concerns at paragraph 97 of her Decision: –

“97. It is also noted that the defendants here seek a blanket review of all items taxed, including those items withdrawn by the plaintiffs and also of those items where the rulings accord with what the defendants seek for in their list of objections. That sort of conduct illustrates the attitude of the defendants in the taxation proceedings and taxation review applications.”

21.The defendants have not made such request to the Taxing Master for her specific reasoning, and I agree that the Taxation Appeal should be dismissed on this ground alone.

C2.   The Appeal Notice does not state the ground of “review”

22.When reviewing the Taxing Master’s review, this court should consider the reasons for the Taxing Master’s decision, to ascertain whether or not the Taxing Master: –

(1)   erred in principle;

(2)   took into account irrelevant matters; or

(3)   failed to take into account relevant matters.

[see: Practice Note 62/35A of the Hong Kong Civil Procedure 2017; Chan Yin Na v Union Medical Centre Ltd,Supra, paragraph 26]

23.It is up to the defendants to (i) point out to the court and (ii) satisfy the court where and in what way the Taxing Master erred in principle, took into account irrelevant matters and/or failed to take into account relevant matters.

24.It is unacceptable for the defendants not to state any grounds in the Appeal Notice.  In the Appeal Notice, the defendants have not begun to state clearly or at all where and in what way the Taxing Master erred in principle, took into account irrelevant matters and/or failed to take into account relevant matters.

25.It is only in the 1^st defendant’s 15^th Affirmation dated 1 February 2016 where he began to state his grounds of appeal.  However, those grounds are simply a regurgitation of the defendants’ previous objections.  In effect, the defendants are seeking this court to reconsider the costs orders item by item, which is not the proper purpose of a review under Order 62, rule 35 of the RHC.

26.In the premises, I agree with the plaintiffs that the Taxation Appeal is plainly incompetent and should be dismissed.

D.   THE STAY SUMMONS

27.It should be noted that the Stay Summons itself did not state the period during which the stay of execution should operate.  However, from paragraph (2) at pages 2 and 3 of the 1^st defendant’s 15^th Affirmation, it is clear that the stay of execution sought is one pending the determination of the Taxation Appeal.

28.Having come to the conclusion that the Taxation Appeal should be dismissed for the reasons stated above, the Stays Summons must also be dismissed.

29.At the hearing before this court, the defendants further sought to apply for a stay of execution pending trial, out of “fairness and justice of the case”.

30.In particular, the defendants rely on the case of Tsui Po Hing v SK Kaken Company Co Ltd, HCCL 42/2004 (Decision dated 27 April 2010).  In that case, Stone J granted a stay of execution of his own costs order made after a trial, in light of the fact that the applicant there had a cross-claim which was the subject of another action against the parties who were seeking to enforce the costs order against him by way of bankruptcy proceedings. 

31.However, in my view, the defendants’ reliance on the Tsui Po Hing case is misconceived.  In the present case, in the affidavit evidence filed in support of the Stay Summons, the only basis upon which the defendants sought a stay was that there was a pending Taxation Appeal with reasonable prospect of success (see paragraph 27 above).  Further, there is no evidence before the court that the defendants do not have the funds available to effect payment of the costs taxed by the Taxing Master, or that the bankruptcy proceedings against the 1^st defendant and the winding-up proceedings against the 2^nd and 3^rd defendants would stifle the defendants’ counterclaim against the plaintiffs.

32.In the premises, the Stay Summons should be dismissed.

E.   CONCLUSION

33.In conclusion, for the reasons set out above: –

(1)   The Taxing Master’s Decision on the taxation review dated 29 January 2016 should be upheld; and

(2)   The Taxation Appeal and the Stay Summons should be dismissed.

34.As to the costs of the applications, I agree that the defendants have brought on a meritless case on the Taxation Appeal, without following proper procedures, and should be dismissed at the very outset.  The defendants continued to pursue the Taxation Appeal using a “wholesale” approach, without specifying the exact items they are appealing and proper grounds of appeal.

35.In the circumstances, I consider it appropriate to order that the costs of the applications be paid by the defendants to the plaintiffs forthwith, such costs are to be taxed on an indemnity basis if not agreed.

36.The above order as to costs is nisi and shall become absolute in the absence of any application within 14 days to vary the same.

Mr Michael Liu, instructed by Joseph Li & Co, for the plaintiff in HCA 167/2011

Mr Joseph Li, of Joseph Li & Co, for the plaintiff in HCA 1801/2010

The 1^st defendant appeared in person

The 2^nd and 3^rd defendants represented by the 1^st defendant