China Technology Solar Power Holdings Ltd, Formerly Known As Soluteck Holdings Ltd v. Zeng Xiangyi and Others

HCA 3017/2016

[2019] HKCFI 44

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 3017 OF 2016

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D E C I S I O N

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A.   INTRODUCTION

1.This is an appeal by the 3rd Defendant against the order of Master Phillis Loh dated 3 September 2018 dismissing the 3rd Defendant’s application to invoke the “slip rule”. 

B.   THE RELEVANT BACKGROUND

2.On 23 February 2018, the 3rd Defendant issued a summons to strike out the action against him on the grounds that it discloses no reasonable cause of action or alternatively that the claim is frivolous and vexatious.

3.The substantive hearing of the 3rd Defendant’s striking out summons was scheduled to be heard on 18 July 2018.

4.By a letter dated 14 July 2018, the Plaintiff’s solicitors informed the 3rd Defendant’s solicitor that the Plaintiff intended to seek leave to amend its Amended Statement of Claim and that a summons would be issued on 16 July 2018.  A copy of the draft Re‑Amended Statement of Claim was attached to the Plaintiff’s solicitors.

5.The Plaintiff’s summons to amend its Amended Statement of Claim was issued on 17 July 2018 and was fixed before Master Phillis Loh on 18 July 2018.

6.It appears from the correspondence dated 16 and 17 July 2018 that the parties had reached some consensus that the 3rd Defendant’s striking out summons and the Plaintiff’s amendment summons would not be dealt with substantively at the hearing on 18 July 2018 but would be adjourned to a date to be fixed.  The parties were, however, unable to reach complete agreement on the position of the 3rd Defendant’s costs of the striking-out summons and appeared before the Master on 18 July 2018. 

7.At the hearing on 18 July 2018, Master Loh was informed that there were only two outstanding issues between the parties on costs, namely (1) whether the Plaintiff should pay the 3rd Defendant’s costs of the striking‑out summons up to and including the hearing on 18 July 2018 (as contended for by the 3rd Defendant) or simply his costs of the hearing on 18 July 2018 (as contended for by the Plaintiff), and (2) whether the 3rd Defendant should get a certificate for 2 counsel (as contended for by the 3rd Defendant) or 1 counsel (as contended for by the Plaintiff).  It does not appear from the transcript of the hearing on 18 July 2018 that there was any issue between the parties as to whether or not the 3rd Defendant’s costs should be paid by the Plaintiff forthwith.

8.After hearing submissions from counsel from the 3rd Defendant and the Plaintiff, the Master made, amongst others, the following order (“the Costs Order”):

“Costs of the 3rd Defendant’s Summons for striking out filed on 23 February 2018 up to and including the hearing on 18 July 2018, with certificate for 2 Counsel, be paid by the Plaintiff to the 3rd Defendant, to be taxed if not agreed”[1]

9.On 23 July 2018, the draft order lodged by the Plaintiff’s solicitors was approved by the Master’s clerk.

10.On 24 July 2018, the 3rd Defendant’s solicitors realised that immediate taxation was missing from the Costs Order and submitted an amended draft order to the Court containing the following costs order:

“Costs of the 3rd Defendant’s Summons for striking out dated 23 February 2018 up to and including the hearing on 18 July 2018 be paid by the Plaintiff to the 3rd Defendant to be taxed immediately if not agreed, with certificate for 2 Counsel”

However, the 3rd Defendant’s solicitors were informed by the Court on the same day that the draft order submitted by the Plaintiff’s solicitors had been approved on 23 July 2018.

11.The parties could not subsequently resolve the matter as to whether the Costs Order should provide for immediate taxation.  On 30 July 2018, the 3rd Defendant issued a summons (“the Variation Summons”) returnable before Master Loh pursuant to, amongst others, RHC Order 20, rule 11, and asked for an order to allow insertion of the words “and be paid forthwith” at the end of the Costs Order and that the application be dealt with by way of written submissions.

12.On 31 July 2018, Master Loh directed the parties to file and serve written submissions.  After considering written submissions from both parties, the Master dismissed the Variation Summons on 3 September 2018, with costs to the Plaintiff.  In her Decision, she stated, amongst other things:

“The costs order dated 18 July 2018 having been perfected, the Court is functus officio. In the circumstances of the present case, it is not appropriate for the Court to vary the costs order or grant the relief sought by the 3rd Defendant.”

13.By a Notice of Appeal dated 10 September 2018, the 3rd Defendant sought to appeal against the Master’s dismissal of the Variation Summons.

C.   DISCUSSION

14.In this appeal, the 3rd Defendant submitted that the Master was wrong to dismiss the Variation Summons on the basis of the functus officio doctrine, and should have allowed the insertion of the additional words into the Costs Order under the “slip rule” so that the 3rd Defendant can tax his costs immediately without having to wait until the conclusion of the action.

15.On the other hand, the Plaintiff submitted that the Master had decided that the “slip rule” should not have been invoked and was therefore correct in dismissing the Variation Summons.

C1.   Engagement of the “Slip Rule” after Sealing of the Order

16.RHC Order 20, rule 11 provides that “[c]lerical mistakes in judgments or orders, or errors arising therein from any accidental slip or omission, may at any time be corrected by the Court on summons without an appeal”.  This is generally known as the “slip rule”.

17.It is well‑settled that the “slip rule” can operate “at any time”, even after the sealing of the relevant order: Winston Camera & Radio Co Ltd v Combi (Singapore) Pte Ltd [1988] HKC 156 at 157E (Kempster JA); Man Ping Nam v Man Fong Hang (No 2) (2007) 10 HKCFAR 140 at §20 (Ribeiro PJ).  Because the correction is to reflect what the Court has in fact already decided, the rule does not involve the Court acting when functus officio. 

18.Accordingly, insofar the Master had relied on the functus officio doctrine alone to dismiss the Variation Summons, I respectfully consider that she was in error in doing so. 

19.In the reasons given on 3 September 2018, the Master did not say anything about the operation of the “slip rule”.  I am therefore not satisfied that by dismissing the Variation Summons, she had implicitly ruled that she had no intention to make a forthwith taxation order on 18 July 2018.

C2.   Operation of the “Slip Rule”

20.In order for the “slip rule” to be engaged, it is necessary to identify a clerical mistake, or an error arising from any accidental slip or omission, in a judgment or order.  One instance where such a mistake or error may be identified if the judgment or order does not reflect or encapsulate the true and objective intention of the Court: eg Adam & Harvey Ltd v International Maritime Supplies Co Ltd [1967] 1 WLR 445 at 448E-H (Harman LJ); Wing Wo Engineering Ltd v Tyco Engineering & Construction (Hong Kong) Ltd (unreported, CACV 1120/2000, 28 October 2002) §4.

21.Therefore, if the court intends that one party is entitled to have his costs taxed immediately but the order drawn up only provides for taxation at the conclusion of the substantive action, the order may be amended to reflect the intention of the court: Allied Collection Agencies Ltd v Wood [1981] 3 All ER 176.

22.The issue I need to determine is whether the Court intended for the taxation of the 3rd Defendant’s costs to take place immediately, or at the conclusion of the action.  If it is the former, the Costs Order would not have expressed the Court’s intention and the “slip rule” may be invoked to correct that error.

23.Having looked at the contemporaneous correspondence of the parties’ solicitors and the transcript of the hearing on 18 July 2018, I consider that the Court on 18 July 2018 in all probabilities intended to allow the 3rd Defendant’s costs of the striking out summons, up to and including the hearing on 18 July 2018, to be taxed immediately.

(1)  After receiving notice of the Plaintiff’s intention to seek leave to amend its Amended Statement of Claim, the 3rd Defendant’s position prior to the hearing on 18 July 2018 had always been that his costs of the striking out summons should be paid by the Plaintiff forthwith. Specifically, when the Plaintiff’s solicitors commented on the 3rd Defendant’s draft consent summons on 17 July 2018, it seems to have been accepted that the Plaintiff should pay to the 3rd Defendant the costs of the hearing on 18 July 2018 forthwith. 

(2)  Indeed, this was how the matter was presented to the Master at the start of the hearing on 18 July 2018.  As mentioned above, Master Loh was informed that there were only 2 outstanding issues between the parties on costs, namely (a) whether the Plaintiff should pay the 3rd Defendant’s costs of the striking-out summons up to and including the hearing on 18 July 2018 or simply his costs of the hearing on 18 July 2018, and (b) whether the 3rd Defendant should get a certificate for 1 or 2 counsel. 

(3)  Notably, the 3rd Defendant’s counsel and the Plaintiff’s counsel made their respective oral submissions to the Court on the basis that there would be immediate taxation in respect of the 3rd Defendant’s costs. 

(4)  In these circumstances, I consider that the Master must have considered that the timing of taxation of the 3rd Defendant’s costs to be a non‑issue, and that there would not be any issue in making an order for costs to be taxed forthwith.  My view is reinforced by the complete absence of discussions at the hearing as evident from the transcript as to whether or not the 3rd Defendant’s costs should be taxed immediately.  If the Court was not prepared to make an immediate taxation costs order, fairness would dictate that the issue be raised and ventilated with the 3rd Defendant’s counsel at the hearing.

24.For these reasons, I consider that the Court intended for the taxation of the 3rd Defendant’s costs to take place immediately when making the Costs Order.  The Costs Order does not reflect this and the “slip rule” should be invoked to correct the error.

25.The appeal is accordingly allowed.  I make the following orders:

(1)  The Order of Master Loh dated 3 September 2018 be set aside.

(2)  The Costs Order be amended by adding the word “forthwith” immediately before the phrase “to be taxed if not agreed” so that it reads:

“Costs of the 3rd Defendant’s Summons for striking out filed on 23 February 2018 up to and including the hearing on 18 July 2018, with certificate for 2 Counsel, be paid by the Plaintiff to the 3rd Defendant forthwith, to be taxed if not agreed”

(3)  An order nisi that (a) the costs of and occasioned by the 3rd Defendant’s Summons dated 30 July 2018 incurred on or prior to 31 July 2018 be paid by the 3rd Defendant to the Plaintiff forthwith, and (b) the costs of and occasioned by the 3rd Defendant’s Summons dated 30 July 2018 incurred after 31 July 2018 be paid by the Plaintiff to the 3rd Defendant forthwith, such costs to be taxed if not agreed. For the avoidance of doubt, I would only give a certificate of one counsel in respect of the 3rd Defendant’s costs incurred after 31 July 2018.

Mr Jeremy Cheung, instructed by Messrs Pauline Wong & Co, for the plaintiff

Mr Danny Tang, instructed by Messrs Fred Kan & Co, for the 3rd defendant