Gain Wealth Global Credit & Investment Ltd v. Chan Suk Fong

HCA 77/2016

[2019] HKCFI 1732

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 77 OF 2016

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DECISION ON COSTS
(To vary costs order nisi)

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Background

1.The trial of this action took place in November 2018 and judgment was handed down on 21 December 2018.

2.In its judgment the court dismissed the plaintiff’s claim against the defendant and made a costs order nisi that the plaintiff pay the defendants costs to be taxed if not agreed.

3.There is now before the court an application made by the defendant’s solicitors letter and accompanying summons, both dated 3 January 2019, for an order that the costs order be varied to provide that the defendants costs be awarded on an indemnity basis.

4.After directions leave was given for the filing of submissions and the parties agreed that the matter be disposed of on the papers.  The filing of the parties’ submissions were complete by 4 June.

5.There is no dispute between the parties that the question of costs is in the discretion of the judge.  The submissions instead focus on whether the circumstances of this case are sufficient to justify a departure from the usual practice of the court, in hostile litigation, which is to order the costs to be paid by the unsuccessful party to the successful party and to be taxed as between party and party.

6.The general rule as to when the court may order costs on an indemnity basis are well established.  I respectfully adopt the summary of the basis upon which such an order of costs may be made which is set out in the judgment of Godfrey J (as he then was) in Overseas Trust Bank Ltd v Coopers & Lybrand (a firm) and Others [1991] 1 HKLR 177 at 182G – 183C.  There it is made clear that:

“ … In order to justify a taxation on the indemnity basis, the successful party has to show, either that the case is one of a type already recognised in the practice of the court as warranting a taxation on that basis (such as, for example, the contempt cases to which I have already referred) or that there is some feature in the case even more special or unusual than one which would justify a taxation on the common fund basis. A case in which the successful party has demonstrated that the proceedings were initiated or prosecuted by the unsuccessful party in a manner which constitutes that party’s proceedings an abuse of the process of the court might well be a candidate for an award of taxation of costs on an indemnity basis. A taxation of the successful party’s costs on an indemnity basis could properly be ordered, in my opinion, where the proceedings were scandalous or vexatious, or had been initiated or prosecuted maliciously, or for an ulterior motive, or in an oppressive manner. Any proceedings instituted or prosecuted in such circumstances as to constitute an affront to the court could properly be the subject of a direction for taxation of the successful party’s costs on an indemnity basis.”

7.This passage was cited with approval by Stock J (as he then was) in Choy Yee Chun v Bond Star Development Ltd[1997] HKLRD 1327 (CA) who also referred to the judgment of Godfrey JA in Sung Foo Kee Ltd v Pak Lik Co (a firm) [1996] 3 HKC 570 in particular his ruling that:

“ Here as in England and Wales, the judge has a discretion, in a case which does fall outside the general, to direct the taxation of the receiving party’s costs on the basis which he considers to be appropriate to that case. This is not a discretion limited by indications in previous cases ….”

8.Stock J further adopted the Court of Appeal’s finding in Sung Foo Kee Ltd (supra) that: [1]

“ The power to order taxation on an indemnity basis is not confined to cases which have been brought with an ulterior motive or for an improper purpose. Litigants who conduct theircases in bad faith, or as a personal vendetta, or in an improper oroppressive manner, or who cause costs to be incurred irrationallyor out of all proportion as to what is at stake, may also expect to be ordered to pay costs on an indemnity basis if they lose, and have part of their costs disallowed if they win. Nor are these necessarily the only situations where the jurisdiction may be exercised; the discretion is not to be fettered or circumscribed beyond the requirement that taxation on an indemnity basis must be ‘appropriate’.”

9.In other words the judge retains a very wide discretion in the matter of costs albeit one which has to be exercised judicially.

10.The plaintiff in this application, whilst conceding that the courtretains a wide discretion in relation to costs, submits that the grounds upon which costs are to be awarded must be connected with the case which has been brought before the court and in this connection the court may consider any matter relating to the litigation and the party’s conduct of it including circumstances leading to the litigation but nothing further.  The plaintiff contends that since the conduct of the parties including in events leading up to the commencement of the litigation were all issues in the case they are properly resolved and dealt with by the court’s judgment and an indemnity costs order should not be added as another means of punishment.

11.It seems to me to that this characterisation misunderstands the purpose of a costs order in a case such as this; it is not a punishment at all but rather a case of providing the winning party—given all of the circumstances—with appropriate compensation for the costs they have had to expend in defending an unmeritorious claim brought against them.

12.In view of the court’s findings that the plaintiff acted in collusion with others to the detriment of the defendant, that the defendant was the victim of unscrupulous lending practices which contravened ordinary principles of fair dealing and involved a conspiracy to have the defendant execute a number of documents which were never explained to her and finally its finding that the scale of these abuses suggested the need for greater scrutiny of the plaintiff’s business and the support it received from its solicitors I am satisfied that this is an appropriate case for the exercise of my discretion to award Indemnity costs in favour of the Defendant.

13.Accordingly I order that the costs order nisi in the court’s judgment handed down on 21 December 2018 that the plaintiff pay the defendant’s costs to be taxed if not agreed be varied such that the plaintiff pay the defendant’s costs on an indemnity basis to be taxed if not agreed such costs to include the costs of this application subject to the Legal Aid Regulations.

Written submissions by Mr Victor Cheng, instructed by H Y Leung & Co LLP, for the plaintiff

Written submissions by Mr B K Ho, instructed by Lau & Chan, assigned by Director of Legal Aid, for the defendant