China Health Group Ltd (Formerly China Healthcare Holdings Ltd) v. Chiu & Partners (A Firm)

HCMP 1636/2017

[2020] HKCFI 2018

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1636 OF 2017

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Before: Hon Au-Yeung J in Chambers

Closing Date for Written Submission: 10 August 2020

Date of Decision on Costs: 13 August 2020

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D E C I S I O N   O N   C O S T S

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Introduction

1.By a Decision dated 11 March 2020, this Court ordered that profit costs in 2 office bills issued by the defendant (“the Firm”) to China Health (“China Health”) shall be referred to the taxing master for taxation. It was ordered, on a nisi basis, that costs of the originating summons be reserved to the taxing master for decision.

2.China Health applies to vary the costs order nisi to the effect that costs of the originating summons (including all costs reserved) be paid by the Firm to China Health, to be summarily assessed if not agreed.

3.Having considered the written submissions, I am satisfied that the costs order nisi should be varied.  The reasons are twofold:

(1)  There is no reason why costs should not follow the event; and

(2)  The taxing master does not have power or jurisdiction to make a costs order for the originating summons which he/she has not decided.

Costs to follow the event

4.The originating summons was for an order for taxation.  The order was granted and that was the event.  It was not an interlocutory order.  It was independent of the outcome of the taxation.  Costs should therefore follow the event unless it appears to the Court that in the circumstances of the case some other order should be made as to the whole or any part of the costs: Order 62, rule 3(2) of the Rules of the High Court.

5.The successful party should not be deprived of any of the costs unless he has raised issues on which he fails and that has caused a significant increase in the length or costs of the proceedings.  Further, the successful party should not be made to pay the unsuccessful party’s costs unless he has acted improperly or unreasonably in raising issues: Re Elgindata Ltd (No.2) [1992] 1 WLR 1207, at 1214 A-C; Kam Leung Sui Kwan v Kam Kwan Lai & ors, FACV 4/2015, 3 February 2016, at §8; Hong Kong Civil Procedure 2020, Vol 1, §62/3/3.

6.In the present case, China Health was almost wholly successful on the application.  China Health’s case has included an issue about a lump sum charged by the Firm for 14 days’ work (Issue 3).  That issue was ruled against China Health, however it was not raised unreasonably and did not take up much time of the Court.  All in all, I find no improper or unreasonable conduct on the part of China Health which should deprive them of any of the costs. 

Lack of power or jurisdiction in the taxing master

7.The powers of the taxing master are expressly provided for by statute under Order 62, rules 12-14 of the Rules of the High Court.  In particular, under rule 12, a taxing master has power to tax the costs of essentially all proceedings in the High Court.

8.Given that the taxing master did not hear the originating summons in this case, he would not be able to make an order for costs.  However, he/she can make an order relating to costs of the taxation under s.67(5) of the Legal Practitioners Ordinance, Cap 159.

9.There were occasions where a judge who heard the originating summons made an order for costs dependent on the outcome of the taxation. In Chin Yuk Lun Francis & anor v Lo & Lo (a firm), HCMP 1142/2005, 7 July 2006, DHCJ To, the court did grant an order for taxation but the learned judge found P’s conduct to be unreasonable in that they had previously demanded and obtained waivers and discounts under the bills but turned round to seek taxation.  At §61, the learned judge ordered that D shall pay P’s costs of P’s summons if D shall be ordered to pay the costs of the taxation, otherwise, there shall be no order as to costs.  Even in that case, it was the judge and not the taxing master who made the order as to costs of the originating summons before the taxation.

10.Accordingly, it was an error of law to leave it to the taxing master to deal with the costs of the originating summons in this case.

Other reasons

11.The Firm mentioned the point that most of the efforts of the originating summons were spent on the amendment of the originating summons.  With respect, China Health has already been penalized on costs in relation to the amendments.  The costs I have to decide now no longer has anything to do with the amendments.

Conclusion

12.Given the above analyses, I am satisfied that there were errors in principle when the costs order nisi was made.  I vary the costs order so that costs of the originating summons including all costs reserved to be paid by the Firm to China Health, summarily assessed at $95,000.  Costs of the application to vary the costs order nisi are summarily assessed and allowed at $29,640.

Written Submission by Mr Joseph Wong, instructed by Johnnie Yam, Jacky Lee & Co, for the plaintiff

Written Submission by Chiu & Partners, the defendant