Lai Kim Ming Joseph Trading As Joe Lines Co v. Macrotech Security & Management Services Ltd

DCCJ 3647/2014

[2021] HKDC 179

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3647 OF 2014

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DECISION ON COSTS

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Introduction

1.This is an application by the plaintiff for variation of a costs order nisi (“costs variation application”), which is contested by the defendant.

2.This was originally a case of business dispute between the parties under two actions, DCCJ 3392/2014 and DCCJ 3647/2014, which were heard together.  By a judgment handed down on 4 September 2020 (“Judgment”), with respect to this action DCCJ 3647/2014, I made a costs order nisi, which should become absolute in 14 days in the absence of any parties’ objection, that the plaintiff should pay the defendant 50% of its costs with certificate for one counsel (“costs order nisi”)[1].

3.By a summons filed on 16 October 2020 (“Summons”), the plaintiff applied for:

(a)     leave to apply out of time to vary the costs order nisi;

(b)     an order that the costs order nisi be varied such that it provides that the defendant should pay the plaintiff costs of this action or alternatively, that the defendant should pay the plaintiff such costs of this action as the Court thinks fit; and

(c)     an order that the defendant should pay the plaintiff costs of this application.

4.In support of this application, the plaintiff filed the 2^nd affidavit of Chan Chi Hung[2] on 5 November 2020, the purpose of which was to explain the delay in making this application and urge the Court to exercise its discretion to allow this application out of time.

5.First of all, the defence objects to the plaintiff’s filing of the 2^nd affidavit of Chan Chi Hung, arguing that it was done without the leave of the Court or not pursuant to any Court’s direction, that it contained mostly matters beyond the defendant’s knowledge, and that it should have been filed at the same time when the Summons for the costs variation application was filed on 16 October 2020.

6.It is not exactly correct nor fair to criticize the plaintiff for filing the said affidavit without the leave of the Court or not pursuant to any Court’s direction.  In fact, prior to the filing of this Summons, there was correspondence between the parties and the Court, and it was directed in the Court’s letter dated 29 September 2020, among other things, that if the then intended summons was to be taken out by the plaintiff, it should be accompanied by an application for time extension with cogent reason(s) explaining the delay.

7.The fact that a party’s affidavit containing matters not within the knowledge of the other party, which is common, should not be a bar to the filing of that affidavit.  It is at the end of the day for the Court to decide what matters contained in the affidavit are to be accepted and what weight, if any, is to be attached thereto.

8.No doubt it should be more appropriate for the plaintiff to file the Summons and the supporting affidavit at the same time.  Nevertheless, the late filing of the affidavit was done before the time due for the parties to file their respective submissions.  As such, it caused no prejudice or unfairness to the defendant who had the opportunity to consider and reply when preparing its written submission to oppose this application.

9.In any event, in making an application for an extension of time, a clear statement of the reasons for the inability to comply with the stipulated time limit should normally be provided, and that the requirement of an explanation for delay on an application for time is the norm[3].

10.I am prepared to accept the 2^nd affidavit of Chan Chi Hung for the purpose of this costs variation application and would consider the matters deposed therein when needed.

11.Also, the defendant objects to this application by the plaintiff, arguing that:

(a)     the Court is now functus officio and has no jurisdiction to deal with this costs variation application;

(b)     if the Court is not functus officio and still has jurisdiction to deal with this costs variation application, leave should not be granted to the plaintiff to make this application out of time; and

(c)     if leave is to be granted to the plaintiff to make this costs variation application out of time, the application should be refused and the costs order nisi should be made absolute.

12.These are in fact the key issues of this costs variation application.  I shall deal with them one after another.

Is the Court now functus officio and has no jurisdiction to deal with this costs variation application?

13.The relevant statutory provisions are O. 42, r. 5B(3) and O. 3, r. 5(1) and (2) of the Rules of the District Court, Cap. 336H (“RDC”):-

Handing down reasons for judgment or order (O. 42, r. 5B)

(1)     …

(2)     …

(3)     Where a written judgment is handed down pursuant to this rule the Court may make therein an order nisi as to costs and, unless an application has been made to vary that order, that order shall become absolute 14 days after the decision is pronounced[4].

(4)     …

Extensions etc., of time (O. 3, r. 5)

(1)     The Court may, on such terms as it thinks just, by order extend or abridge the period within which a person is required or authorized by these Rules, or by any judgment, order or direction, to do any act in any proceedings.

(2)     The Court may extend any such period as is referred to in paragraph (1) although the application for extension is not made until after the expiration of that period.

(3)     …

14.The relevant dates are:-

4 September 2020 –	the Judgment, with the costs order nisi, was handed down
18 September 2020 –	the costs order nisi became absolute upon expiry of 14 days
12 October 2020 –	the Judgment was sealed
16 October 2020 –	the plaintiff filed a summons to vary the costs order nisi

15.The defendant does not dispute that the Court has power to extend time even after a costs order nisi has become absolute, but, by relying on the cases RTX Products Hong Kong limited v Li Yiu Fai[5] and Poon Ching Man v Lam Hoi Pun[6], argues that the Court does not have power or jurisdiction to vary a costs order nisi once the judgment containing the costs order has been sealed[7].

16.In the Court of Appeal’s decision in Ma Wan Farming Ltd v Chief Executive in Council & Anor[8], an authority heavily relied upon by the plaintiff, Liu JA stated that:-

“A judgment clearly takes effect from the date of its pronouncement but when a handed down judgment contains a provisional costs order, the provisional costs order would nevertheless remain tentative, albeit made in a final judgment and the tentative costs order is liable to be re-ventilated as provided for in O. 42 r. 5B(6)[9] … If an extension were granted for making an application under O. 42 r. 5B(6), the order nisi would not become absolute because it shall become absolute ‘unless an application has been made to vary’ it within the time prescribed or extended. The order nisi may be made absolute if the application is dismissed or otherwise made final subject to some variation if the application succeeds. The order nisi may be altogether replaced. Time for appeal against costs would run from a final costs order and the procedural predicament postulated by Mr Dykes would not arise. In my view, this court has jurisdiction to extend time to the appellant for making an application to vary the order nisi…”[10]

17.The above was confirmed in another Court of Appeal’s decision in Tang Man Kit & Anor v Hip Hing Timber Company Limited[11], where Cheung JA (representing the majority’s decision) stated that:-

“6. In Ma Wan Farming Limited v. the Chief Executive in Council and another (No. 2) [1998] 2 HKLRD 314, this Court (Nazareth VP, Liu and Mayo JJA) was of the view that the court has jurisdiction under Order 3, Rule 5 and Order 59, Rule 10 to allow time to be extended for a variation of the costs nisi.

7. …

8. …

9. I am further of the view that Ma Wan Farming Limited was correctly decided. Liu JA held that Rule 5B(6) implicitly authorizes a party to apply to vary an order nisi within 14 days. As the 14 days is a time prescribed by the Rules for the doing of an act in any proceedings, Order 3, Rule 5 and Order 59, Rule 10 (inherent jurisdiction), would allow such a time to be extended.

10. I think the reasoning is sound and supported by the wording of Order 3, Rule 5(1) which provides that

‘5. (1) The Court may, on such terms as it thinks just, by order extend or abridge the period within which a person is required or authorized by these rules, or by any judgment, order or direction, to do any act in any proceedings.’ (emphasis added)

As Rule 5B(6) provides for 14 days for a party to vary the order nisi, Order 3 Rule 5(1) is engaged. Once there is jurisdiction to extend time, the application to extend time can be made either before or after the time prescribed by the rules. This is also clear from Order 3, Rule 5(2) which provides that

‘(2) The Court may extend any such period as is referred to in paragraph (1) although the application for extension is not made until after the expiration of that period.’

11. This reasoning is supported by authorities such as Manley Estates Ltd. v. Benedek [1941] 1 All ER 248 and Regina v. Bloomsbury & Marylebone County Court ex parte Villerwest Ltd [1976] 1 WLR 362.  The fact that Rule 5B(6) provides for an eventual event, namely, the order becoming absolute is not a basis for excluding the jurisdiction.  In terms of logic, it is no different from, for example, an order giving judgment or dismissing an action unless a party perform certain acts within a specified period.  In such a case, the court still has jurisdiction to extend time for the act to be done after the period has expired.  While I appreciate the requirement of finality of a decision, the rationale for making a provisional order on costs is that arguments have not been heard and hence the parties are given time to vary the order.  This being the case it is inconceivable that the jurisdiction to vary the costs order can only be exercised if an application is made within the 14-day period but not otherwise.  This being the case, Ma Wan Farming Limited is binding on this Court and hence the Court retains jurisdiction to extend time.”

18.In a more recent Court of Appeal’s decision in Re Good Idea International Ltd[12], a case also heavily relied upon by the plaintiff, in which the first respondent sought leave to appeal against the order of Harris J in granting the plaintiff’s application for leave to extend the time period for convening an Extraordinary General Meeting under a consent order.  The first respondent’s main argument was that the Court did not have jurisdiction to extend time as it had been rendered functus officio by the consent order.  It was argued that, the general power to extend time under O. 3, r. 5(1) of the Rules of the High Court (Cap. 4A) did not apply to a stipulation of time under a final judgment disposing of the entire proceedings in the absence of any express or implied liberty to apply provision.  When refusing leave to appeal, Cheung CJHC (as he then was) stated that:-

“…we take the view that O. 3, r. 5(1) is wide enough to cover stipulations as to time contained in final judgments. O. 3, r. 5 expressly refers to ‘judgment’, without differentiating between a final judgment and an interlocutory judgment. The fact that O. 45, r. 6(1) deals with extensions of time under some overlapping circumstances does not require O. 3, r. 5(1) to be given a restrictive interpretation, which serves no meaningful purpose.”[13]

19.I have also considered the two case authorities, RTX (a Court of First Instance decision) and Poon Ching Man (a District Court decision), relied upon by the defendant, where the orders nisi in question had already been sealed at the time when the applications to vary the same were made.

20.For the case RTX, it is, first of all, worth-noting that Anthony Chan J considered the application to vary the order nisi was “hopelessly unmeritorious” and that it was “extraordinary” for it to be made almost 3 years after the order had become absolute[14]. In passing, the learned judge expressed his view that “once the order has become absolute, I am inclined to the view that any disagreement will then have to be pursued on appeal”[15]. He went on to express that, even if the Court retained jurisdiction over the order nisi, no time extension should be allowed as the lapse of 3 years was a serious erosion of the principle of finality to litigation and the potential injustice to the other party was obvious[16].  Finally, the learned judge concluded that he “see[s] no justification for a variation of the [order nisi] and no reason at all to allow an extension of time to enable the defendant to apply to do so (assuming that the court retains jurisdiction over the matter)”[17]. I am of the view that the above comment on the jurisdiction issue is obiter and therefore not binding.

21.The other case Poon Ching Man requires more detailed consideration.  After recognizing the principle under Andayani v Chan Oi Ling[18] (i.e. by the common law, the court is functus officio when the judge’s order had been drawn up, entered or otherwise perfected) as well as RTX and considering a number of case authorities, Deputy District Judge Winnie Tsui (as she then was) set out four categories of cases which involve a court revisiting a previous order which had been sealed[19].  The only category of cases which was of direct relevance to that case, so is for the present case as accepted by the plaintiff here[20], is the last category of the “statutory rules” cases, which refer to the cases where the court, pursuant to applicable rules of court, amends a previous order, including but not limited to enlarging time specific in it.

22.The learned judge then considered the relevant authority Re Good Idea[21],  where the Court of Appeal took the view that O. 3, r. 5 was wide enough to cover all judgments, be they final or interlocutory[22]. The learned judge observed at paragraph 34 of her judgment:-

“34. It seems sufficiently clear that the principle underlying the decision is that the court may revisit a previous order, even after sealing, if a power is conferred on it to do so under the applicable rules of court. In Re Good Idea, the applicable rule of court was RHC Order 3 rule 5.  In such an instance, the court’s power to revisit stems not from its original jurisdiction over the case, which has come to an end upon sealing (applying the principle of functus officio), but from a “fresh” power to act conferred on it by the statute. Such power is of course to be exercised strictly in accordance with the provisions of the applicable rule.” (original emphasis)

23.The learned judge went on to draw support to the above   observation from Re L and B (children) (care proceedings: power to revise judgment) [2013] UKSC 8, where Lady Hale SCJ on the one hand recognized the common law principle that when a judgment is perfected a judge is not allowed to revisit it and on the other hand stated that a court may do so where there is an express power to vary or revoke, which was consistent with the decision in Andayani and echoed the position of the Hong Kong courts in the “statutory rules” cases[23].

24.I pause here to quote the comment of Lady Hale in Re L and B, to which I entirely agree, “Where there is a power to vary or revoke, there is no magic in the sealing of the order being varied or revoked. The question becomes whether or not it is proper to vary the order.”[24].

25.The learned judge in Poon Ching Man eventually stated emphatically at paragraph 46 of her judgment:-

“46. Having considered the authorities at some length, I now return to how the principle established in the “statutory rules” cases should be applied to the plaintiff’s application to vary the costs order nisi in this case.  But for the reason stated in §§48 to 50 below, I would be inclined to hold that the court does have jurisdiction, which it derives from the express power given under RDC Order 3 rule 5, to extend the 14-day time limit stipulated in the order (by operation of RDC Order 42 rule 5B(3)) so as to bring the plaintiff’s application to vary within time.  I would be inclined to treat it as an instance of the court exercising a power conferred on it by the applicable rules of court to revisit a previous order, namely, to vary a time limit imposed in that order, just as in Re Good Idea.”

26.The learned judge, however, when deciding on that particular jurisdiction issue in Poon Ching Man at paragraphs 48 to 50 of her judgment, took the view that the case before her was indistinguishable from RTX and, because RTX was a decision of the Court of First Instance and under the rule of stare decisis, the learned judge felt she was bound by it.  Therefore, notwithstanding her conclusion drawn from the authorities and her view as clearly expressed in paragraph 46 of her judgment[25], she decided that she had no jurisdiction to revisit the costs order nisi upon the sealing of the order[26].

27.I should mention that the judgment as well as the costs order in Poon Ching Man were appealed against.  The Court of Appeal nevertheless declined to deal with the learned judge’s decision on her jurisdiction to extend time because the Court felt it did not have the benefit of proper arguments[27]. Instead, the Court of Appeal dealt with the actual costs order.    For the sake of completeness, I set out the useful comments of the Court of Appeal on that particular jurisdiction point as follows:-

“42. In light of what had been said, we shall confine ourselves to the following brief comments on the jurisdiction point:

(a) There are 2 Court of Appeal judgments suggesting that the court has jurisdiction to extend time for varying a costs order nisi after it had become absolute: Ma Wan Farming Ltd v Chief Executive in Council (No 2) [1998] 2 HKLRD 314; Tang Man Kit v Hip Hing Timber Co Ltd CACV 137 of 2002, 8 June 2006;

(b) At the same time, in both instances, the courts actually refused to vary the costs order;

(c) Also in both instances, the applications for variation were made within a relatively short period after the expiry of the 14-day limit.

(d) It is not clear from the judgments whether the costs order absolute had been perfected. There was no discussion in Ma Wan and the majority’s decision in Tang Man Kit on the implication of the court being functus officio after sealing of the order (if the costs order absolute had been sealed) though Chung J (who would have decided differently in Tang Man Kit but for Ma Wan) adverted to it at paragraph 28, citing his own judgment in Syed Haider Yahya Hussain v Registrar of Births and Deaths HCAL 73 of 1999, 12 July 2005;

(e) The functus officio point was taken up again by Anthony Chan J in RTX Products v Li Yiu Fai HCA 1777 of 2009, 12 Nov 2014 in refusing to entertain an application for variation of a costs order nisi after the sealing of the order;

(f) In the present case, the Judge considered herself to be bound by the decision of Anthony Chan J but she also opined that an application for variation might fall within the principles discussed in Re Good Idea International Investment Ltd [2012] 4 HKLRD 186 and Re L & B [2013] 1 WLR 634 by way of exception to the general principle of functus officio; and

(g) For reasons we have canvassed earlier, without proper arguments before us, we shall not express any concluded view on the controversy.  However, we would add that even assuming that the court has jurisdiction to entertain the application, it may not be just an application to extend time.  Rather, it also involves the setting aside of the order absolute that had been entered.  If the nature of the application is viewed in that way, it is at least arguable that the considerations in Order 2 Rule 5 should also be relevant.”

28.Having carefully considered all the above authorities, I am in full agreement with the detailed analysis of Deputy District Judge Winnie Tsui (as she then was) on the jurisdiction issue in Poon Ching Man, except that, with respect, I do not share her view that the decision on the jurisdiction issue in RTX is binding as I find it to be comments as obiter for the reasons stated above[28].

29.In any event, I am of the view that I should follow the Court of Appeal’s decisions in Ma Wan, Tang Man Kit (the majority’s decision) and in particular, Re Good Idea (where a consent order was the subject matter) on this very jurisdiction issue.  The starting and fundamental point for consideration is that, O. 3, r. 5(1) should be given a natural interpretation, it is wide enough to cover stipulations as to time contained in final as well as interlocutory judgments, this rule explicitly confers the widest measure of discretion and draws no distinction whatsoever between various classes of cases[29]. I therefore come to conclude that this Court have power or jurisdiction to revisit, and vary if needed to, the costs order nisi even when the Judgment containing it has been sealed.

Whether leave should not be granted to the plaintiff to make this costs variation application out of time?

30.The Court of Final Appeal in Astro Nusantara International B. V. v PT Ayunda Prima Mitra[30] observed that it had often been emphasised that the discretion to extend time conferred by O. 3, r. 5 is broad and unrestricted, which was designed to enable justice to be done between the parties, and held that the proper test involves looking at all relevant matters and considering the overall justice of the case, eschewing a rigid mechanistic approach[31].

31.In order to succeed on the application for leave to extend time, the plaintiff must show that there is justifiable reason for not making the application within time and there are merits in varying the costs order^[32].

32.Also, the Court is also required to take into consideration whatever consequences that would follow from a time extension when exercising its discretion[33].

33.I also take note of the Court of Appeal’s comment in Poon Ching Man where it was observed that, it may not be just an application to extend time, rather, it also involves the setting aside of the order absolute, and it is at least arguable that the considerations in O. 2, r. 5 should also be relevant[34].

34.O. 2, r. 5 of RDC provides:-

5.     Relief from sanctions (O. 2, r. 5)

(1)     On an application for relief from any sanction imposed for a failure to comply with any rule or court order, the Court shall consider all the circumstances including—

(a)     the interests of the administration of justice;

(b)     whether the application for relief has been made promptly;

(c)     whether the failure to comply was intentional;

(d)     whether there is a good explanation for the failure to comply;

(e)     the extent to which the party in default has complied with other rules and court orders;

(f)     whether the failure to comply was caused by the party in default or his legal representative;

(g)     in the case where the party in default is not legally represented, whether he was unaware of the rule or court order, or if he was aware of it, whether he was able to comply with it without legal assistance;

(h)     whether the trial date or the likely trial date can still be met if relief is granted;

(i)     the effect which the failure to comply had on each party; and

(j)     the effect which the granting of relief would have on each party.

(2)     An application for relief must be supported by evidence.”

35.The plaintiff’s solicitors sought to explain by the 2^nd Affidavit of Chan Chi Hung (“CCH’s Affidavit”) as to why it took so long for the plaintiff to take out the Summons for this costs variation application.  The following matters are of relevance:-

(a)     The Judgment was handed down on 4 September 2020, meaning that the costs order nisi contained therein would become absolute on 18 September 2020.

(b)     It was asserted that the plaintiff’s legal team took time to consider the judgment, to discuss with the trial counsel, to advise the plaintiff and to obtain instructions from the plaintiff, for this trial involving many factual issues and disputes[35].

(c)     It was also asserted that a “summons was therefore intended to be issued on 17 September 2020” (i.e. one day before the order nisi became absolute)[36].

(d)     The plaintiff’s legal team was “worried about having to recall and reconsider voluminous materials, documents, and transcripts of the trial” and that trial counsel had other work commitments during the months of October and November 2020[37].

(e)     On 17 September 2020, the plaintiff’s solicitors sent a litigation clerk to the District Court in the hope of issuing a summons and securing a later hearing date for the variation application; however, the clerk was informed by the Listing Officer that no hearing date would be fixed because she did not have my diary when I was at that period of time seconded to the High Court.  The litigation clerk was told to leave with the Listing Officer the summons and the counsel’s diary[38].

(f)     There were further verbal communications between the Listing Officer and the plaintiff’s solicitors (through the handling solicitor or the litigation clerk) as well as written correspondence passed between the plaintiff’s solicitors and my clerk between 18 September and 29 September 2020^[39].

(g)     On 12 October 2020, the plaintiff presented the summons for this costs variation application to the District Court and, after consultation by the Listing Officer with the Court’s diary, eventually had it filed on 16 October 2020

36.The plaintiff’s explanation for the delay is that the 28-day-delay was “inadvertent and arose out of an overly cautious but now perhaps erroneous worry for the amount of preparation” required for the variation application, and it is submitted that the delay was relatively short and not intentional and that it did not cause any prejudice to the defendant[40].

37.The defendant’s stance was that the earliest time the plaintiff showed an intention to challenge the costs order was allegedly on 17 September 2020, one day before the costs order nisi would turn absolute, appeared to be an afterthought.  Furthermore, such “inadvertence” sat uncomfortably with the fact that a statutory demand was issued by the plaintiff’s solicitors against the defendant for the judgment debts on 16 September 2020.  It is submitted that, the plaintiff had only himself and his legal team to blame, asking the Court to revisit a costs order absolute and its judgment having been sealed would cause serious injustice and prejudice to the defendant, and that no credible explanation for the delay had been put forward to warrant the Court’s exercise of discretion in his favour[41].

38.First of all, I am prepared to accept that the plaintiff’s solicitors’ litigation clerk attended the District Court, intending to issue a summons and secure a later date for hearing to apply for varying the costs order nisi, on 17 September 2020.  It seems to me that if the clerk did go to the District Court on that day, i.e. a day before the costs order nisi had become absolute, but for the fact that I was at that time sitting in another Court and therefore the Listing Officer did not have my diary, the plaintiff would have filed the summons with a return date fixed on that particular day.  Further, various correspondence between the plaintiff’s solicitors and the Court showed that the plaintiff’s solicitors had been concerned with (though erroneously) the time and efforts required for the preparation of this costs variation application and thus endeavoured to secure a latest possible hearing date.  All these appear to have explained the plaintiff’s failure in taking out the Summons in time or at least not being able to do so sooner than they actually did.

39.The delay of 28 days (or 24 days, if the date of presentation of the Summons to the Listing Officer is to be counted) in filing the Summons, though not insubstantial, does not amount to a bad delay in the circumstances of this case.  More importantly, the delay, in my view, had not caused any real or substantial prejudice to the defendant.

40.I have also considered and found that there are at least some merits in this costs variation application. As said, the proper test involves looking at all the relevant matters and considering the overall justice of the case.  It would not be just to shut out a party from arguing a meritorious case simply because of a delay of 20 odd days, in particular in the somewhat unusual circumstances, as described above[42], of this case.

41.Having considered all the circumstances, I am prepared to exercise my discretion to grant an extension of time so as to allow the plaintiff to proceed with this costs variation application.

Whether this costs variation application should be granted and what the costs order absolute should be?

42.The two actions, DCCJ 3392/2014 and DCCJ 3647/2014, were heard together.  At the end of my judgment, I made a costs order nisi for each of them.

43.In DCCJ 3392/2014, I found that the plaintiff succeeded in all his claims under Issues 1 and 2 for the full sum of HK$660,000, the set-off of the unpaid loan of HK$100,000 owed to the defendant was not in issue, and that the plaintiff was entitled to all his costs[43].

44.In DCCJ 3647/2014, where there were 5 issues (Issues 3 to 7) in dispute, I found that the plaintiff succeeded in Issues 3, 4 and 7 but failed in Issues 5 and 6.  I took the view that Issues 5 and 6 were discrete from the rest of the controversies and added a lot to the complexity and the length of the trial.  Having considered all the circumstances, notwithstanding that the plaintiff succeeded in some issues, I ordered that the plaintiff should pay the defendant 50% of its costs[44].

45.The plaintiff argued that the proper costs order for the action DCCJ 3647/2014 should be costs be to the plaintiff for three reasons: (a) the plaintiff succeeded in the two actions on different legal bases; (b) the plaintiff succeeded in most of the claims on the facts or the law in DCCJ 3647/2014 but for two issues; and (c) the plaintiff’s conduct for the two losing issues was in the course of ordinary litigation and they did not add much to the length or complexity of the case[45].

46.The defendant argued that the costs order nisi for DCCJ 3647/2014 was the proper order to make, which was of unassailable reasoning and wholly in line with the established legal principles[46].

47.On reflection, I am convinced by the plaintiff’s argument that the plaintiff succeeded in the two actions, namely DCCJ 3392/2014 and DCCJ 3647/2014, on different legal bases.

48.Although the exact nature of the business relationship between the plaintiff and the defendant (Issue 1)[47] was the common and primary issue in both actions, it was not the “element” of the plaintiff’s claim in the first action DCCJ 3392/2014.  The fundamental issue in that first action was whether there was an oral agreement, and what its terms were, between the parties on provision of “additional work” by the plaintiff at the material time.

49.By contrast, in the second action DCCJ 3647/2014, that particular Issue 1, namely the nature of the parties’ business relationship, depending on what exactly it was, formed the basis of the defendant’s counterclaim and that of the plaintiff’s defence thereto.

50.As such, I am now convinced that the relevant costs issues in the two respective actions, notwithstanding that there existed a common and primary issue (Issue 1) as aforesaid, should be approached and considered separately.

51.Leaving aside the common issue of the parties’ business relationship (Issue 1) and looking at the key issues of the second action DCCJ 3647/2014 from a global view, there were five issues as follows:-

Issue 3 –	the termination agreement (and its terms)
Issue 4 –	the profits for July and August 2014
Issue 5 –	the properties claim
Issue 6 –	the bonus claim
Issue 7 –	the defendant’s counterclaim (the plaintiff’s implied and/or fiduciary duties)

52.In the Judgment, in summary, I found the plaintiff succeeded in 3 out of 5 of those issues (Issues 3, 4 and 7) but failed in the remaining 2 issues on various claims for properties and bonus (Issues 5 and 6).

53.The general principle, which is beyond argument, is that costs are matters of discretion of the Court.

54.Costs should follow the event, except when 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: O. 62, r. 3(2) of RDC.

55.O. 62, r. 5(1) of RDC sets out a number of factors which the Court should take into account when exercising its discretion.  I set out below those factors which I consider to be relevant to the present case:

(a)     the underlying objectives set out in RDC O. 1A, r. 1;

(b)     the conduct of all the parties; and

(c)     whether a party has succeeded on part of his case, even if he has not been wholly successful.

56.With respect to the conduct of the parties, O. 62, r. 5(2) of RDC elaborates on the factors to be considered, which include, whether it was reasonable for a party to raise, pursue or contest a particular issue and the manner in which he has done so.

57.A successful party to an action should not be ordered to pay any part of the costs of the hearing simply because he has failed to prove all of the allegations made, unless he has acted improperly or unreasonably in raising issues and that the issue must be something so distinct and separate in itself that the decision of it constitutes an “event”[48].

58.The plaintiff in his written submission, in particular in Annexes 1 and 2 (“General survey of pleadings and evidence”), set out a lot of details of the proceedings.  I do not find that useful.  I am mindful of the apposite remarks of Deputy High Court Judge Marlene Ng (as she then was) in Lam Po Yee & anor v. Dr Chan Yee Shing aka Dr Chan Yee Shing Alvin[49],

“... in an application for variation of costs order nisi, it is inappropriate to call upon the court to revisit all aspects of the litigation and conduct a minute fact-finding exercise to determine the rights and wrongs of all aspects of the conduct of the litigation. Such approach would only add unnecessarily to costs.”

59.In my view, it would not be right nor necessary to undertake an arithmetic exercise by working out how much time and efforts had been spent by the Court and the parties in handling each and every issue or aspect of the case.

60.Suffice to say, Issues 5 and 6, i.e. the plaintiff’s claims for his contributions towards various properties of the business and those under the bonus saving agreement between the parties, for which the plaintiff failed to prove his case, appear to me to be distinct and separate from the rest of the controversies in this case.  More importantly, those two issues were far from straightforward as the plaintiff sought to rely on alternative bases of implied terms and different forms of trust.  They clearly added a lot to the complexity of the case, as plenty of financial documents were produced, considerable time was taken up and counsel made lengthy factual and legal submissions in dealing with them.

61.I do not consider it reasonable for the plaintiff to raise and pursue Issues 5 and 6 in the manner in which he did.  In my view, such issues should not have been raised, or at least should not have been pursued in the scope or argued to the extent or with such complexity as the plaintiff did.  The plaintiff’s such conduct in the litigation in this case should be reflected in the relevant costs order and it is only just and fair to do so.

62.The plaintiff, in his written submission, submitted that he should recover all costs in DCCJ 3647/2014 or as a fallback position, 80% to 90% of the costs[50]. On the other hand, the defendant, in the written submission, whilst opposing this costs variation application, submitted that, even if the plaintiff’s case was to be taken to the highest, his awarded costs should not be more than 50%[51].

63.Having re-considered all the circumstances of the case, I am of the view that the plaintiff should be awarded costs for the action DCCJ 3647/2014 but they should be reduced by 50%, for the aforesaid reasons.

Disposal

64.To conclude, for this costs variation application under the Summons, I order that: -

(a)     the plaintiff be granted leave to apply out of time to vary the costs order nisi; and

(b)     the costs order nisi be varied and made absolute such that the defendant should pay the plaintiff 50% of the costs of the action DCCJ 3647/2014, with certificate for counsel, to be taxed if not agreed.

65.Finally, I have to deal with the costs of this costs variation application.  In essence, there are two applications, (a) application for leave to apply out of time to vary the costs order nisi and (b) application for variation of the costs order nisi.

66.For application (a), the general position is that costs of applications to extend time should be borne by the party applying[52], I see no reason to order the otherwise, and that means the plaintiff here should bear all the relevant costs.  For application (b), the plaintiff succeeded in the application for variation of the costs order nisi and therefore, as a general rule, should be entitled to the relevant costs.

67.Having considered all the circumstances in the round, I am of the view that the plaintiff’s entitlement to the costs under application (b) should be offset by his responsibility for the costs under application (a).  It is therefore fair to make an order nisi that there be no order as to costs for this costs variation application under the Summons and I so order.

Mr Jonathan Ah-Weng, instructed by So, Lung & Associates, for the plaintiff

Mr Lawrence Cheung and Mr Johnny Chan, instructed by T.K. Tsui & Co., for the defendant