Lee Chi Hang and Others v. Well Done Garment Factory Ltd and Another

HCA 227/2012, HCA 464/2013, HCA 465/2013 (Consolidated) &
HCA 913/2013
[2021] HKCFI 2288

HCA 227/2012, HCA 464/2013, HCA 465/2013 (Consolidated)

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 227 OF 2012

(On transfer from DCCJ No 3995 of 2009)

ACTION NO 464 OF 2013

(On transfer from DCCJ No 928 of 2011)

ACTION NO 465 OF 2013

(On transfer from DCCJ No 4775 of 2011)

________________________

HCA 913/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 913 OF 2013

Before: Deputy High Court Judge MK Liu (Paper Disposal)

Date of Written Submissions of Plaintiffs by Original Action and Defendants by Counterclaim in HCA 227/2012 and Plaintiffs in HCA 913/2013: 28 July 2021 & 5 August 2021

Date of Written Submissions of Defendants by Original Action and Plaintiffs by Counterclaim in HCA 227/2012 and Defendants in HCA 913/2013: 2 August 2021

Date of Decision:  9 August 2021

________________________

DECISION

________________________

1.On 25 June 2021, I handed down a judgment (“the Judgment”), in which I ruled in favour of Ps and against Ds on all issues save and except the Diversion. I made a costs order nisi that 95% of the costs (including all costs reserved, if any) of these proceedings be paid by Ps to Ds, to be taxed if not agreed (“the Costs Order Nisi”).

2.On 9 July 2021, Ps took out a summons (“the Summons”) for an order to vary the percentage in the Costs Order Nisi from 95% to 85%.  On 16 July 2021, I directed that the Summons be determined on the papers without an oral hearing.  Pursuant to those directions, the parties have provided me their respective written submissions and I have considered the same. This decision should be read together with the Judgment.  For ease of reference, the abbreviations used in the Judgment are adopted herein.

3.In considering an application for varying a costs order nisi, everything must be based upon the rulings made in the main judgment.  The application is not an opportunity for rearguing the matters which have already been determined by the court in the main judgment.  See Hong Kong Civil Procedure 2021, Volume 1,§42/5B/1.

4.Mr Ng for Ps put forward the following points in support of the proposed variation:

(1)  There are 4 main matters or claims in HCA 913/2013, namely, (a) the 1996 Allotment; (b) the 2001 Transfer; (c) the Diversion; and (d) the golf club licences.  Ps succeeded in one of them, ie the Diversion. From a holistic point of view, P should be entitled to at least 25% of the costs in HCA 913/2013.

(2)  Although the New Co, but not WYW, conceded the Diversion claim by the letter dated 14 April 2021, most of the costs had already been incurred by that time.

(3)  The court should take into account the fact that WYW and the New Co did not concede the Diversion claim until before trial even though it had no defence.  If the New Co had not resisted the claim, costs would have been saved.

(4)  Since Ps succeeded in their claim against the New Co, there is no basis for Ps to bear the costs of the New Co.

(5)  Taking a broad-brush approach, it should only be fair that Ps should only be required to bear 85% of the costs of HCA 913/2013 and the Loans Action.

5.With respect, I am unable to accept these submissions.  I agree with Mr Lam for Ds that the proposed variation should be refused.

(1)  As said in [162] of the Judgments, Ds succeeded on all issued save and except the Diversion.  In these circumstances, Ds should get all the costs of these proceedings subject to a discount reflecting Ps’ success on the Diversion issue.  How much discount should be given to Ps depends upon how much time has been spent on the Diversion issue.

(2)  In [64] of Ds’ Defence and Counterclaim dated 11 February 2015 in HCA 913/2013, it is admitted that the New Co was running the business of Well Done.

(3)  By Ds’ solicitors’ letter dated 14 April 2021, Ds have told Ps that:

“…… in respect of the claim against [the New Co], [the New Co] confirms that the business of [Well Done] has been run by [the New Co] and that it has been holding any such business and its profit on trust for Well Done and is willing to account for the same to [Well Done].”

(4)  At the trial, Ds accepted that WYW was the beneficial owner of the New Co.

(5)  Mr Lam for Ds expressly conceded to the Diversion claim in the trial.  The time spent on the Diversion issue in the trial is minimal.

(6)  In my view, most of time in these proceedings and nearly all the time in the trial have been spent on issues on which Ps have failed.  The 5% discount given to Ps as set out in the Costs Order Nisi is fair and just.

(7)  As to the point that Ps should not be required to pay costs to the New Co, I agree with Mr Lam that this point cannot assist Ps.

(a)  If one is to strictly differentiate between the various Ds, the result should be that: (i) the New Co should pay P’s costs of the Diversion claim; (ii) Ps should pay all of the costs of the other defendants, since the other defendants are wholly successful against Ps on all issues.  This would not improve Ps’ position on costs.

(b)  The reality is that all the defendants instructed the same legal team, and that the New Co would not have a separate set of costs. Taking a broad-brush approach, it is justified to make an overall order in respect of all the defendants.

(c)  Indeed, the variation sought by Ps still says that Ps should pay 85% of all the Ds’ costs.  In other words, Ps in fact accept that such an overall order should be made.

(8)  I am not satisfied that any reasonable ground has been shown in support of the proposed variation.  Ps’ application must be refused.

6.Mr Ng further submits that since Ps are now appealing against the Judgment in the Loans Action (but there is no appeal in HCA 913/2013), for the sake of clarity and for the purpose of facilitating taxation, there should be one costs order in the Loans Action, and another costs order in HCA 913/2013. Mr Ng suggests that in each costs order, Ds should only be allowed to have 85% of the costs.

7.Strictly speaking, Mr Ng’s further submissions are not covered by the Summons.  However, it seems that Mr Lam does not object that these submissions be considered by the court, and Mr Lam has addressed these submissions in his written submissions.

8.In my view, there is no need to make separate costs orders as suggested by Mr Ng.  I have already said that I refused to accept the 85% proposed by Mr Ng.  To tackle the contingency that Ps may succeed in their appeal against the Judgment in the Loans Action, I would specify the following:

(1)  65% of the time in these proceedings was spent on the issues on which Ds succeeded in HCA 913/2013;

(2)  5% of the time in these proceedings was spent on the Diversion issue in HCA 913/2013;

(3)  30% of the time in these proceedings was spent on the issues in the Loans Action.

With these specifications, taxation can be easily carried out, no matter whether Ps’ appeal in the Loans Action is successful or not.

9.I dismiss the Summons and make absolute the Costs Order Nisi.  Costs of the Summons should follow the event and be paid by Ps to Ds forthwith.  Those costs are summarily assessed at HK$20,000.

10.I thank counsel for the assistance rendered to the court.

Written submissions of Mr Tong Ng, instructed by JWC Solicitors, for the plaintiffs (by Original Action) and the defendants (by Counterclaim) in HCA 227/2012 and plaintiffs in HCA 913/2013

Written submissions of Mr Keith Lam, instructed by Tony Kan & Co, for the defendants (by Original Action) and the plaintiffs (by Counterclaim) in HCA 227/2012 and defendants in HCA 913/2013