Glory Sky Finance Ltd v. Chen Jianhua and Another
Read the full judgment text of HCMP 2482/2014 on BabelCite. This High Court CFI judgment was delivered on 31 August 2022.
1. This is the plaintiff’s (“P”) appeal against the decision of Master Hui (“Master”) dated 27 September 2021 (“Decision”) made in taxation proceedings in respect of the costs of P’s claim and the defendants’ (“Ds”) counterclaim.
Cited by 12 cases · Cites 7 cases
|
HCMP 2482/2014 [2022] HKCFI 2652 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO 2482 OF 2014
_________________________
________________________ Before: Deputy High Court Judge Suen SC in Chambers Date of Hearing: 12 May 2022 Date of Decision: 31 August 2022 _______________ D E C I S I O N _______________ A. INTRODUCTION 1.This is the plaintiff’s (“P”) appeal against the decision of Master Hui (“Master”) dated 27 September 2021 (“Decision”) made in taxation proceedings in respect of the costs of P’s claim and the defendants’ (“Ds”) counterclaim. 2.By the Decision, the Master dismissed P’s 3 Summonses with costs. Whilst P’s 3 Summonses seek various orders, they may be broadly summarised as follows:
3.I should also mention that P’s Notice of Appeal against the Decision (“NoA”), albeit dated 11 October 2021, was filed on 12 October 2021. As the time limit for P to appeal is 14 days from the date of the Decision, the NoA is 1 day late. Thus, P requires leave to appeal out of time. For such purpose, P has issued a Summons for leave to file the 3rd Affirmation of Ching Ming Yu (“Mr Ching”) to explain the delay. I grant leave for such 3rd Affirmation to be filed. 4.In my view, P’s delay is entirely avoidable. Indeed, P has been duly reminded by a reply letter from Ds’ solicitors dated 5 October 2021 that “any appeal should be made within the Court’s stipulated time limit”. That said, the delay is short (1 day) and there is no material prejudice to Ds. In Re Jagseer Singh[2022] HKCA 14, the Court of Appeal emphasised at §15 that, while a delay of 7 days may not be regarded as significant, the prospect of success of the intended appeal is important and the court will not grant extension for a hopeless appeal to be pursued. Therefore, whether leave is to be granted would, ultimately, turn on the prospect of success of P’s appeal. B. BRIEF BACKGROUND 5.P is a licensed money lender. Ds are husband and wife and tenants-in-common of a property at Grand Promenade, Tai Hong Street (“Property”). Ds are based in the Mainland. In gist, P’s claim is that it has made to Ds two loans secured by two charges on the Property in the total sum of HK$17,000,000, which loans Ds have defaulted in repayment. Ds claim in defence that they are victims of a fraud, that the borrowers were in fact not them but fraudsters who impersonated them, so that they should not be held responsible for the loans or the charges. Ds also counterclaim for declaratory relief and vacation of registrations of the two mortgages against the Property in the Land Registry. 6.Due to P’s regular flouting of peremptory orders, it was ordered by Deputy High Court Judge Keith Yeung SC (as he then was) on 11 May 2018 that, unless P pays the sum of HK$1,500,000 into court by 4pm on 18 May 2018, P’s claim be dismissed without further order. P did not pay such sum, and P’s claim was dismissed with costs on 18 May 2018. 7.Further, by the Order of Master Hui dated 19 July 2019, P’s Amended Reply and Defence to Counterclaim was struck out for non-compliance with the Order of Master Lui dated 26 June 2019, and judgment was entered against P on Ds’ counterclaim with costs. 8.On 12 August 2020, Ds filed the Notice of Commencement of Taxation (“NOCT”) which was served to P’s registered address under the cover of a letter from Ds’ solicitors dated 12 August 2020 (“12 Aug 2020 Letter”). Such registered address was provided to P by Mastercorp Services Limited (“Mastercorp”). 9.On 12 August 2020, Ds filed Ds’ Bill which was also served to P’s registered address, under the cover of the 12 Aug 2020 Letter. 10.P did not raise any objection to Ds’ Bill within the time limit by 17 September 2020. 11.On 23 September 2020, Ds filed the Application to Set a Bill Down for Taxation (“Setting Down Application”) which was served to P’s registered address under the cover of a letter from Ds’ solicitors dated 23 September 2020 (“23 Sept 2020 Letter”). A call-over hearing was fixed for 20 October 2020 at 11am. 12.On 20 October 2020, Master Hui allowed Ds’ Bill as drawn (except 2 items in Section C) in the absence of the parties (i.e. the Taxation Decision) and issued a Notice of Taxation Call-over Hearing to the parties on the same day informing them of the Taxation Decision. 13.P did not apply for review of the Taxation Decision within the time limit of 14 days by 3 November 2020. 14.On 6 November 2020, Ds’ solicitors wrote to P seeking the latter’s confirmation of its agreement to the taxed costs with breakdowns, in the total amount of HK$2,608,135.50. 15.On 9 November 2020, P’s solicitors wrote to Ds’ solicitors claiming that they have received instructions from P to participate in the taxation of the costs as claimed in Ds’ Bill. On the next day, P’s solicitors filed a Notice to Act. 16.On 11 November 2020, P filed the 1st Summons. 17.On 20 November 2020, P filed the 2nd Summons. 18.On 23 November 2020, Master Phoebe Man ordered that the 1st Summons be adjourned to be heard together with the 2nd Summons, scheduled for 12 January 2021 at 10:30am. 19.On 14 December 2020, notwithstanding the foregoing and pending the hearing of the 1st and 2nd Summonses, Master Hui issued the Allocatur in favour of Ds against P for the amount of HK$2,608.135.50. 20.On 5 January 2021, P filed the 3rd Summons, returnable on 12 January 2021 at 10:30am. 21.On 12 January 2021, Master Hui adjourned the hearing of P’s 3 Summonses for disposal on paper. He gave directions and granted stay of execution of the Allocatur pending the disposal of P’s 3 Summonses. 22.On 27 September 2021, Master Hui gave his ruling, dismissing P’s 3 Summonses with costs (i.e. the Decision). 23.On 12 October 2021, P filed the NoA, 1 day out of time. 24.On 3 December 2021, Master Hui summarily assessed the costs of P’s 3 Summonses at HK$42,000, payable forthwith by P to Ds. I understand that such assessed costs were eventually paid by P to Ds. C. SUMMARY OF THE PARTIES’ POSITION 25.P relies on the Submissions made to the Master. 26.In gist, P claims that, due to miscommunication, P only picked up the 12 Aug 2020 Letter from Mastercorp in November 2020 (see Affirmation of Mr Ching, §7), and P was not aware of the 23 Sept 2020 Letter (see Affirmation of Wong Kwun Ho (“Mr Wong”), §§4-7). As a result, P was not aware of the NOCT, Ds’ Bill and the Setting Down Application at the time. This is the reason why no list of objections was ever filed by P. 27.P prays in aid the decision of Saw J in A Solicitors v Law Society of Hong Kong [2007] 4 HKC 165. In that case, the appellant alleged that, due to misunderstanding, he did not appear in the taxation call-over hearing and in the absence of objection, one of the bills was taxed as drawn. The appellant further requested the master to withhold the approval of the allocatur, but the master indicated that the application should be made by inter-partes summons within 14 days of his order and eventually sealed the allocatur. The appellant later took out an inter-partes summons seeking leave to review but the master dismissed such application with costs. Saw J allowed the appeal, and attached great weight to the fact that the appellant was ignorant of the taxation proceedings at the time (at §§22, 25-27). 28.Whilst P acknowledges that Saw J’s decision is pre-Civil Justice Reform (“CJR”), P argues that his decision, particularly on what constitutes “good reasons”, remains good law after the CJR. 29.P also relies on the decision of Deputy High Court Judge Lok (as he then was) in Lie Han Ji v The Registrar of Hong Kong Institute of Certified Public Accountants, CACV 265/2009 (7 October 2013), where he opined that if the paying party has had the opportunity to argue his objections in the taxation hearing, he has to establish a strong reason before the master would exercise the discretion under O.62 r.16(1)(b) to extend the time for review after the issuance of the allocatur. P contends that, since P did not have the opportunity to argue his objections in the taxation hearing, no such “strong reason” need to be established. P also submitted that time should be extended having regard to (1) the length of the delay; (2) the reasons for the delay; (3) the chances of the review succeeding if time is extended; and (4) the degree of prejudice to Ds if time is extended. 30.In addition, P now argues that the Master erred in law in allowing Ds’ Bill as drawn because, even in the absence of any objections from the paying party for whatever reasons, the Master should still exercise its discretion judicially, to tax each of the items of Ds’ Bill using the “necessary or proper” test applicable in a party and party taxation. 31.On the other hand, Ds emphasise that P has regularly flouted court orders and procedures, since the commencement of action 8 years ago in 2014. Further, Ds contend that P’s appeal should be dismissed on 3 main grounds:
D. ANALYSIS
32.In my view, if P allegedly had no notice of the taxation proceedings, it was due to P’s neglect, carelessness or oversight. 33.It is not in dispute that the NOCT and Ds’ Bill were duly served on P at its registered address on 12 August 2020. The NOCT specifically provided that P was “required to file and serve a list of objections within 28 days of the service” of the NOCT. It further provided, inter alia, that: -
34.P’s case is that it did not have notice of the above at the relevant times. It is however clear that P acted with neglect. According to P’s own evidence in Mr Ching’s Affirmation at §7: -
35.P has not explained when it was informed by Mastercorp of the 12 Aug 2020 Letter. Irrespective of the foregoing, there is no reasonable excuse why P did not act promptly to pick up the 12 Aug 2020 Letter, once it was informed by Mastercorp of the same. 36.Indeed, if Mastercorp had taken the trouble to inform P that a letter was received, it seems likely that it would have at least told P that it was a letter from a solicitors’ firm (which represent Ds). In these circumstances, P must be expected to act expeditiously to pick up the letter as it was sent by a law firm in an existing legal action in which P took part. Having been ordered by the Court to pay costs to Ds, P must have expected Ds to commence the taxation proceedings at some point in time. Receipt of a letter from Ds’ solicitors should have alerted P, and if P chose not to pick up such letter, P was indeed acting recklessly or turning a blind eye to the real possibility of taxation proceedings. 37.In the circumstances, I accept the submission of Mr Ng for Ds that there is no alleged miscommunication or misunderstanding of the service of the NOCT, because P ignored the letter which contained the NOCT despite being informed of the service of the same. P’s failure to raise objections to Ds’ Bill is attributable to P’s own carelessness and oversight, if not recklessness. 38.Further, it is also not in dispute that the 23 Sept Letter containing the Setting Down Application was duly served on P at its registered address. On P’s evidence, the letter containing the Application “had indeed been received” at its registered address but “due to miscommunication, the Plaintiff was not informed of the receipt of the letter before 20th October 2020”: Mr Wong’s Affirmation, §3. P has not explained what precisely the miscommunication was. In any case, P must be under a duty to communicate properly with Mastercorp to ensure that it would receive any letter served on P’s registered address. That P did not receive such letter also points to P’s neglect. 39.All in all, there was plainly neglect, carelessness or oversight on the part of P. There can be no denial that P ought to have followed up with Mastercorp and acted diligently and that had P done so, P should have acquired notice of the taxation proceedings.
40.Apart from neglect, Ds also contend that P’s explanation should be disbelieved. 41.Ds rely on the fact that P did receive and was fully aware of the letter from Inland Revenue Department on Profits Tax (“IRD Letter”) issued on 12 August 2020, the same day when the NOCT was served. Ds contend that it is inherently improbable that P was aware of the IRD Letter but not the NOCT. 42.Further, Ds argue that the excuse given in P’s affirmations are mere assertions not supported by contemporaneous documentary evidence. Indeed, as noted by the Master, “there is no explanation as to why there was no record of having received the Papers on the one hand and P was somehow informed of having received the same on the other hand”. Ds further submit that P’s explanation must be viewed against P’s long history of regularly flouting court orders and procedure. 43.I can see the force of Ds’ submission. To some extent, this is borne out by my observations above that, despite being informed of the receipt of the 12 Aug 2020 Letter, P (on P’s own evidence) chose not to pick up the same until November 2020, thereby acting recklessly or turning a blind eye to the real possibility of taxation proceedings. 44.Having said that, the suggestion that P in fact received and considered the contents of the 12 Aug 2020 Letter and the 23 Sept 2020 Letter, but deliberately chose not to participate in the taxation and told blatant lies now to cover up the same, constitutes a serious allegation. It amounts to an accusation that P’s deponents were lying on oath. For present purposes, I consider it sufficient to proceed on the basis that P acted recklessly or negligently, without expressing any conclusive view as to whether P deliberately disregarded court documents or orders.
45.For present purposes, there are a few statutory provisions which are relevant. 46.First of all, a party may apply to a taxing master for review under O 62 r 33 of RHC which provides as follows:
47.Although O 62 r 33(2) provides that “no application under this rule for review of a decision in respect of any item may be made after the signing of the taxing master’s final certificate dealing with that item”, this is not absolute, and must be read in conjunction with O 62 r 16 which provides as follows:
48.Therefore, notwithstanding the issuance of an allocator, the Court still has power to set aside the allocatur and extend the time limit for review beyond the date of the allocatur. It may be noted that the above provisions exist before the CJR, and they do not expressly refer to the need to demonstrate “good reasons”. Of course, the position could well be different after the CJR, as these provisions should now be read in conjunction with post-CJR provisions. 49.Second, there is a new post-CJR provision which empowers the court to set aside an allocatur. This is O 62 r 17A which provides as follows:
50.Unlike pre-CJR provisions, O 62 r 17A(3) requires “good reasons” before a taxing master may set aside an allocatur. 51.Third, there is also a new post-CJR provision which empowers the court to set aside a taxing decision. This is O 62 r 17B which provides as follows:
52.Again, O 62 r 17B requires “good reasons” before a taxing master may set aside or vary his taxing decision. 53.In the present case, given that the Allocatur was already issued, prima facie P must establish “good reasons” in order to persuade the court to invoke the power under O 62 r 17A(3). 54.On behalf of P, Mr Ching submits that, even putting aside the circumstances concerning P’s notice of the taxation proceedings, there are good reasons to set aside the Allocatur because the Master should not have issued it in view of pending applications for extension of time of review and setting aside of the Taxation Decision (i.e. the 1st and 2nd Summons). 55.There is some force in Mr Ching’s argument. O 62 r 17A(2) of RHC provides that “A taxing master shall not issue a final certificate unless the period within which an application for review of his decision may be made under rule 33(2) has expired”. The clear legislative intent is that a final certificate or allocatur should not be issued, if the time limit for seeking review has not yet lapsed. In the present case, it is true that the time limit of 14 days under O 62 r.33(2) has already expired. However, P has taken out the 1st Summons to extend time for review which, if successful, would culminate in an extant application for review. As a matter of principle, the court should not issue a final certificate in these circumstances, particularly if the legal consequence of doing so is to impose a more stringent threshold for any prospective challenge or review, despite the fact that a pending application for extension is yet to be heard. In short, the court should not prejudge the outcome of P’s application for extension of time under the 1st Summons. 56.In response, Mr Ng for Ds rely on the dicta of Lam VP (as Lam PJ then was) in Global Medical Solutions Hong Kong Ltd v Ma Man Lung, HCMP 717/2017 (12 June 2017) at §11: “[a]fter the issue of the Allocatur, there cannot be any review. A review is only possible if the master deems fit to set aside the Allocatur under Order 62 Rule 16(1)(b). And Order 62 Rule 17A(3) provides that the taxing master may only set aside the Allocatur for good reasons.” With respect, this is not a sufficient answer because, if the Master should not have issued the Allocatur pending the determination of an application for extension of time to review, that could well constitute “good reasons” to set aside the Allocatur. 57.Having said that, on reflection, whether P could demonstrate “good reasons” to set aside the Allocatur in this case seems to be academic because, irrespective of that, it remains necessary for P to establish “good reasons” to persuade the court to invoke the powers under O 62 r 17B to set aside the underlying Taxation Decision. Another way of putting is that, if there are no “good reasons” to set aside the underlying Taxation Decision to which the Allocatur relates, it would be pointless (and there are thus no “good reasons” ultimately) to set aside the Allocatur. 58.In this regard, Mr Ching for P submits that it is not strictly necessary for P to rely on O 62 r 17B and, insofar as P seeks extension of time under O 62 r 16, “good reasons” need not be demonstrated. In my view, irrespective of whether this may be the position pre-CJR (for which I need not express any conclusive view), the court should construe O 62 r 16 in conjunction with the new provisions of O 62 rr 17A & 17B after the CJR. It is trite that (i) the court should read all of the relevant provisions together and in the context of whole statute as a purposive unity in its appropriate legal and social setting: Medical Council of Hong Kong v Chow Shiu Shek (2000) 3 HKCFAR 144 at 154B-C; and (ii) the context of a statutory provision should be taken in its widest sense and certainly includes the other provisions of the statute and the existing state of the law: Town Planning Board v Society for the Protection of the Harbour Limited (2004) 7 HKCFAR 1 at 13I-J. 59.Therefore, at least in circumstances where an extension of time for review, if granted, would achieve a similar effect as the setting aside or variation of a taxing decision, “good reasons” must be demonstrated by an applicant. It could not have been the legislative intention that in these circumstances, an applicant can cherry pick a particular route, thereby enjoying a different or more lenient test. Moreover, the statutory provisions ought to be construed in a coherent manner, and not in a way which would render other statutory provisions (e.g. O 62 r 17B) superfluous or nugatory. In the present case, the purpose of the 1st Summons is to enable the court to re-open the matter and, in effect, set aside the Taxing Decision, such that P could be allowed to submit a list of objections to Ds’ Bill for the court to carry out the taxation exercise afresh. Therefore, it is necessary for P to establish “good reasons”. 60.If, however, I am wrong to conclude that P has to establish “good reasons”, it would remain necessary for P to persuade the court that extension of time should be granted having regard to the following factors: (1) the length of the delay; (2) the reasons for the delay; (3) the chances of the review succeeding if time is extended; and (4) the degree of prejudice to Ds if time is extended.
61.In view of the above, it is necessary for P to establish “good reasons” for setting aside the Taxation Decision. 62.It is not in dispute that O 62 rr 17A & 17B of the RHC were added under the CJR: see Hong Kong Civil Procedure 2022, §§62/17A/1, 62/17B/1. These rules should be construed in line with the underlying objectives provided in O.1A r.1 of the RHC, namely:
63.Therefore, among others, the underlying objectives include (i) increasing cost-effectiveness; (ii) ensuring that a case is dealt with as expeditiously as practicable; (iii) promoting a sense of reasonable proportion and procedural economy; (iv) ensuring fairness between the parties; and (v) ensuring fair distribution of court resources. 64.Given that O 62 r 17B expressly refers to the situation where a party fails to raise any objection to a bill of costs or to appear at a taxation hearing, it seems clear that “good reasons” must be established in the context of such failure of the party. In line with the underlying objectives set out above, it seems to me that there would be good reasons to re-open the matter if a party’s failure to raise any objection is not attributable to the party’s fault, or is caused by factors beyond the party’s control. The corollary is that “good reasons” should not, in principle, cover a party’s failure to raise any objection due to such party’s neglect, carelessness or oversight (let alone recklessness). Should it be otherwise, then almost every taxing decision made in default of raising objections to a bill of costs by a party may be set aside and re-argued afresh. This cannot be the case, as it runs contrary to the purposes of the provision and the underlying objectives of the RHC to increase cost-effectiveness, deal with a case expeditiously, promote procedural economy, ensure fairness between parties, and fairly distribute judicial resources. 65.In line with the foregoing, as submitted by Mr Ng for Ds, in considering what constitute “good reasons” in the context of O 62 r 17B, the court may draw analogy from other rules in the RHC. For instance: -
66.In this regard, I do not think that the decision of A Solicitor points to the adoption of a different test post-CJR. 67.First, A Solicitor was decided before the CJR, and did not concern O 62, rr 17A & 17B of the RHC, which were added after the CJR. 68.Second, under O 62, rr 17A & 17B of the RHC, the exercise of discretion to set aside a taxation decision or allocatur requires the presence of “good reasons”. There was no such requirement when A Solicitor was decided. Therefore, the decision could not be read as providing guidance on what constituted “good reasons”. 69.Third, A Solicitor is distinguishable from the present case on the facts. In that case, Saw J did express some reservations on the appellant’s account at §27: “There is no doubt in my mind that the appellant has not conducted himself with expedition and that I have serious reservations as to the circumstance surrounding the non-appearance on the date the bill was taxed.”. However, Saw J has not expressed any conclusive view, nor did he reject the appellant’s explanation. It seems to me that, whilst having serious reservations, Saw J was prepared to give the appellant the benefit of doubt and proceeded on the basis that the appellant’s non-appearance was attributable to a misunderstanding. In contrast, in the present case, there can be no question that P acted with neglect (if not recklessness), even based on P’s evidence alone. There was no misunderstanding or miscommunication as such in respect of the service of the NOCT. It follows that, the mere fact that Saw J saw fit to grant extension of time on the facts in A Solicitor does not, without more, mean that there are “good reasons” to do so on the facts of the present case. 70.On the other hand, the decision of Lie Han Ji seems to bring in some uncertainty. In particular, Mr Ching for P relies on the dicta of Deputy High Court Judge Lok (as Lok J then was) at §18, where he opined that “if the paying party has had the opportunity to argue his objections in the taxation hearing, he has to establish a strong reason before the master would exercise the discretion under r 16(1)(b) to extend the time for review after the issuance of the allocatur”. It also appears that in considering the application for extension of time for review before him, he was essentially applying the principles for extension of time for appealing by considering the 4 factors set out in Hong Kong Civil Procedureat §54/4/9 (see similarly Tang Chai On v Tang Sing Ki[2016] 5 HKLRD 104 at §9). 71.On reflection, I do not think Lie Han Ji would affect my analysis above. 72.First of all, Deputy High Court Judge Lok (as Lok J then was) merely suggested that “strong reason” has to be shown if the paying party has had the opportunity to argue his objections in the taxation hearing. This seems to be a more stringent threshold than “good reasons”. Hence, his dicta could not be taken to mean that, where the paying party did not have the opportunity to argue his objections in the taxation hearing, “good reasons” (as opposed to “strong reasons”) need not be established at all. Indeed, this is unlikely to be his view because it would contradict the express language of O 62 r 17B of the RHC which requires “good reasons” to be shown, even in situations where “a party entitled to be heard on taxation fails to raise any objection to a bill of costs or to appear at a hearing set down under rule 21B(4) or 21C(1)”. 73.Second, whilst Deputy High Court Judge Lok (as Lok J then was) has considered the 4 factors normally taken into account in deciding whether to grant an extension of time for appealing, he did make it clear at the outset at §19 that “It is not possible for the court to lay down any rigid guideline as to what amounts to a strong reason, and the master has to consider the facts and merits of each individual case in determining whether to extend the time for review after the issuance of the allocatur”. Hence, he did not purport to lay down any definitive test as to what amounts to a “strong reason” (and similarly as to what amounts to “good reasons”). 74.Accordingly, proceeding on the premise that “good reasons” do not cover a party’s neglect, carelessness and oversight (let alone recklessness) in failing to raise objections and apply for review within time, I come to the conclusion that P has failed to demonstrate “good reasons” to set aside or vary the Taxation Decision under O 62 r 17B of the RHC. For such reasons, I also consider it inappropriate to grant extension of time to P under O 62 r 16 of the RHC. 75.Further and in any event, I would have refused time extension upon considering the 4 factors which are normally taken into account in in deciding whether to grant an extension of time for appealing. This is particularly apposite in the present because, not only does P require extension of time for seeking review, P also requires extension of time for pursuing the present appeal against the Decision of the Master. 76.First, the 14-day time limit for P to apply for review of the Taxation Decision lapsed on 3 November 2020. As the 1st Summons was taken out on 11 November 2020, there was a delay of 8 days. Whilst the delay is not excessive, it cannot be said to be insubstantial either. 77.Second, I do not accept there is satisfactory explanation of the delay in seeking review. The delay on the part of P is attributed to its neglect, carelessness or oversight (if not recklessness). In addition, there is also no satisfactory explanation of the delay (albeit of 1 day only) in filing the NoA. As explained above, such delay is entirely avoidable. 78.Third, as to the merits of the review, a key argument advanced by P is that the Master erred in law in allowing Ds’ Bill as drawn because, even in the absence of any objections from the paying party for whatever reasons, the Master should still exercise its discretion judicially, to tax each of the items of Ds’ Bill using the “necessary or proper” test applicable in a party and party taxation. Whilst I would deal with such argument in the next section, it suffices to say that, in the absence of such objections, Ds’ Bill prima facie stands and the Master could not be faulted for allowing Ds’ Bill as drawn in accordance with practice direction. 79.P further argues that, “if there are objections filed, the court would NOT normally allow the full amounts of the costs claimed, but rather, and more likely, that, a certain percentage thereof, ranging from 50%-80% on average, would be taxed off, depending on the individual bill. As such, the chance of success would be high. If only 20 % had been taxed off, the amount that would have been deducted, or saved, would be more than HK$500,000.” 80.Whilst this may be an attractive proposition, I do not accept this is how the matter should be approached. If P were right, then whenever a party entitled to be heard on taxation fails to raise any objection to a bill of costs, such party could almost invariably establish a high chance of success of review because, had a list of objections been lodged, it is almost certain that some deductions would have been made by the court in the course of taxation. On such reading, the paying party can simply ignore a NOCT and delay the taxation proceedings, and apply subsequently for extension of time to review, on the ground that the paying party would necessarily has high chance of success of review. This seems to run contrary to the underlying objectives of the RHC. Therefore, unless P can point to any error of law or facts in the Taxation Decision, I do not consider it sufficient for P to merely point to the likelihood of taxing down Ds’ Bill had P lodged a list of objections, because it wrongly presupposes that P was indeed entitled to put in such list of objections afresh. 81.Alternatively, if, contrary to my view, merits can be shown simply on the basis of likelihood of taxing down Ds’ Bill had P lodged a list of objections, this would reinforce my primary view that the court should not merely consider the 4 factors normally taken into account in deciding whether to grant an extension of time for appealing. Instead, the Applicant has to establish “good reasons” as required under O 62 rr 17A & 17B of the RHC. 82.Fourth, I am of the view that material prejudice will be caused to Ds if the application is granted. The Taxation Decision and the Allocatur were made on 20 October 2020 and 14 December 2020 respectively. As a result of P’s application and appeal, there has been substantial delay in the enforcement of the Allocatur against P. If the appeal is allowed and P is given leave to lodge a list of objections to Ds’ Bill, there will be further delay which is likely to be substantial, as the taxation proceedings would take time to complete. Ds may have to wait for a long time for the recovery of their costs which would not be fair: see similarly Lie Han Ji at §29. 83.Further, it is significant that P does not purport to be in a position to pay Ds’ costs. To the contrary, it is argued in P’s submissions filed before the Master (which is adopted by P in this appeal) as follows:
84.If it is P’s stance that it is not in a position to make any payment into court of a percentage of the total costs of HK$2,608,135.50 claimed by Ds, it must follow that P is not in a position to pay the entirety of such total costs to Ds. The position may get worse given that P is running at substantial losses. To say the least, there is a real likelihood that P is or will become insolvent, due to P’s inability to pay Ds’ costs. In these circumstances, any delay in enforcement would likely prejudice the position of Ds, including the possibility of presenting winding-up petition against P expeditiously, as well as the prospects of recovery against P by taking enforcement actions as early as practicable. Any further delay could prejudice the recovery by Ds due to P’s running at substantial losses and the depletion of P’s assets as time goes by. 85.Moreover, if P is allowed to re-open the taxation process, substantial further costs will be incurred for the review hearing. Hence, Ds would be exposed to additional costs, which Ds may not recover against P in the light of the poor financial position of P as alleged. 86.For completeness, although the relevant factors focus on the prejudice to the respondent, I would also consider and balance this against the prejudice which may be suffered by P. At first blush, it may be said that P would also suffer substantial prejudice if it is deprived of an opportunity to lodge a list of objections to Ds’ Bill which could potentially reduce the total amount substantially upon taxation. Nevertheless, as I have pointed out to Mr Ching during oral submissions, given P’s position that it is unable to pay even a proportion (say 50%) of the total costs claimed by Ds, it does not seem to matter that much to P if, at the end of the day, it need only pay a substantially taxed down amount of costs. 87.For all these reasons, I am not minded to grant time extension to P under the 1st Summons in any event, even if (contrary to my view) it is not necessary for P to establish “good reasons” for setting aside the Taxation Decision (if not also “good reasons” for setting aside the Allocatur).
88.P argues that the Master erred in law in allowing Ds’ Bill as drawn because, even in the absence of any objections from the paying party for whatever reasons, the Master should still exercise its discretion judicially, to tax each of the items of Ds’ Bill using the “necessary or proper” test applicable in a party and party taxation. 89.In my view, P’s argument is misconceived for the following reasons. 90.First, the Master was entitled to allow Ds’ Bill as drawn if he is satisfied that (i) the NOCT and Ds’ Bill have been duly served and (ii) P has failed to file a list of objections: see Practice Direction 14.3, §26(1) and O.62 r.24(1) of the RHC. 91.Second, the Master’s approach cannot be faulted. In the absence of any objections raised, the items in Ds’ Bill prima facie stand and there is no reason why the Master should go through the files in details to scrutinize each and every item in Ds’ Bill. 92.Third, it is well established that the Court would not interfere with the exercise of discretion by the Master without exceptional circumstances: Re Wing Fai Construction Co Ltd (Costs: Taxation) (2012) 15 HKCFAR 657 at §16, per Chan PJ.
93.In the circumstances, like the Master, I would also dismiss P’s 1st, 2nd and 3rd Summonses. Therefore, it is not strictly necessary for me to consider whether conditions should be imposed. 94.For completeness, even if I do not dismiss P’s 3 Summonses, I would have imposed conditions against P. 95.To start with, it is clear that O 62 rr 17A & 17B empower the court to set aside the Allocatur and the Taxing Decision “on such terms as [the court] thinks fit”. In a similar vein, O 62 r 16(2) provides that a taxing master may from time to time extend the period specified by an order of the court “on such terms (if any) as he thinks fit”. Whilst it may be argued that the 14-day time limit for review is not a period specified by an order of the court (as it is specified by O 62 r 33(2) instead), to the extent the court grants extension of time by setting aside the Allocatur under O 62 r 16(1)(b), the court must have power to set aside the Allocatur on such terms as the court thinks fit. There can thus be no dispute as to the Court’s jurisdiction to impose terms or conditions. 96.In view of the prejudice which would be caused to Ds in acceding to P’s Summonses, even if I am to allow P’s Summonses, I would be minded to impose the condition of payment into court by P of at least 50% of the total costs claimed by Ds. It appears to me that, on a party and party basis, it would be fanciful to suggest that P could expect more than 50% of the costs to be taxed off. As such, even if P is to succeed in having Ds’ costs substantially taxed off, it seems reasonable to say that P would at least have to pay 50% (if not more) of Ds’ costs. To address the prejudice of non-recovery of costs caused by any further delay, it seems fair and just to require P to make payment into court (say within 28 days) of at least such sum (which P is obliged to pay in any case) as a condition for setting aside the Taxation Decision and the Allocatur, and extending time for P to review. E. CONCLUSION 97.For all these reasons, I refused to grant leave to P to appeal against the Decision out of time. Alternatively, even if leave is to be granted, I would have dismissed P’s appeal. 98.I further order that costs of the appeal (including the costs of P’s application for leave to appeal out of time) be paid by P to Ds. Having considered Ds’ Statement of Costs for Summary Assessment and P’s objections thereto, it appears to me that the costs claimed on account of the solicitors are excessive particularly because (i) counsel has been engaged and (ii) the arguments advanced are similar to those put forth before the Master. On a broad-brushed basis, I summarily assessed the costs payable by P to Ds at HK$120,000. 99.It remains for me to thank Mr Ching for P and Mr Ng for Ds, for their submissions and assistance rendered to the court.
Mr Ching Ming Yu of Ching & Co., for the plaintiff Mr Michael Ng, instructed by Holman Fenwick Willan, for the 1st and 2nd defendants [1] These are standard directions contained in Practice Direction 14.3, §21 |
Cases cited in this judgment
Other judgments that cite this case
Further hearings and rulings under HCMP 2482/2014