Re Chui Tak Keung Duncan

HCBI 2/2021

[2022] HKCFI 3018

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS

INTERIM ORDER APPLICATION NO. 2 OF 2021

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Before:  Hon Cheng J in Chambers (by Paper Disposal)

Date of Debtor’s Submissions:  13 April 2022

Date of Zhongcai’s Submissions:  5 May 2022

Date of Debtor’s Reply Submissions:  19 May 2022

Date of Decision:  30 September 2022

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D E C I S I O N

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A.  INTRODUCTION

1.Mr Chui has applied to vary the costs order nisi made in paragraph 56 of my decision of 8 April 2022 (“the Decision”), in which I had ordered that he pay 40% of the costs of and incidental to the Discovery Summons.[1] He says that he should at most be ordered to pay 10% of the costs.

2.Mr Chui advances the following arguments.

2.1  First, he says that Zhongcai was only successful at obtaining limited discovery. Of the ten exhibits sought, it obtained disclosure of only some part of four of them. The costs which he has been ordered to pay are therefore disproportionate to the extent of the discovery allowed.

2.2  Second, he relies on “without prejudice” correspondence exchanged with Zhongcai prior to the hearing. He says that had Zhongcai accepted his proposals, it would have done better than litigating the matter.

3.There is no dispute as to the applicable principles.

3.1  The court has a wide discretion to deal with costs of interlocutory proceedings under RHC O.62 r.3(2A). The matters to be taken into account in exercising that discretion are set out in O.62 r.5 and include the underlying objectives in O.1A r.1, any written offer expressed to be “without prejudice save as to costs”, the conduct of all the parties, and whether a party has succeeded on part of his case, even if he has not been wholly successful.

3.2  The court may deprive a successful part of the whole or part of his costs because he caused a significant increase in the length or costs of the proceedings by raising issues on which he did not succeed. On the other hand, an “issue-based” costs order must not be so readily made as to undermine the utility of the general rule that costs follow the event and to lead to the proliferation of unwarranted costs disputes. The question of costs ultimately depends heavily on the facts and circumstances of each case. See Momin Lok v Hospital Authority [2021] HKCA 1319 at [10].

4.I deal first with the “without prejudice” correspondence. Mr Chui says that he had offered to let Zhongcai see all the documents being sought, on a “without prejudice” basis, and to explain to them why the redacted information was irrelevant or unnecessary; and that if, despite such an explanation, Zhongcai had still wanted to have unredacted copies, he would have provided the same information which was ultimately ordered to be provided in paragraph 55 of the Decision.

5.However, the offer to provide unredacted copies was on the basis that they should bear a revised redaction “as agreed between [Mr Chui and Zhongcai]”. In other words, whether or not unredacted copies would be provided would have been subject to Mr Chui’s decision. Whether or not Mr Chui would have agreed to provide any unredacted copies is far from certain, given that his stance was that the redacted parts were irrelevant and unnecessary. Mr Chui says in his reply submissions that he would have provided the documents had Zhongcai so requested, notwithstanding his stance that they were irrelevant and unnecessary. However, I note that in the course of the “without prejudice” correspondence, Mr Chui rejected Zhongcai’s proposal that documents be provided if so requested, save where Mr Chui agreed to do so and with any revised redactions he considered necessary.

6.I therefore do not agree that Zhongcai would have put itself in a better position by agreeing to Mr Chui’s proposal. Furthermore, the proposal would not have resolved the issues between the parties, but simply put them off for subsequent resolution. I do not agree that it was unreasonable for Zhongcai not to have accepted it.

7.It was therefore necessary for Zhongcai to come to court to obtain discovery, even if it was only successful to a limited extent. The order for costs should reflect the fact that Zhongcai had to incur a substantial amount of costs in order to obtain the discovery ordered. As Zhongcai points out, apart from the order for discovery which it obtained, it also achieved success in the form of voluntary disclosure by Mr Chui in Chui 3^rd, which was given only after Zhongcai took out the Discovery Summons. Furthermore, in assessing the amount of costs to be paid, the approach should not be, as Mr Chui suggests, to compare the number of words, lines or pages which were ordered to be disclosed with the number of words, lines or pages which were not ordered to be disclosed. I therefore do not agree that the order was disproportionate.

Certificate for counsel

8.Mr Chui says that certificate should be granted for one counsel only, as the law was straightforward and the documents involved were not voluminous.

9.Zhongcai does not take issue with there being certificate for one counsel only.

10.In the costs order nisi I had not in fact granted certificate for two counsel. The order does not need to expressly grant certificate for one counsel: see Hong Kong Civil Procedure 2022, note 62/App/28. Accordingly, no variation to the costs order nisi is necessary.

Alleged dishonesty

11.Zhongcai made an alternative submission that I should penalise Mr Chui for giving a misleading description of what was in two of the items which were the subject of the discovery application, by maintaining the costs order nisi. In view of what I have indicated above, I do not need to deal with this alternative argument.

Disposition

12.I dismiss Mr Chui’s application to vary the costs order nisi. I further make an order nisi that Mr Chui pays the costs of the application, summarily assessed at $20,000.

Mr Lincoln Cheung and Mr Jason Kung, instructed by Vincent T. K. Cheung, Yap & Co, for the Creditor, Zhongcai Finance Limited

The Debtor appeared in person