Ma Pik Yee v. Heruka Hayagriva Mahakala Chu

HCA 1412/2020

[2023] HKCFI 1574

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1412 OF 2020

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BETWEEN

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DECISION

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INTRODUCTION

1.By a decision handed down on 31 January 2023 (“the Decision”), this Court decided that conditional leave to defend should be granted to the defendant in relation to the plaintiff’s claim on the SP Agreement and the Assignment[1]. 

2.In the plaintiff’s reply written submissions dated 21 November 2022, she submitted that in the event the Court was minded to grant conditional leave to defend to the defendant, the Court should impose a condition of payment into Court in the sum of $6 million.  At the time, she explained through counsel that this sum was appropriate because if it was the defendant’s case that the plaintiff had affirmed the SP Agreement, then he should pay this sum (which represented the amount of consideration stated in the SP Agreement)  into Court.

3.As it was considered that the defendant should be given an opportunity to adduce evidence on his financial ability so that the Court could take the same into account before deciding on the condition(s)  to be imposed, further directions were given for the defendant to file and serve affirmation on his financial circumstances.  Parties were also directed to lodge further submissions on the condition(s)  to be imposed, costs of the Summons as well as directions on the further conduct of this action. 

4.Parties have since then complied with the aforesaid directions. 

CONDITIONS FOR LEAVE TO DEFEND

Conditions as proposed by the parties

5.As aforesaid, the plaintiff initially (before the Decision was handed down)  proposed that leave to defend should only be granted upon the defendant’s payment of a sum of $6 million into Court.  The amount was suggested by reference to the consideration as stated in the SP Agreement (even though it was undisputed that the said amount of consideration was not actually paid).

6.Having perused the Decision and the affirmations of financial circumstances filed by the defendant, the plaintiff abandoned her original proposal, and suggested another condition, namely, that the defendant shall pay into Court a sum of $2.3 million, being a discounted estimation of the plaintiff’s costs of the present proceedings.

7.The defendant objected against such a new condition.  He said he was prepared to give an undertaking not to sell, transfer, assign, charge, dispose of or otherwise deal with the Property or any part thereof until the final determination of this action or further order of the Court as the condition for leave to defend.  He contended that no order for payment into Court should be made as a condition.

8.The undertaking as proposed by the defendant was accepted by the plaintiff.  Be that as it may, she still took the view that an additional condition of payment into Court should be made by the defendant, so that the plaintiff could be protected on her costs.

The issues

9.As I see it, there are three issues which this Court has to resolve, namely:

(1)  Whether the Court has jurisdiction to make an order of payment into Court in the form of security of the plaintiff’s costs as a condition pursuant to Order 14 rule 4(3)  of the Rules of the High Court (Cap.4A, Laws of Hong Kong)  (“RHC”)  (“the Jurisdiction Question”);

(2)  If so, whether the Court should make such an order herein (“the Discretion Question”);

(3)  What condition(s)  should be imposed.

The Jurisdiction Question

10.The power to make an order of payment into Court as a condition for the grant of leave to defend is given to the Court by virtue of Order 14 rule 4(3)  of the RHC which reads:

“The Court may give a defendant against whom such an application is made leave to defend the action with respect to the claim, or the part of a claim, to which the application relates either unconditionally or on such terms as to giving security or time or mode of trial or otherwise as it thinks fit.”

11.While the said rule has been drafted in a very wide way and there is nothing on the face of it which prohibits the Court from ordering payment into Court as security of the plaintiff’s costs in advancing the claim in question, the word “security” has usually been understood to mean “security as to the plaintiff’s claim” rather than “security of the plaintiff’s costs”.  This may be demonstrated by the followings:

(1)  In Hong Kong Civil Procedure 2023, Volume 1, the following commentaries may be found:

“Leave to defend – conditional leave – A condition of paying some or all of the money or damages into court, or giving security, is imposed where there is a good ground in the evidence for believing that the defence set up is a sham defence or the master ‘is prepared very nearly to give judgment for the plaintiff’ […]

Leave to defend conditional on the full amount claimed being paid into court may be ordered where the defence is ‘shadowy’ […]” (at §14/4/16 (page 357))

“It should be noted that the discretionary powers given by r.4(3)  are very wide, and the terms imposed on granting conditional leave to defend may relate to the giving of security or time or mode of trial or otherwise or any combination thereof. The more usual terms are to require the defendant to bring into court within a specified time a sum representing the whole or part of the claim, and in default leave to the plaintiff to sign final judgment for such sum […]” (at §14/4/16A (page 357))

(emphasis added)

(2)  In Hong Kong Civil Court Practice, Volume 1, paragraph II [2924.1], the learned editor also stated:

“Quantum of security – the court may order the defendant to give security for all or part of the claim […]” (emphasis added)

(3)  In Pitamberdas Chatomal Kalwani trading as Kalwani Corporation v Jacobson Van Den Berg (Hong Kong)  Ltd. [1964] HKLR 842 (CA), Blair-Kerr J held that:

“In Hong Kong it not infrequently happens that when a defendant is asked to show cause why judgment should not be given against him, he puts forward by way of defence an allegation which, on the face of it, may strike a court as being rather farfetched, although the court may hesitate to shut him from the seat of judgment. For my part, I think that the court should not hesitate to grant conditional leave in such cases; and payment into court of the sum in dispute should ordinarily be considered […]” (at 862)  (emphasis added)

12.Pausing here, it should be mentioned that, in answer to the defendant’s argument that any security ordered by the Court as condition shall commensurate with the reliefs sought by the plaintiff in each case, the plaintiff submitted that “costs” was in fact part of the final reliefs which she sought in the Statement of Claim.  With greatest respect, this argument is disingenuous, as “costs” apparently was not claimed as a substantive relief as such in the Statement of Claim.  Indeed, pursuant to Order 18 rule 15(1)  of the RHC, it has been specifically provided that “costs need not be specifically claimed” in the Statement of Claim.

13.Parties have not been able to locate any Hong Kong authority in which the Jurisdiction Question was discussed.  The only Hong Kong case which the plaintiff had cited on the Jurisdiction Question was Choy Po Chun & Another v Au Wing Lun William (HCMP 1617/2011, unreported, 19 October 2011).  In this case, the plaintiffs claimed, among other things, for an order that the court pronounces in solemn form a will which was allegedly made by the deceased (the father of the defendant therein).  The learned first instance Judge found that the defendant had not shown any credible defence. The learned Judge also considered that the defendant had demonstrated a lack of good faith in his conduct of the litigation.  Be that as it may, the learned Judge decided that conditional leave to defend should be granted.  Having taken into account the factors that probate action was likely to be very costly, that the defendant was not a beneficiary under the will and that he would not be able to pay his costs should he lose and as a result the estate of the deceased would suffer, his Lordship ordered him to pay security for the plaintiff’s costs as a condition of leave to defend.  While it may be said that this case supports the plaintiff’s contention that the Court has jurisdiction to order the defendant to pay security for the costs of the plaintiff as a condition for leave to defend, it must be noted that, on the face of the decision, the Court did not address its mind specifically on the Jurisdiction Question, and it is unclear as to whether any submission had been made in this regard.[2]

14.However, the question has been considered in Olatawura v Abiloye [2003] 1 WLR 275 (CA).  In this case, the claimant, who was a Nigerian lawyer, sued the defendant, the sole proprietor of a firm of solicitors, for remunerations which were alleged to be due under an oral employment agreement.  The defendant denied the claimant’s claim, as they had dispute as to the terms of employment.  The defendant applied under CPR rule 24.1 for summary dismissal of the claim.  The learned District Judge took the view that while the prospects of the claimant succeeding were limited, Her Honour took the view that she was not in a position to conclude that there was no real prospect of success, and that there might be a very small or shadowy prospect of success.  Her Honour considered that, in the circumstances, it would be appropriate to give the defendant some security for costs.

15.In making the order for security for costs, the learned District Judge had referred to, inter alia, paragraph 5.2 of the Practice Direction supplementing Part 24 (“CPR Part 24 PD”), rule 1.3 and rule 3.1 of the CPR. 

16.Before I go on, I should set out the relevant provisions in the CPR and the CPR Part 24 PD below:

CPR rule 1.3

The parties are required to help the court to further the overriding objective.

CPR rule 3.1

(1)  The list of powers in this rule is in addition to any powers given to the court by any other rule or practice direction or by any other enactment or any powers it may otherwise have.

(2)  Except where these Rules provide otherwise, the court may –

[…]

(m)  take any other step or make any other order for the purpose of managing the case and furthering the overriding objective […]

(3)  When the court makes an order, it may –

(a)  make it subject to conditions, including a condition to pay a sum of money into court; and

(b)  specify the consequence of failure to comply with the order or a condition.

[…]

(5)  The court may order a party to pay a sum of money into court if that party has, without good reason, failed to comply with a rule, practice direction or a relevant pre-action protocol.

(6)  When exercising its power under paragraph (5)  the court must have regard to –

(a)  the amount in dispute; and

(b)  the costs which the parties have incurred or which they may incur.

(6A)  Where a party pays money into court following an order under paragraph (3)  or (5), the money shall be security for any sum payable by that party to any other party in the proceedings.

CPR Part 24 PD

The Court’s approach

4. Where it appears to the court possible that a claim or defence may succeed but improbable that it will do so, the court may make a conditional order, as described below.

Orders the Court may make

5.1 The orders the court may make on an application under Part 24 include:

(1)  judgment on the claim,

(2)  the striking out or dismissal of the claim,

(3)  the dismissal of the application,

(4)  a conditional order.

5.2 A conditional order is an order which requires a party:

(1)  to pay a sum of money into court, or

(2)  […] to take a specified step in relation to his claim or defence, as the case may be,

and provides that that party’s claim will be dismissed or his statement of case will be struck out if he does not comply.

17.The claimant then appealed to the English Court of Appeal.  Simon Brown LJ had the following to say in his Judgment:

“18. […] is there indeed now jurisdiction under the CPR to make orders which are tantamount to orders for security for costs outside the provisions of Part 25, Section II[3]?

19. In my judgment the answer to this question is a clear ‘Yes’. The individual rules which I have already set out above admit of no other possible conclusion and, indeed, as Judge Cowell below observed, this too is the stated view of the editors of the Civil Procedure, Spring 2002, vol.1. As to the editors’ view, let me quote from just two paragraphs:

‘3.1.5 … In the case of claimants, an order under rule 3.1(5)  significantly broadens the court’s powers to order security for costs (as to which, see generally CPR Pt 25, Section II).’

‘25.13.20 The discretions and conditions set out in rule 25.13 relate to applications for security for costs under rule 25.12. There are also several other rules and provisions under which security for costs may be ordered; rule 3.1(5)  (sanction for failure to comply with a rule, practice direction or relevant pre-action protocol), Practice direction supplementing Part 24 paragraphs 4 and 5 (a conditional order on a summary judgment application where the court considers that the respondent’s case may succeed but it is improbable that it will do so) …’

20. As to the rules themselves, let me make just a few obvious points. Paragraphs 4 and 5 of CPR Pt 24 PD to my mind necessarily contemplate an order akin to that for security for costs, providing as they do for the making of an order requiring a sum of money to be paid into court where it appears to the court improbable that a claim (and not merely a defence)  will succeed. Rule 3.1(3)  in terms allows the court to make any order conditional on (amongst other things)  the payment of money into court. Yet more specifically rule 3.1(5)  empowers the court to order a non-compliant party to pay money into court and rule 3.1(6)  requires the court in exercising that power to have regard to the costs incurred or to be incurred.”

18.It can be seen from paragraph 16 above that paragraphs 4 and 5 of the CPR Part 24 PD are quite straight-forward: these provisions state that the Court may make a conditional order if it appears to the Court that it is improbable (though it is still possible)  that a claim or defence may succeed, and that the Court may require a party to pay a sum of money into court as a condition.

19.If the English Court has jurisdiction to make an order for security for costs under Part 24 of the CPR, there is no reason why the Hong Kong Court does not have the same jurisdiction pursuant to Order 14 rule 4(3)  of the RHC which apparently has also given the Court a wide discretion in imposing conditions.

20.I therefore conclude that the answer to the Jurisdiction Question should be “Yes”[4].

The Discretion Question

21.I now turn to the Discretion Question.  In this regard, what Simon Brown LJ held in Olatawura v Abiloye (supra)  is instructive:

“21. I pass, therefore, to the more difficult second question which arises on this appeal: what should be the court’s approach to the exercise of its wider new jurisdiction to order security for costs […]?

22. The first point to be made is I think this. Before ordering security for costs in any case (ie whether or not within CPR Pt 25)  the court should be alert and sensitive to the risk that by making such an order it may be denying the party concerned the right to access to the court. Whether or not the person concerned has (or can raise)  the money will always be a prime consideration, not least since article 6 of European Convention for the Protection of Human Rights and Fundamental Freedoms became incorporated into domestic law. Paradoxically, of course, the more difficult it appears to be for the person concerned to raise the money, the more obvious becomes the need for an order for security to protect the other party against the risk of incurring irrecoverable costs. The court will have to resolve that conundrum as best it may.

23. Assume, then, that in a given case the court concludes that an order for security would not unfairly deprive the party concerned of his ability to litigate the dispute. Should such an order then be made? In addressing this question it is right to bear in mind that under the new rules it is not just the claimant against whom an order for security for costs can be made; it can also be made against the defendant. Under the old rules, of course, it was only the defendant who could be ordered to pay money into court, principally in proceedings for summary judgment, as a condition of his being allowed to defend the claim. That payment in was not, of course, in respect of costs, but rather to provide some security for the claim. But if, as a condition of pursuing an unpromising defence, it is appropriate to secure the claim, why not also the claimant’s costs of advancing the claim? And if that, why is it not at least as appropriate to require someone advancing an unpromising claim to secure the defendant’s costs. He, after all, has chosen to involve the defendant in litigation and the defendant has no option but to concede the claim or incur costs in resisting it. Such no doubt was the thinking underlying the new rule 24.

24. Now, it is clear, the court has an altogether wider discretion to ensure that justice can be done in any particular case. Obviously relevant considerations, besides the ability of the person concerned to pay, will be (a)  his conduct of the proceedings (including in particular his compliance or otherwise with any applicable rule, practice direction or protocol), and (b)  the apparent strength of his case (be it claim or defence). And these considerations, of course, are expressly reflected in the new rules governing the court’s power to order payment into court: rule 3.1(5)  dealing expressly with compliance, rule 24 with the probabilities or otherwise of success.

25. That, however, is by no means to say that the court should ordinarily penalise breaches of the rules and the like by making orders for payment into court under rule 3.1(5). Quite the contrary. The one case drawn to our attention in which this question has been considered – Buckley J’s judgment in Mealey Horgan plc v Horgan The Times, 6 July 1999, to which reference is made in paragraph 3.1.5 of the Civil Procedure, Spring 2002, vol.1 – held that it would be inappropriate to order a defendant to give security as a penalty for failure to serve witness statements in time when that had prejudiced neither the trial nor the claimant. Buckley J suggested, however, that such an order might be appropriate if

‘there is a history of repeated breach of timetables or of court orders or if there is something in the conduct of the party which gives rise to suspicion that they may not be bona fide and the court thinks the other side should have some financial security or protection.’

That seems to me to point the way admirably: a party only becomes amenable to an adverse order for security under rule 3.1(5)  (or perhaps 3.1(2)(m))  once he can be seen either to be regularly flouting proper court procedures (which must inevitably inflate the costs of the proceedings)  or otherwise to be demonstrating a want of good faith - good faith for this purpose consisting of a will to litigate a genuine claim or defence as economically and expeditiously as reasonably possible in accordance with the overriding objective.

26. Similarly it is not to be thought that an order for security for costs will be appropriate in every case where a party appears to have a somewhat weak claim or defence. The last thing this judgment should be seen as encouraging is the making by either side of exorbitant applications for summary judgment under rule 24.2 in a misguided attempt to obtain conditional orders providing security for costs. On the contrary, the court will be reluctant to be drawn into an assessment of the merits beyond what is necessary to establish whether the person concerned has ‘no real prospect of succeeding’ and the occasions when security for costs is ordered solely because the case appears weak may be expected to be few and far between.” (emphasis added)

22.Simon Brown LJ’s comments in paragraph 26 as quoted above were considered by Moore-Bick LJ in Hucroft v P & O Ferries Ltd [2011] 1 WLR 939 (CA):

“14. It is clear from para 26 of the judgment in Olatawura v Abiloye [2003] 1 WLR 275 that the court was viewing the matter though (sic)  the prism of an unsuccessful application for summary judgment, but the warning against making exorbitant applications in misguided attempts to obtaining a conditional order for security for costs is of more general application. It would be wrong, in my view, to encourage litigants to regard rule 3.1(3)[5] as providing a convenient means of circumventing the requirements of Part 25 and thereby of providing a less demanding route to obtaining security for costs. In my view, when the court is asked to consider making an order under rule 3.1(3)  or 3.1(5)  which is, or amounts to, an order for security for costs, or when it considers doing so of its own motion, it should bear in mind the principles underlying rules 25.12 and 25.13. These include the principle that a personal claimant who is resident within the jurisdiction or in one of the other member states of the European Union cannot be required to provide security for costs just because he is impecunious, even though his conduct of the proceedings may be open to criticism. Although it might be argued that the defendant in such a case should be entitled to obtain protection against the risk of being unable to enforce a judgment for costs, a policy decision has been taken to the contrary. This suggests that an order of that kind should not be made in the exercise of the power under rule 3.1(3)  unless one or more additional factors are present which make it appropriate to impose a burden of that kind on one party and a corresponding benefit on the other.

15. In Ali v Hudson (trading as Hudson Freeman Berg) [2004] CP Rep 15 Clarke LJ sounded a note of caution in relation to the exercise of the court’s power to order security for costs under rule 3.1. Having referred to the judgment of Simon Brown LJ in Olatawura v Abiloye [2003] 1 WLR 275 he said [2004] CP Rep 15, para 40:

‘Those principles show that the power to order security for costs in a case of this kind should be exercised with great caution. The correct general approach may be summarised as follows: (i)  it would only be in an exceptional case (if ever)  that a court would order security for costs if the order would stifle a claim or an appeal; (ii)  in any event (a)  an order should not ordinarily be made unless the party concerned can be shown to be regularly flouting proper court procedures or otherwise to be demonstrating a want of good faith; good faith being understood to consist (as Simon Brown LJ put it)  of a will to litigate a genuine claim or defence (or appeal)  as economically and expeditiously as reasonably possible in accordance with the overriding objective; and (b)  an order will not be appropriate in every case where a party has a weak case. The weakness of a party’s case will ordinarily be relevant only where he has no real prospect of succeeding.’ ”

(emphasis added)

23.While Hucroft is not a case involving conditional leave to defend (it is now called “conditional order” in England)  but an application made under the Hong Kong equivalent of Order 1B rule 1(3)  of the RHC, in my view, Moore-Bick LJ’s comments are equally applicable to the present case because Order 14 rule 4(3), like Order 1B rule 1(3), gives the Court a general power to impose conditions.

24.Taking into account the aforesaid authorities and the wordings of Order 14 rule 4(3)  of the RHC, I hold the view that while the Court has jurisdiction to make an order for security for costs when granting conditional leave to defend, the Court must exercise its discretion with great caution, and should bear in mind the requirements laid down in Order 23 rule 1 of the RHC.  It is not enough for the plaintiff to show that the defence is “shadowy”. 

25.In the present case, the plaintiff submitted that an order for security for costs as a condition should be made for the following reasons:

(1)  The defendant has admitted that he is impecunious and that he had been relying on the loans granted by Shirley Loong and Wong Mei Yee for settlement of legal fees;

(2)  Partial judgment had been granted in favour of the plaintiff and that means the plaintiff would be awarded at least part of her costs at the end of the day;

(3)  Although the plaintiff might apply for non-party costs order against Shirley Loong and Wong Mei Yee, substantial time and costs would have to be incurred for that purpose, and it is possible that the Court may find that there are no exceptional circumstances which justify the making of such a costs order against them;

(4)  The defendant had applied for and failed to obtain legal aid (twice), and has a history of delaying and derailing the current proceedings.

26.Having considered the plaintiff’s grounds, I hold the view that the Court should not accede to the plaintiff’s request for an order for security for costs, for the following reasons:

(1)  There is no evidence which shows that the defendant’s situation falls into any of the categories under Order 23 rule 1(1)(a)  to (d)  of the RHC;

(2)  While this Court is prepared to grant summary judgment in relation to the Lease, the plaintiff’s cost which is incurred exclusively in relation to the Lease is minimal – see further paragraph 37 below;

(3)  If the plaintiff takes the view that there is a sufficient basis for her to make an application for a non-party costs order against Shirley Loong and Wong Mei Yee, it is up to her to take out such an application;

(4)  I do not agree that there is sufficient basis for the plaintiff to allege that the defendant has intentionally delayed the progress of these proceedings:

(a)  Although the defendant did apply for time extension more than once for the filing of his Defence, it is apparent that the applications were necessary because he was still waiting for the result of his first application for legal aid at the material time;

(b)  The fact that the defendant has made a second application for legal aid does not necessarily mean that he was minded to derail these proceedings;

(c)  While the defendant did apply for two time extensions for the filing of his affirmation in opposition to the Summons, it cannot be inferred by reason of that fact that he was trying to delay the progress of the case:

(i)  it is understandable that the defendant needed at least one extension of time because of the length of the plaintiff’s affirmation in support (and the volume of documents exhibited thereto);

(ii)  by the time when he made his second application for time extension, the date of the substantive hearing for summary judgment had already been fixed. In other words, the second application for time could not have delayed the hearing.

27.In Bank of Leumi (UK)  Plc v. Philip Robert Akrill [2014] EWHC 4341, His Honour Judge Dight held at [28] that:

“The sum which ought to be paid into court must be one which (a)  to test the defendant’s bona fides, (b)  discourages him from delaying the proceedings and (c)  provides some security to the claimant […]”

28.Relying on the above criteria, the plaintiff further submitted that the defendant’s proposed condition (i.e. only an undertaking not to transfer)  runs counter to the principles behind the ordering of security as set out above, because the proposed condition would not be able to test the bona fides of the defendant, nor would it give the plaintiff any protection, as a lis pendens had already been registered against the Property.

29.With greatest respect, the plaintiff has twisted the meaning of the principles explained in Bank of Leumi (UK)  Plc. What the learned Judge meant was that in the event it is decided that an amount of money should be paid into court as a condition, then the Court should take those factors into account when fixing the amount.  It should not be interpreted to mean that the Court should make an order of payment into court (or to test the defendant’s bona fides)  in all cases when conditional leave to defend is granted.

What condition(s)  should be imposed

30.Apart from payment into Court, the plaintiff has not proposed any other condition.

31.As aforesaid, the defendant proposed to give an undertaking as set out in paragraph 7 above to the Court.

32.I consider that the provision of the defendant’s proposed undertaking would be acceptable as the only condition which this Court should impose when it grants conditional leave to defend.  I will hold him to his undertaking.

COSTS

Costs of the Summons

33.It is trite that costs are in the discretion of the Court.  Having said that, there are usual orders which the Court would make in relation to applications for summary judgment.  The relevant ones have been set out in Hong Kong Civil Procedure 2023, Volume 1 as follows:

“Costs on judgment for part only of claim – In this event, the order should not deal with the costs of the action, which should be left to be dealt with when the question as to the residue is determined, for it is undesirable, if not impracticable, to have two orders dealing with the costs of the action. On the other hand, the costs of the application itself should be dealt with. If the residue is ordered to be tried in the Court of First Instance, the costs of the application are generally in cause, though they may be left to be dealt with when the residue is tried and disposed of. It is, however, in the discretion of the master or judge to make some other order as to the costs of the application, e.g. where the plaintiff recovers judgment for a substantial part of the claim, to award him the costs in any event, or conversely where the defendant has always admitted liability for the part for which the plaintiff recovers judgment, to award him the costs in any event or in cause.” (at §14/7/10)

“Costs on giving conditional leave to defend – In this event, the order for costs generally corresponds with the condition imposed, and its operation made dependent upon whether or not the condition is complied with. If the leave is conditional upon the whole debt or demand being paid into court, the usual order is that if the condition be not complied with the costs are the same as upon a judgment for the whole claim (see para.14/7/9)  and if the condition is complied with the costs are the same as upon unconditional leave to defend being given (see 14/7/13). If the leave is conditional upon part only of the debt or demand being paid into court, the usual order for costs is the same as upon judgment for part of the claim (see para.14/7/10)  […]” (at §14/7/12)

34.While there are “usual orders” which the Court would consider to make, this Court is of course not bound to make those orders.  It should consider all the relevant circumstances of the case and decide what costs order should be the most appropriate.

35.In the present case, the plaintiff asked this Court to make an order for the costs of and occasioned by the Summons be to the plaintiff forthwith, to be taxed/summarily assessed on indemnity basis.  It was alleged that:

(1)  the plaintiff “had recovered judgment for a substantial part of the claim, with most of the major disputes between the parties ruled in the plaintiff’s favour”[6];

(2)  “Given that the plaintiff has recovered judgment regarding the Lease, which is a final judgment, […] costs should follow the event”[7];

(3)  The defendant had unreasonably contested issues such as the nature of the relationship between the parties and whether the transaction called for an explanation;

(4)  The defendant had unreasonably raised unpleaded and scandalous allegations and wholly incredible explanations of certain contemporaneous documents.

36.Although this Court has in the Decision made rulings on some of the issues in the plaintiff’s favour, with greatest respect, I do not understand how the plaintiff’s counsel could validly assert that the plaintiff “had recovered judgment for a substantial part of the claim” at all. Despite those rulings, if at the end of the day it is found that the presumption of undue influence is rebutted, the plaintiff will still be regarded as the “loser” as far as the plaintiff’s claims in relation to the SP Agreement and the Assignment are concerned.

37.I have of course not lost sight of the fact that this Court would enter judgment in favour of the plaintiff in relation to the Lease.  However, it is noted that only a very small portion of the evidence filed by the plaintiff for the purpose of the Summons is exclusively related to the Lease.  In these circumstances, despite the partial judgment granted, I think it is more appropriate to treat it as if the Court has granted conditional leave to defend in respect of the entirety of the plaintiff’s application when the question of costs is considered.

38.Having considered parties’ submissions, and the fact that the defendant has already given his proposed undertaking through his counsel, I am of the view that the most appropriate costs order of the Summons should be costs in the cause.

39.I am also of the view that whether the plaintiff’s costs (if awarded)  should be taxed on indemnity basis should be left to be decided after trial by the trial judge.

Costs of further written submissions

40.In the Decision, this Court, on a nisi basis, directed the defendant to file and serve affirmation on his financial circumstances.  He was also ordered to lodge and serve further written submissions on the condition to be imposed, which shall be followed by the plaintiff’s further written submissions in reply.

41.The plaintiff then sought to vary the above directions, and suggested, inter alia, that there should be three rounds of written submissions, with the plaintiff lodging her submissions first, as it might be more prudent for the parties to be given a chance to propose conditions by reference to the materials to be disclosed in the defendant’s affirmation on financial circumstances.

42.The plaintiff’s suggestion was objected against by the defendant.  Having considered parties’ respective reasonings, the order nisi was made absolute by this Court.

43.The affirmations and written submissions were then filed/lodged accordingly.

44.However, because the plaintiff made a new suggestion in her reply submissions on the condition to be imposed, this Court considered that, as a matter of fairness, the defendant should be given a chance to make submissions on such a new suggestion.  This Court therefore directed that another round of written submissions be lodged. 

45.Against the above background, Mr Tang submitted on behalf of the defendant that he should be entitled to the costs of the additional round of written submissions because:

(1)  The plaintiff should have known that the purported basis of her original condition (payment of the sum of $6 million into Court)  as proposed in her reply written submissions dated 21 November 2022 has already been spent as a result of the Court’s refusal to consider the defendant’s unpleaded affirmation defence;

(2)  The plaintiff only made a new suggestion of condition (payment into court the sum of $2.3 million)  when she lodged her reply submissions dated 8 March 2023, which has led to the Court giving leave for the parties to lodge another round of written submissions.

46.I must say that it is quite unfair on the part of the defendant to criticise the way that the plaintiff had conducted the case as far as the proposal of condition is concerned.  It can be seen above that the plaintiff had indeed informed the Court at the first opportunity that there was a possibility that she might propose a new condition after she has perused the defendant’s affirmation on financial circumstances, and she had proposed directions to cater for such a possibility.  However, this Court considered at that time that her proposed directions were too complicated and as a result decided to adopt a simpler approach as suggested by the defendant.  It turned out that the plaintiff was right, and that was why further written submissions had to be lodged.  In the above circumstances, the plaintiff simply cannot be blamed.

47.Furthermore, I do not agree with the defendant that he had wasted time and cost on his first round of submission dated 1 March 2023, because only a small portion thereof[8] addressed the plaintiff’s original condition.  Other parts of the said submissions remain relevant despite the plaintiff’s change of stance.

48.Finally, even though the plaintiff has failed to persuade this Court in imposing a condition in the form of payment into court, I am of the view that the Court should not separate the costs of submissions lodged subsequent to the date of Decision from the other parts of the costs of the Summons. The costs of such submissions should be treated as part of the costs of the Summons.

ORDER

49.I therefore make the following orders:

(1)  A declaration that the Lease dated 14 April 2018 ought to be set aside as having been procured by undue influence of the defendant over the plaintiff;

(2)  Upon the defendant’s undertaking not to sell, transfer, assign, charge, dispose of or otherwise deal with the Property or any part thereof until the final determination of this action or further order of the Court, leave be granted to the defendant to defend the plaintiff’s claim on the SP Agreement and the Assignment (both dated 23 September 2019);

(3)  Unconditional leave be granted to the defendant to defend the plaintiff’s claim for reliefs Nos.7 – 13 of the Statement of Claim filed on 11 February 2021[9];

(4)  Costs of the Summons be in the cause.

50.I also give the following case management directions for the further conduct of this action:

(1)  The parties do file and serve their respective lists of documents within 14 days hereof, followed by inspection within 7 days thereafter;

(2)  Parties shall file and serve their respective Timetabling Questionnaires within 42 days hereof;

(3)  If parties are able to reach agreement on the further case management directions to be sought from the Court, the plaintiff shall file a Consent Summons within 56 days hereof;

(4)  If parties are unable to agree on the further case management directions to be sought from the Court, the plaintiff shall take out a Case Management Summons within 56 days hereof.

Mr Jeffrey Chau and Ms Joanne Szeto, instructed by Sun Lawyers LLP, for the plaintiff

Mr Danny Tang, instructed by Anthony Siu & Co, for the defendant