Pang Kam Chuen, The Sole Executor of the Estate of Pang Yeuk Chi, Deceased v. Pang Kam Bor

DCCJ 348/2021

[2024] HKDC 598

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 348 OF 2021

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DECISION

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Introduction

1.By my earlier reasoned decision with neutral citation number [2024] HKDC 110 (“the Decision”), I dismissed the summons for leave to appeal (“the DC Leave Summons”) taken out by the plaintiff (“P”) on 3 November 2023, with an order nisi that P shall pay to the defendant (“D”) the costs of the DC Leave Summons, summarily assessed at HK$121,555, forthwith (“the Order Nisi”).

2.On 13 March 2024, being dissatisfied with the Order Nisi, P took out a costs variation summons (“P’s Costs Variation Summons”), supported by the Affirmation of Wong Ka Wai dated 13 March 2024 (“P’s Affirmation in Support”), seeking to vary the Order Nisi so that costs of the DC Leave Summons would be “in the cause of the renewed application for leave to appeal [made in] the Court of Appeal” instead.

3.Having considered (1) P’s Costs Variation Summons; and (2) P’s Affirmation in Support, it was very clear to me they both called for oral clarifications from P or his legal team, so I directed a short 30-minutes oral hearing, which took place before me earlier today.

4.Having considered P’s clarifications, my decision is to make the following order: -

(1)  P’s Costs Variation Summons be dismissed;

(2)  The Order Nisi be made absolute; and

(3)  P shall pay to D all costs of and occasioned by P’s Costs Variation Summons, including the costs of today’s oral hearing, summarily assessed by me with certificate for counsel at HK$74,208, forthwith.

5.My reasons are as follows. For convenience and consistency, I shall continue to use the abbreviations used in the Decision.

P’s Submissions

6.Mr Alwin Chan, counsel for P, submitted to me that since the Decision on 28 February 2024, “circumstances have changed” because P had on 13 March 2024, pursuant to Part B of Practice Direction 4.1, lodged a renewed application for leave to appeal with the Court of Appeal (CAMP 46/2024) and it “should not be long” before the Court of Appeal arrives at a decision. As such, Mr Chan argued, there should be an order in terms of P’s Costs Variation Summons.

7.However, in reply to my queries vis-à-vis his use of the phrase “should not be long”, Mr Alwin Chan, counsel for P, admitted he used that phrase without any evidential foundation. He for his part accepted that P’s Affirmation in Support did not say anything about time estimation, and that he was instead just referring to §5 of Practice Direction 36, which specified a timeframe of 6 months for the Court of Appeal to hand down its ruling.

8.Mr Alwin Chan, counsel for P, further submitted that if I were to refuse to vary the Costs Order Nisi, P would have “no choice” but to go to the Court of Appeal to ask for a stay.

9.However, in reply to my queries vis-à-vis his use of the phrase “no choice”, Mr Alwin Chan, counsel for P, admitted he used that phrase in the absence of any evidence P could not pay HK$121,555 forthwith. In fact, P was just refusing to pay HK$121,555 forthwith when P clearly could have paid HK$121,555 forthwith. My understanding is that P’s refusal was based on a subjective belief that he would eventually win, and would never be required to pay anything.

D’s Submissions

10.Mr Tommy Cheung, counsel for D, submitted to me that on a survey of recent court decisions, one could see that “the usual position” in refusing leave is for the judicial officer in question to also order the losing party to pay for all of the costs of the failed application forthwith, and that there was simply no reason why we should depart from that usual position in our present scenario.

11.Mr Tommy Cheung, counsel for D, further said the complete lack of merits of P’s intended appeal had been clearly demonstrated by the “thorough and cogent analysis” in the Decision and that as such, there was simply no foundation for P’s Costs Variation Summons to stand on. Since there was simply no foundation for P’s Costs Variation Summons to stand on, my duty should be to dismiss P’s Costs Variation Summons.

My View

12.I agree with D, and disagree with P.

13.In my view, the starting point is always Pacific Ace Finance Ltd v Delay & Anor [2023] 4 HKC 424 [2023] HKDC 611 (§28, per DDJ Kenneth KY Lam), where this Court summarized the general legal position as follows:-

“The award of costs in District Court civil actions is governed by Order 62 of the Rules of the District Court (Cap 336H) (“RDC”), which is substantially the same as Order 62 of the Rules of the High Court (Cap 4A). The most important principle is that a judicial officer has a wide discretion on matters concerning costs, but the discretion must be exercised judicially. See, eg, HKCP 2023, §62/2/6. Usually, a judicial officer would start from the assumption that ‘costs should follow the event’, which is to say the losing party should pay for the legal costs incurred by the winning party, not because there is such a rule, but because in the vast majority of scenarios that would be the fair, just and most appropriate order.”

14.Further consideration must be given to Wing Fai Construction Co Ltd v Yip Kwong Robert (No 2) (2012) 15 HKCFAR 454, where Ribeiro PJ of our Court of Final Appeal said this (§7):-

“Whether or not the immediate payment of costs should be ordered is quintessentially a matter within the court’s discretion. The former practice was generally to order interlocutory costs to be ‘in the cause’, to be settled up at the end of the proceedings where orders which may have been made in favour of the respective parties might be set-off against one another and when the overall result of the proceedings can be taken into account. However, it is now generally recognized that such an approach may lead to procedural laxity and a damaging proliferation of interlocutory or satellite litigation. The first four of the underlying objectives are relevant to redressing such tendency by emphasising the need:… (a) to increase the cost-effectiveness of any practice and procedure to be followed in relation to proceedings before the Court; (b) to ensure that a case is dealt with as expeditiously as is reasonably practicable; (c) to promote a sense of reasonable proportion and procedural economy in the conduct of proceedings; (d) to ensure fairness between the parties…”

15.Also relevant is what was said by Lam J (as Lam PJ then was) in the earlier case of Midland Business Management Ltd v Lo Man Kui (No 2) [2011] 2 HKLRD 667, which was as follows (§§9 to 12):-

“Under Civil Justice Reform, the court is encouraged to order immediate payment of costs of interlocutory proceedings and if possible by way of summary assessment of costs. The objective is to discourage unnecessary and disproportionate interlocutory applications. It is recognised that the lack of immediacy of orders to pays costs “in the cause” or “in any event” weakens costs as a sanction against unwarranted applications or resistance, see paras 529-536 of the Final Report of the Chief Justice’s Working Party on Civil Justice Reform. By reason of O 62 r 5(1)(aa), the court should take into account the underlying objectives in O 1A r 1 in the exercise of its discretion. The objectives in r 1(a), 1(c) and 1(d) are particularly relevant in the present context. In my view, the approach recommended by the Working Party should be adopted in furtherance of these objectives. Unwarranted interlocutory applications should normally be sanctioned by an immediate costs order. In so saying, I must not be taken as saying that an immediate costs order should be made against every unsuccessful party in an interlocutory application. I can readily see that there are cases where such a party may have a proper justification for making an interlocutory application even though he fails at the end of the day. There could also be cases where the court considers that it would be more appropriate to make an order “in any event” or “in the cause” or to reserve costs. However, what I do say is that after Civil Justice Reform the court is more astute to the impact of costs on legal proceedings and an order for immediate payment of costs will be made more readily as a discipline against unmeritorious interlocutory applications.”

16.In applying these basic principles, judicial officers must bear in mind the issue of bank interests payable on cash deposits, and indeed the issue of investment returns. This Court is aware that as of 16 April 2024, almost any person in Hong Kong can just put his money in a retail bank for a fixed duration and earn contractual interests at an agreed rate of up to 5% per year depending on things like currency, duration and the policy of each individual bank. Riskier investment options may have substantially higher investment returns. If we were to delay P’s payment of costs to D, D would be deprived of the use of the money in the meantime, and suffer a financial loss. That would be wholly unfair to D. For that reason, I should refuse to vary the Order Nisi in the manner as proposed by P.

17.Mr Alwin Chan, counsel for P, suggested to me that in the scale of things, HK$121,555 is “insignificant”. With respect, I disagree. The conventional quantum of costs for a 3-minute time extension summons would be even smaller, yet such smaller sums of costs are routinely ordered to be paid forthwith at all levels of court, and rightly so. In fact, P should perhaps be asked if HK$121,555 is truly “insignificant”, why exactly did P take the trouble of taking out P’s Costs Variation Summons, instructing his solicitor to make an affirmation in support of it, and then instructing Mr Chan to argue it substantively today, incurring even more legal costs in the process, essentially just throwing good money after bad. In my view, the wisest thing for P to do has always been, and indeed still is, for P to simply pay that sum over to D forthwith as he should.

18.Even if I were to ignore all considerations of contractual bank interests and potential investment returns, I would still have refused to vary the Order Nisi in the manner as proposed by P since I take the view, for all of the reasons set out in the Decision which I shall not repeat here, that P’s drafting of the DC Leave Summons was so irresponsible it was deplorable, and that P’s leave to appeal application was wholly devoid of merits. I take the view that an order for the immediate payment of costs should be made as a discipline against unmeritorious applications.

19.As to what the Court of Appeal may or may not choose to do in the future, that is a matter for the Court of Appeal. Having checked P’s application bundle in CAMP 46/2024, it is clear to me that P is ignoring all observations in the Decision, and maintaining false assertions knowing full well they are false assertions. As such, I agree with D that there was simply no foundation for P’s Costs Variation Summons to stand on.

20.In my view, P’s Costs Variation Summons is devoid of merits. Applying the exact same principles as set out above to P’s Costs Variation Summons, P shall further pay to D all costs of and occasioned by P’s Costs Variation Summons, including the costs of today’s oral hearing, forthwith, both so as to ensure D shall have the use of the money immediately, and as a discipline against unmeritorious applications.

Final Remarks

21.I do thank both counsel for their most able assistance.