Chan Kon Fung v. Gallop Pioneer Ltd and Others

HCA 1357/2011

[2024] HKCFI 2119

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1357 OF 2011

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BETWEEN

(BY ORIGINAL ACTION)

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AND BETWEEN

(BY COUNTERCLAIM)

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DECISION ON COSTS

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1.This is the decision on costs following the trial of this action: see Judgement dated 12 July 2024 ([2024] HKCFI 1766).

2.Unfortunately, Chan[1] has ceased to instruct lawyers after the handling down of the Judgment.  He has not responded to the costs proposals made by the other parties pursuant to the directions of this court, nor filed submissions on costs.  Consequently, the matter cannot be disposed of on paper and more costs are incurred. 

3.Chan did not appear at the hearing this morning.  I am satisfied that proper notice of this hearing had been given to him by (a)  the court via a letter posted to him and (b)  by the other parties by way of service of their submissions via emails. 

4.Broadly speaking, PRCYT and Gallop are the winners after trial with Chan and HKPS the losers.  HKYT was properly joined in this action, although PRCYT’s causes of action against it had failed: see para 141 of the Judgment. 

5.With the exception of Chan, the parties have agreed that there should be no order as to costs between PRCYT and each of Gallop, HKPS and HKYT.  Accordingly, I make such an order in respect of the costs of PRCYT’s counterclaim against these parties (with the exception of Chan).

6.In respect of the costs between PRCYT and Chan, the former submitted that the latter should pay its costs of this action and its costs of the counterclaim against the latter (including all costs reserved)  with a certificate for 2 counsel, to be taxed if not agreed.

7.PRCYT is the winner on the main dispute, namely, the Categorisation Issue.  Although PRCYT’s causes of action against Chan based on dishonest assistance of breach of fiduciary duties on the part of HKPS and HKYT had failed, they were not the focus of the trial.  I agree with Ms Kang, who appeared for PRCYT, that Chan’s persistence in contesting the Categorisation Issue was unreasonable taking into consideration the evidence of the accounting experts, including that of his own.

8.Considering the matters in the round, I accept PRCYT’s contention and make an order in terms as suggested in para 6 above.

9.In respect of G/L and Chan, G/L say that Chan should pay their costs, including all costs reserved, of the action as well as their counterclaim with a certificate for 2 counsel, save that there be no order as to the costs of and occasioned by, including costs reserved in relation to, the Non-pursued Issues as defined in a Joint Letter lodged by Chan and G/L dated 30 January 2024.

10.There can be little doubt that G/L are the overall winners vis-à-vis Chan.  I make the order proposed in the preceding paragraph, save that the certificate should not cover this hearing.

11.As regards the costs of HKPS and HKYT which arose out of the former’s contribution notice and the latter’s counterclaim, they submitted that notwithstanding the failure of PRCYT to make out the causes of action against them their claim against Chan was properly grounded, because (a)  the erroneous instructions over the booking of PRCYT’s 18% contribution was given by Zhou acting as the personal assistant of Chan, which had played a primary role in this action (Judgment, [70]); and (b)  if not for Chan’s litigation against Gallop, the parties might have been able to work out a satisfactory solution over PRCYT’s “missing contribution” amicably (Judgment, [142]). 

12.Therefore, but for the mistakes of Zhou and the position taken by Chan in this action, HKPS and HKYT would not have been sued by PRCYT and would not have incurred respectively the costs of the contribution notice and the counterclaim.  It was noted in para 36 of the Judgment, that Chan conceded on the liability to the contribution notice and counterclaim in the event that PRCYT’s causes of action in question were made out.  HKPS and HKYT ask that the costs of the contribution notice and counterclaim be paid by Chan. 

13.I agree with the submissions by HKPS and HKYT and order that the costs of HKPS’s contribution notice and HKYT’s counterclaim against Chan, including all costs reserved, be borne by Chan.  As regards the costs of the action between Chan and HKYT, I make no order as to costs.

14.All costs orders are to be taxed if not agreed.

15.Lastly, I am grateful to counsel for their assistance.

Mr Mike Lui SC and Mr Jun Lee, instructed by Benjamin Au & Billy Chan, for 1^st and 2^nd Defendants (by original action)  and 4^th Defendant (by counterclaim)

Ms Kinsey Kang, instructed by Kwan & Chow & Co., for 3^rd Defendant (by original action)  and Plaintiff (by counterclaim)

Mr Lau Ka Kin, instructed by Cheung & Yip, for 4^th Defendant (by original action)  and 3^rd Defendant (by counterclaim)

Mr Lau Ka Kin, instructed by Cheung, Chan & Chung, for 2^nd Defendant (by counterclaim)

Plaintiff (by original action)  and 1^st Defendant (by counterclaim), acting in person and being absent