Ng Yiu Chi v. Ng Kwok Piu Philip

HCSD 21/2023

[2024] HKCFI 3552

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

APPLICATION TO SET ASIDE A STATUTORY DEMAND

NO 21 OF 2023

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D E C I S I O N

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INTRODUCTION

1.This is an application for the setting aside of a statutory demand dated 30 August 2022.  The debt claimed amounts to $18,477,687.07 in total.  This figure comprises seven sums due under three costs orders made in three groups of proceedings, together with interest.

2.The three groups of proceedings are:

(1)  HCA 51/2007, HCA 1040/2009 and HCA 1041/2009;

(2)  HCA 523/2008, CACV 281/2012 and CACV 1/2013; and

(3)  CACV 21/2016, CACV 24/2016, CACV 25/2016, CACV 26/2016, CACV 27/2016, CACV 28/2016 and CACV 29/2016.

3.In this decision, I shall refer to the above as “the restructuring proceedings”, “the share proceedings” and “the 2016 proceedings” respectively. 

4.The costs orders which give rise to the debt will be called “the first costs order”, “the second costs order” and “the third costs order”.  The details are as follows:

Costs order	Proceedings	Date of costs order	Amount due
First	Restructuring proceedings	6 January 2016	$7,397,228.35 (taxed costs) $3,946,680.24 (interest)
Second	Share proceedings	2 March 2016	$4,411,282.85 (taxed costs) $2,299,577.81 (interest)
Third	2016 proceedings	26 January 2021	$375,000 (taxed costs) $47,917.82 (interest)

5.The applicant and the respondent are siblings. I shall call them by their first names, Eleanor and Philip.  They have six other siblings – Angela, Olympia, Tony, Jeremy, Stephanie and Andrew.  Their late father, Mr Ng Po Sum, passed away in 2002. Since then, the siblings and their mother, Madam To Pui Kui, were embroiled in a series of litigation over their shareholdings in various family companies set up by the father.

6.The first costs order was made by Mimmie Chan J at the conclusion of the trial in the restructuring proceedings.  I shall refer to her written judgment dated 6 January 2016 when I construe the costs order below. 

7.The second costs order was made by the Court of Appeal on 2 March 2016 in the share proceedings.  It would be convenient to identify at the outset the written judgments which are relevant to the interpretation of that costs order.  They are:

(1)  The judgment for the trial handed down by Deputy High Court Judge Seagroatt dated 30 November 2012;

(2)  The judgment of the Court of Appeal dated 21 August 2014 disposing of the appeals brought against the trial judgment (“the appeals judgment”);

(3)  The judgment of the Court of Appeal dated 29 January 2015 ruling on the costs of the appeals and giving directions for the disposal of the costs of the trial (“the first CA costs judgment”);

(4)  The judgment of the Court of Appeal dated 24 September 2015 giving further directions for the disposal of the costs of the trial (“the second CA costs judgment”);

(5)  The judgment of the Court of Appeal dated 2 March 2016 ruling on the costs of the trial (“the third CA costs judgment”).  This is the second costs order; and

(6)  The judgment of the Court of Appeal dated 28 September 2023 dismissing an application made by Eleanor to amend the second costs order pursuant to the slip rule: see [2023] 5 HKLRD 278, [2023] HKCA 1108 (“the CA slip judgment”).

8.As regards the third costs order, it is unnecessary to refer to any written judgment.

9.Eleanor puts forward three grounds for setting aside the statutory demand.  The first ground applies to the first and second costs orders.  So does the second ground.  The third ground applies to the third costs order only.

The first ground

10.The first and second costs orders are made against Eleanor and other parties.  This gives rise to her present contention that her liability to pay under those costs orders is not joint and several. She is therefore not liable for the entire sums due under them.  However, in the statutory demand, Philip claims that she is liable for the entire sums. The demand is therefore overstated and ought to be set aside for that reason.

The second ground

11.The first and second costs orders are made in favour of Philip and other parties.  This gives rise to Eleanor’s further contention that there is no basis for Philip to claim the entire sums on his own.  For that reason, the statutory demand is also overstated.

The third ground

12.As regards the third ground, Eleanor accepts that she is liable to pay the costs under the third costs order but says that she has offered to secure or compound the debt.

13.In this application, Eleanor relies on rule 48(5)(d) of the Bankruptcy Rules, Cap 6A.  She says that it would be unjust to allow the statutory demand to stand, and to allow Philip to present a bankruptcy petition based on that would be highly prejudicial to her.

THE FIRST COSTS ORDER[2]

14.The restructuring proceedings concerned three family companies.  The main dispute was whether a restructuring of the three companies took place in 1997.  The effect of the restructuring was that all shares in those companies were beneficially vested in a holding company named Confederate Assets Group Limited (“CAGL”).  That turned on whether the signatures of the mother, Eleanor, Angela and Andrew as appearing on the restructuring documents were forgeries (para 17).

15.Philip, Olympia, Tony and Stephanie, referred to by the trial judge as “the Philip Group”, contended that the restructuring did take place.  On the other hand, the mother, Eleanor, Angela and Andrew claimed that they had never signed the restructuring documents and those signatures purporting to be theirs were all forgeries (para 14).

16.In this application, Eleanor says that in the trial, she “broadly supported Mother’s case”.  While she initially shared legal representation with the mother, Angela and Andrew, she later instructed a separate law firm to represent her and Andrew appeared in person.  She also filed her own pleadings, which were separate from those filed by the mother and Angela.  The arguments raised by her on forgery were not entirely the same as those advanced by the mother, Angela and Andrew.

17.On the last point, in her own words:

“… my case of forgery was based on my own evidence and a separate line of arguments.”

18.More specifically, in the trial, Eleanor said that the signatures “Eleanor Ng” appearing on the restructuring documents were in fact not hers, because she only signed “Ng Yiu Chi” for the family companies whereas she signed “Eleanor Ng” for other documents (para 44).

19.Mr Eugene Kwan, counsel for Eleanor, submits that this is a significant aspect of Eleanor’s case on forgery and it revolved around her distinctive signature pattern.  By contrast, Angela and Andrew advanced their own arguments regarding forgery of their own signatures and did not raise any argument on signature pattern (paras 49 to 52).

20.Mr Kwan also highlights that while the trial lasted 26 days, Eleanor’s oral evidence only took up three days.

21.The judge found in favour of the Philip Group (para 75). 

22.She made the following costs order nisi, namely the first costs order:

(1)  HCA 51/2007, in which Eleanor was the 3^rd defendant:

“There be a costs order nisi that the costs of the action be paid by the Defendants to the Plaintiffs in HCA 51/2007 action with certificate for two counsel, and such costs are to be taxed if not agreed.”

(2)  HCA 1040/2009, in which Eleanor was the 6^th defendant:

“There be a costs order nisi that the costs of the action be paid by the 1^st and 3^rd Plaintiffs and the 6^th Defendant in HCA 1040/2009 to the 2^nd to 5^th Defendants in HCA 1040/2009 with certificate for two counsel, and such costs are to be taxed if not it agreed.”

(3)  HCA 1041/2009, in which Eleanor was the 6^th defendant:

“There be a costs order nisi that the costs of the action be paid by the Plaintiffs and the 6^th Defendant in HCA 1041/2009 to the 2^nd to 5^th Defendants in HCA 1041/2009 with certificate for two counsel, and such costs are to be taxed if not agreed.”

The first ground for setting aside in relation to the first costs order

23.Eleanor contends that the first costs order could not have intended her to bear joint and several liability for the costs because:

(1)  Her case and evidence raised different issues and could be distinguished from that of the other parties.

(2)  Her oral evidence only took up a fraction of the trial time.

(3)  She filed her own pleadings.

(4)  She had separate legal representation from the other parties.

24.Nevertheless, in the statutory demand, Philip claims that Eleanor owes him the full amount under the first costs order.  Mr Kwan submits that there is clearly an overstatement and this makes it impossible for Eleanor to ascertain the correct amount of her liability under the costs order.  This is her first ground for setting aside.

The second ground for setting aside in relation to the first costs order

25.In addition, Eleanor points out that Philip is only one of the receiving parties under the first costs order.  He is only entitled to claim the costs which he had personally incurred in the proceedings, but not those costs which were incurred by the other successful parties.  Here, there is nothing to suggest that Philip was personally liable for all the costs incurred by the successful parties in the restructuring proceedings.  Hence, there is no basis for him to claim on his own the entire amount awarded under the first costs order.  This is Eleanor’s second ground for setting aside.

THE SECOND COSTS ORDER

26.The share proceedings concerned the number of CAGL shares allotted to each family member (“the allotment issue”) and the subsequent disposal of CAGL shares held in the father’s name (“the share transfer issue”).  The contentions of the parties at the trial can be gathered from the written judgments identified in para 7 above.

27.On the allotment issue, the dispute was over two versions of a resolution of CAGL dated 3 March 1997 which set out the number of shares to be allotted to each family member.  The mother contended that the version known as “the original resolution” was the valid one whereas the other version known as “the official resolution” was forged.  On the other hand, Philip, Olympia, Tony and Stephanie claimed that the official resolution was the valid one (paras 26 and 27 of the trial judgment; paras 3 and 4 of the appeals judgment).

28.On the share transfer issue, the dispute was over the validity of various transfer documents by which the father’s shares in CAGL were disposed of.  The Philip camp relied on the transfer documents, while the mother contended that the father’s signatures on those documents were forged (para 5 of the appeals judgment).

29.Eleanor says that at the trial, Angela, Andrew and she “broadly supported Mother’s position”.  However, while the mother had her own legal representation, the three of them appeared in person.  While Eleanor gave oral evidence, the trial judge observed that her testimony did not directly touch upon the issues in the trial (para 50 of the trial judgment).

30.The trial judge found in favour of the Philip camp on the allotment issue, but ruled in favour of the mother on the share transfer issue (paras 162 to 164 of the trial judgment).

31.Appeals were lodged on the rulings by the mother and the Philip camp.  The ruling on the allotment issue was upheld but the ruling on the share transfer issue was overturned on appeal.

32.In the appeals judgment, the Court of Appeal made a costs order nisi that the mother pay the costs of the Philip camp and CAGL in the appeals, but the judgment was silent on the costs as between the unsuccessful defendants (including Eleanor) and the other parties.

33.This was followed by applications taken out by both the Philip camp and the mother to vary the costs order nisi.  The Philip camp sought an order that the mother should personally pay the costs of the appeals and the costs below and that there be no order as to costs between the unsuccessful defendants and the other parties.

34.By the first CA costs judgment, the Court of Appeal affirmed the above costs order nisi relating to the appeals, and gave directions for the disposal of the costs of the trial.

35.By the second CA costs judgment, the Court of Appeal gave further directions in relation to the costs of the trial.

36.By the third CA costs judgment, the Court of Appeal made the second costs order as follows:

“1) the Plaintiff and the 2^nd, 3^rd, 6^th and 8^th Defendants [namely the mother, Eleanor, Angela, Jeremy and Andrew] shall pay 75% of the costs of the 1^st, 4^th, 5^th, 7^th and 9^th Defendants [namely the Philip camp and CAGL] in the Action HCA 523 of 2008, such costs are to be taxed if not agreed with certificate for three Counsel”; and

“2) the Plaintiff and the 2^nd, 3^rd, 6^th and 8^th Defendants shall pay 75% of the costs of the 1^st, 4^th, 5^th, 7^th and 9^th Defendants and incidental to the [costs variation application taken out by the latter], such costs are to be taxed if not agreed.”

37.In December 2022, Eleanor applied to vary the second costs order to the effect that only the mother, and not Eleanor or any of the unsuccessful defendants, should bear the costs of the Philip camp in the trial under the “slip rule”.  By the CA slip judgment, the Court of Appeal held that it did not make any accidental slip and dismissed the applications.

The first ground for setting aside in relation to the second costs order

38.Eleanor similarly puts forward the first ground in relation to the second costs order.  She contends that the order could not have intended her to bear joint and several liability because:

(1)  Her role in the trial was highly limited. 

(2)  Her case and evidence only touched upon the peripheral issue and could be separated from that of the other parties.

(3)  She appeared in person while the mother was legally represented.

(4)  In respect of Philip’s costs variation application, she did not file any submissions and did not even take part in the argument.

39.Nevertheless, in the statutory demand, Philip claims that Eleanor owes him the full amount under the second costs order.  Mr Kwan submits that there is clearly an overstatement.  She should only be held liable for the costs incurred due to her conduct of the litigation.  This is her first ground in relation to the second costs order.

The second ground for setting aside in relation to the second costs order

40.Eleanor relies on her second ground in respect of the second costs order.

THE THIRD COSTS ORDER

41.As regards the third costs order, Eleanor does not dispute her liability to pay the sum of $375,000 together with interest. 

42.However, by letters dated 27 and 29 December 2023, her solicitors wrote to Philip’s solicitors offering to secure or compound the debt.  By letter dated 2 January 2024, Philip wrote back stating that he would not accept the offer.  It is Eleanor’s stance that the rejection was unreasonable but she intends to engage in further negotiations with Philip to see if any agreement can be reached.

43.Mr Kwan suggests that if the court upholds the first and second grounds, it may allow time for Eleanor to pay the debt under the third costs order or to reach agreement with Philip on the same.  If the debt is paid or secured or compounded, the statutory demand can then be set aside.  Alternatively, the court may indicate that if the third costs order is paid or secured or compounded to the reasonable satisfaction of Philip, then any bankruptcy petition presented on the basis of the statutory demand be dismissed.  He relies on the Northern Ireland decision in James Moore v Commissioners of Inland Revenue [2001] NICh 15 in support of this approach.

LEGAL PRINCIPLES

44.The principles on (1) setting aside a statutory demand and (2) the construction of a costs order against multiple paying parties are not in dispute. 

Principles on setting aside a statutory demand

45.Rule 48(5)(d) of the Bankruptcy Rules provides that the court may grant an application to set aside a statutory demand if:

“the court is satisfied, on other grounds, that the demand ought to be set aside”.

46.The applicant bears the burden of satisfying the court that there is a valid reason that the demand ought to be set aside: DCKD v JPWL [2022] HKCFI 1059 at para 22.

47.Generally, a limited exercise is involved when one is considering an application to set aside a statutory demand.  All that the court is concerned with is whether the creditor is able to pursue bankruptcy proceedings founded on the statutory demand.  These applications are akin to a filtering process to protect the debtor against a petition being presented based on a statutory demand that is demonstrably unjustified: DCKD at para 23.

48.Where a debtor relies “on other grounds” within rule 48(5)(d), the question for the court remains whether the creditor is entitled to rely on the non-compliance with the statutory demand to found a petition, and whether it would be just to allow the statutory demand to be relied on for a bankruptcy petition to be brought: DCKD at paras 25 to 26.

49.The fact that a debt in a statutory demand is overstated does not render the statutory demand invalid.  Where only a part of the debt is disputed, the statutory demand still stands and a bankruptcy petition can properly be presented on the basis of the statutory demand, unless the undisputed or indisputable portion of the debt has been paid: Cheung Sun Lam v Lai Kam Man CACV 148/2011, 18 March 2013 at para 33; Re Cheung Chung [2019] HKCFI 2770 at para 9.

Principles on construing a costs order against multiple paying parties

50.Where a costs order is against more than one paying party and is silent on the parties’ liabilities, the principles determining whether a paying party’s liability is joint and/or several and whether it can be apportioned are discussed by Acting Registrar Wong King Wah of the Court of Final Appeal in Securities and Futures Commission v Yiu Hoi Ying Charles (No. 2) (2021) 24 HKCFAR 382, [2021] HKCFA 41:

(1)  The general starting point is that the liability to pay the winning party’s costs under such order should be joint and several, except in respect the separate case or cause raised by one of the losing parties, and in that case, that losing party alone is solely liable for the costs incurred by the winning party in meeting the separate case or cause (para 32(ii)).

(2)  This starting point is not be elevated to the status of a hard and fast legal principle.  Rather, it is an application of a more general principle of costs, namely, it being a discretion of the court taking into consideration of all circumstances including, inter alia, who is the winner and the parties’ conduct  (para 32(iii)).

(3)  Where one party raises a separate cause or defence of his own that can be distinguished from the others, or when the parties are truly divorced one from another or evidence falling into real compartments, parties are not liable on a joint and several basis (para 32(iv)).

(4)  However, the fact that the losing parties are separately represented, or that their cases were not consolidated, or that one is less active than the others are not determinative in deciding whether special circumstances or exception have been shown (para 32(iv)).

(5)  Parties will be held jointly and severally liable for the costs of their adversary if they have acted in a coordinated and concerted manner, or supported each other’s case until they are no longer mutually supportive, or pressed on their common cases despite raising different grounds, or, while being real and justifiable (as against nominal) defendants, they sought to obtain benefit from the active resistance of the other defendant, even if they were less active and even willing to abide by any judgment of the court (para 32(iv)).

51.As explained in Stumm v Dixon & Co (1889) 22 QBD 529, a paying party is liable to pay all the costs caused to the receiving party by his act or conduct.  This is true whether there is one or more than one paying party.

52.In the case of one paying party only, it was said, at 533:

“But the common form of “judgment for plaintiff with costs” does not in the case of a single defendant mean that the defendant is to pay all the costs incurred by the plaintiff, or all the costs reasonably incurred by him.  It means that the defendant is to pay all the costs caused to the plaintiff by the act of the defendant.  … The meaning of the common form is, that the plaintiff is to recover the costs caused to him by the defendant. ” (underline added)

53.Applying this principle to where there are more than one paying parties, it was said, at 533-534:

“When an action is tried against two or more defendants, and any defendant separates in his defence, and the judgment is against all, the law is that each of them is liable for the damages awarded by the judgment, and each of them is liable for all costs taxed on his behalf as properly incurred by him in the maintenance of his action, except as to costs caused to him by so much of the separate defence of any defendant as is, and can only be, a defence for that defendant as distinguished from other defendants. With regard to such costs so caused to the plaintiff, he is entitled by law to recover them against that defendant alone who has caused him to incur them.” (underline added)

54.It was explained that natural justice requires that one defendant should not be liable for the costs occasioned solely by the act of the other defendant (at 536). 

55.When determining whether the costs liability is joint and several, the general question to consider is whether the costs incurred by the receiving party in maintaining his case was caused by the conduct of the paying party in question.  That is why it is said in Yiu Hoi Ying Charles that even if a paying party was less active than the others, the liability to pay could be joint and several if all the parties acted in a coordinated manner or supported each other’s case.  This is because in this situation, it can properly be said that the conduct of all the paying parties had caused the receiving party to incur the costs to maintain his action.

56.Where the liability to pay costs is joint and several, the receiving party may go after any one of the paying parties for the full amount of the costs.  If any one of them satisfies such liability, he should be entitled to apply to the court for an apportionment of the liability among the paying parties: Law Yin Pok Bosco v Dr Chan Yee Shing [2021] HKCFI 3058 at para 52.

DISCUSSION

57.I shall deal with the application with reference to the three grounds put forward by Eleanor.

The first ground

58.The first ground applies to the first and second costs orders.

59.The starting point is that both costs orders should be regarded as imposing joint and several liability on Eleanor and the other paying parties.  It is for Eleanor to show that she should not be liable for all the costs incurred by the Philip camp.  The main submission of Mr Kwan is that in the restructuring proceedings, her case and evidence raised different issues and could be distinguished from the other parties, and in the share proceedings, her role was highly limited and her case and evidence could similarly be separated from the others.

60.On this issue, the proper approach is to examine the conduct of Eleanor in the two sets of proceedings on an overall basis and ask the question whether her conduct had caused the Philip camp to incur the costs which they did in running their case.

61.I shall deal with the first costs order first.

62.As to what case Eleanor was running and how she was running it at the trial, I highlight the following passages in the trial judgment.

63.The judge recorded that it was the case of Eleanor, the mother, Angela and Andrew that all the signatures purporting to be theirs were forged.  In other words, Eleanor not only said that her signatures were forged, she was also saying that the other’s signatures were also forged.  The mother, Angela and Andrew took the same position.

“14. … On the other hand, Mother, Eleanor, Angela and Andrew claim that they had never signed the relevant Restructuring Documents on which their signatures appear, and that those signatures were all forgeries. They deny that the Restructuring ever took place.

…

18. According to the Combined Defence and Counterclaim of Mother, Angela and NSMAL (“Mother Group”), … Mother, Eleanor, Angela and Andrew did not sign the Restructuring Documents, which Restructuring Documents were forged, or invalid. … Angela claims that the signatures appearing in the minutes of the meetings of HCL, allegedly held in May 1997, and in the instrument of transfer of her HCL shares to CAGL, are forgeries.

19. Likewise, Eleanor denies that any Restructuring took place in 1997. She claims that the signatures appearing in the minutes of the meetings allegedly held in May 1997 and purporting to be hers, and those of Mother and Andrew, were all forged. She further denies that she had ever held any shares in HEL on trust, and claims that the signature purporting to be hers and appearing in the Declaration of Trust relating to 280 shares in HEL are also forged.” (underline added)

64.It was in fact Eleanor’s submission that if any one of the signatures, whether it was hers or not, was forged, then the restructuring was ineffective.  The trial judge recorded the submission of Eleanor’s counsel at para 37:

“… Mr Tang, Counsel for Eleanor, emphasized that the final case of the Philip Group, as advanced at the trial of these proceedings, is that the shareholders of HEL, HCL and HCIL had “unanimously agreed” to, and resolved on, the Restructuring.  Hence, Mr Tang argued that so long as the Court can be satisfied that any one of the signatures on the Restructuring Documents is forged, there is no other evidence of unanimous consent and agreement to the alleged Restructuring.” (underline added)

65.Eleanor, the mother, Angela and Andrew also put forward a common case of why the Philip Group forged the restructuring documents.  The trial judge recorded it at para 53:

“The whole basis of the claims made by Eleanor, Angela and Andrew, that the Restructuring Documents are forged by the Philip Group, is that the Philip Group wish to wrestle control of the Family Companies after Father’s death, to manipulate for the sale and division of the landed properties against Mother’s wishes, and otherwise to further the interests and benefits of the Philip Group.”

66.In light of what the trial judge recorded, I do not agree with Mr Kwan’s submission that Eleanor’s case raised different issues from the mother, Angela and Andrew. 

67.On the contrary, looking at the matter broadly, they together put up a united front in running the case of forgery in the restructuring trial.  While each of them asserted that his or her own signatures were forged, the common position adopted by them was that the signatures of all of them were forged.  They also put forward the same theory why the forgery was engineered by the Philip Group.  It is true that Eleanor made the “signature pattern” argument in respect of her own signatures, which was unique to her case.  That was nonetheless part of the overall forgery case run by her, the mother, Angela and Andrew.  That she had her own theory about her own signatures does not detract from the overall position taken by the group.  In fact, Eleanor accepts in this application that she “broadly supported” the mother’s position at the trial. 

68.Eleanor now emphasises that she had her own legal representation at the trial and filed her own pleadings.  I accept that these are factors which I should take into account.  However, when one looks at the case and position adopted by Eleanor in substance, it is clear that the separate legal representation and separate pleadings do not alter the reality that she, together with the mother, Angela and Andrew, put forward the same case.  And it was this case that the Philip Group were to meet at the trial. As such, the case jointly pursued by Eleanor, the mother, Angela and Andrew had caused the Philip Group to incur their costs.  The costs liability should therefore be joint and several.

69.As regards the second costs order, similarly, I do not accept that Eleanor’s role was highly limited in the share proceedings, as suggested by Mr Kwan.  Contrary to that submission, in the judgments given by the Court of Appeal, it was observed that the litigation was in substance between the two different camps of siblings and Eleanor was in one of the two camps.

70.In the first CA costs judgment, when determining whether the mother, suing in her capacity as the administratrix of the late father, should pay the costs of the Philip camp personally or such costs be borne by the estate, the Court of Appeal observed:

“12. … Though on the face of the pleadings the claims were advanced on behalf of the estate, it is clear that in substance the disputes are fought between the children with the plaintiff [ie the mother] siding with some of them against the successful defendants. The plaintiff also had her personal interest in advancing the claim on the allotment issue. The reality of the situation is borne out by the fact that some of the children gave evidence for the plaintiff against the successful defendants at the trial whilst the plaintiff herself chose not to testify and the stance taken by such children in the appeals. …

…

14. … Taking account of these matters, it can readily be seen that in essence the disputes were between the two camps in the family.

…

19. Since the plaintiff acted for her own benefit in pursuing the claims and the appeals and the battle was essentially between two different camps in the family, we shall dismiss the plaintiff’s application for an indemnity from the estate.” (underline added)

71.In the CA slip judgment, the Court of Appeal once again observed that the fight was between the two camps of siblings, at para 6 (Eleanor being the 2^nd defendant):

“Rivalry between the siblings and the mother had split the family into two camps, namely the plaintiff, the 2^nd, 3^rd, 6^th and 8^th defendants (“Mother’s Camp”) on the one hand, and the 1^st, 4^th, 5^th, 7^th and 9^th defendants (“Philip’s Camp”) on the other.”

72.The Court of Appeal also commented on the role played by Eleanor, suggesting that it was not a “highly limited” role as now suggested by Eleanor.  See para 25:

“The position in relation to the trial, where the Unrepresented Defendants, although unrepresented, took part and gave evidence, was different from that on appeal, where they played little active role.”

73.It is plain from the above that in the share proceedings, Eleanor was in one of the two rival camps and her camp opposed the case of the Philip camp and as such caused the latter to incur costs.  Such costs should be borne by her camp on a joint and several basis.

74.To conclude, the liability under the first and second costs orders is joint and several.  Having taken up the same position and running the same case as the others in her camp, Eleanor is liable for the entire costs of the Philip camp.  It may however be open to her to claim apportionment from the other members of the camp.  The first ground for setting aside should be rejected.

The second ground

75.The second ground applies to the first and second costs orders.

76.Mr Kwan contends that Philip is only entitled to claim the costs which he had personally incurred in the proceedings, but not those costs which were incurred by the other successful parties.  He relies on the authority of Ellingsen v Det Skandinaviske Compani [1919] 2 KB 567.

77.The principle was stated as follows, at 569:

“As the principle of allowance of costs is that the successful party is to be recompensed the liability he has reasonably incurred in defending himself, if he is only liable to his solicitor for half of certain joint items he cannot be allowed the whole of them …”

78.Mr Kwan further contends that where there is no express agreement concerning the division of costs, a general rule of thumb is to divide them equally between the relevant parties.  But where costs can be shown to be attributable to one party rather than another, the liability falls on that party: Meretz Investments NV v ACP Ltd [2008] 1 Costs LR 42 at para 30.

79.Here, Mr Kwan submits that there is nothing to suggest that Philip was personally liable for all the costs incurred by the successful parties in the two sets of proceedings.  Hence, there is no basis for him to claim on his own the entire costs. 

80.On the other hand, Mr Adrian Lai, appearing with Mr Raymond Tsang for Philip, relies on the principle stated in Re Chan Chi Loi (a debtor) [2007] HKCLRT 447, namely that where the costs order does not distinguish the costs payable to the individual receiving parties, the costs are joint debts in nature and one of them is entitled as creditor to claim the entire costs from the paying party and issue a statutory demand for the whole sum.

81.At para 16, Chu J said:

“As regards the law, in each of the three aforesaid actions, the costs order awarded by the Court in favour of the defendants was one set of costs which did not distinguish the costs payable to the individual defendants. Therefore, the costs are joint debts in nature and the various defendants are jointly and severally entitled to the taxed costs. As one of the defendants in those actions, the creditor is certainly entitled to the taxed costs and to pursue the same against the debtor. Therefore, in respect of the debts arising out of the costs, he has locus standi as a creditor and is entitled to issue a statutory demand. Once the debtor paid to him all the taxed costs, the debtor’s obligation under the costs orders would not be discharged in full, and the other defendants could not make another claim against him for the same matter despite their also being beneficiaries of the costs orders. …”

82.This principle was confirmed by the Court of Appeal in Cheung Sun Lam at para 29.

83.In my view, the principle stated in Chan Chi Loi plainly applies to the present case.  As a matter of law, Philip is prima facie entitled to claim on his own the entire costs under the first and second costs orders against Eleanor. 

84.At the same time, I do not take issue with Mr Kwan’s reliance on the principle set out in Ellingsen.  In this application, the burden is however not on Philip to show that he was personally liable to the solicitors for all the costs of the receiving parties.  The burden is on Eleanor to show otherwise. 

85.In this regard, it has been said that where more than one person jointly instruct a solicitor in the same case, then as between them and the solicitor, they are jointly and severally liable for his costs, absent any evidence to the contrary: Mahmood v Penrose [2004] EWCA Civ 1254 at para 8, per Neugerger LJ.  It is for Eleanor to adduce such contrary evidence in the present case.  She has not done so.

86.The second ground for setting aside is therefore not valid.

The third ground

87.The third ground applies to the third costs order.

88.Eleanor accepts that she is liable for the costs and interest.  She also accepts that at this setting aside stage, the court is not concerned with the issue of whether Philip’s refusal of her offer is reasonable or not.  That is an issue to be considered at the bankruptcy petition stage: Re a debtor (No 415-SD-1993) [1994] 1 WLR 917 at 922A-925B. 

89.Furthermore, Eleanor has not put forward any reason to support her suggested approach set out in para 43 above. 

90.Hence, there is no reason for setting aside the statutory demand in respect of the third costs order.  The third ground fails.

CONCLUSION

91.None of the grounds put forward by Eleanor are valid. I dismiss the setting aside application. 

92.I make a costs order nisi that Eleanor should pay the costs of Philip, including any reserved costs, to be summarily assessed if not agreed, with a certificate for one counsel (Mr Adrian Lai).  Philip has already lodged his statement of costs.  Eleanor should submit her list of objections, if any, on or before 23 December 2024.  The list should be within two pages.  The summary assessment will be conducted on paper after the deadline.

93.Pursuant to rule 48(7) of the Bankruptcy Rules, I authorise Philip to present a bankruptcy petition against Eleanor on or after 23 December 2024.

Mr Eugene Kwan, instructed by Kenneth Poon & Co, for the applicant

Mr Adrian Lai and Mr Raymond Tsang, instructed by Philip SW Chan & Co, for the respondent