Leung Chi Cheong (The Person Appointed To Represent the Estate of Leung Fai, Deceased) v. Liu Che Wun and Another

HCA 1128/2007

[2025] HKCFI 367

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1128 OF 2007

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BETWEEN

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DECISION ON COSTS

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A.  INTRODUCTION

1.In this Decision on Costs, unless otherwise stated, I shall adopt the abbreviations used in the Judgment of this court dated 2 September 2024 (“Re-hearing Judgment”).

2.By the Judgment dated 20 August 2021, ie [2021] HKCFI 2435 (“Judgment”), this court found in favour of the 1^st defendant’s primary case on adverse possession and dismissed the plaintiff’s claim against the 1^st defendant.  No determinations were made on the other causes of action advanced by the 1^st defendant.

3.On appeal by the plaintiff as the personal representative of the Estate of his father, the Deceased, and by a Judgment dated 6 September 2022 (“Appeal Judgment”), the Court of Appeal allowed the appeal, set aside the orders made in the Judgment, and ordered that the remaining outstanding issues of (a)  constructive trust and/or proprietary estoppel; and (b)  the 1^st defendant’s entitlement under the IPFDO be remitted to this court for determination.

4.On costs, the Court of Appeal ordered that:

“71. There will be an order nisi that the plaintiff’s costs of the appeal be borne by the 1^st defendant to be taxed if not agreed. The costs below be reserved to the Judge upon the determination of the outstanding issues.”

5.Following a re-hearing on 9 January 2024 and by the Re-hearing Judgment, this court found in favour of the 1^st defendant on all the remaining outstanding issues.  At §72 of the Re-hearing Judgment, this court made the costs order as follows (the “Costs Order Nisi”):

“72. I order that the costs relating to the determination of the issues set out at paragraph 3 above (including all costs reserved, if any)  be paid by the plaintiff to the 1^st defendant, such costs are to be taxed if not agreed. The plaintiff’s and the 1^st defendant’s own costs are to be taxed in accordance with the Legal Aid Regulations.”

6.The parties agree that the Costs Order Nisi deals with both costs of the re-hearing on 9 January 2024 as well as costs of the action reserved by the Court of Appeal, ie all costs incurred before this court.

7.By Summons dated 20 September 2024 (the “Summons”), the plaintiff seeks, inter alia, to vary the Costs Order Nisi as follows:

(1)  The costs of the hearing on 9 January 2024 relating to the determination of the issues in paragraph 3 of the Re-hearing Judgment be paid by the plaintiff to the 1^st defendant, to be taxed if not agreed;

(2)  Save as provided in paragraph (1)  above, the plaintiff do pay the 1^st defendant 40% of her costs of this action, including the trial from 11 to 13, on 16 November 2020, from 7 to 8 December 2020 and on 10 February 2021 (including all costs reserved, if any), to be taxed if not agreed;

(3)  Save as provided in paragraph (1)  above, the 1^st defendant do pay the plaintiff 60% of his costs of this action, including the trial from 11 to 13, on 16 November 2020, from 7 to 8 December 2020 and on 10 February 2021 (including all costs reserved, if any), to be taxed if not agreed;

(4)  The plaintiff’s own costs be taxed in accordance with the Legal Aid Regulations; and

(5)  The 1^st defendant’s own costs be taxed in accordance with the Legal Aid Regulations.

8.By Consent Summons dated 16 October 2024, the parties agreed that the application under the Summons be disposed of on paper.

B.  BACKGROUND

9.The material facts of this case have been set out at §§1 to 16 of the Judgment and at §§4 to 20 of the Re-hearing Judgment.

10.For present purposes, the following procedural background of these proceedings is most relevant:

(1)  On 10 September 1992, in HCA 6145/1992, Birkenhead commenced proceedings against the Deceased for, inter alia, possession of a large piece of land including the Land.  The Deceased counterclaimed for possessory title thereto on the ground of adverse possession;[1]

(2)  In 2001, the 1^st defendant applied to be joined as a party in the 1992 Action on the ground that she also had interest in the Land, but in 2009 withdrew her application thinking that the Deceased’s said claim would protect her interest and status relating to the Land;[2]

(3)  On 2 February 2011, after the Deceased’s passing, the Deceased’s counterclaim in the 1992 Action partially succeeded when the court held that he had acquired good possessory title of the Land through adverse possession against Birkenhead;[3]

(4)  Separately, in the current action, the 1^st defendant’s initial pleaded case referred to joint ownership of the Land by the 1^st defendant and the Deceased through adverse possession as joint tenants, with the 1^st defendant later becoming the only person entitled to a good possessory title after the Deceased’s passing via the right of survivorship;

(5)  On 8 December 2020, after the parties had lodged their respective Closing Submissions, the 1^st defendant lodged a note stating that she was not pursuing the right of survivorship argument in its joint adverse possessors claim;

(6)  On 9 December 2020, the 1^st defendant filed and served her Re-Re-Amended Defence and Counterclaim with deletions making clear that her adverse possession claim is based on the 1^st defendant and the Deceased being tenants in common; and

(7)  On 3 February 2021, the 1^st defendant filed and served her Supplemental Closing Submissions on her amended case.

11.In gist, the plaintiff’s application to vary the Costs Order Nisi is based on three grounds:

(1)  The 1^st defendant abandoned its argument on adverse possession as joint tenants at a very late stage of the action, wasting time and costs;

(2)  The 1^st defendant’s claim that she had possessory title of the Land being an adverse possessor with the Deceased as tenants in common was ultimately rejected on appeal; and

(3)  The 1^st defendant’s withdrawal of its joinder application to the 1992 Action necessitated the plaintiff to come before the court to twice prove how the Land was occupied since 1980, when the subject in dispute could have been dealt with in one go during the 1992 Action.

12.On the other hand, the 1^st defendant contends that the Costs Order Nisi should be made absolute for the following reasons:

(1)  Although the 1^st defendant’s claim of adverse possession as tenants in common was defeated on appeal, the 1^st defendant nevertheless remains the overall winning party following the Re-hearing Judgment which dismissed all of the plaintiff’s claims, costs should therefore follow the event;

(2)  The evidence prepared and adduced at trial are relevant and necessary to all causes of action, such that one cannot single out any part relating only to the 1^st defendant’s withdrawn or rejected claims, such costs are, in any event, minimal;

(3)  Further, the 1^st defendant’s rejected claim is only an alternative cause of action for the same relief, and not an issue so distinct and separate in itself that the decision thereof constitutes an “event” of its own; and

(4)  The 1^st defendant’s withdrawal of her joinder application to the 1992 Action is irrelevant as it had been dealt with by the Judgment and no adverse comments had been made by this court.

C.  RELEVANT LEGAL PRINCIPLES

13.It is trite that the court has a wide discretion in matters relating to costs; it may order costs to follow the event or make some other order if the circumstances so justify: Order 62, rule 3(2), Rules of the High Court, Cap 4A (“RHC”).  In the exercise of its discretion, the court may take into account such factors under Order 62, rule 5, RHC:

“(1)  The Court in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account—

(aa)  the underlying objectives set out in Order 1A, rule 1;

...

(e)  the conduct of all the parties;

(f)  whether a party has succeeded on part of his case, even if he has not been wholly successful;

...

(2)  For the purpose of paragraph (1)(e), the conduct of the parties includes—

(a)  whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(b)  the manner in which a party has pursued or defended his case or a particular allegation or issue;

(c)  whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim; and

(d)  conduct before, as well as during, the proceedings.”

14.Further, it is an established principle that where a party who is overall successful in the outcome has raised issues or made allegations on which he fails that has caused a significant increase in the length or costs of the proceedings, he may be deprived of the whole or part of his costs.  See Re Elgindata Ltd (No.2) [1992] 1 WLR 1207 at p.1214:

“The principles are these. (i)  Costs are in the discretion of the court, (ii)  They should follow the event, except when it appears to the court that in the circumstances of the case some other order should be made. (iii)  The general rule does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or cost of the proceedings he may be deprived of the whole or a part of his costs. (iv)  Where the successful party raises issues or makes allegations improperly or unreasonably, the court may not only deprive him of his costs but may order him to pay the whole or a part of the unsuccessful party's costs.” (Emphasis added)

15.What amounts to an “issue or allegation” in the context of principle (iii)  of Elgindata, ibid, and Order 62 rule 5, RHC is to be widely construed.  The test set out in Seepersad v Persad [2004] UKPC 19, ie that an issue should be something so distinct and separate in itself that the decision of it constitutes an event, has been criticised for being too narrow after the Civil Justice Reform: Chan Shun Kei t/a Chan Shun Kei Construction Works v Hong Kong Construction (Hong Kong)  Ltd, CACV 192/2014 (unrep, 07/03/2016)  at §25.

16.Moreover, as can be seen from the above, an order to deprive the successful party wholly or partly of his costs under principle (iii)  of Elgindata, supra is distinguished from an order for that party to pay the whole or a part of the unsuccessful party’s costs under principle (iv).  The latter requires that the overall successful party is shown to have raised issues or made allegations unreasonably or improperly: Chan Shun Kei, supra, at §§36-37; Hong Kong Kam Lan Koon Ltd v Realray Investment Ltd [2005] 4 HKC 162 at §§10-11.

17.Ultimately, the court will take an overall view of the justice of the case to arrive at a suitable order.  The court will not generally go into a minute examination of whether each issue, sub-issue or arguments therein have been argued successfully by the parties: Cathay Pacific Airways Ltd v Kwan Siu Wa Becky & Ors, FACV 5/2012, (unrep, 26/07/2013)  at §4.

D.  DISCUSSION

D1.  The 1^st defendant’s abandoned and/or rejected claims

18.Applying the above principles, I see fit to deprive the 1^st defendant of a part of her costs pursuant to principle (iii)  of Elgindata, supra, for abandoning and/or failing on her claims based on adverse possession (ie her abandoned claim of adverse possession as joint tenants and her failed claim of adverse possession as tenants in common).

19.First, for the purpose of applying principle (iii), I am satisfied that the 1^st defendant’s claims on adverse possession amount to independent issues.  I agree with the plaintiff that these claims, being fundamentally different in substance, are clearly discrete from the 1^st defendant’s other causes of action on constructive trust and/or proprietary estoppel, and the IPFDO.  Alternatively, they are so distinct and separate by themselves that a decision thereof constitutes an “event” of its own.

20.Second, as the 1^st defendant’s failed claim on adverse possession as tenants in common was put forward as her primary case, it constituted a significant issue at trial.  On this basis, it must have warranted considerable attention and preparation from the parties.  I thus agree with the plaintiff that the costs of argument should be reflected in the costs order by a partial deprivation of the 1^st defendant’s costs despite her overall success in the outcome of the action.

21.Having said that, when looking at the action as a whole, I find that the proportion of time and/or costs taken up by the 1^st defendant’s claims on adverse possession is not as significant as the plaintiff has put it.

22.Indeed, the bulk of the 7-day trial was used to establish matters of general relevance.  Evidence was adduced on the relationship between the Deceased and the 1^st defendant as husband and wife, the circumstances surrounding the couple’s divorce, and the Deceased’s personality etc., all of which equally go to the 1^st defendant’s other causes of action.

23.Importantly, the factual findings from the first trial were undisturbed by the Court of Appeal.[4] At §5 of the Re-hearing Judgment, I also noted that:

“5. In general, this court found in the Judgment that the 1^st defendant’s case was consistent from start to finish; her evidence is corroborated by an independent witness; and ultimately, her evidence regarding her joint management of the business carried out on the Land was accepted in its totality. On the other hand, the court rejected the plaintiff’s evidence in different sections on various issues in the Judgment for reasons stated therein.”[5]

24.It is for this reason that I adopted the factual findings from the first trial in determining the remaining outstanding issues, and no further oral evidence was heard at the re-hearing.

25.Therefore, while I take the plaintiff’s point that the 1^st defendant had, quite undesirably, abandoned her claim at a late stage of the action, I am not of the view that this case calls for a costs deprivation of an extent as drastic as what the plaintiff has suggested in his proposed varied costs order.

26.Further, in respect of the position under principle (iv)  of Elgindata, supra, I do not see fit to make an order for the overall successful 1^st defendant to bear the whole or part of the overall unsuccessful plaintiff’s costs.  Given that the plaintiff has not in his submissions advanced any allegations or real reasons that the 1^st defendant had been unreasonable or improper in pursuing the said claims, I do not find that there are special circumstances justifying such an exceptional costs order.

D2.   The 1^st defendant’s withdrawal of her joinder application

27.As to the 1^st defendant’s withdrawal of her joinder application to the 1992 Action, it is difficult to see how this is in any way relevant to the present Summons.

28.First, at §9 of the Judgment, this court already addressed with no adverse comments the 1^st defendant’s act of withdrawal and her explanation for doing so.

29.In addition, while the 1992 Action and the current action both pertain to the issue of title over the Land, I explained at §24 of the Judgment that in fact the two actions are each concerned with entirely different aspects of the same subject matter:

“As submitted by the 1^st defendant, single and joint possession can be exercised by several persons (usually in the context of a family situation). When more than one squatter has possession simultaneously, the title acquired is held by the squatters jointly...In those circumstances, vis-a-vis the outside world including the registered owner of the land, adverse possession is by one single and joint family unit. Each one of the possessors can defend the owner’s suit to recover possession. The 1992 Action is a contest between the Deceased and [Birkenhead] in the above context. The 1992 Action did not deal with, let alone resolve, any question of relationship among the joint possessors within the family or whether licences have been granted by one of the possessors to the others.” (Emphasis supplied)

30.In other words, there is no overlapping of the issues in the two actions, and the Deceased had not expended any effort into arguing his position vis-à-vis the 1^st defendant in the 1992 Action.  I am therefore unconvinced by the plaintiff’s submission that there is any duplication of costs in this regard.

E.   CONCLUSION

31.By reason of the foregoing, I order that the Costs Order Nisi be varied in the following manner:

(1)  The costs of the hearing on 9 January 2024 relating to the determination of the issues in paragraph 3 of the Re-hearing Judgment be paid by the plaintiff to the 1^st defendant, to be taxed if not agreed;

(2)  Save as provided in sub-paragraph (1)  above, the plaintiff do pay the 1^st defendant 70% of her costs of this action, including the trial from 11 to 13, on 16 November 2020, from 7 to 8 December 2020 and on 10 February 2021 (including all costs reserved, if any), to be taxed if not agreed;

(3)  The plaintiff’s own costs be taxed in accordance with the Legal Aid Regulations; and

(4)  The 1^st defendant’s own costs be taxed in accordance with the Legal Aid Regulations.

32.Bearing in mind the outcome in paragraph 31 above, and that the 1^st defendant did not concede to any variation of the Costs Order Nisi, I further order that the costs of and occasioned by the Summons be paid forthwith by the 1^st defendant to the plaintiff, with the plaintiff’s and the 1^st defendant’s own costs be taxed in accordance with the Legal Aid Regulations.

Mr Tommy Lo, instructed by Messrs W K To & Co, for the plaintiff

Mr Erik Shum, instructed by Messrs Simon Cheng & Co, for the 1^st defendant