Lo Fong Hung v. Fung Yuen Kwan, Veronica and Another

HCMP 2219/2020

[2025] HKCFI 3101

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2219 OF 2020

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RULING ON COSTS

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A.  Introduction

1.This is my ruling on costs in respect of the Summons dated 13 October 2023 (“Summons”) taken out by the Intended Intervener (“Madam Chiu”) for leave to intervene in the trial of the preliminary issue in these proceedings (the “Trial”).

2.The background facts have already been set out in my recent decision on the Preliminary Issue, i.e. [2025] HKCFI 2351. For the present purpose, the salient ones may be stated as follows.

3.The 2^nd Respondent (the “Company”) was at all material times a company incorporated in Hong Kong, with an issued share capital of HK$10,000 divided into 10,000 shares of HK$1.00 each. The Petitioner (“Madam Lo”) has been a shareholder holding 3,000 shares of the Company, whereas the 1^st Respondent (“Ms Fung”) has been holding the remaining 7,000 shares of the Company. It is Madam Lo’s case that Ms Fung has been holding the said 7,000 shares as a nominee for one Sam Pa (“Sam Pa”).

4.On 1 November 2022, Mr. Justice A Chan made an order directing that there be a trial of the preliminary Issue, namely, whether the Co-operation Agreement as pleaded in paragraph 20 of the Petition was entered into between Madam Lo and Sam Pa. The Trial was scheduled to be heard before me from 17 November 2023 (with 8 days reserved).

5.Madam Chiu is the wife of Sam Pa. She made 2 affirmations for Madam Lo for the purpose of the Trial. On 13 October 2023, Madam Chiu took out the Summons for leave to intervene in these proceedings together with consequential directions. The Summons was returnable before me on 1 November 2023, only about two weeks before the Trial. In the Summons, Madam Chiu applied for, inter alia, the adjournment of the Trial and for further directions including the filing of pleadings, exchange of lists of documents and witness statements on the issue of the ownership of 7,000 shares of the Company (registered under the name of Ms Fung).

6.The Summons was supported by Madam Chiu’s 3^rd Affirmation. Madam Chiu took out the Summons on the following basis:-

(1)  She had commenced divorce proceedings against Sam Pa in September 2023; and that she would seek ancillary relief against the estate of Sam Pa, which would include the 7,000 Shares in question.

(2)  She would testify for Madam Lo at the Trial; and that this Court may have to make findings on whether Ms Fung was holding the 7,000 shares on trust for Sam Pa. As such, Madam Chiu was concerned that she may be prejudiced if there would be some form of estoppel against her when she will be adducing evidence on the issue of the ownership of the 7,000 shares.

7.At the hearing of the Summons on 1 November 2023:-

(1)  Madam Lo did not oppose Madam Chiu’s Summons.

(2)  Upon the offer of undertakings from Ms Fung not to rely upon any issue estoppel of any findings in these proceedings against Madam Chiu in the matrimonial proceedings, Mr Mok SC, Leading Counsel for Madam Chiu, accepted that this would be sufficient to allay the concern of Madam Chiu. On the basis of the undertakings as agreed between Madam Chiu and Ms Fung, I made an Order dismissing the Summons.

8.At the hearing, it was agreed between Madam Lo and Madam Chiu that there be no order as to costs. Thus, the only outstanding question is one of costs between Madam Chiu and Ms Fung. Ms Fung seeks costs against Madam Chiu with a certificate for three counsel to be taxed on an indemnity basis. It is contended for Madam Chiu that there should be no order as to costs. I do not intend to rehearse the parties’ arguments here. Suffice it to say that I have considered the parties’ written submissions filed for this purpose.

B.  Submissions and ruling

9.On question of costs, it is not disputed that question of costs is a matter of the discretion of the Court. It is also trite that the Court can take into account the parties’ conduct. In the present case:-

(1)  I see no justification for Madam Chiu to intervene in the Trial. To accede to the application would have the serious effect of derailing the Trial.

(2)  If Madam Chiu’s concern is one that she would give evidence at the Trial and that any ruling on the question of the beneficial ownership of the 7,000 shares may prejudice her position in the divorce proceedings, I do not see why she had to seek leave to intervene and to adjourn the Trial, especially when Madam Lo has already been represented by a team of four counsel (with two Senior Counsel).

(3)  I agree with the submissions of Mr Dawes SC that there was inexplicable and undue delay on the part of Madam Chiu in taking out the Summons. This inevitably caused significant disruption to the parties’ preparation for the Trial.

(4)  Further, as submitted by Mr Dawes SC, which I agree, there is the much more cost-effective route of simply writing to Ms Fung’s solicitors to seek the relevant confirmations or undertakings. Even after the Summons had been taken out, there was still ample time for Madam Chiu to raise her concern through correspondence and see if any appropriate undertakings can be provided by Ms Fung in that regard. Yet it is not clear why Madam Chiu and her legal team never saw fit not to pursue this much cheaper and much more cost-effective alternative.

10.In these circumstances, Ms Fung also seeks certificate for three counsel and costs to be taxed on an indemnity basis. I agree. Whilst Mr Mok SC argues that there should be no order as to costs, as no undertakings were ever offered by Ms Fung to Madam Chiu until the hearing of the Summons, the fact remains that Madam Chiu and her legal team had never asked for such undertakings through correspondence, whether before or after the issue of the Summons. Given the vast volume of documents (including numerous legal authorities) produced by Madam Chiu’s legal team at this eleventh hour application, Madam Chiu has no basis to resist the application for certificate for three counsel, when she herself also instructed a team of three counsel at the hearing.

11.In the circumstances, Madam Chiu should pay Ms Fung the costs of and occasioned by the Summons on indemnity basis together with a certificate for three counsel. A statement of costs was provided for Ms Fung, seeking in total a sum of HK$992,764 (representing counsel fees of HK$423,000 and solicitors’ fees of HK$562,970 for a team of 4 fee earners, one trainee solicitor and one litigation clerk). Mr Mok SC contends that the sum is excessive and an appropriate sum should be HK$400,000.

12.Taking into account all the circumstances and adopting a broad-brush approach, I tax the costs down to a sum of HK$680,000 and I so order. Such costs are to be paid by Madam Chiu to Ms Fung forthwith.

Ms Sharon Yuen and Mr. Jiang Zixin, instructed by Sit, Fung, Kwong & Shum, for the Petitioner

Mr Victor Dawes SC, leading Ms Natalie So and Mr Alexander Burg, instructed by Dentons Hong Kong LLP, for the 1^st Respondent

The 2^nd Respondent, New Bright International Development Limited, acting in person and absent

Mr Johnny Mok SC, leading Ms Theresa Chow and Ms Jennifer Fan, instructed by KCL & Partners, for the Intended Intervener