Chung Ying Building Materials Company Ltd (in Liquidation) v. Chow Wai Lam, William and Others

HCA 656/2019

[2025] HKCFI 4279

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 656 OF 2019

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BETWEEN

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Decision on
Variation of Costs Order Nisi

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Introduction

1.By a Judgment dated 18 June 2025 ([2025] HKCFI 2480) (“Judgment”), this court dismissed the application for security for costs by the 1^st, 2^nd, 3^rd and 6^th Defendants (“Relevant Defendants”) as well as that by the 4^th Defendant (“D4”) against the Plaintiff (“Applications”).

2.In the Judgment at para 68(2), this court made a costs order nisi that the costs of and occasioned by the Applications be to the Plaintiff, to be taxed if not agreed, and paid by the Defendants forthwith, certificate for two counsel (“Costs Order Nisi”).

3.By Summons dated 30 June 2025, the Plaintiff seeks to vary the Costs Order Nisi. The gist of the variation is that the costs in question should be summarily assessed instead of to be taxed if not agreed.

4.For completeness, this court should mention that on 2 September 2025, this court handed down another Judgment (“2^nd Judgment”) in which this court allowed the 2 outstanding applications by the Relevant Defendants for (i) leave to amend their Defences and (ii) for leave to file the 4^th Supplemental witness statement of the 1^st Defendant (“2 outstanding applications”). The 2 outstanding applications were originally scheduled to be heard at the same time as the Applications on 12 December 2024. Owing to shortage of time, they were adjourned to 5 June 2025. The bundles used at the hearing on 12 December 2024 were largely reused on 5 June 2025. D4 was not involved in the 2 outstanding applications and its attendance at the hearing on 5 June 2025 was thus excused.

The Law

5.RHC O 62 r 9A(1) provides that “Where the Court has determined an interlocutory application at any stage of proceedings and orders a party to pay costs in respect of the interlocutory application to any other party, it may, if it considers it appropriate to do so but subject to rule 9C – (a) make a summary assessment of the costs by ordering payment of a sum of money to that other party in lieu of taxed costs…”

6.Whether or not to order immediate assessment and payment of costs in an interlocutory application is quintessentially a matter within the Court’s discretion.

7.Under the 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: Midland Business Management Ltd v Lo Man Kui (No 2) [2011] 2 HKLRD 667 at [9] (per Lam J, as he then was). Such an approach ie an order for immediate payment of costs was endorsed by the Court of Final Appeal in Wing Fai Construction Co Ltd v Yip Kwong Robert (No 2) (2012) 15 HKCFAR 454 at [4] – [7].

8.The considerations relevant to deciding whether or not to make an order for immediate quantification/payment of costs in interlocutory applications included (a) the extent to which the proceedings on taxation (or assessment) were severable and self-contained from the rest of the action, (b) the justice of making such an order having regard to the effect on the respective parties’ cash flow, (c) whether the amount at stake was sufficient to justify the expense of a separate taxation (or assessment) for it rather than bringing it on the final taxation, and (d) the possibility that there might be no trial: Seridom Servicios Integrados Idom S.A.U. v. Heng Wen Trade Co., Limited (桓文貿易有限公司) [2019] HKCFI 761 at [17] (per Marlene Ng J).

9.Lastly, PD 14.3 at para 6 provides that upon the disposal of any interlocutory application, the Court will give preference to summary assessment or provisional summary assessment of costs, unless there is a good reason not to do so.

Deliberation

10.In brief, the Plaintiff seeks a variation of the Costs Order Nisi for the following reasons.

11.First, the Applications are self-contained and severable applications. Previously, the parties have lodged their respective statements of costs for the purpose of summary assessment before the hearing on 12 December 2024. As far as the Plaintiff is concerned, it has filed its Statement of Costs (No 1) for the security for costs application and Statement of Costs (No 2) for the 2 outstanding applications, both dated 10 December 2024. As for the Relevant Defendants, they have filed 1 Statement of Costs dated 9 December 2024 for both the security for costs application and the 2 outstanding applications.

12.Second, this court has already ordered the Relevant Defendants to pay costs to the Plaintiff “forthwith”, envisaging that the payment of costs should be made immediately. It is more cost-effective for this court to adopt a broad-brush approach under the summary assessment procedure. The amount at stake ie HK$423,980 is not sufficiently large to justify the expenses of a separate taxation.

13.At this juncture, this court should record that the Plaintiff’s legal team should know very well that an order for the Relevant Defendants to pay costs to the Plaintiff “forthwith” simply means the payment should be made “forthwith” upon taxation of or agreement on costs. It does not mean summary assessment is appropriate. Otherwise, this court would have ordered summary assessment.

14.Third, since the Plaintiff is funded by the Employees Compensation Assistance Fund Board (“Board”), it is undesirable for public funds to remain unreimbursed for a lengthy period of time until the end of taxation.

15.The Relevant Defendants oppose the variation on a number of grounds. It seems to this court that their main ground concerns the apportionment of costs between the Applications and the 2 outstanding applications, including the the 50:50 apportionment of counsel’s fees. The Relevant Defendants find the 50:50 apportionment of counsel’s fees inappropriate owing to the relative complexity of the Applications as compared with the 2 outstanding applications and the fact that an additional party ie D4 was involved in the Applications but not the 2 outstanding applications.

16.At this juncture, this court should mention that it is a bit puzzled by item C of the Plaintiff’s Statement of Costs (No 1) ie Communications as to how the Plaintiff’s solicitors managed to apportion the time spent on its security for costs application and that on the 2 outstanding applications. The same applies to item D3 ie Court Attendance.

17.In its skeleton submissions dated 25 August 2025, D4 also opposes the variation. Its main argument is that the Plaintiff’s preparation for the hearing on 12 December 2024 covered a mixture of matters ie the Applications and the 2 outstanding applications and each item in the Plaintiff’s Statement of Costs (No 1) will be subject to potential challenge.

18.While it is usual to order summary assessment of costs in interlocutory applications, which the Applications were, this court is not satisfied that in the circumstances of this case, it is appropriate to do so.

19.First, this court is not satisfied that the Applications are sufficiently severable from the rest of the Action, to be precise from the 2 outstanding applications. This court can envisage that apportionment of the parties’ costs between the Applications and the 2 outstanding applications is potentially contentious and problematic.

20.Second, in its 2^nd Judgment, this court allowed the 2 outstanding applications by the Relevant Defendants with costs against the Plaintiff to be taxed if not agreed. From a practical point of view, it is understandable that the Relevant Defendants will wish to set off their costs of the 2 outstanding applications against the Plaintiff’s costs of the Applications. It is also the view of this court that a just result would be for the Plaintiff’s costs and the Relevant Defendants’ costs to be set off against one another so that at the end of the day, one side need only pay the balance to the other. In order to achieve that, the Relevant Defendants will have to seek to have their costs of the 2 outstanding applications summarily assessed and paid forthwith, which engenders more problems concerning apportionment.

21.If the parties wish to avoid the expenses of taxation, which is sensible and which they should, they can always come to an agreement on costs. If not, taxation of both the Plaintiff’s costs and the Relevant Defendants’ costs by the same taxing master at the same time is the only sensible alternative way out.

22.Third, the matter is further complicated by the fact that D4 was involved in the Applications but not the 2 outstanding applications. D4 has made it clear that because the Plaintiff’s preparation for the hearing on 12 December 2024 covered both, each item in the Plaintiff’s Statement of Costs (No 1) would be subject to potential challenge.

23.In view of the unusual complexity of the exercise of summary assessment in light of the anticipated challenge by the Relevant Defendants and D4 to the Plaintiff’s costs on the ground of inappropriate apportionment, this court is of the view that in the circumstances of the present case, summary assessment is unsuitable and inappropriate.

Disposition and costs order nisi

24.In the exercise of its discretion, this court hereby dismisses the Plaintiff’s summons dated 30 June 2025. The Costs Order Nisi is thus made absolute.

25.Costs of the Plaintiff’s summons should follow the event. On a nisi basis, costs be to the 1^st to 3^rd and 6^th Defendants and the 4^th Defendant, to be summarily assessed and paid by the Plaintiff forthwith, certificate for counsel.

26.In the absence of agreement on costs within 7 days, leave to the 1^st to 3^rd and 6^th Defendants and the 4^th Defendant to lodge with the court their statements of costs within 7 days. Leave to the Plaintiff to lodge with the court its statement of objections within 7 days thereafter. Costs will be assessed on paper unless further directed by this court.

Mr Vincent Chen, instructed by M/s Gallant, for the Plaintiff

Ms Angela Gwilt, instructed by M/s Y T Szeto & Co, for the 1^st to 3^rd and 6^th Defendants

Mr John Fong, instructed by M/s Y C Chow & Co, for the 4^th Defendant