Business Finance Ltd v. Wai Ping So and Others

HCA 2269/2016

[2026] HKCFI 2780

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2269 OF 2016

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(By Original Action)

(By Counterclaim)

______________________

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DECISION ON COSTS

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1.This Court handed down its judgment after a 6-day trial on 19 January 2026 (“the Judgment”). Herein below, I will continue to adopt the defined terms and expression used in the Judgment.

2.In §208 of the Judgment, I directed that the issue of costs to be dealt with on papers after the parties have lodged and served their respective submissions. In §209, this Court also indicated provisionally that it was minded to order taxation on indemnity basis against the Counterclaimants to express this Court’s disapproval and affront on, among others, the matters there stated.

3.BFL, Yeung and the Official Solicitor (“the OS”) have lodged and served their submissions. Ping So and Bing Yin, both of whom acted in person at trial, did not lodge and serve theirs, and are therefore taken as having adopted a neutral stance. Having considered the submissions, this is my decision on the costs of the action.

4.For ease of reference, I will first give a summary of the parties and the results :

BFL :

(a)  In the Original Action : (i) it was successful in all its claims, and obtained all reliefs sought, as against the co-borrowers Ping So and Yeung, save that I found BFL was in breach of s.18 of the MLO vis-à-vis Yeung, but in the exercise of my discretion under s.18(3) I allowed the enforcement of the Subject Loan and the BFL Legal Charge except the recovery against Yeung of the overdue interest and of the higher contractual interest and only ordered her to pay interest at 9% per annum, and (ii) it was also successful in obtaining the vacant possession of the Subject Property against Bing Yin who claimed to be an occupier with interest therein.

(b)  In the Counterclaim : it was completely successful in defending all the claims brought by the Counterclaimants, namely Yeung and Bing Yin.

Yeung :

(c)  She had been legally aided until the aid was discharged on 31 January 2024. On the first day of trial on 21 February 2024, the OS was appointed as Yeung’s guardian ad litem and next friend in the circumstances explained in §§23 to 29 of the Judgment.

(d)  In the Original Action : Yeung was unsuccessful in all the matters raised by way of defence save the breach of s.18 of the MLO by BFL but, as said, she was unsuccessful in resisting the enforcement of the Subject Loan and the BFL Charge under s.18(3) save reducing the interest as mentioned above.

(e)  In the Counterclaim : Yeung and Bing Yin were completely unsuccessful in all the claims raised therein.

Ping So :

(f)  All along she has been acting in person.

(g)  In the Original Action : on 7 June 2017, she filed her Defence admitting the Subject Loan. On 24 October 2017, she was adjudged bankrupt upon her own petition. On 1 August 2022, her trustees in bankruptcy indicated that they did not give Ping So consent to defend the Original Action.

(h)  In the Counterclaim : Ping So’s right to defend the Counterclaim was not affected by her bankruptcy. All the claims against her in the Counterclaim were dismissed.

Bing Yin :

(i)  She had been legally represented by the same firm of solicitors who have been acting for Yeung until one day before the PTR hearing on 21 November 2023, and then after she has been acting in person.

(j)  In the Original Action : upon her own application made on 20 February 2017, she was joined as the 3^rd Defendant. She failed in her case in resisting the order of possession of the Subject Property sought by BFL.

(k)  In the Counterclaim : together with Yeung, she was completely unsuccessful in all the claims raised therein.

5.BFL in its submissions seeks :

(a)  Costs in the Original Action to be paid by Yeung and Ping So on indemnity basis pursuant to their contractual obligation under Clause 2.01(x) of the BFL Legal Charge;

(b)  Costs in the Counterclaim be paid by Yeung and Bing Yin on indemnity basis; and

(c)  A wasted costs order against O&L under Order 62, rule 8(1).

6.Regarding BFL’s application for a wasted costs order against O&L, BFL has formally issued a summons for the same against O&L on 23 February 2026, which is opposed by O&L. In its hearing on 17 April 2026, BFL limited its wasted costs application to all costs thrown away by reason of the adjournment of the trial on 21 February 2024[1] and withdrew its claim for other wasted costs. The application is proceeding and there will be a substantive hearing on a date to be fixed.

7.Yeung in her submissions resists indemnity costs and asks that her costs to be taxed according to Legal Aid Regulations. I note that Yeung does not seek to fillet out the costs regarding the issue pertaining to the breach of s.18 to seek a different order on such costs.

8.The OS lodged submissions to seek a costs order that the OS’s own costs incurred and disbursements paid since 21 February 2024 be paid by BFL on indemnity basis. This BFL strongly resists.

9.I will first deal with the question of indemnity costs.

Indemnity costs in the Original Action and Counterclaim

10.There is no dispute that Clause 2.01(x) would entitle BFL to recover costs on indemnity basis in relation to the enforcement of the BFL Legal Charge against Yeung and Ping So and such is the starting point in the exercise of the court’s discretion in such costs.

11.As Ping So has not advanced submissions otherwise, BFL is entitled to claim such indemnity costs against Ping So. However, after the issuance of the letter of the trustees in bankruptcy of Ping So dated 1 August 2022 in which the trustees expressed in clear terms that they did not give consent to Ping So to defend the Original Action, Ping So was not entitled to and did not resist BFL’s claims in the Original Action. This action since then was proceeded with only because of the defence and the Counterclaim mounted by Yeung and Bing Ying. Therefore, regarding Ping So’s liability to pay the costs of BFL in the Original Action, I take the view that she is liable so to pay on indemnity basis such costs incurred up to 1 August 2022 only.

12.Regarding the contractual basis to seek indemnity costs as against Yeung, I accept Ms Chan’s submissions thereon. I have reasoned in §198 of the Judgment that I disallowed BFL’s recovery of the overdue interest and the contractual interest because I do not regard that BFL has obtained Yeung’s full consent or agreement to them as BFL failed to have Yeung personally signed a s.18 memorandum. For the same reason and in the exercise of my discretion, I refuse to order Yeung to pay indemnity costs of the Original Action on the basis of contractual obligation created by a clause in the BFL Legal Charge.

13.On the other hand, it is in my view clearly appropriate that the Counterclaimants – Yeung and Bing Yin – should pay BFL its costs of the Counterclaim on indemnity basis for, among others, the reasons I have given in §209 of the Judgment as to why this Court disapproved and found itself affronted by the bringing of and their conducts pertaining to the Counterclaim.

14.In resisting the indemnity costs in respect of the Counterclaim, Ms Chan, counsel for Yeung, again harps back on such themes she advanced at trial that Yeung was aged and illiterate, and that Yeung yielded to the money requests by her children, and such. Ms Chan further submits by characterizing the Counterclaim as merely “weak”, and that the pursuance of mere “weak” claims should not be penalized with indemnity costs. She further submits that the many factual matters based on which this Court rejected the Counterclaim came out from “new” oral evidence of Yi Kwan and Bing So previously not disclosed in their witness statements, and therefore Ms Chan seems to be suggesting (without saying so expressly) that Yeung somehow was ignorant of these new factual matters and somehow had not taken a part in advancing the Counterclaim based on false and untrue factual bases.

15.I firmly reject these submissions. I here reject again the picture portraited of Yeung that she was completely ignorant, distant and disconnected from the family’s financial circumstances and plight, and was herself a victim. In the Judgment, I essential held against such a general picture. It is evident from my discussions in the Judgment that these so‑called “new” factual matters are matters pertaining to the Inheritance Understanding and the finance of the family and Yeung herself for many years that Yeung must have contemporaneous knowledge of. In my view, Yeung merely chose to omit them in her much-engineered witness statements. I also do not accept the characterization that the allegations or claims in the Counterclaim were merely “weak” claims. I remain of the clear view that they were made based on completely false and untrue factual settings and they ought not have been brought at all.

16.Moreover, Yeung’s own personal or family circumstances cannot excuse her from her litigation conducts. Regardless of her age and level of education, she has chosen to bring and continue to prosecute the Counterclaim, the costs consequence of which she therefore has to bear.

17.Thus, I accede to BFL’s request to award to it indemnity costs in respect of the Counterclaim.

The costs order in the Original Action and in the Counterclaim

18.In the premises, I order

(a)  Ping So and Yeung do pay BFL its costs of the Original Action, including all costs reserved, save that Ping So is only liable to pay BFL such costs incurred up to 1 August 2022 but in her case taxed on indemnity basis;

(b)  Yeung and Bing Yin do pay BFL and Ping So their respective costs of the Counterclaim, including all costs reserved, to be taxed on indemnity basis;

(c)  In the event that O&L is later found liable to pay BFL by way of wasted costs any of its costs thrown away by reason of the adjournment of the trial on 21 February 2024, such amount of costs so paid by O&L be deducted from the costs liable to be paid by Yeung and Bing Yin to BFL; and

(d)  Yeung’s own costs, when she was legally aided, be taxed according to the Legal Aid Regulations.

19.I note that BFL has not sought a costs order against Bing Yin in the Original Action. I regard it as sensible and appropriate as very shortly after Bing Yin joined as the 3^rd Defendant in the Original Action, she (together with Yeung) began the process of making the Counterclaim, and the interest she alleged she had in the Subject Property, and based on which to resist the order of vacant possession, allegedly arose from the matters she raised in the Counterclaim.

OS’s costs

20.To begin with, I accept the submission of Mr Ho, counsel for BFL, that the factual narrative of Ms Chan that when the OS was appointed on 21 February 2024, “the appointment was ordered by the Court by short notice without OS having the opportunity to obtain any undertaking in costs from the Plaintiff (BFL) or receiving costs on account” (paragraph 9 of her submissions) was not correct.

21.The question of the OS’s costs in fact has been expressed raised and much discussed at the hearing on 21 February 2024 before the OS gave his consent and before his appointment was ordered.

22.In the afternoon on 21 February 2024, a representative from the Official Solicitor’s Office attended the hearing. She stated clearly that usually the OS would only give his consent to be appointed as guardian ad litem or next friend upon an undertaking that one of the parties would indemnify the OS all the costs he would incur. There was then a discussion as to whether there would be such an undertaking to be provided by BFL or other parties. All parties, not just BFL, but also Bing Yin, had clearly indicated that they would not provide such an undertaking.

23.There was then also a discussion concerning s.4(1)(a) and (b) and s.4(2) of the Official Solicitor Ordinance Cap 416 (“the Ordinance”) regarding the duties of the OS. The relevant part of that section provides :

“4. Duties of Official Solicitor

(1) The duties of the Official Solicitor are —

(a) to act, where so appointed by the Court, as provided in Parts 1 and 2 of Schedule 1;

(b) in his discretion, to act as provided in Parts 1 and 3 of Schedule 1 where he is satisfied that the interests of justice so require and where there is no other person fit and willing so to act;

…

(2) In exercising his discretion under subsection (1)(b) to act in a particular matter, the Official Solicitor may —

(a) act on such terms, including terms as to indemnity for costs properly incurred by him, as are appropriate in the circumstances; and

(b) have regard to the funds available to meet his expenses.”

To complete the picture, paragraph 1 of Part 1 of Schedule 1 of the Ordinance states : “To act as guardian ad litem or next friend to any person under a disability of age or mental capacity, in proceedings before any court”.

24.It was also discussed that the specific stipulation providing that the OS may act on such terms as to costs seems to be applicable when the OS is acting under s.4(1)(b) whereby the OS acts under his discretion and not under s.4(1)(a) when the OS is appointed by the court.

25.After these discussions but without this Court making any ruling on the interpretation of s.4 of the Ordinance, the representative sought and was given an adjournment in which to seek instructions from her superior. When the hearing resumed, the representative intimated to this Court and the parties that the OS would consent to being appointed guardian ad litem of Yeung in defending the Original Action and next friend of Yeung in the Counterclaim without any undertaking to be given by any party regarding the OS’s costs. It was also not said then that the OS would reserve his right to claim costs against any party afterwards. Had such been said and in light of the parties’ prior indications, it seemed to me most likely that there would be further discussions to sort the situation out instead of appointing the OS right away. Accordingly, the OS was then appointed without such an undertaking nor any stipulation reserving the costs the OS would thereafter incur to be dealt with later.

26.Of note also is that there was also the discussion on that occasion that the OS should and would be given time to assess the merits of Yeung’s defence and the Counterclaim. Pursuant to that discussion, this Court on that occasion directed, among others, that BFL do serve to the OS the trial bundles within 5 working days and the hearing of the adjourned trial be fixed on a date not earlier than 5 months from that day. Moreover, the summonses taken out by Yu and Wong on 19 January 2024 to set aside the 2 Subpoenas issued by Yeung were directed to be disposed of on papers but the dates for the OS to file submissions to oppose (if he should so wish) was postponed to months later giving ample time to the OS to consider and decide on the stance to be taken (see the Decision thereon : [2024] HKCFI 2489).

27.Ms Chan now informs this Court in the submissions that since then Yeung applied to be legally aided again (such an application presumably was made by the OS on her behalf), but her application was refused by the DLA (Ms Chan did not indicate what the reason for refusal was); and the OS “decided to deploy its own funds to finance” the litigation and to re-engage Yeung’s previous legal team to maintain Yeung’s defence and to continue to pursue the Counterclaim.

28.Ms Chan now on behalf of the OS advocates that I should exercise my discretion on costs to award to the OS his costs and disbursements to be paid by BFL on indemnity basis, because the OS operates from public funding and the appointment of the OS as guardian ad litem was a sina qua non to the proceedings going on and being effectively disposed of (citing Re P.C. (An Infant) (1961) 1 Ch 312).

29.In the exercise of my discretion on costs, I have no hesitation in refusing the OS’s application.

30.First, and as narrated above, the issue about the OS’s costs had been fully canvassed at the hearing on 21 February 2024 and the OS has consented to being so appointed without any undertaking from any party, including BFL, to reimburse the OS his costs, and without indicating that he would be seeking such costs from any party later on.

31.Second and therefore, it would be entirely unfair to BFL now, no less after having won the trial, that it is required to pay the OS’s his costs for running for Yeung what have been adjudged to be unsuccessful, even completely unmeritorious, defence and counterclaims.

32.Third, while the appointment of the OS as guardian ad litem of Yeung was necessary for the proceeding of the Original Action to enable BFL to obtain the reliefs it sought from Yeung, that is not so with the Counterclaim, which was totally unmeritorious and ought not have been brought at all.

33.Fourth, and in the specific setting of the present case, I accept Mr Ho’s submission that after having been given ample opportunity to assess the merits and the DLA’s refusal to grant legal aid, the OS’s decision to continue to prosecute the Counterclaim and to maintain Yeung’s defence was the OS’s own decision and the OS therefore has assumed the risk of costs.

34.I recognize that even if the OS had properly assessed the merits and decided not to pursue the Counterclaim or the majority of Yeung’s defence, the OS would still have to expend some public funds and usually it merits consideration that the OS be reimbursed those lesser costs, but on the very specific facts and circumstances of this case and on the OS’s own consent given without any undertaking as to his costs or reservation of his right to claim some costs afterwards, I take the view that it is more just to refuse the OS’s application rather than now ordering BFL to pay even part of the OS’s costs. I must emphasize that this decision is specific to the facts and should not be taken as a general precedent.

Disposal

35.In the premises, I make the costs order set out in §18 above and refuse to order BFL to pay the OS’s costs and disbursements. On nisi basis, I order that the costs of BFL’s submissions be made part of the costs of the trial and be recovered as such, save and except that its such costs relating to opposing the OS’s application be paid by the OS, to be taxed if not agreed.

36.I thank Mr Ho and Ms Chan for their assistance.

Mr Raymond Ho, instructed by Messrs C.T. Chan & Co., for the Plaintiff (By Original Action) and the 1^st Defendant (By Counterclaim)

Ms Winnie Chan, instructed by Messrs Or and Lau, for the 2^nd Defendant (By Original Action) and the 1^st Plaintiff (By Counterclaim)

Ms Winnie Chan, instructed by and for the Official Solicitor

The 1^st Defendant (By Original Action) and the 2^nd Defendant (By Counterclaim) was not represented

The 3^rd Defendant (By Original Action) and the 2^nd Plaintiff (By Counterclaim) was not represented