Jong Yat Kit, As Sole Administrator of the Estate of Li Chung, Deceased v. Li Mun Hok Steven also known as Lee Mun Hok and Lee Mun Hok Steven

CAMP 109/2025, [2026] HKCA 1345

On an Intended Appeal from [2025] HKCFI 1764

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 109 OF 2025

(ON AN INTENDED APPEAL FROM HCA NO. 1767 OF 2017)

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DECISION ON COSTS

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The Court:

Introduction and Background

1.This is our decision on the costs of the intended appellant’s (“Intended Appellant”) application for leave to appeal (“Leave Application”)  against the Judgment of Deputy High Court Judge K C Chan (“Judge”) dated 2 May 2025 (“Judgment”) .

2.The Plaintiff is the sole administrator of the Estate of the late Mr Li Chung (“Li Senior”). The Defendant is the youngest son of Li Senior. The Intended Appellant is one of the children of Li Senior and a beneficiary of the Estate but not a party to the proceedings.

3.By the Judgment, the Judge dismissed the Plaintiff’s claim against the Defendant in its entirety in respect of the latter’s alleged breaches of fiduciary duties concerning funds of over HK$36 million withdrawn by the Defendant from a bank account of Li Senior while he was still alive. The Plaintiff alleged the funds were held by the Defendant in trust for Li Senior.

4.By ex parte Summons dated 30 May 2025 (“Summons”), the Intended Appellant took out the Leave Application.

5.The Defendant opposed the Summons.

6.By letter dated 10 June 2025 to the Intended Appellant’s solicitors Gallant (“June Letter”), the Defendant, by his solicitors (“KWM”), clearly expressed his opposition to the Leave Application and explained the grounds therefor. In brief, it was the Defendant’s case that the Intended Appellant had no standing to bring the intended appeal and in any event he had not shown any arguable grounds of appeal.

7.Pursuant to the directions of the Registrar of Civil Appeals on 18 August 2025, the Intended Appellant was to serve the Summons on the Plaintiff and the Defendant who were directed to state their stance in relation to it.

8.On 10 September 2025, a solicitor of KWM filed a 7-page affirmation setting out the background and stating the Defendant’s grounds of opposition. On the other hand, the Plaintiff’s stance was neutral, as stated in a letter dated 11 September 2025 of his solicitors to the Registrar of Civil Appeals.

9.On 18 September 2025, the Intended Appellant filed his 2^nd affirmation stating he had “made a decision not to proceed with (his) application” and seeking leave to “withdraw the Summons with no order as to costs.”

10.Subsequently, the Plaintiff had reached an agreement with the Intended Appellant that there would be no order as to costs between them.

11.By letter dated 6 October 2025, Gallant reported to the Registrar of Civil Appeals that the Intended Appellant and the Defendant were liaising on the dismissal of the Summons and the terms of the consent summons. By letter also dated 6 October 2025, KWM reported to the Registrar of Civil Appeals that the parties were unable to reach an agreement on the costs of the Leave Application.

12.The Registrar of Civil Appeals thus directed the Defendant to lodge a statement of costs and written submissions and the Intended Appellant to lodge a list of objections. Costs of the Leave Application as between the two would be dealt with by the Court of Appeal on paper.

Deliberation

13.Mr Anson Wong SC for the Defendant submits that costs should be to the Defendant and the circumstances of the present case warrant an order for costs on indemnity basis.

14.First, costs and the basis of taxation are in the discretion of the court. Generally, upon an application for leave to discontinue, or withdraw for that matter, the discontinuing/withdrawing party will be required to pay the costs of the other party, unless exceptional circumstances can be shown to justify a different order: China Baoli Technologies Holdings Ltd v. Orient Equal International Group Ltd [2021] HKCA 1609 at [17] per Barma JA; Re China Solar Energy Holdings Ltd unrep, HCCW108/2015, 1 March 2016, DHCJ Le Pichon at [15]. No exceptional circumstance has been identified by the Intended Appellant in his 2^nd affirmation or otherwise.

15.The mere fact that the claimant’s decision to discontinue may have been motivated by practical, pragmatic or financial reasons, as opposed to a lack of confidence in the merits of the case, will not suffice to displace the general rule: Re China Solar Energy Holdings Ltd at [17(4)].

16.We agree. The reason given in the Intended Appellant’s 2^nd affirmation at para 4 was simply: “I have thoroughly considered my position and obtained legal opinion again on various aspects of my application including the procedural hurdles, merits of appeal and the tremendous costs implication”. This is hardly exceptional circumstance which can displace the general rule. Thus the Intended Appellant must bear the costs of the Defendant.

17.Second, the principles governing an award of indemnity costs are well established.  In Town Planning Board v Society for Protection of the Harbour Ltd (No 2) (2004) 7 HKCFAR 114, at [16]-[17], Li CJ observed:

“16. The courts have rejected the proposition that an award of indemnity costs will only be made where a case has been brought with an ulterior motive or for an improper purpose or where there is some deception or underhand conduct on the part of the losing party…

17. In these and other cases, courts have emphasized the undesirability of attempting to define the circumstances in which orders for indemnity costs are to be made. It has been said that:

‘…the discretion is not to be fettered or circumscribed beyond the requirement that taxation on an indemnity basis must be ‘appropriate’.’”

18.The grounds relied upon by the Defendant in seeking an order of indemnity costs are stated in paras 8 to 12 of Mr Anson Wong SC’s skeleton. Essentially, they are:

(1)  In the June letter, KWM had set out the detailed reasons with reference to authorities explaining why the Leave Application was misconceived, yet the Intended Appellant persisted instead of withdrawing the application immediately, causing the Defendant to incur costs in preparing evidence in opposition.

(2)  The Intended Appellant breached his duty of full and frank disclosure while his application remained ex parte by not informing the court of the Defendant’s stance despite having agreed to do so in his 1^st affirmation. Instead, by Gallant’s letter dated 18 August 2025 to the Registrar of Civil Appeals, the Intended Appellant continued to take the view that the Leave Application could proceed on an ex parte basis, no doubt on the advice of Gallant. The Intended Appellant was guilty of dishonest and deliberate non-disclosure.

(3)  The Intended Appellant did not explain why he chose to withdraw the Leave Application only in his 2^nd affirmation or why he did not bring the June Letter to the attention of the court.  In the absence of any proper explanation of his conduct, the Defendant invites this court to infer that the conduct of the Intended Appellant is calculated to waste the court’s time and the Defendant’s costs.

19.We do not consider that the Intended Appellant’s failure to immediately withdraw the Leave Application after receiving the June Letter to be so unreasonable that he should be visited with indemnity costs.  It is normal litigious behaviour for a party to take time to obtain and consider the advice from his lawyers upon receiving an opposing party’s reply before deciding to proceed or withdraw his application. The Intended Appellant might have taken longer than what the Defendant thinks is necessary to make up his mind but an adverse costs order against the Intended Appellant is sufficient to address the costs incurred by the Defendant prior to the withdrawal of the Leave Application.

20.Nor do we consider the Intended Appellant had completely failed to explain why he chose to withdraw the Leave Application in his 2nd affirmation. As stated above, the Intended Appellant did provide some explanation, albeit without much detail.

21.As to the Defendant’s complaint that the Intended Appellant had failed to update the court immediately upon receiving the June Letter, we are not prepared to draw the inference that such conduct was dishonest and deliberate. The failure was equally consistent with inadvertence or simply the result of inadequate advice. We note that the Registrar of Civil Appeals only gave directions on 18 August 2025 for the Intended Appellant to serve the Summons on the Plaintiff and the Defendant who in turn were directed to state their stance in relation to it.  All parties complied with those directions.

22.All in all, we do not consider this to be a case in which indemnity costs are warranted.

Order

23.The costs of the Leave Application be borne by the Intended Appellant to be summarily assessed on a party and party basis and pay to the Defendant forthwith.

24.In the Defendant’s statement of costs, he seeks a total sum of $447,790, including $340,000 for the fees of 2 counsel. In the Intended Appellant’s list of objections, he seeks to deduct approximately $345,140.

25.In our view, the Defendant’s statement of costs is clearly on the high side.

26.Apart from some time spent attending on client, the other parties, the Registrar of Civil Appeals and counsel, as well as some time on perusal of documents, the really substantive work done consisted of preparing (i) the 3-page June Letter (ii) the 7-page affirmation opposing the Leave Application and (iii) the 3-page skeleton submissions.

27.Having considered the above, the Defendant’s costs of the Leave Application is summarily assessed at $150,000.

Mr Anson Wong SC and Mr Lai Chun Ho, instructed by M/s King & Wood Mallesons, for the Defendant

M/s Gallant, for the Intended Appellant