Central Harvest Development Ltd v. Secretary for Justice

HCA 2386/2019

[2026] HKCFI 5643

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2386 OF 2019

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D E C I S I O N

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A. INTRODUCTION

1.By summons of 31st March 2026 (“the Summons”), the Defendant seeks to vary the costs order nisi in my judgment of 9th March 2026 (“the Judgment”) that the costs of the proceedings up to and including the trial of the issues of liability are to be paid by the Defendant to the Plaintiff, with certificate for two counsel (“the Costs Order Nisi”).  The Defendant says that either the Plaintiff should pay 30% of the Defendant’s costs up to and including the trial of the issues of liability, or that there should be no order as to costs between the parties.

2.The Defendant also seeks an extension of time to apply for variation of the Costs Order Nisi, as he was out of time by eight days in making the application.

3.The Plaintiff says that:

3.1  the application is improperly constituted as the court is functus officio, its order of 9th March having been sealed on 20th March 2026 (“the Order”) and the Costs Order Nisi having become absolute on 23rd March 2026 (fourteen days after the Judgment);

3.2  in any event, the Defendant has provided no good reason for failing to apply to vary the Costs Order Nisi within time.

B.  WHETHER APPLICATION IMPROPERLY CONSTITUTED

B1.  The Plaintiff’s submissions

4.The Plaintiff accepts that even where a costs order nisi has become absolute pursuant to RHC O.42 r.5B(6) after fourteen days have passed, the court may nevertheless extend the time in which an application for variation may be made, pursuant to O.3 r.5, even though the application is made out of time: see Ma Wan Farming Ltd v Chief Executive in Council [1998] 2 HKLRD 314 at 317B-D (Liu JA); Tang Man Kit v Hip Hing Timber Company, unreported, CACV 137/2002, 8th June 2006 at [9] to [11] (Cheung JA); Tin Lik v Deutsche Bank AG, unreported, CACV 145/2016, 23rd August 2017 at [5] (Kwan JA, as she then was).

5.However, the Plaintiff says that the position is different where a costs order has not only become absolute, but has also been sealed and perfected, as the court is then functus officio and cannot change its mind, citing Universal Entertainment Corporation v Kazuo Okada [2021] HKCFI 3432 at [24] (Coleman J, as he then was); Cheung Mei Ling Roni v Dr Li Wang Pong Franklin [2022] HKCFI 1581 (Wilson Chan J); and RTX Products Hong Kong Ltd v Li Yiu Fai, unreported, HCA 1777/2009, 12th November 2014 (A Chan J, as he then was).

6.The Plaintiff further submits that there are conflicting judgments as regards the interaction of the rule in O.3 r.5 empowering the grant of an extension of time to seek a variation of a costs nisi, and the rule that once an order has been drawn up and perfected (by sealing), the court is functus officio and can no longer vary it.[1]  In particular, the Plaintiff says that Balram Chainrai v Kushnir Family (Holdings) Ltd [2021] 4 HKC 345 should not be followed.

B2.  Perfected order nisi vs. perfected order absolute

7.Having reviewed the authorities cited by the Plaintiff, it seems to me that it is important to distinguish between two situations.

7.1  The first is where a costs order nisi is perfected as an order nisi, and only afterwards does the time allowed for applying to vary the order expire.

7.2  The second is where a costs order nisi is made absolute (whether by expiry of the time allowed for applying to vary the order, or by variation by the court), and then perfected as an order absolute.

8.The orders in these two situations are different in nature.  In the first, the perfected order is merely a provisional order, which expressly provides for the possibility of further variation; in the second, the perfected order is a final order, which does not provide for any further variation.

9.The effect of O.42 r.5B(6) is that an application can be made to vary a costs order nisi up to fourteen days after it has been made.  The court has the power to extend this period of time under O.3 r.5: that rule provides that the court may extend the period within which a person is required or authorised by the Rules of the High Court, or by any judgment, order or direction to do any act in any proceedings.  Furthermore, O.3 r.5(2) expressly provides that this power may be exercised even in the situation where the application for extension is not made until after the expiration of the period in question.

10.The period of time allowed for applying to vary a costs order nisi can therefore be extended.  This will be the case no matter whether the order has been perfected or not.  O.3 r.5 does not distinguish between orders which have been perfected and orders which have not.  As Baroness Hale observed in Re L (Children) (Preliminary Finding: Power to Reverse) [2013] 1 WLR 634 (in the context of the English CPR):

“ [19] … Under CPR r.40.2(2)(b), an order is now perfected by being sealed by the court. There is no jurisdiction to change one’s mind thereafter unless the court has an express power to vary its own previous order.  The proper route of challenge is by appeal. …

[37] …Where there is a power to vary or revoke, there is no magic in the sealing of the order being varied or revoked.  The question becomes whether or not it is proper to vary the order.”

11.However, where a costs order that has been made absolute, there will no longer be any power to vary it: the order is no longer a nisi one, with provision for applying for variation within a specified period; there is therefore no period to extend.  This will be the case whether or not the order is perfected.

12.The various authorities relied on by the Plaintiff reflect, or at least are consistent with, the above,[2] and there is in fact no inconsistency in the authorities if one has regard to the nature of the order at issue in the case.  I now turn to consider these in more detail.

B3.  Authorities relied on by the Plaintiff

13.The Plaintiff relies on Universal Entertainment Corporation.  In that case, two costs orders were under consideration.

14.The first, termed “the July Costs Order”, was made as a costs order nisi; it was sealed before the time allowed for applying for variation had expired; it then became absolute before the application for variation was made.  This sequence of events is the same as those in the present case.  In other words, the July Costs Order was perfected as a costs order nisi.  There was no dispute that the court had jurisdiction to grant an extension of time for applying to vary the July Costs Order.  The dispute between the parties was whether it was necessary for the applicant to also obtain relief from sanctions under O.2 r.5.[3]

15.The second, termed “the September Costs Order”, was made as a final costs order, without any provision for variation;[4] and sealed before the application for variation was made.  The terms of this order never provided for the possibility of variation.  In other words, the September Costs Order was perfected as a costs order absolute.  All that was said at [24] was the September Costs Order provided no express power for variation, and that as it had been perfected by sealing, the court was functus and could not change its mind thereafter, in the absence of such a power.  There was no discussion of any power to extend the time for making an application for variation, because there was simply no such provision for variation in the first place.

16.As Coleman J pointed out at [6], the two costs orders ought to be considered separately, and the approach to be taken in respect of each might be affected by the difference in the way that the orders had been made.

17.This authority therefore does not support the Plaintiff’s proposition that whenever a costs nisi has become absolute and has been sealed, the court is functus officio and has no jurisdiction to extend time for variation of the order.  On the contrary: the July Costs Order was in fact a costs order nisi which was sealed, and there was no dispute that the court did have jurisdiction to extend time. The September Costs Order was never made as a costs order nisi in the first place, so there was never any question of applying for a variation, let alone extending the time for doing so.

18.The Plaintiff says that Universal Entertainment Corporation was applied in Cheung Mei Ling Roni v Dr Li Wang Pong Franklin [2022] HKCFI 1581 (Wilson Chan J) to dismiss an application for varying, out of time, a costs order nisi which had become absolute (and had subsequently been sealed) by the time of the application.  In that case, the respondent drew an analogy with the September Costs Order to argue that the application should be dismissed, without pointing out the difference between the July Costs Order and the September Costs Order in Universal Entertainment Corporation.  It does not seem to me that the reasoning in relation to the September Costs Order (that it contained no express power for future variation and was sealed as such) was applicable to the costs order nisi in Cheung Mei Ling Roni.  I therefore respectfully decline to follow Cheung Mei Ling Roni.

19.The Plaintiff says that in RTX Products Hong Kong Ltd v Li Yiu Fai, unreported, HCA 1777/2009, 12th November 2014, Anthony Chan J (as he then was) had “indicated his view in obiter that once the order becomes absolute, even if a judgment is perfected before the order nisi becomes absolute, any disagreement will have to be pursued on appeal (§9)”.[5]  In fact, however, the costs order nisi in that case became absolute before it was sealed (although in the sealed Judgment, it was wrongly referred to as an order nisi): see [3].  This was therefore a case of a perfected order absolute, rather than a case of a perfected order nisi.  At [7], Anthony Chan J accepted the submission that the court had become functus officio upon the perfection of the Judgment, and that the fact that the Judgment had (wrongly) referred to the order as an order nisi did not make any difference, since the order had, pursuant to O.42 r.5B(6), actually become absolute.  What Anthony Chan J said at [9] was that the situation might have been different if the Judgment had been perfected before the order became absolute, that is, if the order had been a perfected order nisi.  As he explained:

“ ... It may be said that in such a case it is inherent in the judgment that the costs order has yet to become absolute and the door remains open to an affected party to make an application to have it varied, including an application for an extension of time to make the variation application.  However, once the order has become absolute, I am inclined to the view that any disagreement will then have to be pursued on appeal. This is of course not the situation before this court.”

20.In other words, Anthony Chan J also drew a distinction between a perfected order nisi and a perfected order absolute.  The costs order in RTX Products Hong Kong Ltd was a perfected order absolute, so the court had no jurisdiction to vary it; it could only challenged by way of appeal.  However, Anthony Chan J commented that if, instead, the costs order had been a perfected order nisi, then it might have been said that it was still possible to apply for an extension of time to vary the order, even though such an application would have been three years out of time.

21.The Plaintiff says that RTX Products Hong Kong was applied in Chinachem Charitable Foundation Limited v The Secretary for Justice [2026] HKCFI 1129 (Au-Yeung J).  This case concerned a costs order, made some thirteen years earlier in other proceedings, which had already been varied on the parties’ earlier applications, and was therefore a final costs order: see [6].  Accordingly, the issue of costs had already been disposed of and was res judicata: see [51].  Au-Yeung J observed that the court was functus officio in those other proceedings as regards the issue of costs.  This can hardly be controversial.  It does not shed light on the present situation.

22.The Plaintiff then refers to Hou Hsiao Bing v Ren Baogen [2026] 1 HKLRD 375, saying that Mr Recorder William Wong SC “agreed with the submissions of the defendant, resisting an application to vary a costs order nisi where it had become absolute and the order was perfected”.[6]  In fact, the orders in question were final orders (for specific performance and other relief, not costs).

23.The Plaintiff cites Poon Ching Man v Lam Hoi Pun [2016] 3 HKLRD 815, where Lam VP (as he then was) noted that Ma Wan Farming Ltd and Tang Man Kit did not discuss the implications of the court being functus officio after sealing of the orders in those cases.  In that case, the trial judge made a costs order nisi, which then became absolute before it was perfected; the application to vary the costs order was subsequently made, out of time.[7] Lam VP did not express any concluded view as to whether the court could extend time for applying to vary a costs order where the order has been drawn up.  He observed that even if the court had jurisdiction to entertain the application, it might not be a mere application to extend time, but also involve the setting aside of an order absolute, so that the considerations under O.2 r.5 of the Rules of the District Court might be relevant.[8]  His observations were therefore directed at a perfected order absolute rather than a perfected order nisi.

B4.  Authorities cited by the Defendant

24.As mentioned above, the Defendant’s reliance on Ma Wan Farming and Tang Man Kit is not disputed by the Plaintiff, save that the Plaintiff points out Lam VP’s observations in Poon Ching Man which I have addressed above.

25.In Balram Chainrai v Kushnir Family (Holdings) Limited and others [2021] 4 HKC 345, the costs nisi was sealed as an order nisi, although the perfected order was defective in that it failed to reflect the provisional nature of the order: see [4].[9]  Lisa Wong J held that the court had jurisdiction to extend the time for applying for a variation of the order, following Ma Wan Farming and Tang Man Kit.  In particular, she held that the mere fact that the early perfection of the order did not extinguish a party’s right under O.42 r.5B(6) to make such an application: see [20].  (In the circumstances of the case, no extension was granted, the application having been made almost a year out of time).

26.I do not agree with the Plaintiff’s submission that Balram Chainrai was wrongly decided.  The order was sealed as a provisional order, which the court had the power to vary within the time allowed.  As Baroness Hale explained, there is no magic in the mere fact of the sealing of the order.  This was essentially also the point made in Balram Chainrai at [20], although Re L (Children) does not appear to have been cited to Lisa Wong J.

27.I note that the Plaintiff itself describes a costs order sealed as an order nisi, before it becomes absolute, as follows: “The order nisi though sealed continues to stand as an order to show cause within the prescribed time.”[10]  It would follow that an application can be made to extend the time in question.

B5.  Application not improperly constituted

28.It follows that the Defendant’s application in the Summons is not improperly constituted.  The court has the power to extend time for the Defendant to apply to vary the Costs Order Nisi.

29.Insofar as it may be said that it is anomalous that if a costs order is sealed as an order nisi, a party can still apply to extend the time allowed for variation after fourteen days, whereas if the costs order is sealed as an absolute order, there can be no such application, it seems to me that the two situations are not the same.  In the latter situation, the costs order is no longer a provisional one, but has been made absolute, and is perfected as such.  In the present case, the Plaintiff arranged to seal the Costs Order Nisi when it had not yet become absolute.  The difference between the two situations was recognised by A Chan J in RTX Products Hong Kong Ltd at [9] and subsequently by Coleman J in Universal Entertainment Corporation at [6].

C.  WHETHER TIME SHOULD BE EXTENDED

30.There is no dispute that the burden is on the Defendant to show that there is a justifiable reason for not making the application to vary the Costs Order Nisi within time, and that it has a meritorious case to seek a variation.

31.The Defendant has not put forward any good reason to justify an extension of time.  There is a frank acknowledgement that the Defendant was all along aware of the fourteen-day period for seeking any variation of the Costs Order Nisi.  The reason given for the delay is that the Lands Department was considering the merits and fiscal ramifications of a potential appeal, and there were various rounds of communications between the Department of Justice and counsel regarding the merits, but ultimately no instructions were given by the Lands Department until after the expiry of the fourteen-day period.

32.With respect, this cannot be a sufficient reason to justify an extension of time.  It is important that there be finality in litigation.  Granting an extension of time intrudes into such finality.  The jurisdiction to grant an extension should not be granted except for good reason.  Dilatoriness on the part of a party, despite awareness of the relevant deadline, cannot justify depriving the other party of the finality conferred by an order or rules of court.

33.I therefore do not need to go into the merits of the intended variation.  I will simply make a few observations.

34.Prima facie, there is some attraction in the Defendant’s submission that a relatively greater portion of the trial was spent on Issue 1 (the area of 1941RP), on which the Defendant was successful, than on Issues 2 and 3 (whether the Grant contains the Conversion Term and if so whether the Plaintiff was in breach), and that the costs order should reflect this.

35.However, as the Plaintiff points out, as long ago as 22nd September 2015, the Plaintiff had made a without prejudice offer to the Defendant to settle the parties’ dispute on the basis that the Plaintiff would accept the area of 1941RP as 6,937 sq m, subject to the District Lands Office’s confirmation of the Plaintiff’s right of conversion of the lot to building land with development conditions similar to GN 364 and that, in the case of land resumption, statutory compensation would be assessed based on this contractual right of conversion or the converted building land status.  The Plaintiff chased for a response from 2015 to 2019.  No substantive response was given by the Lands Office before the remaining 74,674 sq ft of RP(1) was resumed in December 2019.  See Judgment at [105] to [109], where these matters were set out.

36.The outcome of the trial on liability has been essentially the same as that in the Plaintiff’s September 2015 offer.  Had the Defendant accepted the offer, substantial costs would have been saved; in fact, the Plaintiff might not even have had to commence the present proceedings.  The Defendant’s reply submissions do not seek to contradict this.

37.It is therefore far from clear that there is any merit in the application to vary the Costs Order Nisi.

D.  DISPOSITION

38.I dismiss paragraphs (1) and (3) of the Summons.

39.I further make a costs order nisi that the Defendant is to pay the costs of and occasioned by the Summons to the Plaintiff, to be summarily assessed.  The Plaintiff is to lodge and serve a statement of costs within five days; the Defendant has leave to lodge and serve a list of objections in bullet point form, limited to one page, within three days thereafter; the Plaintiff has leave to lodge and serve a reply in bullet point form, limited to one page, within three days thereafter.

Ms Julia Au, instructed by Johnson Stokes & Master, for the Plaintiff

Mr Desmond Leung, instructed by Department of Justice, for the Defendant