Re Wing Fung Construction (HK) Ltd

HCCW 807/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 807 OF 2004

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Before: Hon Kwan J in Chambers

Date of Hearing: 28 November 2005

Date of Decision: 28 November 2005

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D E C I S I O N

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1.On 6 October 2005, I delivered judgment on the petitioner’s Notice of Motion to commit the 1^st and 2^nd respondents for contempt of court.  I found the contempt proved against both respondents on each of the grounds alleged by the petitioner.  After hearing submissions of the respondents’ counsel on mitigation, I imposed a fine of HK$10,000.00 on the 1^st respondent and a fine of HK$5,000.00 on the 2^nd respondent.  As part of the sanction against the respondents, I ordered them to pay the petitioner’s costs of the application on an indemnity basis, to be taxed if not agreed.

2.The order made on 6 October 2005 was sealed on 28 October 2005.

3.On either 28 or 29 October 2005, the respondents filed a Notice of Appeal only in respect of the costs order on indemnity basis.  They asked for the order to be set aside and replaced by a costs order on a party and party basis.  Two grounds of appeal were advanced in this Notice of Appeal.  Firstly, there is no factual or legal basis to support a costs order on an indemnity basis.  Secondly, the judge did not offer any opportunity to the respondents to make submissions why the “usual” costs order on a party and party basis should not be ordered before making the order.

4.This Notice of Appeal was served on the petitioner’s solicitors on 27 October 2005 but without a case number in the civil appeal.

5.Under section 14(3) of the High Court Ordinance, Cap. 4, an appeal relating to costs only may be brought with the leave of the court or tribunal in question or of the Court of Appeal.  It was only after the Notice of Appeal was filed that the respondents issued a summons on 4 November 2005, seeking leave from this court to appeal against the costs order.

6.As pointed out by Miss Pheobe Man for the petitioner, where leave to appeal is required, a valid notice of appeal cannot be served unless and until leave to appeal has been granted (Hong Kong Civil Procedure 2004, Vol 1, paragraph 59/1/44; Cumbes v. Robinson [1951] 2 KB 83).  An intending appellant cannot stop time for serving a notice of appeal from running by serving a notice of appeal in advance of obtaining leave (Hong Kong Civil Procedure, paragraph 59/14/6).

7.The Notice of Appeal filed on 28 or 29 October 2005, the application to fix a date for the hearing of the appeal and the notice of setting down of the appeal both filed on 1 November 2005, are all invalid.

8.Under Order 59 rule 4(1) of the Rules of the High Court, the Notice of Appeal must be served not later than the expiration of 28 days beginning on the date immediately following the date on which the order was sealed.  The time limit for service of a proper notice of appeal in this instance would have lapsed on 26 November 2005, 28 days after the sealing of the order appealed from.

9.Jurisdiction to extend time for serving a notice of appeal is conferred on a single judge of the Court of Appeal and the full Court of Appeal.  The court below has no jurisdiction to extend time in this respect after expiration of the time limit.  Under Order 59 rule 15, the jurisdiction of the court below is limited to making an order to extend time for appealing if the application is made before the expiration of the time limit.

10.On 25 November 2005, the petitioner’s counsel served her written submission, taking the point that no application to extend time for serving the Notice of Appeal was made to this court before the expiration of time.

11.Apparently on receiving and considering the submission of the petitioner’s counsel, the respondents’ solicitors issued a summons on 25 November 2005 returnable before me today to extend time to file and serve a notice of appeal, seeking an extension of time for doing so 3 days after leave is granted to appeal against the costs order at the hearing today.

12.I have jurisdiction to entertain an application to extend time for appealing as the application was made before the expiration of time.

13.The grounds for granting leave to appeal against the costs order and for an extension of time for appealing in this situation are not materially different.  I must be satisfied that the grounds of appeal should have reasonable prospects of success.

14.The respondents’ counsel, Mr William Allan, made these submissions in support of the appeal against the costs order:

(1)     An indemnity costs order should only be made if the respondent to the application to commit for contempt had opposed the application in a “scandalous or vexatious way” and/or had defended the application in a “malicious” way or “with an ulterior motive”, or “in an oppressive manner and/or with an oppressive game plan”.  In support of this proposition, he cited Choy Yee Chun (The representative of the estate of Chan Pui Yiu) v. Bond Star Development Limited [1997] HKLRD 1327.

(2)     The indemnity costs order was wrong in law and/or principle as it was “wholly disproportionate” to the levels of the fine imposed by the court.  In support of this, he cited Au Wing Lun, William v. The Solicitors Disciplinary Tribunal & The Law Society of Hong Kong, CACV No. 4154 of 2001, 9 September 2002, at paragraph 32, per Le Pichon JA; A Solicitor v. The Law Society of Hong Kong/The Solicitors Disciplinary Tribunal, CACV No. 221 of 2003 and CACV No. 254 of 2003, 11 November 2003, at paragraphs 114 to 116, per Stone J; A Solicitor v. The Law Society of Hong Kong, CACV No. 302 of 2002, 18 February 2004, at paragraphs 57 to 126, per Woo VP, and at paragraphs 153 to 219, per Cheung JA.

(3)     The judge had erred in law in failing to give any or any proper reasons when exercising the discretion to award costs on an indemnity basis, as the “usual” order in all the circumstances of this case was costs on a party and party basis.  For this proposition, he cited Eagil Trust Co Ltd v. Pigott-Brown & Another [1985] 3 All ER 119 at 122; Westminster City Council v. Great Portland Estates Plc [1985] AC 661 at 673D; Flannery v. Halifax Estate Agencies Ltd. [2000] 1 WLR 377 at 381G to H.

(4)     The judge made the costs order immediately after hearing submissions on mitigation, the respondents were unable to make submissions before this order was made and this was in breach of the rules of natural justice.  He relied on Metropolitan Properties Co. (F.G.C.) Ltd. v. Lannon & Others [1969] 1 QB 577 at 606C; Durayappah v. Fernando [1967] 2 AC 337 at 345G; and In re Hamilton; In re Forrest [1981] AC 1038 at 1054B to D.

15.The petitioner opposed the respondents’ applications contending that there is no prospect of success on any of the grounds of appeal.  This is an appeal against the exercise of the discretion of the court and Miss Man submitted that the burden on the respondents is a heavy one.

16.She referred to decisions of the Court of Appeal to the effect that to justify an appeal as to costs only, the appellate court must be satisfied that the judge at first instance had taken into account extraneous or irrelevant matters, or had acted in any way unjudicially, or that the decision was “so aberrant…that no reasonable judge regardful of his duty to act judicially could have reached it” (Hadmor Productions v. Hamilton [1983] AC 191 at 220, per Lord Diplock; Chen Hsiao Mei Oung Lillian v. Chen Shih Ta Michael [1992] 1 HKC 40 at 49G to 50H, per Cons ACJ; Choy Yee Chun, supra. at 1337A to B, per Stock J; and Halsbury’s Laws of Hong Kong, Vol 5(2) 2003 Reissue, paragraph [90.1206]).

17.Miss Man also submitted that contrary to the respondents’ submission that an order for costs on a party and party basis is the “usual” order in all the circumstances of this case, orders for costs on an indemnity basis are frequently made in cases of contempt, see Overseas Trust Bank Ltd. v. Coopers & Lybrand (a firm) & Others [1991] 1 HKLR 177 at 180G and 183A, in which Godfrey J stated that contempt cases are of a type already recognised in the practice of the court as warranting a taxation on an indemnity basis.  Miss Man submitted that it is more often than not that the court had awarded costs on an indemnity basis where contempt was found, see the cases cited at Hong Kong Civil Procedure, paragraph 52/1/11.  So the cases cited by the respondents – Eagil Trust, Westminster City Council, Flannery v. Halifax Estate Agencies – are of no application to this situation, which involves the exercise of a discretion in making an order, which is by no means unusual, in the award of costs.

18.Miss Man also made submission on the other grounds of appeal advanced in the submission of Mr Allan, on the lack of factual basis to support the indemnity costs order, and the lack of opportunity to make submission before the costs order was made.  I do not propose to set them out.  She also contended that the Court of Appeal decisions cited by Mr Allan concerning costs in the Solicitors Disciplinary Tribunal would have no application to the present situation.

19.Of the grounds of appeal advanced in Mr Allan’s submission, I am satisfied that it is reasonably arguable that the award of indemnity costs should not be disproportionate to the fines imposed.  It is not necessary to express any views on the other grounds.  I also note that the respondents were late in serving their notice of appeal by only two days.

20.It is appropriate to grant leave to appeal against the costs order and to extend time for appealing.  I grant leave to appeal and an extension of time to file and serve a notice of appeal within 3 days hereof.

21.On the costs of the application to extend time for appealing, I order costs of this application be to the petitioner in any event.  This application was necessitated because the Notice of Appeal filed earlier was invalid, it was not until the petitioner’s submission was received by the respondents that the respondents’ solicitors sought to rectify their error by issuing the summons to extend time to be heard today, and they were just in time.

22.For the costs of the application for leave to appeal against the costs order, I order the costs of the application to be in the cause of the appeal.

Miss Pheobe Man instructed by Messrs Tsang, Chan & Wong, for the Petitioner

Mr William Allan instructed by Messrs Paul Kwong & Co., for the 1^st and 2^nd Respondents