Edmund Kung Chiu Nam v. The Insider Dealing Tribunal

CACV 176/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 176 OF 2006

(ON APPEAL FROM HCAL 120 OF 2005)

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BETWEEN

Before : Hon Cheung JA, Yuen JA and Waung J in Court

Date of Hearing : 15 May 2007

Date of Decision : 15 May 2007

Date of Reasons for Decision : 22 May 2007

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REASONS FOR DECISION

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Hon Cheung JA :

Variation of costs order

1.Mr. Kung asked for a variation of our provisional costs order of 23 January 2007 in that

1)       the costs in the Court of First Instance should remain as it is i.e. Mr. Kung should be entitled to the costs below; and

2)       the costs of the appeal should also be awarded to Mr. Kung.

2.We refused to vary our previous costs orders.  These are my reasons :

Costs of the appeal

3.In respect of the costs in this Court, the Financial Secretary succeeded in setting aside the decision of the Full Bench in awarding Mr. Kung the costs of the hearing in the Tribunal.  He was therefore entitled to the costs of the appeal.  However as he did not succeed completely in depriving Mr. Kung of the costs in the Tribunal, he was only entitled to half of the costs.

4.The argument of Mr. Barlow S.C., counsel for Mr. Kung, is that the Financial Secretary only succeeded by way of a last minute amendment of the notice of appeal which was granted on the date of the appeal.

5.To that we have already awarded Mr. Kung the costs ‘occasioned and thrown away’ by the amendment.  If we have not made clear in our judgment, the costs will necessarily include the costs of the argument on amendment which took one and a half hours before us.  In my view our costs order on amendment has adequately covered the costs incurred by Mr. Kung as a result of the change of approach by the Financial Secretary. 

6.Mr. Barlow asked for all costs prior to the amendment of the notice of appeal to be given to Mr. Kung as well.  In my view it must be left to the taxing master to decide what costs incurred prior to the amendment were totally wasted by reason of the amendment. 

Costs below

7.As to the costs below, one should look at the substance of the decision and not merely at the form of the order sought by Mr. Kung before the Full Bench which eventually gave a different form of relief.  The substance is that Mr. Kung would only be entitled to the full costs below if the Full Bench’s decision in awarding him the costs of the Tribunal proceeding was upheld by this Court.  This was not the case.  Mr. Kung did not succeed in obtaining his costs in the Tribunal as a result of our decision.  That matter has to wait for the determination of the Tribunal.  This means that he has not succeeded completely in the substantive relief he sought from the Full Bench.  The situation is clearly different from In re Elgindata (No. 2) [1992] 1 WLR 1207 which affirmed the principle that the general rule that costs should follow the event unless there were circumstances suggesting that some other order should be made did not cease to apply because a successful party had raised issues or make allegations which he had failed to establish at the hearing of the action.  Mr. Kung was not a truly successful party.  Accordingly the appropriate order was that Mr. Kung was only entitled to half of the costs below.

Hon Yuen JA :

8.I agree that we should decline to vary the costs order nisi.

Costs of the appeal

9.As far as the costs of the appeal are concerned, as Cheung JA has already pointed out, Mr Kung has been given the costs of the amendment which would include the costs of the time taken to argue the Financial Secretary’s application for leave to amend the notice of appeal.  Whether any other costs have been occasioned and thrown away by the amendment would be a matter for the taxing master if the parties are unable to come to an agreement.

10.In the light of that, the order that the Financial Secretary is entitled to half of the costs of the appeal is appropriate.  As a rule, costs follow the event and as the Financial Secretary succeeded in half of his appeal (in that he failed to obtain an order from this court confirming the Tribunal’s decision that Mr Kung pay the costs of the proceedings before the Tribunal), he should get half of the costs of the appeal.

Costs before the Full Bench

11.As for the proceedings before the Full Bench, Mr Kung had sought two reliefs: first that the Tribunal’s order as to costs should be quashed (on which he succeeded), and secondly, that there be an order of mandamus requiring the Tribunal to award to Mr Kung the costs of the proceedings before the Tribunal.

12.In respect of this second relief, the Full Bench went beyond what Mr Kung wanted.  It made an award of costs and we have held that it had no jurisdiction to do so.

13.What the Full Bench should have done was to have remitted the matter to the Tribunal to reconsider the issue of costs applying the correct (civil) principles.  But that was not good enough for Mr Kung - he had wanted an order from the Full Bench requiring the Tribunal to actually award him the costs.  So Mr Kung has failed to get his second relief. 

14.In the light of that, should Mr Kung still get all his costs before the Full Bench?  Mr Barlow SC says that Mr Kung should get all his costs even though he has only succeeded in getting one of two reliefs and he says he relies on the principles in Re Elgindata Ltd (No.2) [1992] 1 WLR 1207.  The principles are as follows (the applicable Hong Kong rules are set out in parentheses):

“(i)      Costs are in the discretion of the court [Order 62 r.2(4) RHC];

(ii)       They should follow the event, except where it appears to the court that in the circumstances of the case some other order should be made [Order 62 rule 3(2) RHC];

(iii)      The general rule does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or cost of the proceedings he may be deprived of the whole or part of his costs;

(iv)     Where the successful party raises issues or makes allegations ‘improperly or unreasonably’ [in Hong Kong, ‘improperly or unnecessarily’], the court may not only deprive him of his costs but may order him to pay the whole or a part of the unsuccessful party’s costs [Order 62 rule 7(1) RHC].”

15.I see nothing in those principles which would require us to award all the costs in the Full Bench to Mr Kung.  This is not a case in which one relief is sought (say, damages for breach of contract) and a number of issues are raised (say, breach of condition precedent and frustration).  The general rule in that type of situation is that costs follow the event (subject to the “significant increase in length” exception in Elgindata). 

16.In the present case, there are two discrete reliefs - the first only sought to “knock back” the Tribunal’s order against Mr Kung; but he was not content returning to Square 1 - by insisting in the second relief that the Tribunal be required to order that he get the costs, he went one step further in the opposite direction.  Mr Kung having failed to get this, it seemed to me that applying the “costs following the event” principle, an order that he should get only half of his costs in the Full Bench was appropriate.

Hon Waung J :

17.I agree.

Mr. Barrie Barlow, S.C., instructed by Messrs Minter Ellison, for the Applicant

Respondent, in person, absent

Mr. Nicholas Cooney, instructed by Department of Justice, for the Interested Party