Mimi Kar Kee Wong Hung v. Severn Villa Ltd and Others
Read the full judgment text of HCMP 243/2011 on BabelCite. This High Court CFI judgment was delivered on 17 January 2014 before Hon Au-Yeung J.
Civil procedure – Costs – Certificate for 2 counsel – Slip rule – Functus officio – Consent Judgment – Taxing Master – Indemnity costs – Civil Justice Reform – High Court – Whether court functus officio regarding sealed costs orders – Whether slip rule applies to amend orders for counsel certificate – Whether consent judgment contained implied term for 2 counsel fees – Application dismissed for categories A, B, C1, E and D – Amendment granted for categories C2 and F – Costs of summons denied to Defendants
Legal issues: Functus officio status of the court · Application of the slip rule to Costs Orders · Implied term in Consent Judgment · Costs of the summons application
Outcome: Summons dismissed save that costs order dated 31 October 2011 in respect of the original trial dates shall be amended to include a provision for certificate for 2 counsel. Costs order dated 22 May 2012 in favour of D3 amended to provide for certificate of 2 counsel. Order nisi that there be no order as to costs.
Cited by 14 cases · Cites 14 cases
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HCMP 243/2011 & HCMP 522/2011 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO 243 OF 2011 ____________
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_____________ D E C I S I O N _____________ The applications 1.These summonses by D1, D2 and D4 (“the Corporate Defendants”) and D3 arose as a result of adjournment of the taxation of costs. The Taxing Master asked the parties to seek clarification from Deputy Judge Carlson as to whether or not a certificate for 2 counsel (“the certificate”) should be allowed for various costs orders. As a result of the passing of the late Deputy Judge Carlson, the matter has been handed over to me for disposal. 2.The subject costs orders (“the Costs Orders”) are set out as follows:
3.Mr Dawes, counsel for the Defendants, concedes that his clients had never asked for the certificates from Deputy Judge Carlson. 4.The Plaintiff opposes the applications on the grounds that:
The background 5.The Plaintiff filed 2 originating summonses to seek a declaration that certain properties were held on trust by D1 (a subsidiary of D2) for her together with other consequential reliefs. D3 was her ex-husband engaged in ancillary relief proceedings with her. The case changed substantially after the filing of evidence. The original 2 days of trial on 8 and 9 June 2011 were vacated. Another 15 days were fixed in between 25 October and 13 December 2011 which were also vacated. The originating summons proceedings were consolidated with the ancillary relief proceedings pending between the Plaintiff and D3. The case then grew into an estimated 25-day trial to start on 2 May 2012. 6.On the 3rd day of trial, ie 4 May 2012, the Plaintiff abandoned her entire claim and entered into the Consent Judgment under which she was to, among others, pay the Defendants indemnity costs. The late Deputy Judge Carlson approved that Consent Judgment. 7.According to the transcript of proceedings at the trial, Mr Bleach SC, who appeared on behalf of the Corporate Defendants, informed Deputy Judge Carlson about the terms of the Consent Judgment and stated as follows:
Bases of the defendants’summonses 8.D3’s summons relied on O 20, rule 11 of the Rules of the High Court and the inherent jurisdiction. At the hearing, D3’s position was no different from that of the Corporate Defendants. 9.The Corporate Defendants’ summonses relied solely on the inherent jurisdiction of the court to seek “the grant of certificates for 2 counsel”. However, in their first set of written submission for the hearing, the Corporate Defendants sought (1) further directions in respect of, or alternatively a variation to, the Costs Orders (including the Consent Judgment) and the application of the slip rule in respect of the Costs Orders other than the Consent Judgment for the grant of the certificates “to carry out the agreement between the parties and express the manifest intention of the court”; (2) alternatively, with leave of this court, for an order that the Costs Orders be amended to provide for certificate for 2 counsel. 10.The approach of the Corporate Defendants clouded the issue, to say the least, as the principles governing variation, amendment under the slip rule and the inherent jurisdiction of the court are different. I disagree with Mr Dawes that the Plaintiff’s objections are “technical” in nature. 11.It is only in the joint reply submissions that the Defendants make clear that they are not seeking variation of the costs orders and does not involve the court acting when functus officio. Rather, they are seeking the indulgence of the court (1) in relation to the Consent Judgment, to give effect to the parties’ true agreement; and (2) in relation to the other Costs Orders, to bring into harmony the orders which the late Deputy Judge Carlson obviously meant to pronounce. The Defendants put in a whole range of issues involving facts and law. They even seek leave to amend the summons to rely on the slip rule. 12.Mr Dawes frames this question for the court:
He submits that the answer must be in the affirmative. 13.Mr Tam, counsel for the Plaintiff, frames the question as:
14.As the issue of “slip rule” was brought out in the first set of written submission of the Corporate Defendants and the Plaintiff has had full opportunity to make submissions, I shall grant leave for the amendment to the Defendants’ summonses so as to deal with the issues substantively. 15.In view of the grounds in opposition in paragraph 4, it will be useful to examine the principles on functus officio and the slip rule. Legal principles on functus officio 16.The principles are not disputed. In Andayani v Chan Oi Ling [2000] 4 HKC 233, at 237 C-D, Keith JA stated,
17.The same principles apply to a consent judgment. In Moores Rowland (a Firm) v Grant Thornton (a firm) and ors, HCA 735/2010, HCA 1126/2010, HCA 1873/2010 and HCMP 1284/2011, 8.6.2012, Deputy Judge Lok, having referred to Andayani v Chan Oi Ling, stated as follows:
Legal principles under the slip rule 18.Order 20, rule 11 of the Rules of the High Court provides that “clerical mistakes in judgments or orders, or errors arising therein from any accidental slip or omission, may at any time be corrected by the Court on summons without any appeal.” 19.However, the error or omission must be an error in expressing the manifest intention of the court. In Li Tze Cho v Ching Hua Co (No.3) [1954] HKLR 201, at 205, Reece J held,
20.A party cannot use the slip rule to insert, into the original order, a provision which was not there, not because of any slip in expressing the court’s intention but because it was not originally asked for: The Bank of China v Xinyuan Trading Co, CACV 276/1998, 21 June 2000, Godfrey VP. 21.The slip rule has been applied to correct orders where there was omission of counsel to seek costs and/or interests: In re Inchcape (Earl of) [1942] 1 Ch 394; Tak Ming Co v Yee Sang Co [1973] 1 WLR 300, at 304 B-D; Winston Camera & Radio Co Ltd v Combi (Singapore) Pte Ltd [1988] HKC 156. In the first 2 cases, the learned judges said that they had a very distinct recollection of their cases and they would have ordered costs or interests if asked for at the hearings. 22.The Court of Final Appeal in Man Ping Nam v Man Fong Hang (No.2) (2007) 10 HKCFAR 140 applied the inherent jurisdiction and slip rule to amend its sealed order.
23.The circumstances in Man Ping Nam were special. The appellant, having lost at first instance and before the Court of Appeal, succeeded at the Court of Final Appeal. He asked the Court of Final Appeal to amend its order under the slip rule to include an express order that the respondent do return the judgment sum plus interests. Before the court replied, the order was sealed. The respondent asserted that there was no slip and refused to return the money. 24.There were no provisions in the Court of Final Appeal Rules governing the return of a judgment sum paid by the appellant when it lost in the courts below and any interest lost. If the order had not been amended under the slip rule, the respondent would have been left with a windfall. 25.The Court of Final Appeal granted the application. It made clear (in para 9 of its judgment) that while it would have been desirable (eg to facilitate execution) for an express order for repayment to have been included, there was no ambiguity nor any ground for doubting that such was the effect of its order made. The obvious effect of the order made it unnecessary to resort to its powers of clarification, but the court did for the avoidance of doubt order the respondent to repay the judgment sum with interest. It also took the view that the failure to ask for interest was an accidental omission on the part of the appellants’ lawyers (para 17). 26.Ribeiro PJ made clear that the Court of Final Appeal would unhesitatingly have ordered the interests should the same have been asked for. Accordingly, the Court of Final Appeal was merely making plain its manifest intention. 27.The Court of Final Appeal did not lay down any new principles for applying the slip rule but it did emphasize the final nature of the appeal.
28.The slip rule has also been applied years after the costs orders were made. In LTC v DCL, FCMC 567/1978, 4 June 2008, Deputy District Judge CK Chan (as he then was) relied on Man Ping Nam v Man Fong Hang (No. 2) when considering whether or not to grant the certificate in respect of 3 costs orders (made 3 to 4 years before the hearing) that were not made by him. That case did not establish new principles and is not binding on this court anyway. Without disrespect to the learned Deputy Judge, he was exercising his own discretion to consider the question of counsel’s fees rather than ascertaining the manifest intention of the judges who originally decided the costs. I decline to apply LTC v DCL. 29.The slip rule has also been applied to reflect the true bargain of the parties to a consent judgment. In LPKP v PTPR, FCMC 11056/2005, 19 November 2009, the order by consent provided that maintenance to be paid by the husband was to cease upon his remarriage. The wife applied to amend the order so that maintenance should cease upon her remarriage. The application was granted. After hearing evidence, HH Judge Melloy found the true bargain to be more likely than not to have been that the maintenance should last till the wife’s remarriage; that the husband was aware that that was not the case in the order but did not draw this to the attention of the wife until very late in the day. The mistake was calculated to benefit the husband. 30.Mr Dawes also relies on 2 Court of Appeal cases which state that the practice of the Court of Appeal was to grant the certificate unless the matter was raised specifically: UDL Holdings Ltd & anor v Leung Yuet Keung & anor, CACV 356/2008, 14 September 2009, Rogers VP; Chan Hei Ling Helen v The Medical Council of Hong Kong, CACV 403/2006, 16 July 2009, Le Pichon JA. Without disrespect, they have no application to the situation before the Court of First Instance, where leading counsel is not necessarily justified in every case. 31.Even if Chan Hei Ling Helen is applicable, I agree with Mr Tam that it does not assist the Defendants. Even if, as Le Pichon JA held, the amendment to the Rules of the High Court was not intended to effect a change of substance, that meant a certificate is still required for a hearing before a judge in chambers post-CJR. A certificate was still required for the costs orders in Categories A, B and E since the hearings were conducted in chambers. Application of the legal principles 32.I agree with Mr Tam that this court cannot exercise its discretion for the first time on the issue of the certificate. Therefore, insofar as the summonses invite this court to grant the certificates, this court is functus officio and declines to follow LTC v DCL. 33.Insofar as the summonses rely on the slip rule, the authorities show that sealing of an order is no bar to its application. The court is not functus officio. Categories A & B costs orders 34.This case no doubt was complex. However, it is still the matter giving rise to the relevant costs order that should be considered to ascertain the manifest intention of Deputy Judge Carlson. An order for costs in the cause does not necessarily mean that there should be as many certificates for counsel for an interlocutory matter as for the cause itself. This is because interlocutory matters can vary in terms of difficulty and may not justify engagement of more than one counsel. 35.It was justified to engage counsel for pre-trial reviews. However, I have not been informed of what the complexity was, to justify 2 counsel. I am not even shown any written ruling. 36.Specifically in respect of the costs order of 19 September 2011, while the Corporate Defendants were represented by 2 counsel, the Plaintiff and D3 were respectively represented by senior counsel alone. 37.At the hearing on 6 October 2011, whilst the Corporate Defendants and D3 were represented by 2 counsel, the Plaintiff was represented by her solicitors only. 38.This court is simply unable to say that the manifest intention of Deputy Judge Carlson was to grant the certificate. The application in respect of Categories A & B costs orders should be dismissed. Category C costs order 39.With regard to the Category C1 costs order, the hearing was for leave to appeal and various interlocutory orders made on 24 October 2011. The costs order was made after full argument on costs. The parties even went to the extent of arguing the apportionment of time (para 3 of the Ruling). There was nothing in the written Ruling of Deputy Judge Carlson which showed, eg the complexity of the applications which would have revealed his manifest intention to grant the certificate. The application in respect of the Category C1 costs order is dismissed. 40.Re Category C2 costs order, two rulings of Deputy Judge Carlson will give a glimpse of the complexity of the case. 41.Firstly, the ruling dated 7 June 2011 concerned a hearing on case management issues (including 4 summonses). The Plaintiff and the Corporate Defendants were each represented by leading counsel alone. Deputy Judge Carlson commented that the original estimate of 2 days “has become a hopelessly inadequate estimate of the time required” (para 4 of the ruling). “The facts are seriously contested and cross-examination will be required and more documents are going to be disclosed” (para 4). He vacated the original trial dates and consolidated the proceedings with the ancillary relief proceedings between the Plaintiff and D3. 42.Secondly, the ruling dated 24 October 2011 concerned a hearing that lasted 3 days. The Plaintiff, the Corporate Defendants and D3 were each represented by 2 counsel. Deputy Judge Carlson commented as follows:
43.Mr Dawes draws to my attention that the 2 sets of originating summons proceedings have all along been treated by the court as trial of preliminary issue of the ancillary relief proceedings applying the established procedure following the decision of TL v ML and others (Ancillary Relief: Claim against Assets of Extended Family) [2006] 1 FLR 1263: paras 5-6 of the Ruling dated 24 October 2011. In the ancillary relief proceedings, the parties were all along represented by at least 2 counsel and the certificate was routinely given by reason of the nature and scale of the proceedings. The intention of the court was clear. There was no basis to suggest that the intention of Deputy Judge Carlson was different here, so Mr Dawes submits. 44.With respect to Mr Dawes, even the parties themselves have not engaged 2 counsel at every hearing, eg the one on 1 and 2 June 2011. Therefore, it is hard to say that the certificate was routinely given. 45.However, paragraphs 41-42 above manifestly reflected Deputy Judge Carlson’s view that it was fair for parties to be represented by 2 counsel in this complex case. The Plaintiff herself was so represented. Had he been asked, Deputy Judge Carlson would have unhesitatingly granted the certificate for the trial. The Category C2 costs order should be amended to include the certificate. Category D: the Consent Judgment Legal principles on the power of the court to vary a consent order 46.Deputy Judge Au (as he then was) has summarized the general principles concerning the court’s power to vary a consent order in Cathay Pacific Airways Flight Attendants Union v Cheung & Choy (a firm), HCMP 1863/2007, 3 February 2009, at para 28, as follows:
47.Being a contract, a consent order may contain both express and implied terms based on the plain and necessary meaning or inference to be drawn from the agreement: Lam Hon Keung Keith & ors v Jade Light Village Sea Food Restaurant Ltd [1984] HKC 279 at 284I, Power J 48.In Somerset and anor v Ley and anor [1964] 1 WLR 640, the parties entered into a compromise for costs to be paid to the plaintiffs (executors) on common fund basis subject to approval of the court, as there was an infant defendant involved. The order by consent was silent as to the fees of leading counsel for the plaintiffs. The plaintiffs subsequently applied to the court for granting fees of leading counsel. The taxing master took the view that the matter before the court was a chambers hearing and he refused leading counsel’s fees for lack of a certificate. In dismissing the motion for the grant of a certificate for such fees, Cross J held (at p 645):
49.Cross J examined the pre-compromise negotiation and came to the view that none of the lawyers who prepared and approved the minutes of the consent order had in mind the issue of fees for leading counsel. He went on to apply the officious bystander test to see if a term could be implied to the effect that leading counsel’s fees should be included. He had no doubt that counsel for the Plaintiffs would have said, “Of course they are to be included.” However, counsel for the defendant told Cross J that whatever his and his instructing solicitor’s own views might have been, they would have felt obliged to consult the guardian ad litem as to whether or not those fees should go into the draft order. Counsel for the defendant remembered that it had not been at all easy to bring the guardian ad litem to the point of agreeing to a compromise at all and so he and his solicitor would not have taken it on themselves to vary the agreed terms by a hair’s breadth without her consent. No evidence was provided as to what the state of mind of the guardian ad litem was. Cross J concluded that it was not “of course” that the guardian ad litem would have agreed to such a term. He refused to grant an order for leading counsel’s fees notwithstanding that the guardian ad litem for the infant was also represented by leading counsel in the underlying proceedings. 50.The Consent Judgment evidenced a contract between the Plaintiff and the Corporate Defendants within the meaning of the Cathay Pacific case. It was entered into by negotiation among the parties with the assistance of eminent litigation counsel and signed by leading counsel. It was meant to finally dispose of the entire set of proceedings. There were detailed and specific provisions covering costs, not only of the claim but also the counterclaim and a number of summonses. A letter dated 17 December 2013 from solicitors for the Corporate Defendants to me confirmed that there had been 2 occasions when Deputy Judge Carlson added prior costs reserved orders under the slip rule before the Consent Judgment was perfected, but that did not in any way undermine the contractual nature of the Consent Judgment. 51.Variation of the terms of the Consent Judgment is not sought. The manifest intention of Deputy Judge Carlson was to adopt the terms of the parties. There is nothing unclear in his order. 52.I do not prefer either question framed by counsel in paragraphs 12 and 13 above. Rather the pertinent question to ask is whether the Consent Judgment contained an implied term that 2 counsel’s fees should be included: Somerset v Ley. This is a question of interpretation of the Consent Judgment and ascertainment of the parties’ true bargain: LPKP v PTPR. There is no question of the court being functus officio in exercising its power of interpretation. 53.However, how the language used in a costs order is to be understood is something entirely within the precinct of the taxing master until the conclusion of the taxation of costs before him: China Merchants Kin Swiss Transportation Co Ltd v Treasure Wise Ltd (No.3) [2010] 1 HKLRD 313, at para 16, Chung J. 54.The courts have been quite consistent in refusing to usurp the function of the taxing master. If the court were to grant a certificate, it would assist the applicant in the taxation and take the matter out of the hands of the taxing master who would be bound to give effect to the directions of the court: The Bank of China v Xinyuan Trading Co, CACV 276/1998. 55.Hence, the Court of Appeal refused to express a view on the certificate whilst there was a pending review: The Bank of China v Xinyuan Trading Co. Cross J only gave a ruling only after the taxing master has declined to grant the certificate: Somerset v Ley. HH Judge Melloy amended the consent order as it did not involve interference with taxation: LPKP v PTPR. 56.The circumstances surrounding the making of the Consent Judgment, the transcript, the meaning of indemnity costs, the officious bystander test pressed upon by counsel are all within the precincts of the taxing master. 57.I dismiss the application to amend the Category D costs order and decline to direct the Taxing Master on how to interpret the Consent Judgment as sought in the 1st set of written submission. Category E: Costs order nisi dated 8 June 2012 58.This costs order was made as part of an order after hearing of submissions. The Plaintiff and the Corporate Defendants were represented by leading counsel alone and junior counsel respectively. It was at the hearing on 8 June 2012 that the Plaintiff and all the Defendants were represented by 2 counsel. The underlying matter involved extension of time for the Plaintiff to remove her personal possession from the suit premises and stay of execution of paragraph 2(3) of the Consent Judgment for that purpose. 59.If the costs order nisi did not reflect the true intention of Deputy Judge Carlson, it should have been varied within 14 days of the costs order pursuant to Order 42, rule 5B(6) of the Rules of the High Court. That was not done. This court is thus functus officio. 60.If I am wrong, I have not been told why the Plaintiff and the Corporate Defendants saw fit to engage one counsel on 1 June but engaged an additional counsel on the 8th. Nor have I been provided with the materials before Deputy Judge Carlson and even his written ruling. There is simply no basis to ascertain his true intention. 61.I dismiss the application in respect of this costs order. Category F: Costs order made on 22 May 2012 in favour of D3 62.This Costs Order was made after disposal of the action and after hearing full argument on costs by leading counsel. D3 was not a party to the Consent Judgment. In his Ruling dated 22 May 2012, Deputy Judge Carlson relied on his previous rulings of 24 October 2011.
63.The case was complex. D3 was a necessary party. The manifest intention of Deputy Judge Carlson in the 2 rulings referred to in paragraphs 41-42 above equally applied to D3. The application by D3 to amend the costs order to include the certificate is granted. Conclusion 64.The court is functus officio and should not exercise the fresh discretion in the place of Deputy Judge Carlson to grant certificates for 2 counsel. Though the slip rule applies, I decline to amend the Categories A, B, C1 and E Costs Orders as there was no evidence on which to ascertain Deputy Judge Carlson’s manifest intention. Additionally, Category E order has been made absolute already. In respect of the Category D costs order, it is a matter for the Taxing Master to interpret the Consent Judgment to ascertain the true bargain between the parties and see if there was an implied term for the Plaintiff to pay the Corporate Defendants for 2 counsel. The Category C2 order and D3’s order were clearly for there to be certificates for 2 counsel and ought to be amended to reflect the manifest intention of Deputy Judge Carlson. 65.I order as follows:
Costs 66.The Defendants are seeking the indulgence of the court and should have borne costs of the summons in the first place. 67.However, the Plaintiff contested and lost. Costs of the hearing and the written submissions should, as a matter of principle, follow the event and be paid by the Plaintiff to D3. 68.The Corporate Defendants have limited success. As a matter of principle, they should have costs of the hearing and written submissions. As a matter of discretion, if costs are granted, it would only be for 50% of their costs. As between the Corporate Defendants and D3, counsel’s fees should be split as 60:40. 69.For the reasons given in paragraphs 70 to 72 below, the discretion should be wholly exercised against the Defendants. The Civil Justice Reform concerning certificate for counsel 70.One important change brought about by the Civil Justice Reform (“CJR”) is the amendment to paragraph 2(3) of Part II to the First Schedule of Order 62 which now provides that no costs shall be allowed in respect of more than one counsel appearing before a judge unless the judge has certified the attendance as being proper in the circumstances of the case (“the rule on counsel’s fees”). The intention was to save costs and time on arguments in a taxation as to how many counsel’s fees should be allowed and avoid the need for adjournment of a taxation so as to seek clarification from the judge giving the costs order (often years or months after the substantive matter has been disposed of). 71.Drafting of costs orders in line with the rule on counsel’s fees is not just a matter of technicality. It is also for the purpose of clarity and fairness. As in this case, where the Plaintiff’s lawyers came into the case only after many of the subject Costs Orders have been made, it would be a cost wasting exercise for them to have to examine a whole lot of materials to ascertain the manifest intention of the judge making the Costs Orders before giving advice to the Plaintiff. 72.This case fully illustrates the evil that the amendment to the rule on counsel’s fees was intended to avoid. What was thought to be a simple “clarification” by Deputy Judge Carlson turned into applications by summonses. What set out as a 30-minute hearing turned into a hearing for identification of the bone of contention, followed by 5 sets of written submission and 30 items of authorities. The Corporate Defendants, by their reply submission, brought in new arguments on points of law which the Plaintiff needed to answer and 2 rulings in this case which the Plaintiff had no opportunity to answer as to facts. The Corporate Defendants even belatedly sought leave to amend their summons. 73.Accordingly, the Defendants should be denied their costs and I make an order nisi that there be no order as to costs. 74.I hope that practitioners will bear in mind the need to make clear provision in their costs orders for certificates of counsel, if anything, just for the avoidance of doubt. If, say, only 2 out of 3 counsel are certified, it will also be most prudent to specify which counsel they are, again to save argument in taxation. 75.I thank Mr Dawes and Mr Tam for their able assistance.
Mr Aidan Tam, instructed by S W Wong & Associates, for the plaintiff Mr Keoy Soo Khim, of Baker & McKenzie, for the 1st, 2nd and 4th defendants at the hearing Ms J Chin, of Stevenson, Wong & Co, for the 3rd defendant at the hearing Mr Victor Dawes, instructed by Baker & McKenzie and Stevenson, Wong & Co in the subsequent written submissions, for all defendants | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Further hearings and rulings under HCMP 243/2011