Wong Pak Sum v. Hong Kong Furniture & Decoration Trade Association Ltd

HCMP 2946/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2946 OF 2013

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BETWEEN

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REASONS FOR DECISION

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Introduction

1.The defendant is a Hong Kong company limited by guarantee without a share capital.  The plaintiff, who is unrepresented in these proceedings, is a member of the defendant association.

2.On 9 October 2014, I dismissed the plaintiff’s summons filed on 24 September 2014 (“3^rd Summons”) for production by the defendant of various documents as set out in the 3^rd Summons (see paragraph 35 of my Reasons for Decision and Judgment handed down on 17 October 2014 (“Reasons/Judgment”)).  I reserved my reasons for the dismissal of the 3^rd Summons and I also reserved the issue of costs.

3.By the Reasons/Judgment, I handed down my reasons for the dismissal of the 3^rd Summons and granted a costs order nisi that costs of the 3^rd Summons (including all costs reserved, if any) be paid by the plaintiff to the defendant to be summarily assessed and paid forthwith (“1^st Costs Order Nisi”).

4.For easy reference, I shall adopt the abbreviations in the Reasons/Judgment.

5.On 28 July 2014, the plaintiff filed the 2^nd Summons to dismiss the defendant’s Application to Set Down a Bill for Taxation and/or the taxation proceedings “in the sum of $146,837 and costs in the sum of $5,475”.  The sum of $146,837 refers to the amount of costs claimed by the defendant in the Bill of Costs filed pursuant to the Costs Order, and the sum of $5,475 refers to the assessed Costs under the Master Lo Order.  By the Master Chow Order dated 7 August 2014, Master C Chow dismissed the 2^nd Summons and ordered the plaintiff to pay the defendant costs of the 2^nd Summons on indemnity basis summarily assessed at $5,000.  On 12 September 2014, the plaintiff filed Notice of Appeal to set aside the Master Chow Order. 

6.By the Reasons/Judgment, I held that Master C Chow was correct to dismiss the 2^nd Summons, and there was no basis to disturb her costs order.  In short, I dismissed the Appeal.  I also granted a costs order nisi that the plaintiff do pay the defendant costs of the Appeal (including all costs reserved, if any) on indemnity basis to be summarily assessed and paid forthwith (“2^nd Costs Order Nisi”).

7.On 30 October 2014, the plaintiff filed a summons seeking to vary the 1^st and 2^nd Cost Orders Nisi to the effect that each party shall pay their own costs (“Costs Summons”).

8.On the same day, the plaintiff filed an affidavit in support of the Costs Summons (“Costs Aff”).  In the Costs Aff, the plaintiff claimed that it was the fault of the defendant that caused the plaintiff (being a member of the defendant association) to issue the 3^rd Summons and the Appeal and that led to the two hearings on 9 and 13 October 2014:

(a) the plaintiff had twice requested the defendant to provide the “omitted” (欠缺遺漏) Documents for completing the hearing bundle, but the defendant did not give any reply;

(b) there were many aspects of the Board Minutes in respect of the Board Meeting of the Board that were in breach of the defendant’s memorandum of association and the Articles.

9.On 10 December 2014, the defendant’s solicitors lodged their written skeleton submissions and list of authorities. On 12 December 2014, the plaintiff lodged his.

Discussion

10.The Costs Summons is an application for variation of the 1^st and 2^nd Cost Orders Nisi.  Since this court dismissed the 3^rd Summons and the Appeal, the costs orders under the 1^st and 2^nd Cost Orders Nisi provided for costs to follow event.  Order 62 rule 3(2A) of the RHC provides that “[if] the Court in the exercise of its discretion sees fit to make any order as to the costs of or incidental to any interlocutory proceedings, it may, subject to this Order, order the costs to follow the event or make such other order as it sees fit”. 

11.The defendant’s solicitors have drawn my attention to the following observations by To J in Waxman & anor v Le Fei Yu & anor [2013] 6 HKC 424:

“As for the onus of proof, I think it is the same post-CJR as it was pre-CJR. It must be the successful party’s burden to satisfy the court as to the type of costs order it is entitled. To begin with, the successful party is assisted by the general rule of costs to follow the event. By the mere fact of being successful, the successful party has discharged the evidential burden of showing it is entitled to costs. Thus, effectively, the evidential burden is on the unsuccessful party to adduce sufficient evidence or argument that some other or lesser order is appropriate, such as no order as to costs, costs be to the successful party’s costs in the cause or costs to the unsuccessful party. In the absence of evidence or convincing argument to the contrary, the successful party would also have discharged the legal burden. Costs to follow the event would be the appropriate order to make. If the unsuccessful party is able to discharge that evidential burden, it will be the legal burden of the successful party to show that he is entitled to the costs order which he seeks. In reality, having heard the interlocutory application, it would be quite obvious to the court what costs order would best serve the justice between the parties without relying on the burden of proof.”

12.Further, Bokhary PJ in Mariner International Hotels Ltd v Atlas Ltd (2007) 10 HKCFAR 246 held that a party seeking to displace the general rule that costs should follow event naturally bore the burden of showing that the circumstances justified such exceptional course.

13.It is not the occasion on an application for variation of the 1^st and 2^nd Cost Orders Nisi for the plaintiff to re-argue the 3^rd Summons and/or the Appeal.   The plaintiff complains that the defendant has failed to give any reply, whether yea or nay, to his requests for the Documents.  By the Reasons/Judgment, I have rejected the plaintiff’s request for provision of the Documents by concluding that none of the grounds he has put forward can be supported.  Since I do not see any sufficient basis for the plaintiff to request the Documents, I cannot see how the defendant can be faulted for not complying with the plaintiff’s requests for them and for resisting the 3^rd Summons. Given my conclusions in the Reasons/Judgment, it is also not open to the plaintiff to seek to re-argue that the Documents are necessary to be adduced and placed before the court for completeness.

14.By the Reasons/Judgment, I dismissed the Appeal and explained why I considered Master C Chow was correct to dismiss the 2^nd Summons and to make the costs order for such summons as she did.  Having dismissed the Appeal and given the analysis in the Reasons/Judgment as to why I do not accept the plaintiff’s arguments in respect of the Appeal, there is no further room for this court to re-entertain such earlier arguments put forward by the plaintiff as to the alleged deficiencies of the Board Minutes. 

15.At the hearing of the Costs Summons, the plaintiff emphasised he filed the 3^rd Summons and the Appeal as a result of his subjective but genuine concern over the operation of the Association and his belief that he had a supervisory rule as the defendant association’s member and “永遠名譽會長兼董事身份”, and he was not driven by any vexatious or frivolous motive. I am not persuaded by such argument. Whatever might be the motive of the plaintiff in taking out these applications, the result is that the defendant has been vexed by them, and this court has found there were no merits to those applications.

16.In his skeleton submissions, the plaintiff has urged this court to grant a cost order beneficial to him under section 738(3) of Part 14 Division 4 of the Companies Ordinance Cap 622 (“Cap 622”). Section 738(3) of Cap 622 provides as follows:

“(1) The Court may make any order that it thinks fit about the costs –

(a) incurred or to be incurred in relation to-

(i) any proceedings brought or intervened in, or to be brought or intervened in, under section 732(1), (2) or (3); or

(ii) an application for leave to the purposes of section 732(1), (2) or (3); and

(b) incurred or to be incurred by the member, the company, or any other parties to the proceedings or application.

(2) Any order may require the company to indemnify, out of its assets, the member against the costs incurred or to be incurred by that member in bringing or intervening in the proceedings or in making the application.

(3) The Court may only make an order about costs (including the requirement as to indemnification) under this section in favour of the member if it is satisfied that the member was acting in good faith in, and had reasonable grounds for, bringing or intervening in the proceedings or making the application.” (my emphasis)

It is plain that the provision in section 738(3) of Cap 622 that empowers the court to grant a cost order in favour of the member is limited to “costs …… under this section”. Section 738(1) of Cap 622 sets out the subject matter of any cost order that the court may make “under this section”, and section 738 of Cap 622 only provides for costs incurred or to be incurred in relation to proceedings or applications for leave under section 732(1)-(3) of Cap 622.

17.Section 732 of Cap 622 provides as follows:

“(1) If misconduct is committed against a company, a member of the company or of an associated company of the company may, with the leave of the Court granted under section 733, bring proceedings in respect of the misconduct before the court on behalf of the company.

(2) If, because of misconduct committed against the company, a company fails to bring proceedings in respect of any matter, a member of the company or of an associated company or of an associated company of the company may, with the leave of the Court granted under section 733, bring proceedings in respect of the matter before the court on behalf of the company.

(3) If, because of misconduct committed against the company, a company fails to diligently continue, discontinue or defend proceedings, a member of the company or of an associated company of the company may, with the leave of the Court granted under section 733, intervene in the proceedings before the court for the purpose of continuing, discontinuing or defending those proceedings on behalf of the company.

……”

Plainly, section 732(1)-(3) of Cap 622 is concerned with derivative proceedings and applications, which have nothing whatsoever to do with the 3^rd Summons and the Appeal. In the circumstances, section 738(3) of Cap 622 is wholly irrelevant to the Costs Summons, and the exercise of the court’s discretion to award costs in respect of the Costs Summons is governed by Order 62 of the RHC.

18.I am not persuaded any of the reasons/submissions put forward by the plaintiff amounts to any arguable basis for displacing the general rule that costs follow event.  In the circumstances, at the hearing on 15 December 2014, I dismissed the Costs Summons, and ordered the 1^st and 2^nd Cost Orders Nisi to be made absolute (“1^st and 2^nd Costs Orders”).  There is no reason why costs should not follow event in respect of the Costs Summons. At the hearing on 15 December 2014, I also awarded costs of and occasioned by the Costs Summons in favour of the defendant against the plaintiff to be summarily assessed and paid forthwith (“3^rd Costs Order”).

Summary assessment of costs

19.On 4^th November 2014, the defendant filed their statements of costs under the 1^st and 2^nd Costs Orders Nisi (now made absolute as the 1^st and 2^nd Costs Orders) to claim for costs in the sums of $72,694 and $61,390.  To date, the plaintiff has not lodged any list of objections. 

20.On 10 December 2014, the defendant lodged their statement of costs for the 3^rd Costs Order together with their solicitors’ written submissions.

21.At the hearing on 15 December 2014, I have given directions for the conduct of summary assessment of costs on paper without oral hearing as follows:

(a) the plaintiff be at liberty to lodge and serve succinct summary of objections of not more than one page in respect of each of the defendant’s statements of costs for the 1^st, 2^nd and 3^rd Costs Orders (ie not exceeding three pages in total) (“Objection Summary”) within 14 days from the date thereof;

(b) summary assessment of costs in respect of the 1^st, 2^nd and 3^rd Costs Orders will be dealt with by this court on paper without any oral hearing after 14 days from the date thereof irrespective whether the plaintiff lodges any Objection Summary.

The plaintiff acting in person and present.

Mr Nelson Shum, of Paul K C Chan & Partners, for the defendant.