Mok Hing Chung v. Wong Kwong Yiu

HCAP 8/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO 8 OF 2010

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HCAP 10/2012

PROBATE ACTION NO 10 OF 2012

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COSTS RULING

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Introduction

1.At the end of my Judgment dated 3 July 2014, given after trial, I made certain costs orders nisi.  Within the time to prevent the orders becoming automatically absolute, the parties have made variation applications to vary those orders.  The applications were made by way of written submissions exchanged in accordance with my directions, and which applications I now determine.

2.I shall adopt in this Ruling the definitions used in the Judgment.

Costs Orders Nisi

3.In making my costs orders nisi, I made the following points. 

4.Though against my other findings I thought it to be something of a Pyrrhic victory, WKY succeeded on his case as to the Adoption Issue in HCAP 10/2012 and that he should be granted letters of administration as an adopted child of WYL within the meaning of the IEO.  Hence I thought that WKY is therefore at first blush entitled to his costs of that action, which was vigorously defended. 

5.But I took into account that a considerable amount of evidence had been canvassed when it was ultimately held to be – indeed argued for WKY as being – largely irrelevant to the Adoption Issue.  I also thought it fair to say that I had by no means decided all sub-issues arising in HCAP 10/2012 in favour of WKY.  Indeed, many were decided against him.

6.On the other hand, MHC succeeded on the Resulting Trust and Validity of the Will Issues as arose in HCAP 8/2010, so it seemed MHC is entitled to the costs of that action.  But I also took into account that MHC had adopted an approach which had not helped him on certain matters arising in that action (and essentially which might have caused or exacerbated the incidence of costs).

7.I noted that both actions were in effect progressed and heard together, and that there was considerable overlap in the counter allegations made and the evidence as was called in the two actions (though this plainly did not apply to the expert opinion evidence which went to the Adoption Issue in HCAP 10/2012).

8.Hence, where no party had been wholly successful overall, where neither of the protagonists had come out of the case with a resounding judicial support for their stance, and where it might be thought that the honours had been broadly shared, I considered on a nisi basis that the appropriate order was that there should be no order as to costs on either action.

The Submissions

9.By her submissions, Ms Ng on behalf of WKY proposed that the costs order should be varied as follows:

a. in relation to HCAP 10/2012, an order for MHC to pay WKY’s costs;

b. in relation to HCAP 8/2010, on the Will Validity Issue, an order that MHC shall not pay any costs to WKY, and an order that MHC’s costs be paid out of the estate;

c. in relation to HCAP 8/2010, on the Resulting Trust Issue, an order that MHC shall pay WKY’s costs limited to no more than 20% of the costs of the action.

10.As an alternative, if the Court is minded to make a single costs order for both actions, Ms Ng submitted a fair apportionment should be reflected by WKY being given not less than 80% of his costs for the two actions taken together, and MHC being given not more than 20% of his costs of the two actions taken together.

11.In summary, Ms Ng’s submissions were as follows;

a. I unequivocally found for WKY in the 2012 action, so that costs should follow that event;

b. the decision against WKY on some of the sub-issues should not affect his overall entitlement to costs;

c. I should not have taken into account that a considerable amount of evidence had been canvassed when it was ultimately held to be, and argued for WKY as being, largely irrelevant to the Adoption Issue, because that evidence had been forcibly dragged in by MHC as a result of the legal approach adopted by him and ultimately rejected by me;

d. hence, the consequence of the considerable amount of evidence which turned out to be irrelevant should be visited on MHC, not WKY;

e. I should take into account the conduct of the parties in the litigation, including a late about turn in the legal approach taken by MHC;

f. ultimately, I decided MHC’s case to be untenable, and WKY was fully vindicated on the only central issue, namely his adoption by WYL as her son, conforming to the adoption as an “i-tze” under the Ching Code;

g. WKY’s challenge to the Will was reasonably undertaken and well within the usual exceptions to the usual rule that where opposition to a will is unsuccessful costs should follow the event, it having fallen to MHC to prove the Will, and where the question of the sound mind of the testatrix was part of MHC’s burden of proof;

h. I accepted that the conduct of MHC had raised suspicion which he did nothing to allay, and that conduct in effect provoked the litigation, causing the incurring of costs;

i. WKY’s costs should reasonably come out of the estate, but at the very least there should be no costs ordered against him;

j. WKY’s costs on the Adoption Issue (including the cost of expert opinion evidence) is substantial, whilst his costs on the Resulting Trust and Will Validity Issues could only be modest, so that the practical effect of the order nisi is to render the victory worse than Pyrrhic, and in fact an annihilating defeat in monetary terms;

k. where I also accepted that WKY’s motivation was not primarily about money, that practical effect of the order nisi does not accord with justice as between the parties.

12.By his submissions, Mr Hung on behalf of MHC suggested that the costs order nisi should be varied as follows:

a. in relation to HCAP 10/2012, WKY should pay MHC 75% of the costs;

b. alternatively, WKY should be entitled to only half of the expert costs of Professor Baker and no costs of Professor Liu;

c. in relation to HCAP 8/2010, WKY should pay MHC costs on an indemnity basis.

13.In summary, Mr Hung submitted that:

a. though there were two actions, the disputes of the parties in both were for practical purposes overlapping;

b. as to the three main issues identified, WKY was successful on one (the Adoption Issue), and he was "lucky" to have been so, whereas MHC was successful on the other two (the Resulting Trust and the Will Validity Issues);

c. WKY lost on many sub-issues, which necessitated the parties spending costs and time;

d. it was only at trial that WKY made concessions or resiled from his original position on various issues (many of which were raised by him);

e. I found WKY to have been deliberately misleading or consciously wrong or misleading on certain matters, but made no similar findings against MHC, where the criticism of his conduct was essentially about his character;

f. WKY’s case on pleadings and paper was significantly different to that revealed under cross-examination and as concluded in my judgement;

g. costs were wasted on unnecessary issues;

h. applying Elgindata, there is good reason not just to deprive WKY of his costs on the Adoption Issue, but further to order him to pay a substantial part of the costs;

i. this is particularly in relation to the great stress placed by WKY as to the express purpose for his adoption being to provide a male heir and successor to the Wong family, when this was later was almost abandoned and remained at best peripheral;

j. so much cost was incurred on an issue that could have been simple that the costs following the event rule should not be followed on the Adoption Issue;

k. the costs relating to expert opinion were unnecessarily duplicated by having two experts for WKY;

l. WKY ran and lost a positive case on the other two issues, so costs should follow that event;

m. it is no answer to say that the litigation was caused by suspicion as the Will had been produced by the start of the litigation, and the contentious action could then have been avoided;

n. WKY was also in possession of the medical records for WYL which showed she had no mental problem, but he nevertheless ran a false case of senile dementia.

14.In reply submissions, Ms Ng stated that there was no basis for departing from the usual approach on issues such as the Will Validity Issue, namely that a person reasonably contesting a will should be paid costs out of the estate.  She also pointed out the chronological history of the Adoption Issue, and the change in case in April 2014 upon Mr Hung being assigned as Counsel for MHC.  She rejected the assertion that WKY had ever put forward a false case, and argued as to why Elgindata did not assist MHC’s arguments.

15.Mr Hung filed a supplemental submission, but objection was taken to this by solicitors for WKY who pointed out it was filed without leave and asked me to disregard the contents.  But it seems to me that the contents are largely just repetitive of some of the submissions already made by Mr Hung and summarised above, so it matters little whether I take the content into account or not.  I already have the thrust of the points.

Consideration of submissions

16.I accept that it may not be fair to assume the costs in each action are to be assumed roughly equal.  I also accept the costs of the Adoption Issue may well be rather greater than the costs of the other issues in either action.  I already identified that the costs of at least the expert evidence on the Adoption Issue did not really overlap with the costs of the other issues in both actions. 

17.Hence, I accept that I should not make an order which may have the effect of creating a monetary unfairness against the fact that WKY clearly won the Adoption Issue (albeit on grounds slightly at odds with at least the way the argument had originally been framed).  I also accept the sub-issues on which WKY lost may not have added so greatly to the costs incurred, though I do think some reflection of those points being run and lost is apt.  I think there is some force in Mr Hung’s criticism of the duplication of experts, though I was assisted by both to some extent and do not think it right merely to disallow the costs of either of them.

18.It must also be accepted that there was bound to be, and there was in fact, some overlap in the issues and the evidence to be considered in the two actions.  The overall monetary result depended on the decisions in both actions.  However, the fact of that overlap may not ultimately point to a costs order in the round.

19.On the Will Validity Issue, I think there was hostile litigation.  Though there was no case against MHC that he unduly influenced WYS in making the Will, it was positively suggested by WKY (and an attempt was made to prove) that WYS was not mentally competent to have made a valid will.  That case failed.  Further, of themselves (and even noting the points made by me about MHC’s at times unhelpful approach), the circumstances did not strike me as reasonably necessarily leading to an investigation of the Will’s validity.  The investigation took place essentially because of the stance of WKY.

20.On the Resulting Trust Issue, there seems to be really no dispute that the right starting point would be that WKY should pay MHC’s costs of that issue, albeit those costs are said to be a relatively small proportion of the costs of the HCAP 8/2010 action.

21.So overall it seems to me that my original broad view as to the starting position was correct, namely that WKY was successful on the main issue in his claim, but was not successful in the hostile opposition to the claim as to the Will, and he failed to prove a resulting trust as would have placed him in any monetarily advanced position.

22.In my costs order nisi, I had of course in part intended to avoid the necessity of taxation proceedings, not least in the hope of avoiding further conflict between, and costs expenditure by, the parties (see also the expression of my hopes in paragraph 219 of my Judgment).  As I am told that both parties have appealed my Judgment, that hope of avoiding further conflict may be forlorn.  But I would see no need to provide another arena for conflict (in taxation) if in the exercise of my discretion a broad costs order will meet the justice of the case as I see it.

23.However, in the end I am persuaded that the imbalance of the costs expenditure may simply necessitate separate costs orders, and the taxation of those costs if costs are not agreed.  This may well be the only way to see that the costs awards do not upset the overall justice of the result.

24.I can adjust slightly the percentage allowed to be recovered so as to take account of the issues I have already canvassed, in particular issues or relatively discrete points run but lost and elements of duplication and so forth.

Results and Orders

25.So I am prepared to and do vary the orders made nisi.

26.As to HCAP 8/2010, I order the costs to follow the event, so that they will be paid by WKY, to be taxed if not agreed.

27.As to HCAP 10/2012, I order the costs largely to follow the event, so that 75% of WKY’s costs will be paid by MHC, to be taxed if not agreed

28.MHC’s costs will fall to be taxed in accordance with the legal aid regulations.

Mr Andy Hung, instructed by Ho & Ip, assigned by the Director of Legal Aid, for the plaintiff in HCAP 8/2010 and the defendant in HCAP 10/2012

Ms Margaret Ng, instructed by Charles Wong & Co, for the defendant in HCAP 8/2010 and the plaintiff in HCAP 10/2012