LEE MING MANG SHARON v. NG SIEW SENG RICHARD AND OTHERS

bjbj HCA 1536/2006 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 1536 OF 2006 ____________ BETWEEN LEE MING MANG SHARON Plaintiff and NG SIEW SENG RICHARD 1st Defendant NG SIEW LOONG 2nd Defendant SINO INTELLIGENT LIMITED 3rd Defendant ____________ Before: Deputy High Court Judge Carlson in Chambers Date of Hearing: 28 October 2009 Date of Ruling (Handed Down): 30 October 2009 __________ R U L I N G __________ Introduction This is an application by the Plaintiff to vary an order nisi requiring her to pay the Defendants their costs of the action which was tried over a period of 11 days and heard in three instalments in July, October and November last year. There were two distinct aspects to the trial. Firstly, the Defendants had pleaded that the Plaintiff was estopped from bringing the action because it was identical in its scope and purpose to her application for ancillary relief in divorce proceedings which she had previously instituted against the 1st Defendant who had been her husband at the time. Having obtained a decree of divorce in those proceedings, she then initiated a settlement of her ancillary financial claims by which she and the 1st Defendant withdrew their claims against each other and the 1st Defendant, as Respondent in those proceedings, agreed to contribute $45,000 to her costs. Those proceedings had been going on for about two years by the time that they were settled. Within days of reaching that settlement, she issued her writ in this action in which she made claims in respect of the two properties that had amongst other claims been the subject matter of her ancillary relief application. The action had come as a complete surprise to the Defendants, the 1st Defendant in particular believing that once he and the Plaintiff had agreed to withdraw their financial applications against each other in their divorce that this would be the end of any litigation between him and the Plaintiff. This was the basis of the plea of estoppel which in substance amounted to an application to strike out the claim on the basis that the bringing of this action in these circumstances amounted to an abuse of process based on the extended doctrine of res judicata. The other aspect of the case required a full examination of the evidence in respect of the purchase of the two properties which the Plaintiff was laying claim to, which additionally required the court to have regard to the Plaintiff s and the 1st Defendant s marriage and their financial affairs within their marriage. The shape of the trial At the beginning of the trial in the course of its opening by Miss Lam on behalf of the Plaintiff, it struck me that the plea of estoppel/ res judicata was one that could have been determined earlier and I also required whether it might be appropriate, even now, at the start of the trial to decide this issue first. Miss Lau, on behalf of the Defendants, suggested that it was more convenient to take everything together by hearing all the evidence and deciding the issues at the same time. And so it was that the case proceeded for 11 days during which time I heard all of the evidence. My judgment has dealt with the abuse of process issue first, which I upheld and dismissed the action. In the event of an appeal, I went on to consider the merits of the claim and I also dismissed that. The result is that in the event of an appeal, the correctness of both decisions can be considered by the Court of Appeal. Without the benefit of argument, I ordered the Plaintiff, who had lost on both parts of the action, to pay the Defendants costs. The argument for a variation Miss Lam has addressed a powerful argument for saying that because the Defendants, who had failed to ask the court to rule on their plea that the action was an abuse of process and should therefore be struck out at a very early opportunity, certainly no later than the close of the pleadings, should only get their costs for the final two days of the trial and that for the first nine days, each party should bear their own costs. Her reasoning is that had the Defendants done what they ought to have done, the Plaintiff, and indeed the Defendants as well, would have been spared the need to go through the lengthy process of discovery and preparation for the trial and would in the event have been spared the trial itself. She concedes the final two days because she says that this is a fair reflection of the time occupied on the abuse of process element of the case and had the argument been dealt with earlier, as it should have been, that argument would probably have taken up that sort of time. Miss Lau, in response, submits that the starting point must be that costs follow the event in which the Defendants have been resoundingly successful. The Plaintiff has failed on both aspects. In such circumstances, the order nisi must represent a correct appreciation of the merits overall and should remain undisturbed. This approach does not really address Miss s argument which is that grossly unnecessary costs have been expended because of a procedural failing by the Defendants solicitors in not seeking a hearing of the abuse of process plea as a preliminary issue certainly no later than the close of pleadings. But Miss Lau does have a response to this by submitting that the court could not fairly dispose of the abuse/res judicata argument without hearing out all of the evidence. It she is right about that, then this would restore her primary submission that costs should indeed follow the event. The crucial question then becomes this: Was the abuse/res judicata issue such that it required me to hear out all of the evidence in order to rule on it? It seems to me that this would not have been necessary. The facts which ultimately went to support the application to have the action dismissed as an abuse of process were effectively agreed and fell within a narrow compass. These facts have been recited from paragraphs 17 to 29 of my judgment. Essentially, what was required was an analysis of the effect and purpose of the ancillary relief application and the procedural course that it took before the Plaintiff initiated the settlement of it. The rest concerned a consideration of the law. In my judgment, all of this could and should have been dealt with as a separate issue beforehand. This, of course, must provide Miss Lam with substantial grounds for saying that the order nisi should be varied. The question now is whether the variation should be as drastic as she submits that it should be, which is effectively to deprive the Defendants of 90% of their costs of the action in circumstances where the Plaintiff s conduct (albeit on advice have no doubt from the solicitors then representing her but also perhaps, from those who represent her in this action I know not) has been distasteful and as I found amounted to sharp practice. Should the Defendants be punished quite so drastically for, albeit serious, procedural mistakes? Miss Lau, I think with some force, submits that it was equally open to the Plaintiff who, after all, had the carriage of the action, to invite the court to direct that the abuse/res judicata issue should be ruled on separately and at an early stage of the litigation. Instead she contented herself with proceeding to a combined hearing, and only now when she has lost, she is complaining that the successful Defendants should be deprived of most of their costs. I find this a compelling argument for Miss Lau to make. Whilst the Defendants had raised this plea, and they should have asked for it to be decided first, the Plaintiff as the party coming to court for primary relief could have made that request herself. There is no suggestion that the Plaintiff s solicitors had asked for this to be done and that their request was turned down by the Defendants. Although the Defendants must bear the primary blame for what happened, the Plaintiff, as Plaintiff, must also bear substantial blame for a failure to have the issue decided as a preliminary one. In such circumstances, it strikes me that I should take a global view of costs, recognizing procedural fault on both sides, most of it by the Defendants solicitors, but also being very mindful of the ultimate result in which the Defendants have been notably successful and the Plaintiff has been found to have acted discreditably on the question of abuse of process in bringing this action in the first place. Taking all of these matters into consideration in a broad way and seeking to do justice between the parties overall on costs, it strikes me that the correct order is that the Plaintiff must pay 70% of the Defendants costs and so to this extent, the order nisi will be varied. As to this hearing, where neither party has been completely successful, I will say that each party must bear its own costs. Because I am handing down this ruling, this order for costs will need to be an order nisi. (Ian Carlson) Deputy High Court Judge Catrina Lam, instructed by Messrs Mike So, Joseph Lau & Co, for the Plaintiff Lorinda Lau instructed by Messrs Kelvin Cheung & Co for the 1st 1udk 1udk Dgy p[(/V} k1\' C f\H M" y C f\ 0C f\ p[(/ Dgy M" y M" y M" y M" y M" y M" y M" y M" y M" y Zj2> HCAL.dot Administrator Microsoft Word 9.0 Title Microsoft Word Document MSWordDoc Word.Document.8