FULLY PACIFIC DEVELOPMENT LTD v. WONG SEE YIN AND OTHERS

HCA 167/2011 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 167 OF 2011 ____________ BETWEEN TIN WAN TUNG（田運棟） Plaintiff and WONG SEE YIN（黃斯彥） 1st Defendant MATRIX WEALTH LIMITED 2nd Defendant FULLY FORTUNE (ASIA) LIMITED 3rd Defendant ____________ AND HCA 1801/2010 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 1801 OF 2010 ____________ BETWEEN FULLY PACIFIC DEVELOPMENT LIMITED Plaintiff and WONG SEE YIN（黃斯彥） 1st Defendant MATRIX WEALTH LIMITED 2nd Defendant FULLY FORTUNE (ASIA) LIMITED 3rd Defendant ____________ (Consolidated by Order of Master S. Kwang dated the 4th day of December 2013) Before: Deputy High Court Judge Kent Yee in Chambers Date of Hearing: 16 December 2015 Date of Decision: 29 April 2016 ------------------------ DECISION ------------------------ Introduction 1. In this consolidated action, Mr Tin and Full Pacific Development Limited (“Full Pacific”)(collectively “Ps”) seek to set aside the costs order in paragraph 2 of the order made by Master Hui dated 24 July 2015 (“the Order”) on paragraph 1 of their summons to strike out certain parts of 4 sets of Amended Witness Statements of 4 defence witnesses (“Ps’ Summons”). Despite Ps’ partial success in their striking out application, the master made no order as to costs in respect of paragraph 1 of Ps’ Summons. 2. Ps now ask this court to order the defendants to pay Ps two-thirds (or such other proportion this court may think fit) of the costs of paragraph 1 of Ps’ Summons. 3. It is pertinent to note that in paragraph 2 of Ps’ Summons, Ps ask for an order that the entire witness statements of two other defence witnesses both surnamed “Hui” be struck out. Though the determination of this part of Ps’ Summons is not expressly indicated in the Order, I have read the transcript and I believe the master allowed Ps’ application. In paragraph 3 of the Order, it is ordered that the defendants do pay Ps costs of paragraph 2 of the Ps’ Summons in the total sum of HK$16,000 after summary assessment. 4. Mr Li who appeared for both Mr Tin and Full Pacific before the master conducts this appeal for Mr Tin only. For unknown reason, Full Pacific was separately represented by Mr Cheung instructed by Mr Li. Both Mr Li and Mr Cheung have lodged with this court their skeleton submissions. Upon this court’s enquiries, Mr Li clarifies that he appears for both Ps. Mr. Li adopts the skeleton submissions of Mr Cheung, which mainly contain a summary of case law relating to the well-known principles in Re Elgindata Ltd (No.2) [1992] 1 WLR 1207. Relevant legal principles 5. The applicable principles are well-settled and it suffices to refer to the following passage in Hong Kong Civil Procedure 2016 Vol.1, §58/1/6: “In general, a judge in chambers will not allow an appeal from a master’s costs order unless it is unreasonable or the master erred in law: Hoddle v. CCF Ltd & Anor. [1997] HKLRD 1248; China Venturetechno International Co. Ltd. v New Century Chain Development Co. Ltd.[1996] 2 HKLR 18; see also Paul Y-ITC Construction Ltd v Kin Shing Co Ltd [1999] 1 HKC 511 at 515 per Sakhrani J.: “as this is an appeal as to costs only from the discretion of the master, such application should not be allowed unless it can be shown that the order made by the master was unreasonable or erred in law, i.e., if he either failed to take into account proper matters or took into account matters that should not have been taken into account.” 6. With these principles setting out the requisite threshold in mind, I now turn to the reasons given by the master and the complaints of Ps. Discussion 7. Contrary to Mr Li’s written submissions, as shown in the transcript, the master provided an explanation for his departure from the usual order of costs to follow the event. As explained above, Ps’ striking out application was divided into two parts in Ps’ Summons. For the first part, the master opined that one-third of it involving the defendants’ breaches of the master’s order dated 8 September 2014 (“the September Order”) was extremely minor in nature. The breaches were technical. The master disposed of them by way of either striking them out or granting the defendants retrospective leave for those new matters to be included in those 4 sets of Amended Witness Statements. He made it clear that he was not minded to award Ps any costs. 8. In regard to the remaining one-third of the striking out application, the master was of the view that Ps were only partially successful. He went on to explain that he did not adopt a score sheet approach and instead he took at the matter as a whole. He concluded that the most appropriate costs order was no order as to costs. 9. For the remaining part of the striking out application, in which Ps succeeded in the absence of objections, the master allowed Ps costs. 10. The core complaint of Mr Li is that there is no reason why Ps should be completely deprived of all their costs when Ps succeeded in striking out certain parts of the Amended Witness Statements. He submits that costs should follow the event and the master failed to take heed of the underlying objectives of the CJR nor have sufficient regard to the conduct of the defendants. He further points out that there is no reason why the defendants should not pay Ps costs of and occasioned by the amendments to their witness statements when they were granted indulgence of the court to do so. In this regard, he relies on La Chemise Lacoste SA v Sketchers USA Ltd Ltd. [2006] EWHC 264(Ch) for his contention that normally the costs of and relating to and occasioned by amendments should be borne by the amending party in any event. 11. Mr Li highlights the fact that Ps did raise objections to the offensive parts of the Amended Witness Statements at the case management summons hearing (“CMS Hearing”) before the master on 8 September 2014. Then the defendants expressly agreed to delete such offensive parts to avoid a striking out application. Hence, the master made the September Order to enable the defendants to amend their witness statements by way of deletion. The defendants even promised that they would send to Ps their draft Amended Witness Statements for their approval before they were to be filed. 12. To their disappointment, the defendants breached their promise and did not send them their draft Amended Witness Statements before they filed them. More importantly, the Amended Witness Statements filed still contained some of the offensive parts and new matters which exceeded the scope of the leave granted by the master. Such offensive parts involve voluminous exhibits. All these matters necessitated their striking out application. 13. Given their partial success, Mr Li submits that Ps should at the very least be entitled to recover some of their costs. He complains that the master erred in his total departure from the principle that costs should follow the event absent any findings of misconduct or negligence on the part of Ps. 14. Despite the able submission of Mr Li, I am not convinced that I can interfere with the complete discretion judiciously exercised by the master. 15. I do not find it necessary to refer to all the authorities relating to costs cited to me by Mr Li. In the particular circumstances of this matter, in my view, the master was entitled to depart from the usual rule. 16. First, the master was surely aware of Ps had some success in their application under paragraph 1 in the Summons. He was also aware of the general rule that costs should follow the event (which he followed in respect of paragraph 2 of the Summons). He gave adequate albeit brief reasons for his departure. 17. No doubt the master was well aware of the conduct of the defendants. He made the September 2014 Order at the CMS Hearing. He refused to accept the explanation of the defendants about their breaches of the September 2014 Order. Nevertheless, he found the breaches were merely trivial and technical. He was in pole position to form such a view. 18. Indeed, Ps could not have struck out those offensive parts due to their breaches of the September Order without bringing them to the attention to the master. It apparently follows that Ps should be entitled to costs. 19. Nonetheless, given the trivial and technical nature of such breaches, whether such offensive parts really necessitated a separate hearing so as to get them expunged from the Amended Witness Statements requires careful consideration, particularly in light of the underlying principles of the CJR. 20. O.1A r.1 expressly provides that the underlying objectives of the CJR include an increase on the cost-effectiveness of any practice and procedure to be followed in relation to proceedings before the court and promotion of a sense of reasonable proportion and procedural economy in the conduct of proceedings. 21. I note that the 1st defendant is only legally represented before this court in these proceedings and at all the material times he and the other defendants were not. The Amended Witness Statements were prepared by the defendants acting in person. Mr Wong attended the CMS Hearing on behalf of the defendants and caused to be filed the four sets of Amended Witness Statements and the two witness statements under complaints in paragraph 2 of the Summons. It is not unusual to find irrelevant and frivolous matters contained in pleadings and witness statements prepared by litigants in person. 22. No doubt the court would insist the same law and procedure should apply to all litigants, both legally represented and those acting in person. I do not for a moment suggest that litigants in person should be given a licence to violate rules in litigation or their breaches should be connived at. However, when it comes to the question as to how to deal with such objectionable pleadings or evidence produced by a litigant in person, the legal representatives of the receiving end having a positive duty to further the underlying objectives of the CJR under O.1A r.3 should carefully consider what the appropriate steps to take in the particular circumstances of their proceedings. Taking out an interlocutory application is not necessarily a sensible option. 23. For obviously objectionable and/or irrelevant matters stated in a witness statement, it may be more cost effective to wait until trial to apply to expunge them rather than making an interlocutory application to strike them out. Interlocutory applications are not only expensive but also tend to cause delay to the final determination of the real disputes between the parties. 24. In the present case, judging from the master’s characterization of the breaches of the defendants, he was quite clearly unimpressed with Ps’ application to strike out those matters contained in the Amended Witness Statements in breach of the September Order. I do not find his decision not to make the defendants pay Ps’ costs unreasonable or erroneous in law. 25. For the same reasons, I cannot accept the contention of Mr Li that the defendants should pay costs to Ps for obtaining the leave to amend their witness statements in accordance with the general principles. Should the defendants be in any event entitled to leave to include those new matters in their Amended Witness Statements, it cannot be worthwhile nor in the spirits of the CJR to take out an application to compel the defendants to obtain such leave. A reminder sent to the defendants to obtain such leave where convenient would suffice. 26. For the remaining parts, the master noted that some of the objections were upheld whilst some of them were not. He expressly stated that he should not adopt an issue based approach. 27. Despite this, both parties have a debate about how many issues they won and how many issues they lost. I do not think it is relevant. As Hon Tang VP (as he then was) in Yiu Hon Lam v Chan Yu Chun (unreported, CACV 383/2007, 15.1.2009) pointed out (at §23), it is important not to decide costs according to a score sheet on how many issues had gone one way or the other. 28. The sheer number of issues won or lost on the part of the defendants cannot adequately reflect the overall merit of Ps’ application under paragraph 1 of Ps’ summons. To my mind, the master was right in taking a global view of the matter and made a departure from the general rule of costs following the event. The following dictum of Poon J (as he then was) in Siu Kai Ming v Lau Sai Hing (unreported, CACV 143/2013, 21.5.2014) is apposite, “These principles derived from Eglindata are not rules. Nor should they be applied mechanically. In considering if and how to apply them, the court always bears in mind that fairness is the touchstone. That is to say, the court must exercise the discretion to achieve a just result having regard to the overall circumstances of the case. See Hong Kong Kam Lan Koon Ltd v Realray Investment Ltd (No 4) [2005] 4 HKC 162, per Lam J (as he then was) at para 14; Kwan Siu Wa Becky v Cathay Pacific Airways Limited, CACV 92/2010 and HCAL 2, 4, 5, 8 and 9/2009, unreported, 19 April 2011, per Tang Acting CJHC (as he then was), paras 6 – 9.” 29. The master did not order costs follow the event mechanically. He exercised his discretion to make the Order to achieve a just result having an overall picture of the matter. I do not think I can justifiably interfere with his discretion. 30. For completeness, I should mention that Mr Li explains to this court that Ps found it necessary to make the application to strike out the numerous irrelevant matters in the Amended Witness Statements because they involve voluminous exhibits. If they remain in the Amended Witness Statements, Ps have to deal with them and costs of the trial will inevitably be escalated. 31. I cannot accept his explanation. The legal advisors of Ps are expected to exercise their professional judgment about the relevance and admissibility of those matters. If they are irrelevant and inadmissible, I fail to see why they still have to put in any significant amount of effort to deal with them in the course of proving their claim at trial. Conclusion and Order 32. For the reasons given, I do not find any merit in the appeal of Ps and it falls to be dismissed. 33. I make an order nisi that Ps do pay the defendants their costs of the appeal, to be taxed if not agreed. I should make it clear that in view of the simplicity of this matter, however appreciative I am of counsel’s effort, I do not think the engagement of counsel on the part of the 1st defendant is justified and Ps should not be required to pay the 1st defendant costs relating to his counsel. 34. I further order that the costs of Mr Tin in HCA 167/2011 be taxed in accordance with the Legal Aid Regulations. ( Kent Yee ) Deputy High Court Judge Mr Joseph Li of Joseph Li & Co for the plaintiffs Mr Jackson Poon instructed by K.T. Chan & Co for the 1st defendant Mr Wong See Yin, representative of the 2nd and 3rd defendants acting in person