KAM PAK LI INVESTMENTS LTD v. LI SUI YEE AND OTHERS

HCMP 1454/2020

[2021] HKCFI 2734

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1454 OF 2020

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D E C I S I O N

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1.  On 30 June 2021, DHCJ William Wong SC ordered, inter alia, that the present proceedings shall proceed as if begun by writ (see [2021] HKCFI 1879).

2.  By a summons dated 7 July 2021, the 5^th Respondent applied for an order that the hearing date previously fixed for the hearing of the Originating Summons filed in these proceedings on 23 September 2021 be vacated. At the hearing, I made an order in terms of this summons.

3.  By a summons dated 15 July 2021, the Applicant applied to discontinue these proceedings.  The 5^th Respondent, understandably, did not oppose the application.  What remains in issue is the question of costs.  The Applicant submitted that there should be no order as to costs whereas the 5^th Respondent submitted that the Applicant shall pay the costs of these proceedings to the 5^th Respondent.

4.  Under Order 21, rule 3, Rules of the High Court, the starting point is that the party seeking to withdraw its action should pay the costs of the other party; the burden of persuading the court to depart from the general rule rests on the party who seeks to withdraw (Hong Kong Civil Procedure 2021, vol. 1, §21/5/12A at p 585).

5.  Sik Chiu Yuet (“Sik”) representing the Applicant contended that DHCJ William Wong SC had already dealt with the costs of these proceedings; and that the claim is meritorious.  It is clear that DHCJ William Wong SC had only dealt with the costs of the 5^th Respondent’s summons dated 1 March 2021 including the hearing on 24 June 2021.  It is also trite that, save in exceptional circumstances, the court cannot and will not go into the merits of the claim.  In the circumstances, I am unable to see any reason to depart from the general rule.

6.  For these reasons, in respect of the Applicant’s summons, I make the following orders:

(a)  Leave be granted to the Applicant to discontinue these proceedings;

(b)  The Applicant shall pay to the 5^th Respondent the costs of these proceedings (including all costs reserved but excluding costs which have already been dealt with by other costs orders) to be summarily assessed as follows;

(c)  The 5^th Respondent shall file and serve a statement of costs within 14 days from the date hereof;

(d)  The Applicant shall file a list of objections (if any) within 14 days thereafter;

(e)  The amount of costs to be paid by the Applicant to the 5^th Respondent shall then be determined on paper.

HCMP 1454/2020

[2021] HKCFI 1879

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1454 OF 2020

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DECISION

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APPLICATIONS

1.  I have before me a summons dated 1 March 2021 (“the Summons”) took out by Buddhism Cultivation Association Limited (“the 5^th Respondent”) for a number of directions and orders against Kam Pak Li Investments Limited (“the Applicant”).

2.  The Applicant is represented by one Sik Chiu Yuet (“Sik”).  Sik chose to be absent in the hearing.  I notice that on 24 May 2021, Madam Justice Au-Yeung gave the following directions:

“(1) The Summons was properly issued and should be dealt with by the Court on 24 June 2021.

(2) If Sik Chiu Yuet is not free to attend court on 24 June 2021, the Plaintiff, being a limited company, should send another representative or instruct a legal representative to appear on that day.

(3) Sik Chiu Yuet’s application for postponement of the hearing should therefore be refused.” 

3.  The Applicant did not send any representative, legal or otherwise, to attend the hearing.

4.  I also notice that on 18 February 2021, Deputy High Court Judge To directed that the 5^th Respondent to make prompt application to convert the proceedings to writ action if necessary. 

5.  In the Summons, the 5^th Respondent principally prays for an order that (1) the Applicant to engage a firm of solicitors to act in this action and until the solicitors file a notice to act this action be stayed and (2) the present proceedings shall proceed as if begun by writ. 

CONVERSION INTO A WRIT ACTION 

6.  I propose to address the second issue first.  I am of the view that it is appropriate to turn the present proceedings into a writ action.  First, I agree with Mr Lai for the 5^th Respondent that it is not entirely clear what the Applicant is seeking in the present proceedings and its basis.  It is not immediately apparent to this Court whether the claims in the present proceedings overlap with the judgment of Mr Justice Chung dated 26 July 2006.  If it is, then the present proceedings should be struck out.  If it is not, then the Court and the Respondents need to be informed in very precise terms how are the claims different and what are the legal and factual grounds.

7.  Secondly, as far as any counterclaim based on adverse possession is concerned, I am of the view that the same is likely to give rise to factual disputes and a writ action is more appropriate.

8.  For the above reasons, I make the following orders:

(1)     The presenting proceedings shall proceed as if begun by writ whereby the Applicant shall stand as plaintiff and all named Respondents shall stand as respective defendants.

(2)     The Plaintiff shall file and serve a Statement of Claim within 28 days from the date hereof;

(3)     The Defendants do file and serve their respective Defence and Counterclaim (if any) within 28 days thereafter;

(4)     There be liberty to apply for further directions if necessary.

ORDER 5, RULE 5  

9.  Mr Lai for the 5^th Respondent invited this Court to revoke the leave granted to Sik to act on behalf of the Applicant and make an order that the Applicant do engage a firm of solicitors to act in this action. 

10.  Mr Lai referred this Court to Order 5, Rule (5) of the Rules of High Court and submitted that this Court has jurisdiction to revoke the leave. Mr Lai also relied on the case of Re China Northern Newenergy Investment Ltd [2014] 6 HKC 668 where Harris J. at §11 said:

“11. If lack of funds is said to be the reason why an order should be granted under O.5, r 6(2), it would seems to follow that it should be necessary for the shareholders of the company to demonstrate that they cannot either inject new capital into the company or lend it sums necessary to cover its legal costs.”

11.  I fully understand the frustration encountered by the 5^th Respondent when the Applicant’s case is not framed in a way which is easily understood.  However, on the facts of the present case, Master Hui has already granted leave for Sik to represent the Applicant to commence and carry on the present proceedings. 

12.  Mr Lai has a legitimate complaint that Sik did not adduce the affirmation in support of the ex parte application before Master Hui so this Court is at the dark as to the reasons upon which the Applicant sought the order from Master Hui. 

13.  Having considered the issue, on balance, I am of the view that it is not appropriate to disturb Master Hui’s order at this stage.  First, this Court has no basis to decide whether Master Hui’s order should not be made.  Secondly, if the reason is that the Applicant does not have financial resources to engage a firm of solicitors, an order from the Court that it has to engage a firm of solicitors otherwise the present proceedings should be stayed would necessarily mean that the present proceedings will be stifled. This is not a satisfactory outcome.  Thirdly, if the 5^th Respondent or any respondents are concerned about costs, then there are avenues under which they can legitimately seek costs against Sik personally, as director of the Applicant, for the costs that were incurred and are to be incurred.

14.  Accordingly, I am not minded to make an order in terms of paragraph 1 of the Summons.

COSTS

15.  I am of the view that the 5^th Respondent has substantively succeeded in this application and should be awarded with 80% of the costs of and occasioned by the Summons and the present hearing.  

16.  I am also of the view that the above costs should be paid by Sik personally.  There is no doubt that Sik is at the driving seat of this litigation and given the historical record that the Applicant has refused to comply with costs order made by courts of this jurisdiction, it is only fair and just that Sik should personally bear the costs.  But I do not find it appropriate to make a costs order on an indemnity basis.  

17.  Accordingly, I make an order that costs of and occasioned by the Summons including the present hearing be paid forthwith by Sik to the 5^th Respondent.  This Court will make a gross sum assessment of the costs.  The 5^th Respondent is directed to file its statement of costs within 7 days herein. Sik is entitled to file a statement of opposition within 7 days thereafter.  The 5^th Respondent is entitled to file a reply statement within 7 days thereafter.  This Court will dispose of the issue of gross sum assessment of costs on paper without further oral hearings.  

18.  Finally, it remains for this Court to thank Mr Lai for the 5^th Respondent for his helpful assistance.