APPLICATION FOR WASTED COSTS ORDER
UNDER ORDER 62, RULES 8, 8A, 8B AND 8C

A     Introduction

1.    This Practice Direction addresses certain procedural aspects of applications for wasted costs orders.  It applies to all civil proceedings in the High Court, the District Court and the Lands Tribunal.  The expression "wasted costs" is defined in the High Court Ordinance (Cap. 4), section 52A(6). 

2.    The Court of Final Appeal in Ma So So Josephine v Chin Yuk Lun Francis and Chan Mee Yee [2004] 3 HKLRD 294 has given guidance on applications for wasted costs orders.

3.    Although Ma So So involved a wasted costs order against a solicitor, the introduction of sections 52A(4) to (7) to the High Court Ordinance (Cap. 4) means that wasted costs orders may now be made against a counsel or solicitor conducting litigation on behalf of a party.  The general principles in Ma So So are likely to be relevant.

B    When the Application is Usually Made

4.    The Court may make a wasted costs order against a legal representative on its own motion at any time.

5.    However an application by a party under Order 62, rule 8A(2) should usually only be made and dealt with after the relevant proceedings have concluded.  This is to avoid disruption of those proceedings and, in relation to an opposite party's legal representative, to avoid any risk of it being used as a means of intimidation.  Attention is specifically drawn to Order 62, rule 8C (wasted costs order application not be used as a means of intimidation).

C     To Whom the Application is Made

6.    The application should usually be heard by the Judge or Master who dealt with the proceedings in which wasted costs are alleged to have been incurred, unless there are exceptional circumstances which dictate otherwise.  An example of an exceptional circumstance is where apparent bias is established.

7.    Where the trial Judge is disqualified, in exercising its discretion whether the application for a wasted costs order should proceed further before another Judge, the Court would have to take into account the likely increased costs for another Judge having to start afresh without any knowledge of the underlying proceedings.

D     General Approach to Procedural Questions

8.    The wasted costs jurisdiction is intended only for clear cases, that is, cases where there is prima facie liability unless the charge is answered.

9.    This fact, together with the fact that the application should usually only be made at the conclusion of the proceedings before the Judge or Master who tried the matter, enables a summary procedure to be adopted.

10.    The facts will in most cases already be within the Judge's knowledge because the relevant events took place in Court or will be facts that can be readily ascertained.

11.    The Court must decide the appropriate procedure to be followed to meet the requirements of procedural fairness in the individual case (see Order 62, rule 8(5)).

12.    But the need for a simple, summary and fair procedure must always be borne in mind.  It would defeat the purpose of the jurisdiction, which is to compensate for wasted costs, if such proceedings were allowed to become themselves an elaborate and costly form of satellite litigation.

13.    Procedural issues arise at 3 points:

(1)   when an application is initially made by a party (see Order 62, rule 8A);

(2)   at the first stage hearing when the Court decides whether the proceedings should proceed further (see Order 62, rule 8B(1)(a)); and

(3)   at the second stage hearing when the Court proceeds to a substantive assessment of the application (see Order 62, rule 8B(1)(b)).

E     The Initial Application

14.    Although the application may be made orally at a hearing, it should normally be commenced by an inter partes summons in the proceedings in which wasted costs are alleged to have been incurred.  Attention is specifically drawn to Order 62, rule 8A(4) (save in exceptional circumstances, application not to be made or dealt with until the conclusion of the relevant proceedings).

15.    The application should be served by the applicant on the legal representative against whom an order is sought, any person represented by that legal representative and any other person as may be directed by the Court (see Order 62, rule 8A(3)).

16.    The summons, which seeks an order that the legal representative show cause under Order 62, rule 8(3), should be accompanied by particulars clearly specifying the conduct of which complaint is made, that is, the particulars must identify precisely what the legal representative is alleged to have done or failed to do.

17.    The particulars to the summons should also state precisely what wasted costs are alleged to have been caused by such acts or omissions of the legal representative and how much of such costs are being claimed by the applicant.

18.    The less clear the complaint is and / or the more complicated and wide-ranging the particulars are, the less likely it will be that the Court will be prepared to allow the matter to proceed to the second stage hearing.

19.    The summons should be supported by an affidavit which verifies the facts alleged in the particulars of complaint and identifies the evidence or other material on which the applicant relies in support.

20.    Where such evidence or material is already before the Court, they should not be exhibited to the affidavit.  But, where some evidence or material crucial to the application is not already before the Court, the affidavit should exhibit the same.

21.    The legal representative need not file any evidence, but is free to do so if it is desired to place some important item of evidence before the Court for the purposes of its decision at the first stage hearing.

22.    Since the particulars and any affidavit should make the case against the legal representative clear, there usually should be no need for any preliminary directions hearing before the first stage hearing.  If the complaint is unclear or plainly unsustainable, objection can be taken or directions sought at the first stage hearing itself.

F     The First Stage Hearing

23.    At the first stage hearing, the Court decides whether the matter should be allowed to proceed further.  The Court will only do so if it is satisfied that the criteria in Order 62, rule 8B(1)(a) have been met.

24.    The applicant and the legal representative are given an opportunity to be heard at this hearing.  But submissions should be succinct, bearing in mind the Judge's familiarity with the matter and the papers instituting the application.  It would be helpful for both parties to indicate to the Court the extent of any genuine factual or legal disputes.

25.    If the Judge decides that wasted costs proceedings are justified, directions to ensure that the legal representative is afforded a reasonable opportunity to show cause why a wasted costs order should not be made will be considered.

26.    Where the Court is satisfied that a legal representative has already had a reasonable opportunity to give reasons why the Court should not make a wasted costs order, it may proceed without adjournment from the first stage to the second stage hearing (see Order 62, rule 8B(2)).

27.    The legal representative should come to the hearing prepared to apply for any desired direction, for example, to be allowed to give evidence or to recall witnesses who gave evidence in the relevant matter or to make reference to particular documents, etc.  Pleadings and discovery would not generally be appropriate as part of the summary procedure.

28.    The Judge will consider the extent to which the evidence and findings in the underlying matter are relevant and can fairly be used for the purposes of the wasted costs proceedings.

G     The Second Stage Hearing

29.    The jurisdiction is discretionary and, after hearing the applicant and the legal representative and taking into account relevant materials before the Court, the Judge will decide whether he ought to exercise his discretion in favour of making an Order.

30.    If he decides to make an Order, he will consider how much of the wasted costs are the responsibility of the legal representative, specifying the extent of the costs recoverable in the award.

31.    The High Court Ordinance (Cap. 4), section 52A(5) imposes a duty on the Court, when considering whether to make a wasted costs order, to take into account the public interest that there be fearless advocacy under the adversarial system of justice.

32.    The costs of the wasted costs order application itself are also discretionary.

33.    Where a wasted costs order is made such costs would normally be payable by the legal representative on a party and party basis.  But account should be taken of any conduct on the part of the legal representative or the applicant in the course of the wasted costs proceedings which may indicate that a different Order should be made.

34.    Where appropriate, a Judge hearing a wasted costs order application may direct a Master to inquire and report to him on any aspect (see Order 62, rule 8(7)).  In particular, the Judge may refer any determination of the quantum of wasted costs to the Master (see Order 62, rules 8(4)(b) and (8)).

H     Commencement Date

35.    This Practice Direction supersedes the previous Practice Direction 14.5 on Application for Wasted Costs Order Under Order 62 dated 23 February 2005.

36.    Notwithstanding paragraph 35 herein, the previous Practice Direction 14.5 for Wasted Costs Order Under Order 62 dated 23 February 2005 shall apply to any application for wasted costs orders in relation to any costs incurred before 2 April 2009.

37.    This Practice Direction shall come into effect on 2 April 2009. 

Dated this 12th of February 2009.