TSUN FAT FINANCE CO. LTD. v. COMMISSIONER OF POLICE

HCA7017/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 7017 OF 2000

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D E C I S I O N

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1. The plaintiff sued for conversion and damages on 13 July 2000. On 10 August 2000, the defendant took out interpleader summons to determine adverse claims to the goods. On 8 March 2001, the interpleader summons was dismissed by Yeung J (as he then was). Costs of the interpleader summons as between the plaintiff and the defendant was made costs in the cause of the action. On 13 March 2001, the goods were voluntarily returned by the defendant. The plaintiff carried on the action for damages.

2. I have found the defendant liable for conversion and that the interpleader summons was misconceived, and awarded nominal damages of $1 to the plaintiff upon its failure to prove the market value of the goods.

3. The parties are on common ground that the costs up to the return of the goods (excluding the costs of the interpleader summons) be to the plaintiff.

4. Mr Kwok for the defendant submitted that the normal rule is that costs follow the event. Where, however, a plaintiff recovers only nominal damages, the practice is to order the plaintiff to pay the defendant's costs.

5. Mr Kwok relied on Texaco Limited v. Arco Technology Inc., The Times, 13 October 1989, per Phillips J of the Queen's Bench Division :

" Where a plaintiff makes a claim for substantial damages in respect of a breach of contract or duty, which the Court holds has caused him none, he has, effectively, lost the action."

6. Mr Kwok also referred to McGregor on Damages (16th edition, 1997), paragraphs 427-429, on the two practical functions of nominal damages :

(1) to establish, determine or protect a legal right;

(2) to be a mere peg on which to hang costs.

7. As to the second point, at paragraph 428 :

" It is of course proper that costs should be awarded against the defendant where the purpose of the action is the creditable one of determining or protecting some right of the plaintiff but in the many other cases the rule that an award of nominal damages carries costs with it serves only to encourage unnecessary litigation."

8. In McGregor, the case of Anglo-Cyprian Agencies v. Paphos Industries [1951] 1 All ER 873, 874, per Devlin J (as he then was) was cited :

" No doubt the ordinary rule is that where a plaintiff has been successful, he ought not to be deprived of his costs or, at any rate, made to pay the costs of the other side unless he has been guilty of some sort of misconduct. In applying that rule, however, it is necessary to decide whether the plaintiff really has been successful and I do not think that a plaintiff who recovers nominal damages ought necessarily to be regarded in the ordinary sense of the word as a 'successful' plaintiff. In certain cases he may be, for example, where part of the object of the action is to establish a legal right, wholly irrespective of whether any substantive remedy is obtained. To that extent, a plaintiff who recovers nominal damages may properly be regarded as a successful plaintiff but it is necessary to examine the facts of each particular case."

9. It is noted in McGregor that the Anglo-Cyprian Agencies case is a case of contract.

10. Mr Kwok submitted that the present case falls into the second limb, that is, the plaintiff in proceeding to action and obtaining nominal damages was a mere peg on which to hang costs. Mr Kwok submitted there is no legal right to be protected as the goods have been returned. There are no possible future breaches for which an injunction could be issued. It was submitted that the defendant was the real successful party and the costs of the action should be awarded to the defendant. The costs of the interpleader summons, and of the other costs orders, have been made costs in the cause of the action. They should also follow the principal event.

11. The present case is one of conversion and I refer to Hiort & Others v. London & North Western Railway Company (1879) 4 Ex. D 188, C.A., which I have cited in my judgment, per Bramwell LJ stating the following :

" I think therefore that the plaintiffs are entitled to nominal damages because a conversion cannot be purged. If a defendant is guilty of conversion, he must pay some damages. A return of the goods undoubtedly might be shown to reduce damages in the case of conversion, not only where the owner voluntarily received back the goods but whether he took them back against his will. In an action of transfer of conversion, the practice was for the defendant to apply to the court for a stay of proceedings on the delivery up of the goods and on payment of nominal damages and costs. But if the plaintiff refused to accept delivery and insisted on proceeding with his action for substantial damages, he did so at his peril and if he failed to get substantial damages, he was made to pay the costs of the action. It is clear therefore that on the return of the goods, the plaintiff would cover the relevant damages he had sustained by the wrongful act which was called a conversion."

12. Mr Kwok conceded that at no time before the trial an offer of costs was made to the plaintiff. Hence, I found the present case is not a mere peg on which to hang costs. The plaintiff is entitled to purge the conversion in the absence of the offer of costs up to that stage of return of the goods.

13. Mr Law submitted that he should be entitled to costs relating to the determination of liability. They include the two costs orders of Master Lung in relation to directions and setting down. It can be seen from the witness statements and the documents that the materials really relate to liability and they are necessary for the determination of liability and that about four days of the trial which were devoted to the issue of liability.

14. Looking at the matter in an alternative and practical sense, had the plaintiff merely pursued the costs of the interpleader summons at the stage where the goods were returned, similar costs as those relating to liability in the present action would have been incurred.

15. Hence, in the exercise of my discretion, I shall award the costs of the interpleader summons to the plaintiff. As for the action, the costs for the intervening period between 8 March 2001 and the commencement of trial be to the plaintiff. In order to save the taxing master any agony of apportioning what costs related to the liability at the trial, I determine that 75% of the costs of the trial be to the plaintiff. 75% of the costs of today's hearing be also to the plaintiff.