FAMOUS MARVEL CO LTD AND OTHERS v. CONVERSANT GROUP LTD AND OTHERS

HCMP 126/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 126 OF 2013

(ON AN INTENDED APPEAL FROM HCA NO. 2153 OF 2009)

________________________

BETWEEN

________________________

________________________

J U D G M E N T

________________________

Hon Kwan JA (giving the Judgment of the Court):

1.  This is an application by the 1^st and 2^nd defendants for leave to appeal against the decision on costs of Au-Yeung J on 29 October 2012 in HCA 2153/2009 (“the 1^st Decision”). The decision on costs was made after the parties in that action had reached a compromise on the second day of trial without calling evidence. A consent order was made by the judge on 17 October 2012 leaving the question of costs to be determined by the judge with no viva voce evidence to be adduced for that purpose. The judge decided to award costs of the action to the plaintiffs against the 1^st and 2^nd defendants.

2.  For the relevant background matters leading to the decision on costs, we refer to paras 3 to 21 of the 1^st Decision.  The principles for determining costs where the parties have reached a compromise without a trial are not in dispute and are set out in para 22.  Having analysed the central issues in contention, the judge formed the view on the available evidence that the plaintiffs should be regarded as the winner in the litigation and awarded costs to them.  Her detailed reasons appear in paras 24 to 45 and they would not be repeated here.

3.  The judge refused leave to appeal in a decision on 4 January 2013 (“the 2^nd Decision”).

4.  We determine the renewed application for leave to appeal on the basis of written submissions without an oral hearing, pursuant to the powers of this court under Order 59 rule 2A(5)(a) of the Rules of the High Court.

5.  The circumstances in which the appeal court would interfere with a judge’s exercise of discretion in the award of costs are limited (Hong Kong Civil Procedure 2012, vol 1, para 62/2/11).

6.  Mr Benjamin Chain submitted for the defendants the appropriate order should be no order as to costs and there is basis for this court to interfere as the judge had erred in principle.  It would appear from the arguments he developed he was contending that the judge had erred in law and in fact.

7.  The error of law (the first proposed ground of appeal) was that the judge was wrong to determine the issue of costs by “speculating” the likely effect of the “171/2006 Document”, when the effect of this document would be known as a fact when the decree of specific performance is carried out under the settlement.  He contended that the judge could only come to the conclusion that the plaintiffs are the winners if registration of the transfer of the properties to the 2^nd defendant can be effected in the Land Registries in Mainland China.

8.  The judge had rejected the parties’ request to include in the order for settlement a term that the trial be adjourned sine die with liberty to restore or apply for directions or generally[1].  She proceeded to decide the question of costs immediately after the settlement order was made and decided on a broad brush approach in the light of the evidence[2].  This is a matter within the judge’s discretion.  It was not a question of law, nor are we persuaded there was an error of law notwithstanding the elaborate submissions of Mr Chain.

9.  The error of fact (the second to seventh proposed grounds of appeal) contended by Mr Chain was that the judge was wrong to come to the view that the plaintiffs should be regarded as the winners of the litigation.  In a nutshell, he submitted that as the settlement involved give and take, there was no clear winner and so there should be no order as to costs.  We consider that the judge was entitled to come to the view she did on the views she formed about the expert evidence, the likely outcome of the trial and the fact that the plaintiffs had never stood in the way of the registration.  As Mr Dawes had submitted for the plaintiffs, the fact that the settlement order had provided for an alternative mode of performance to cater for all eventualities does not mean that the mode of performance provided for in the contract was not workable, and, we would add, would not make the plaintiffs any less than an overall winner in the litigation.

10.  We are not satisfied the threshold criterion for leave to appeal is met.  We refuse leave to appeal and make a further order under Order 59 rule 2A(8) that no party may under rule 2A(7) request the determination to be reconsidered at an oral hearing inter partes.

11.  We make an order nisi that the 1^st and 2^nd defendants are to pay the plaintiffs’ costs of this application, to be assessed on a gross sum basis.  The plaintiffs are to lodge a skeleton bill for this purpose within 7 days upon the costs order nisi becoming absolute, and the defendants may respond to this within 7 days of service of the bill.