CHINA VENTURETECHNO INTERNATIONAL CO. LTD. v. NEW CENTURY CHAIN DEVELOPMENT CO. LTD.

1995, No.A1868

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

--------------------

----------------------

J U D G M E N T

----------------------

1. This is an appeal against Master Betts' order on costs in relation to an application under Order 26 of the RSC for interrogatories. Two summonses were fixed to be heard at the same time, one was for interrogatories, and the other was for discovery of a document pursuant to Order 24. Both summonses were taken out by the defendant (i.e. the defendant in Action No.A1868 of 1995) and in both of them, the defendant sought "costs of the application be to the Defendant".

2. Both summonses were adjourned for argument and were heard on 18 December 1995. The Order 24 summons was heard first and dismissed with costs to the plaintiff (i.e. the plaintiff in Action No.A1868 of 1995) in any event. The Master made an order in terms of the Order 26 summons as amended. The amendments to the summons were (a) to give a longer time limit for the answers to the interrogatories to be provided by the plaintiff, and (b) to allow one director of the plaintiff instead of three directors sought by the defendant to provide the answers. It was an unless order.

3. Mr. Chan on behalf of the defendant relied on the English case of Hoddle v. CCF Construction Ltd. [1992] 2 All ER 550 where Morland J stated the applicable tests as follows:

"In my judgment it would be highly undesirable as a matter of general principle that a judge in the position that I am in today should intervene and make different orders as to costs from that made by a master, unless it can be shown by the appellant that the master demonstrably erred in the exercise of his discretion in the order that he made. If it can be shown that the master took into account matters that he should not have taken into account or failed to take into account matters that he should have taken into account, in those circumstances the judge in chambers would be entitled to vary the order made by the master, but in my judgment it would not be in the interests of justice if judges in chambers entered into detailed examination of all the matters that were before the master in order to decide whether they would have come to the same decision as the master. Generally speaking, in my judgment, judges in chambers should not allow appeals against costs orders by masters, unless it can be shown that the order made was unreasonable or erred in law or, as I have indicated, either failed to take into account proper matters or took into account matters that should not have been taken into account."

4. Mr. Law, on behalf of the plaintiff, submitted that I should rehear the case in the sense that I should examine all the circumstances relating to the Order 26 application and substitute an order for costs that I felt I ought to make to see whether it was wrong of the Master to make the order for costs. Mr. Law relied on the fact that in Hong Kong, leave was required for lodging an appeal against a master's order as to costs, whereas in England, no such leave was required. He argued that the leave requirement would stop a floodgate of such appeals in Hong Kong and therefore the protection in England offered by the tests in Hoddle should not be applied to Hong Kong. I am, however, not persuaded that that distinction justifies the Hong Kong courts not to adopt those tests. Whenever a master (or for that matter, a tribunal or court), makes an order for costs, he must have reached the decision after hearing all arguments presented on the substantive matters before him and all arguments relating to costs. The decision as to costs is only made after he has considered all the circumstances that have been thrashed out fully before him, and that decision is a matter of discretion. Where there is an appeal against the exercise of such a discretion, it should properly be examined against those tests, and not simply replaced by an exercise of discretion of the appellate tribunal. Further, were it otherwise, the appellate tribunal would have to enter into a detailed examination of all the matters that were before the master. That would be a rehearing of all the substantive matters against the determination on which there is no appeal, which I do not think is practicable, desirable, justified or proper.

5. Returning to the circumstances before Master Betts when he heard the two summonses. The Order 24 summons was dismissed with an order that costs be to the plaintiff in any event. On the other hand, the order for costs under the Order 26 summons was an order in terms, which means that as set out in the summons, namely, "costs of the application be to the Defendant". He also granted a certificate for counsel. There is no reason given by the Matter to explain why he should make a difference in the two matters, one costs in any event and the other simply costs to the defendant, which means costs forthwith. Mr. Chan argued that there were circumstances which justified the Master to differentiate the two matters. He relied on the delay in the plaintiff failing to provide answers to the interrogatories which had resulted in the Master granting an unless order. He said that the delay in providing the answers caused a delay in the defendant's receiving the required information whereas the dismissal of the Order 24 summons did not have a similar effect. He argued that that delay was a possible reason which justified the Master to make the order for costs other than the customary order of "costs in any event" in interlocutory proceedings (see Aktieselskabet Dansk Skibsfinansiering v. Wheelock Marden & Co. Ltd. [1994] 1 KHC 607).

6. It seems to me, however, that the Master did not consider the delay as submitted by Mr. Chan so seriously, for he made an order in terms of the summons as amended by him, so that he gave the plaintiff eleven days after the determination of the summons to provide the answers to the interrogatories, as opposed to only three days sought by the defendant. Apart from this delay aspect, there is no evidence or explanation before me which bears out that the Master had taken into account that he had made an order for costs in any event in the Order 24 summons heard shortly before he dealt with the Order 26 summons. It seems to me that the differentiation was unjustified. The differentiation would cause a sense of grievance to the plaintiff and was unreasonable in the circumstances. More probable than not, the Master's attention was not drawn to the wording of the Order 26 summons regarding costs when he made the order in terms. I therefore allow the appeal. The order for costs should be that costs be to the defendant in any event, and the Master's order is varied to that extent.

7. Applying the same tests, I do not accept Mr. Law's arguments, nor is there anything to show, that the certificate for counsel was given wrongly in the exercise of the Master's discretion.

8. I have heard counsel's arguments on the costs of this appeal. The normal order for costs, of course, is costs to follow the event. However, in this case, the defendant is successful in its submissions as to the proper tests to be applied in this sort of appeal. The plaintiff is only successful in one of the two limbs of the appeal.

9. The time of hearing spent or used on the unsuccessful parts of the appeal attributable to the plaintiff is about one-half. Yet the time in preparation of this appeal used by the parties should also be taken into account. I am of the view that the proper order for costs is that three-quarters of the costs of the appeal and of the costs of the application for leave before Master Jennings be to the Plaintiff in any event.

10. A copy of this judgment will be lodged with the Supreme Court Library.