KWOK YU WON ERIC v. TIM FUNG STEAM LAUNDRY (SHATIN) CO LTD

HCA 1923/2017

[2019] HKCFI 195

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1923 OF 2017

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DECISION

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1.  The issue for this decision is the question of costs on a failed application by the defendant, made on 6 August 2018, to vary a costs order made on 23 July 2018.

2.  It is only necessary to go back in the history to 23 July 2018, when I summarily assessed the plaintiff’s costs of the action at $470,000 (including counsel’s fee plus disbursements).  The defendant was dissatisfied with that summary assessment, and on 6 August 2018, applied to vary the costs order.  The application was supported by an affirmation.  The plaintiff responded by letter, by saying that the costs order, not having been an order nisi, the defendant was not entitled to vary the order.

3.  Upon receipt of that response, the defendant filed a second affirmation.  The plaintiff responded to both affirmations on 17 August 2018, with an affirmation in reply.

4.  On 23 August 2018, I ruled that the costs order was not specified to be an order nisi and accordingly there was no jurisdiction to further consider the sum awarded.

5.  Although it is not relevant to the issue I have to decide, I note that on 29 August 2018, the defendant filed an application for leave to appeal against the costs order and on 31 August 2018, an application to stay the execution of the costs order.  In fact the application for leave to appeal was out of time.  Both those applications were dealt with by M Chan J on 20 November 2018.  Both applications were dismissed with costs.

6.  The plaintiff now applies for costs on the dismissal of the defendant’s summons dated 6 August 2018, to vary the costs order.

7.  I gave directions to the filing of written submissions.  The defendant’s Reply was strictly out of time, however having regard to the fact that the time fell within the Christmas period I have disregarded that failure and have had consideration to all of the submissions made.

8.  Somewhat ironically, the defendant now turns the argument made against it on the plaintiff.  The defendant says that the order dismissing the application dated 6 August 2018 to vary the costs order, was itself silent as to costs.  Consequently, the defendant says, that is the end of the matter and there is no jurisdiction now to award costs.

9.  The solicitors for the defendant submitted in the following terms:

“ An order silent as to costs is not an order for ‘costs reserved’. It is trite that an order silent as to costs is construed to mean that each party will bear their own costs, i.e. no order as to costs: see Hong Kong Civil Procedure 2019, §62/1/4. This is consistent with the interpretation of the Court of Appeal in Lam Yin Man v The Incorporated Owners of Kwun Tong Industrial Centre, (unreported, CAMP 22/2017, 3 November 2017), at [17], and HKSAR v Tam Kwai Keung & Anor (unreported, CACC 10/2001, 6 June 2002), at [7].”

10.  By way of reply, the solicitors for the plaintiff say:

   (i)  §62/1/4 applies to silence on costs of a final judgment which is not applicable to the present application as the order dated 23 August 2018, was not a final judgment;

   (ii)  the Court had no opportunity to consider the issue of costs on the dismissal of the Defendant’s summons dated 6 August 2018 until now;

   (iii)  an appeal is not open to the plaintiff as no decision was made on costs;

   (iv)  the two cases cited were orders by consent, the present case is not a consent order;

   (v)  in any event, Order 62, rule 3(2A) allows the court to exercise its discretion to make any order as to the cost of or incidental to any interlocutory proceedings as the court thinks fit: see Hong Kong Civil Procedure 2019, §62/3/3B.  The defendant erroneously made an application to vary a costs order which was not specified to be an order nisi.  It is only fair and just that the plaintiff, having successfully defended that application should have its costs paid by the defendant.

11.  I shall deal with each of these arguments in turn.

12.  It is necessary to read the whole of the commentary in Hong Kong Civil Procedure 2019 §62/1/4.  The commentary notes that it has long been the practice to treat an interlocutory order which is silent as to costs as one enabling a successful party to recover them as costs in the cause. However, after discussion, the commentary concludes that:

“ It would seem therefore that an order silent as to costs would not entitle any party to recover those costs from an opponent as part of his costs of the whole proceedings unless the court so ordered at the conclusion of the proceedings.”

The submission does not assist the plaintiff.

13.  While it may be right that there is nothing to appeal, the absenceof an opportunity to appeal does not, it seems to me, provide an exception tothe usual rule that an order that is silent as to costs will mean that each party must bear their own costs.

14.  The decision made in Lam Yin Man was a decision made after a trial in which only part of the issues were determined by consent.  The remainder of the claim and the counterclaim were left to the judge’s determination.  Both the remainder of the claim and counterclaim were dismissed with no order as to costs.  It is right that the order dealing with those issues which were determined by consent was silent as to costs, but nothing the Court of Appeal said can be read to suggest other than that an order that is silent as to costs is the equivalent of an order that each party shall bear their own costs.

15.  I gather no assistance at all from the criminal appeal decision in Tam Kwai Keung.  Criminal costs orders, even under the Organized and Serious Crimes Ordinance, Cap 455, in respect of restraint proceedings (which may be considered civil in nature), rarely assist in determining costs in civil proceedings.

16.  Order 62, rule 3(2A) provides:

“ If the Court in the exercise of its discretion sees fit to make any order as to the costs of or incidental to any interlocutory proceedings,it may, subject to this Order, order the costs to follow the event or make such other order as it sees fit.”

17.  The commentary at §62/3/3B makes it quite clear that the principle that costs normally follow the event is no longer the prescribed usual order but is instead just an option.  The decision discussed in the commentary, Melvin Waxman v Li Fei Yu (unreported, [2013] HKEC 1425), deals with a costs order nisi, and is accordingly not applicable in the present case.

18.  For the foregoing reasons I am satisfied that the order dismissing the application to vary the costs order nisi, being silent as to costs, must be taken to mean that each party must bear their own costs on the dismissal of the application to vary costs.

19.  The application for costs is accordingly dismissed.  Each party must bear their own costs on the application for costs.