XCHRX GLENCORE INTERNATIONAL A.G. v. KEEN LLOYD (HOLDINGS) LTD.

HCCL166/97

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL LIST NO.166 OF 1997

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JUDGMENT ON COSTS

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1. On 12th July 1999 judgment was handed down in the trial of these actions. At the conclusion of that judgment, I indicated that absent agreement, I would hear Counsel upon various matters arising. In the event, the only issue now requiring resolution by the Court is that of costs. In this regard, there is not only the main issue relating to the costs of these two actions, including of course the costs of the joint trial, but I am told that there are two reserved costs orders which also require decision.

2. On behalf of Glencore, the Plaintiff in both actions, Mr Paul Shieh suggested that the Court should adopt essentially a macro approach, and for practical purposes consider these two actions as one. Although not commenced together, nor having been formally consolidated, nevertheless he submitted that the history of their development plus the fact that they were ordered to be tried together, made this approach appropriate in principle, and served also to simply such problems as may in due course be encountered by the Taxing Master.

3. Mr Shieh maintained that his client undoubtedly had been the overall winner of this litigation, loss of the 'lien' issue notwithstanding. That issue had been lost as a matter of law, but on the other significant issues that had arisen the Plaintiff had been the victor. In these circumstances, therefore, it would be wrong in principle, he said, to make positive orders for costs in favour of each side, which would have the effect of mutual set-off and would not be reflective of the overall result of the proceedings. In this connection, he relied on dicta in Re Elgindata Limited (1992) 1 WLR 1207, and accepted that if this approach were to be adopted, there would require to be some form of percentage discount (of, say, 20%) to a costs award in his client's favour in order to reflect the Plaintiff's lack of success in the lien argument. In the circumstances, however, Mr Shieh maintained that his client should not have to bear any of the 2nd Defendant's costs.

4. For Keen Lloyd, the 2nd Defendant, Mr Law submitted that this approach would be unfair to his client. Although he accepted that the circumstances of the joint trial invited a global approach to the actual costs of that trial, his client essentially had been successful in the first of these actions, the 'lien' action, and, he said, it would be wrong in those circumstances to deprive the 2nd Defendant of its costs of that action. Accordingly, Mr Law maintained that a just course would be to award his client its pre-trial costs in the 'lien' action, and that there should be an apportionment of the trial costs. In this context he argued that of the seven hearing days, an appropriate split in terms of such costs would be 41/2 days to the Plaintiff and 2 1/2 days to his client, this formula further taking into account the wasted costs caused by the half day adjournment early in the trial which was rendered necessary by the Plaintiff's late amendment.

5. Shorn of detail, the foregoing represented the broad lines of a strongly-contested argument, and this may be one of those instances wherein the decision on costs proves as testing as that upon the substantive issues. Costs, of course, cannot be gauged as if by micrometer, and inevitably involve an element of broad brush wherein the Court attempts generally to reflect success or failure of the parties in the litigation in question.

6. At first blush, also, the approach canvassed by Mr Shieh undoubtedly has its attractions and, I have no doubt, would simplify a contested taxation. The problem, however, is that I have difficulty in accepting that it is indeed just in all the circumstances, not least because in my view it does not adequately reflect the way in which this litigation broadly developed.

7. The first action, CL No.166 of 1997, primarily involved what is termed in the judgment 'the Bright China contract', in which Glencore had obtained judgment in default of notice of intention to defend against Bright China, with damages to be assessed. The 2nd Defendant, Keen Lloyd (Holdings) Ltd., was joined to these proceedings only because of its assertion at the interlocutory stage (as confirmed on affidavit) as to its right to the 250 bundles of aluminium ingots, the subject of Glencore's purported lien on 10th September 1997, which cargo had been shipped under Bill of Lading No.386. Accordingly, the predominant issue between Glencore and Keen Lloyd in this first action was the entitlement to the sale proceeds of these 250 bundles of ingots, which proceeds presently stand in Court; indeed this issue was one of the issues agreed between Senior Counsel as presenting itself for decision in this action, and, no doubt, constitutes the principal reason why this first action was generally referred to as the 'lien action'.

8. Against this background, therefore, in the context of costs I am disinclined to accept as determinative the benchmark urged upon the Court by Mr Shieh when he submitted that his client emerged "as the overall winner in terms of monetary recovery." Nor do I consider the situation in Re Elgindata, op.cit., as necessarily analogous. Not only did the latter case involve the trial of but one action, but in this context it is not easy to see why Keen Lloyd's success in defeating Glencore's claim to a valid lien over the ingots should be any less significant than, for example, the success of the petitioners in Elgindata in establishing a right to have their shares purchased by Mr Purslow.

9. So that whilst these two actions were heard together for reasons of obvious practicality, the fact is that in reality Keen Lloyd won the 'lien action', whilst Glencore undoubtedly was successful, for the greater part at least, in the second action, CL No.177 of 1998, which focused primarily upon the issues of liability and quantum arising from the July contract entered into between Glencore and Keen Lloyd, which issue was dealt with at the same time as Keen Lloyd's restitutionary claim, on which element Glencore was again successful. In connection with the restitutionary claim I recognise the point made by Mr Shieh as to the duplication of the pleadings in both actions, but I do not think that this detracts from the primary characterisation of CL No.166 of 1997 as the 'lien action'.

10. In all the circumstances, therefore, I can see no good reason why the costs of each action should not follow the main event, which of course represents the general rule save where circumstances exist such that it appears to the Court that some other order should be made. If this be correct, the only complication which then arises is in terms of an apportionment of the trial costs given the concurrent hearing of these two actions. After taking all these circumstances into account (including the half day loss), in my judgment these costs should be apportioned at 80:20 in favour of the second action.

11. Accordingly, the Order as to costs in these two actions between the Plaintiff and Keen Lloyd (Holdings) Ltd. is as follows :

In CL No.166 of 1997, the Plaintiff is to pay to the 2nd Defendant the costs of the action between the Plaintiff and the 2nd Defendant, to be taxed if not agreed, such costs to include 20% of the costs of the joint trial of this action and of CL No.177 of 1998.

Glencore is, of course, entitled to the costs of its action against Bright China, such costs to be taxed if not agreed.

I make no order as to costs with regard to the action between Glencore and Keen Lloyd Investments Ltd.

Conversely, in CL No.177 of 1998, the Defendant is to pay to the Plaintiff the costs of the action between the Plaintiff and the Defendant, to be taxed if not agreed, such costs to include 80% of the costs of the joint trial of this action and that of CL No.166 of 1997.

12. Finally, I turn to the existing reserved costs orders which have been drawn to my attention by Counsel :-

(1) CL166 of 1997 : Order dated 11th November 1999

Paragraph 3 of this Order specifically reserved the costs of -

(i) the 2nd Defendant's summons dated 24th October 1997 (the strike out summons); and

(ii) the Plaintiff's summons dated 3rd November 1997 (the alternative assessment/affidavit summons).

I have reflected upon the history and circumstances of the issue of these summonses, and I have come to the conclusion that the fairest course now is to make no order as to costs upon each such application, including the costs of the hearings on 6th and 11th November 1997. I so order.

(2) CL177 of 1998 : Order dated 29th April 1999/11/4

By paragraph 7 of the Order dated 29th April, the costs of the Plaintiff's summons dated 20th April 1999 were reserved to the pre-trial review on 5th May 1999, whilst the Defendant's summons dated 27th April 1999 was stood down to the same date.

Both summonses involved, inter alia, amendment of the parties' respective pleadings. My Orders upon each summons are as follows :-

As to the Plaintiff's summons dated 20th April 1999, the costs of and occasioned by the application to amend are to be paid by the Plaintiff to the Defendant, to be taxed if not agreed. Save as aforesaid, the costs of this application are to be costs in the cause.

As to the Defendant's summons dated 27th April 1999, the costs of and occasioned by the amendments and by the application are to be paid by the Defendant to the Plaintiff, to be taxed if not agreed.

13. Finally, in terms of the costs of the costs hearings on 30th September and 14th October 1999, I order that each party is to bear its own costs.

14. All consequential matters arising out of the main judgment have now, I believe, been dealt with during these two hearings or have been determined as a result of this judgment, and accordingly it should now be possible to engross the relevant Orders. Should anything have been overlooked in what undoubtedly is a complex case with a number of loose ends, I grant liberty further to apply, if such be necessary.

15. I thank the parties for their assistance.