OXYVITAL LTD v. DEACONS (A FIRM)

HCA 259/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 259 OF 2007

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DECISION ON COSTS

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I.  Introduction

1.  On 24 November 2008, I handed down decision (“the earlier Decision”) to allow the Defendant’s appeal against paragraph 1(c) of Master Lung’s Order dated 14 July 2008, which gave leave to the parties to adduce expert evidence on the practice and standard of care of patent lawyers/attorneys in Hong Kong (“the standard of care expert evidence”).  I also granted an order nisi that costs of the appeal be to the Defendant, to be taxed if not agreed. 

2.  Before me now is the Plaintiff’s application to vary the costs order nisi, and to replace it with an order that costs of the appeal be in the cause.

3.  By consent, this application is dealt with by written submissions made by the parties’ respective solicitors.

II.  Plaintiff’s submissions

4.  In summary, the Plaintiff’s submissions run as follows.

5.  The Plaintiff’s original application for adducing, inter alia, the standard of care expert evidence was made as part of the directions sought  before Master Lung.  

6.  When the parties were before Master Lung on 14 July 2008, the Plaintiff says the Defendant’s attending solicitor did not make any objection to leave being granted to adduce also the standard of care expert evidence.  The only dispute between the parties at that time was on the timing of the filing of the various expert evidence.  For reasons I will explain later, it is necessary for me to quote these parts of the Plaintiff’s submissions set out in its solicitors letter dated 4 December 2008 as follows:

“3.  Messrs. Herbert Smith, the Defendant’s solicitors replied on 3rd July 2008 setting out five further issues upon which their client intended to call expert evidence (i.e. paragraphs 1(a), (b), (d), (e) and (f) of Master Lung’s Order), and proposed on exchange of expert reports within two months.  No objection was, however, raised to the Plaintiff’s proposal to adduce expert evidence to address the standard of care issue.

4.  Solely by reason that the parties were unable to agree a timetable for mutual exchange of expert evidence, the Plaintiff issued an Inter-Parties Summons on 7 July 2008, by which the Plaintiff sought directions for: [terms of the summons].

5.  Upon hearing the parties’ respective submissions on 14 July 2008, Master Lung made an order in terms of the Plaintiff’s Summons (“Master Lung’s Order”).  The Defendant through their solicitors did not object to the directions given for expert evidence to be given on the standard of care issue (item 1.c.).” (emphasis added)

7.  It was only subsequently that in the correspondence between the parties, and after the Defendant had filed a Notice of Appeal against that part of Master Lung’s Order, that the Defendant started to take the position, as it subsequently took before this Court, to object to leave being granted to adduce the standard of care expert evidence.

8.  In these circumstances, and given that the hearing of the appeal was treated as a de novo hearing of the Plaintiff’s application, the Court should treat the same as effectively a directions’ hearing.  As such, the Plaintiff submits that the proper costs order should be costs in the cause, as is the case generally for directions hearings.

III.  Defendant’s submissions

9.  The Defendant opposes the application to vary the costs order nisi on the following bases.

10.  The Defendant first disputes that its solicitor (Mr Geiser) attending the hearing before Master Lung did not object to leave being granted to adduce the standard of care expert evidence as now suggested by the Plaintiff.  It says instead Mr Geiser submitted to the learned Master that as a matter of legal principles, the standard of care expert evidence sought to be adduced by the Plaintiff was not admissible, and leave should not be granted.  However, the learned Master ruled against the Defendant’s submissions and granted leave.

11.  In the premises and notwithstanding that an appeal from the Master decision is to be treated as a de novo hearing, the Plaintiff is fundamentally wrong (the Defendant further submits) in saying that the appeal should be treated as an ordinary directions hearing, and costs should be in the cause.

12.  Since the Defendant was substantially successful in the appeal, there is no reason why costs of the appeal should not follow the event, and therefore the costs order nisi should not be varied, and should be confirmed and made absolute.

IV.  Discussion

13.  After listening to the recording of the hearing before Master Lung, I accept the Defendant’s submissions that the Defendant through Mr Geiser did object to the Plaintiff’s application to adduce the standard of care expert evidence.  As a matter of fact, Mr Arthur of Laracy Gall appearing for the Plaintiff opened his submissions by indicating expressly to the learned Master that the Defendant was objecting to an order being made in term of paragraph 1(c) of the Plaintiff’s Summons (which is the direction relating to the standard of care expert evidence).

14.  In this respect, the Plaintiff’s written submissions as to what happened before Master Lung are clearly factually incorrect.  In my view, these incorrect submissions as to facts, without any reasonable justification, amount very close to misleading the Court.  I therefore hereby further direct the Plaintiff’s solicitors to provide the Court with a written explanation within 7 days of this decision as to the basis upon which they advanced the above submissions.  The Court further reserves its position in following up the matter depending on their answers.

15.  Coming back to the present application, given that it was in fact argued by the parties before the learned Master on whether he should accede to the Plaintiff’s application to adduce the standard of care expert evidence, I further accept the Defendant’s submissions that the hearing before me was in nature a proper appeal, notwithstanding that it was conducted procedurally by way of a de novo hearing.  It should not be treated simply as an ordinary directions hearing.

16.  In the premises, I am not persuaded that the costs order nisi should be varied for the reasons as submitted by the Plaintiff.

V.  Conclusion

17.  For the above reasons, I reject the Plaintiff’s application to vary the costs order nisi.  I further make the costs order nisi an absolute order.

18.  As mentioned above, I also direct that the Plaintiff’s solicitors shall within 7 days from the day of this decision provide to the Court a written explanation as to the basis upon which they advanced the written submissions that the Defendant’s solicitor attending the hearing before Master Lung on 14 July 2008 made no objection to the Plaintiff’s application for leave to adduce the standard of care expert evidence.

19.  Costs of this application be to the Defendant and treated as part of the costs of the appeal before me.