TIGER RESORT ASIA LTD v. KAZUO OKADA AND OTHERS

HCA 3017/2017

[2022] HKCFI 3118

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 3017 OF 2017

______________

______________

____________________

DECISION ON COSTS

____________________

1.  By my Decision handed down on 29 July 2022[1], I refused P’s application for leave to enter judgment against D1, and acceded to D1’s Relief Application.  Despite my conclusions, for the reasons set out in the Decision, I made a costs order nisi (the “Costs Order Nisi”) that:

(a)  there be no order as to costs in respect of P’s Judgement Summons (“Part 1 of the Costs Order Nisi”), and that

(b)  the costs of D1’s Relief Summons be paid by D1 to P on an indemnity basis, with certificate for 2 counsel, to be summarily assess and be paid forthwith (“Part 2 of the Costs Order Nisi”).

2.  By letter of 12 August 2022 from Haldanes for P, P seeks variation of Part 1 of the Costs Order Nisi from what it is to the following:

“D1 is to pay two-thirds of the costs of P’s Judgment Summons on an indemnity basis, with certificate for 2 counsel, to be summarily assessed together with the costs of D1’s Relief Summons and be paid forthwith.”

3.  There is no application for any variation of Part 2 of the Costs Order Nisi.

4.  The application is opposed by D1.

5.  Pursuant to directions by this Court, Mr Stephen Kwan and Ms Charlotte Chan have filed written submissions P.  Mr MC Law SC leading Ms Natalie So have filed their submissions in reply.

6.  As highlighted by Mr Kwan, I have found that D1’s non-compliance of the Disclosure Order and the Unless Order in relation to the 3^rd Sum has been intentional.  I have also observed that aspects of D1’s explanations tendered on oath are “incredible and unbelievable”, or are “inherently improbable, inconsistent and incredible.”  I have expressed my view that given the contents of the PI Reports, and the unsatisfactory manner in which the compliance of Unless Order has been approached by D1, P was justified in taking out P’s Judgment Summons.

7.  In support of the application for variation, Mr Kwan relies on Biguzzi v Rank Leisure Plc [1999] 1 WLR 1926 and Axa Insurance Co Ltd v Swire Fraser Ltd [2001] CP Rep 17.

8.  In Biguzzi:

(a)  Lord Woolf, in upholding the judge’s decision refusing to strike out a claim for breaches of the Civil Procedure Rules 1998, observed that under those Rules, the court had broad powers and, in many cases there would be alternatives, that:

“Under rule 3.4(2)(c) a judge has an unqualified discretion to strike out a case such as this where there has been a failure to comply with a rule. The fact that a judge has that power does not mean that in applying the overriding objectives the initial approach will be to strike out the statement of case. The advantage of the C.P.R. over the previous rules is that the court’s powers are much broader than they were. In many cases there will be alternatives which enable a case to be dealt with justly without taking the draconian step of striking the case out.

…

There are alternative powers which the courts have which they can exercise to make it clear that the courts will not tolerate delays other than striking out cases. In a great many situations those other powers will be the appropriate ones to adopt because they produce a more just result. In considering whether a result is just, the courts are not confined to considering the relative positions of the parties. They have to take into account the effect of what has happened on the administration of justice generally. That involves taking into account the effect of the court’s ability to hear other cases if such defaults are allowed to occur. It will also involve taking into account the need for the courts to show by their conduct that they will not tolerate the parties not complying with dates for the reasons I have indicated.

Some of the alternatives which are open to the courts to deal with these situations are to be found conveniently summarised in the Practice Direction - Protocols. Paragraph 2 of that practice direction deals with compliance with protocols. It says:

‘2.3 If, in the opinion of the court, non-compliance has led to the commencement of proceedings which might otherwise not have needed to be commenced, or has led to costs being incurred in the proceedings that might otherwise not have been incurred, the orders the court may make include: (1) an order that the party at fault pay the costs of the proceedings, or part of those costs, of the other party or parties; (2) an order that the party at fault pay those costs on an indemnity basis …’

            To that table can be added (in relation to a default such as that which has occurred in this case) the new power of the court to order money to be paid into court.  The ability of the court to make an indemnity order for costs is an important power. Under the old rules there was little or no difference between an indemnity order and a standard order for costs.  Under the new rules there is a significant difference.  For a court to order certain parts of the costs to be paid on an indemnity basis and to be paid forthwith is a valuable sanction since a solicitor has to explain to his client why he has to be put into funds to pay costs on that basis forthwith.  This is particularly valuable in bringing home to the solicitor and the party the consequences of default. It is more effective if the costs are assessed summarily than by a detailed assessment.”

9.  Mr Kwan hence submits that an order for costs is one of the alternatives to the more draconian order of striking out or entering judgment.

10.  Mr Law submits that Biguzzi has no relevance in the present application, as the regime in England and Wales is very different from that in Hong Kong.  He submits that §2.3 of the Practice Direction – Protocols referred by Lord Woolf has no counterpart in Hong Kong, and that we are dealing with costs, but not alternatives.

11.  I do not accept those submissions of Mr Law’s. The Practice Direction – Protocols, as described by Lord Woolf, only “conveniently summarised” “[s]ome of the alternatives which are open to the courts”.  Mr Law has not pointed to anything which suggests that the Practice Direction – Protocols are in fact jurisdiction or power conferring.

12.  In my view, this Court has wide powers when dealing with costs, which include at least the alternative costs order as explained by Lord Woolf.       

13.  In Axa Insurance, Lord Justice Tuckey, in reversing the judge’s decision to strike out the whole claim for delay, observed at §25 that:

“Nevertheless but for Axa’s delay their claim could and should have been heard at the October trial and the strike-out proceedings would not have happened. What can the court do to show its disapproval of the delay and protect Swire as far as possible from the consequences of the fact that they now face a further trial? First, it seems to me that Axa should pay the costs of the strike-out proceedings before the judge which they brought on their own head …”

14.  Mr Law submits that Axa Insurance is again irrelevant as it has referred to Biguzzi.  For the same reasons why I reject Mr Law’s submissions on the alleged irrelevance of Biguzzi, I reject also this submission of his.

15.  Mr Law refers me to my case of Glory Sky Finance Ltd v Chen Jianhua & Anor [2018] HKCFI 1358 at §3, where I in the context of costs considered the “overall fairness of the matter without going into details.”

16.  On the facts of the present case, I bear in mind D1’s conduct as I have stated in the Decision and highlighted above.  P was justified in issuing P’s Judgment Summons.  D1 brought it on his head.  In an attempt to resist it and despite the PI Reports, D1 came up with explanations which I have found to be incredible and unbelievable, gave replies which in my view verge on games of words, and made late challenge against the admissibility of the PI Reports which I have ruled against.  True that he has been ordered to bear the costs of D1’s Relief Summons on an indemnity basis.  But he was seeking the Court’s indulgence there.  It is only right that he should bear the costs of that summons, and on the facts, on an indemnity basis.  That does not mean that the Costs Order Nisi “has already penalised D1”, and that it has “already reflected the overall fairness of the matter”, as Mr Law is seeking to say. 

17.  In the light of the authorities which Mr Kwan has now placed before this Court, for the reasons set out above, to show this Court’s disapproval of D1’s conduct, and bearing in mind the overall fairness of the matter, I accede to P’s application for variation.  D1 should bear some costs of P’s Judgment Summons.  Two-thirds are overall fair to reflect my view that P could not establish non-compliance regarding the 4^th Sum.  Indemnity basis is perfectly justified on the facts of the present case. 

18.  I vary the Part 1 of the Costs Order Nisi to the order as sought (as set out above).

19.  I order that D1 should also bear the costs of this application, on a party-and-party basis, with certificate for one counsel.

20.  I direct that P should file its statement of costs within 7 days of the handing down of this Decision, D1 to file his list of objection within 7 days thereafter, and P to file its reply 7 days thereafter.  Summary assessment will be conduct on the papers.