LI JIA HENG v. GOLDEN WORLD MOTORS (INTERNATIONAL) LTD

DCCJ 2932/2020

[2024] HKDC 1679

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2932 OF 2020

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BETWEEN

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DECISION

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1.  By Summons dated 21 June 2024, the Defendant seeks to vary the costs order nisi made in my Judgment handed down after the trial of this Action [2024] HKDC 888, §44. Reference should be made to that Judgment for the salient facts of and the reasons for my decision in the substantive case. I also adopt here the abbreviations used in the Judgment.

2.  In gist, in Part F of the Judgment, I:

(a) Entered judgment for Mr Li against GWM on his unjust enrichment claim in the sum of the Deposit i.e. HK$320,000.

(b) Awarded Mr Li interest at the normal pre-judgment rate, viz prime plus 1% per annum, until the date of the Judgment, and thereafter at judgment rate until full payment.

(c) Dismissed GWM’s Counterclaim against Mr Li in its entirety.

(d) Made an order nisi that GWM do pay Mr Li’s costs of this Action, including all costs previously reserved and his costs of resisting its now-abandoned Counterclaim (if any), such costs be taxed if not agreed, and that there be a Certificate for Counsel.

3.  Self-evidently, Mr Li won the entire Action (including GWM’s Counterclaim), and so his costs of the whole Action was awarded to him against GWM on a nisi basis.

4.  By the present Summons, GWM invites me to consider three matters:

(a) First, Mr Li abandoned his claim based on contract (“Contractual Claim”) on the eve of the trial. To reflect this, GWM seeks orders that Mr Li should pay GWM such costs of the Action as had been incurred in relation to defending the Contractual Claim (Summons, §1.1 and 1.2), or that his costs entitlement for the Action as a whole be reduced overall by a suitable percentage (Summons, §1.3).

(b) Second, at least in relation to the issue of whether there was a “joint basis” to ground Mr Li’s (ultimately successful) claim of unjust enrichment, various key planks of the reasoning which is said to have found favour with me were raised by me, and not by Mr Li. Hence, his costs entitlement should be reduced overall (Summons, §1.3).

(c) Third, time was incurred in relation to the SOC’s amendment during oral opening at the trial, so GWM seeks an order to reflect this (Summons, §1.4).

5.  The principles governing the Court’s award of costs are well settled, and the parties do not seriously dispute them. The ones most pertinent to this application may be restated as follows:

(a) The general rule is that costs should follow the event, except when it appears that in the circumstances of the case some other order should be made. This general rule does not cease to apply simply because the successful party raises issues or makes allegations on which he fails. After all, costs are not to be decided according to a score sheet on how many issues have gone one way or the other. In any litigation, it is not unusual for a winning party to have raised (and failed on) one or more issues, but this by itself does not attract any costs sanction.

(b) It is only where the successful party’s failed issues or allegations have caused a significant increase in the length or costs of the proceedings, i.e. estimable as a more than trifling proportion of the total costs, that he would likely be deprived of the whole or a part of his costs.

(c) Where the successful party raises issues or makes allegations improperly or unreasonably, the Court may not only deprive him of his costs but may order him to pay the whole or a part of the unsuccessful party’s costs.

(d) An issue (or a relevant allegation) for these purposes must be something so distinct and separate in itself that the decision of it constitutes an “event”. Moreover, the necessity of an issue is not to be judged with the benefit of hindsight. The Court should give real weight to the overall success of the winning party and approach the question of costs from such a perspective.

(e) Further, unless the issue in question has caused a significant increase in the length or costs of the proceedings, it is generally disproportionate to embark on an enquiry as to whether an issue-based approach should be adopted, as such likely to be inconsistent with the underlying objectives in RDC Order 1A, rule 1(a)–(c).

See: Wang Din Shin v Nina Kung (unrep, CACV 460/2002 and CACV 67/2003, 19 April 2005), §39; Cheng Ka Shing v Bonus Plus Company Limited [2020] HKCFI 828, §§7 – 12; Seepersad v Persad (2004) 64 WIR 378 (PC (T&T)), §24; Happy Fish Co Ltd v Tang Jeb Ming [2023] HKCFI 600, §3; and the authorities cited in those passages.

6.  Applying these principles here, GWM firstly submits that:

(a) Mr Li had originally advanced the Contractual Claim against GWM, only for such claim to have been abandoned by way of opening submissions.

(b) Since the parties had all along prepared their pleadings, evidence and witness statements, and GWM had prepared for the trial, on the basis that the Contractual Claim would be a live issue, the same have been wasted. Accordingly, GWM’s primary position is that Mr Li should pay to it such costs of the Action as had been incurred in relation to defending the Contractual Claim.

(c) Alternatively, as a fallback position, Mr Li should be disallowed such costs of the Action as had been incurred in relation to defending the Contractual Claim. In this context, GWM cites Luck Continent Limited v Cheng Chee Tock Theodore [2013] 1 HKC 75 (CFI).

7.  I reject these submissions. The reality is that the parties’ respective pleadings, evidence and witness statements for Mr Li’s abandoned Contractual Claim and his unjust enrichment claim on which he ended up entirely succeeding, very substantially overlapped. Indeed, Mr Kevin Lau, GWM’s able Counsel, frankly accepted that, in a broad sense, the Agreement and how it came to be involved facts common with Mr Li’s unjust enrichment claim, and was only able to identify §§12, 13, 15.4, 15.5 of Mak’s WS (served on D’s behalf), which together occupied about one full A4 page, as the evidence distinctly for dealing with one claim but not for the other. I should add that those passages did not refer to any document, at any rate additional to what the Court would have had to consider in order to adjudicate on the unjust enrichment claim. For this reason, Mr Li’s abandonment of the Contractual Claim has not caused any significant increase in the length or costs of the proceedings, which would be the minimum that GWM has to demonstrate before depriving Mr Li of his costs or even ordering him to pay the whole or a part of GWM’s costs will be seriously considered. I should give real weight to his overall success, and refuse to accede to GWM’s invitation.

8.  Indeed, Luck Continent Limited cited by GWM itself bears this out. There, Barma J (as he then was) pertinently concluded (at §17), on the facts of that case, that “So far as the other allegations that were not pursued at trial are concerned… [a]lthough no time was spent on them at trial, there was nonetheless substantial evidence in relation to them, and time and costs were spent on its preparation to no ultimate purpose. It therefore seems to me that… it would be appropriate… to order that the Petitioner should not recover any of its costs in respect of them.” Here, by contrast, no substantial evidence existed which was relevant only to the Contractual Claim and not Mr Li’s ultimately successful unjust enrichment claim. The Court should not ignore the substantive reality – or split hairs.

9.  Before turning to GWM’s next submission, I should add that I reject its subsidiary argument that another way of looking at the matter is to say that effectively, Mr Li has withdrawn or discontinued the Contractual Claim. A withdrawal or discontinuance under RDC Order 21 involves withdrawing or discontinuing the entire cause, matter or application in question, including the whole set of facts/evidence and arguments on the same. In contrast, in this case, the Contractual Claim and the unjust enrichment claim substantially overlapped; it is both artificial and wrong to treat the Contractual Claim as having been withdrawn or discontinued, when most of the facts/evidence remained extant for Mr Li’s successful unjust enrichment claim. I leave open cases where an abandoned claim in a cause involves a wholly or substantially distinct set of facts/evidence and arguments such that an analogy with withdrawal or discontinuance would be more apposite.

10.  GWM’s next submission is that Mr Li succeeded on arguments raised not by himself but by me; the significance is that, in GWM’s submission, where a party succeeds in such circumstances, the Court should reduce the costs awarded to the winning party. In this respect, GWM cites two Court of Appeal cases, SJ v Hui Yat Fai [2005] 2 HKC 438 (CA) and Ge Qingfu v L & A International Holdings Ltd [2020] HKCA 779.

11.  I have to say I admire Mr Lau’s ingenuity and effort, but neither Court of Appeal authority provides any support for him. In Hui Yat Fai, what happened was (at §4) that “the [appellant] Bank did not succeed on its main argument…. Rather the Bank succeeded on a point raised by the court during the hearing itself, which the Bank, unlike the Receiver, agreed with and adopted in its submission. As substantial efforts had been expended by the Bank on its main argument, the court found it appropriate to apply a discount of two thirds to the Bank's costs.” Self-evidently, the reason for the discount was the expenditure of substantial efforts on the successful appellant’s failed main argument, not the fact that the appellant succeeded on a point raised by the Court itself as such.

12.  Likewise, in Ge Qingfu, the Court of Appeal explained (at §13) that “the plaintiffs have succeeded on the Jurisdiction Ground… because… [of] a point raised by this court. On the question of the construction and effect of section 729, which accounted for a very considerable portion of the arguments on the appeal, the plaintiffs’ submissions were largely unsuccessful. In these circumstances we do not think the plaintiffs should ultimately have any substantial entitlement to costs based on its success on the Jurisdiction Ground.” Once more, the operative reason for the Court’s conclusion was that the successful plaintiffs’ failed argument “accounted for a very considerable portion of the arguments on the appeal”, and not because they won on a point raised by the Court itself per se.

13.  In truth, Ge Qingfu is against GWM, because by its holding at §5, the Court reaffirmed the well-settled principles restated in §5 above:

“It was the defendants who raised the argument below that the power to award damages was ancillary to the power to grant a prohibitory injunction under section 729 of the Companies Ordinance (Cap 622), as part of their argument that the court lacked jurisdiction to award damages in this case. Based on both the outcome at trial and on appeal, the defendants have failed on that argument. In these circumstances we do not think there is any basis in principle to deprive the plaintiffs of part of their costs of the action, whether on the ground that they had caused a significant increase in the length or costs of the proceedings by raising issues on which they did not succeed, or otherwise.”

14.  Contrary to GWM’s submission, the two Court of Appeal’s decisions reinforce the recurrent theme that, unless the successful party’s failed arguments, issues or allegations have caused a significant increase in the length or costs of the proceedings, there is normally no basis for the Court to exercise its discretion either to deprive him of his costs or to order him to pay the whole or a part of the unsuccessful party’s costs.

15.  In this case, regardless of whether Mr Li can fairly be said to have succeeded on arguments raised not by himself but by me (as to which I express no concluded view), no significant increase in the length or costs of the proceedings has been caused (nor has GWM pinpointed or shown any, in the present context). Accordingly, I reject GWM’s submission.

16.  Lastly, GWM asks for an order to reflect the fact that time was spent at trial (in the course of opening in Day 1) in dealing with Mr Li’s application to amend the SOC. I have already made a costs order in GWM’s favour in this regard: see Judgment, §24(e). The parties have since agreed, and I hereby record and indicate, that 3 hours of Day 1 had been spent for dealing with Mr Li’s amendment application.

17.  In conclusion, GWM’s application for varying the costs order nisi is dismissed with costs to Mr Li, to be taxed if not agreed, without however any Certificate for Counsel for this application – which was straightforward enough such that Mr Li’s solicitors should have been more than good enough to have handled it alone. My costs order nisi in the Judgment is hereby made absolute.