PT BALI HOSPITALITY UTAMA v. MATHIAS ECHENE AND OTHERS

HCA 604/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 604 OF 2009

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BETWEEN

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R U L I N G

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1.  On 5 February last, I delivered judgment staying this action in favour of the court at Denpasar, Bali. I made a costs order nisi in the 2nd Defendant’s favour which I directed to be taxed on a party and party basis. The 2nd Defendant now seeks a variation. It is submitted on his behalf that costs should be taxed on an indemnity basis or, at worst, on a common fund basis.

2.  The jurisdiction to award costs is governed by RHC, O.62 r.28(3). The usual taxation in hostile litigation is a party and party taxation. To do better the successful litigant must show that the case has some special or unusual feature about it which would justify a more generous order. The discretion is a broad one. In the Court of Appeal in Sung Koo Kee Ltd v Pak Lik Co. (a firm) (1996) 3 HKC 570 at 575C-D, it was put in this way:

“The power to order taxation on an indemnity basis is not confined to cases which have been brought with an ulterior motive or for an improper purpose.  Litigants who conduct their cases in bad faith, or as a personal vendetta, or in an improper or oppressive manner, or who cause costs to be incurred irrationally or out of all proportion as to what is at stake, may also expect to be ordered to pay costs on an indemnity basis if they lost … the discretion is not to be fettered or circumscribed beyond the requirement that taxation on an indemnity basis must be ‘appropriate’ (emphasis added)”

In Town Planning Board v Society for Protection of the Harbour Ltd [2004], HKCU, para. 23, the Final Court of Appeal held that the reasonableness of the parties’ conduct was something that may be taken into account.

3.  What this case is not concerned with is any egregious behaviour on the part of the Plaintiff in the sense of bad faith, oppressive conduct, ulterior motive or such other discreditable conduct. The highest that it can be put is that on my finding the prospects of the Plaintiff surviving this stay application were very slim indeed. As I found, this was very clearly a matter to be litigated at Denpasar. In my judgment, I described the action as “a more obvious case of forum shopping”. As a result the 2nd Defendant has had to go to the trouble and expense of challenging the jurisdiction of this court in circumstances where he should never have been placed in that situation.

4.  Mr Maurellet has submitted that the engaging of this jurisdiction based on the 2nd Defendant’s substantial residence and ownership of a home here was perfectly understandable. Service was effected in Hong Kong with the result that the Plaintiff was before the court as of right. Additionally, where the jurisdiction clause did not use the word “exclusive” to describe the jurisdiction of the Balinese court is a matter which is to be taken into account. He accepts that had the clause included the word “exclusive” he would have been in great difficulty in resisting an indemnity taxation.

5.  Be that as it may, the Plaintiff’s case in terms of the subject matter of the action based on a Hong Kong jurisdiction was so illusory compared to that of Bali, that in all the circumstances, it should not have been brought. The correct reaction to it is to award costs on an indemnity basis.

6.  I am fortified in this view by the fact that the Plaintiff has yet to serve the other Defendants, one of whom is in London and the others in Bali. To this Mr Maurellet says that what would have happened, had the Plaintiff successfully resisted the stay, was that the Plaintiff would have applied to serve the writ out of the jurisdiction on the other Defendants under O.11 r.1(c) on the basis that the other defendants would be “necessary or proper [parties] …” to the action. To bring such parties, with no Hong Kong connection, to litigate in Hong Kong just because another party had been validly served in Hong Kong, had that been the case, would in my judgment have been most unlikely to succeed. This all underlines the fact that for this action, where all four Defendants had “signed up” to a Bali jurisdiction, the proper place for their joint trial is the court at Denpasar. The Plaintiff should never have attempted to litigate here. Accordingly, the order nisi will be varied to one for taxation on an indemnity basis and the costs of this variation application, upon which I have already heard provisional argument, will also be to the 2nd Defendant on an indemnity basis.