XCHRX SECAN LTD. v. WONG PING WAI

1996, No. A5227

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

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JUDGMENT

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1. On 30 October 1998, I handed down a judgment in relation to an application by the defendant to set aside a default judgment against it. In relation to costs, I said this -

"I have heard no argument on the question of costs, but it seems to me that the defendant should not get its costs because he was in default and he is seeking the court's indulgence. On the other hand, I am inclined to think that the plaintiff should not get its costs unless it wins the action. In this respect, I take into account that the plaintiff's solicitors knew that the defendant intended to file a defence, and took advantage of a lapse by the defendant's solicitors. I make an order nisi that the costs of this application be costs in the plaintiff's cause."

2. The defendant issued a summons on 5 November 1998 in which it sought a variation of this order nisi so that the order be that the costs be to the defendant in any event.

3. Before me, Mr Harris argued that the order should be that the costs be in the plaintiff's cause up to the end of January 1998, and, thereafter, the costs be to the defendant in any event. The basis for this argument is that, by 12 January 1998, the plaintiff had from the defendant a comprehensive defence and the evidence on which it based its case. The plaintiff should then have taken stock of the situation. If it had done so, it would have realised that it should concede the setting aside. Further opposition after this point, Mr Harris says, was unreasonable.

4. Mr Harris drew my attention to my judgment delivered in the case of Kailay Engineering Company (HK) Limited v Silver Faith Holdings Limited (1998, No. CON14) in which I said -

"The plaintiff should then have examined the case thoroughly to see if it was the kind of case that merited opposition. If it had done that, it would have realised that its own evidence did not support its case, and, indeed, established precisely the case pleaded by the first defendant. Having reached that stage, I believe the plaintiff should have consented to the judgment being set aside. I do not think I should give my blessing to further unjustified opposition by the plaintiff by allowing it to recover its costs of this."

5. As I said, that was a case in which the plaintiff's own evidence established the defendant's case. I do not think that the present case is like Kailey at all. Here, it is the defendant's evidence that raised a real prospect of success. But this is not the only difference. The defendant's evidence was not complete until 23 October 1998; the Friday before the application on the following Monday. In particular, the independent expert evidence filed by the defendant in the case before me was important, and this was not filed and served by the defendant until just before the hearing. In these circumstances, I do not think it can be said justifiably that the plaintiff's opposition to the setting aside was so unreasonable so that the order suggested by Mr Harris is the right one.

6. I am also of the view that the letter by the defendants solicitors of 14 October 1998 in which it was said that the defendant was willing to agree that the judgment be set aside on the basis that the costs be to the plaintiff alters the situation. This would only have been so if, at that time, the plaintiff had been fully appraised of the defendant's evidence.

7. It was my belief, when I made the order nisi, that this case fell somewhere between the usual case, where the defendant should be ordered to pay the costs in any event, and the Kailey type of case, where the opposition is totally unreasonable and the plaintiff is ordered to bear part of the costs. I am still, after argument, of this view. Accordingly, the order nisi is made absolute.

8. There remains the question of the costs of this application. There seems no obvious reason why costs should not follow the event, especially in the light of an offer by the plaintiff by letter of 18 November 1998 that the plaintiff was prepared to agree that the order nisi stand. Accordingly, I make an order nisi that the defendant pay the costs of this application in any event.