LIU MA CHEUNG AND OTHERS v. LIAU YIN FU

HCA181/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 181 OF 2004

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DECISION

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1. By a Judgment handed down on 26 October 2007, I  dismissed the plaintiffs’ action against the defendant and the defendant’s claims against the third parties and made the following orders nisi on costs (“the costs order nisi”) under Order 42 rule 5B(6) of The Rules of the High Court, Cap. 4:

(a)	The plaintiffs do pay the defendant his costs of this action, including all costs reserved and all costs which the defendant is ordered in (b) below to pay to the third parties, to be taxed if not agreed.
(b)	The defendant do pay the third parties their costs of this action, including all costs reserved, to be taxed if not agreed.

2. On 8 November 2007, the plaintiffs issued a summons against both the defendant and the third parties asking for variation of paragraph (a) of the costs order nisi “to the extent that the Plaintiffs are not required to pay all costs which the Defendant is ordered to pay the 1^st and 2^nd Third Parties in this action” and for costs of the application.

3. Having served the summons on the third parties, Messrs Kevin Li & Co., solicitors for the plaintiffs, wrote by letter dated 10 December 2007 to Messrs Wilkinson & Grist, solicitors for the third parties, contending that the plaintiffs’ application did not concern the third parties and they saw no reason why Messrs Wilkinson & Grist should appear.  By letter dated 12 December 2007, Messrs Wilkinson & Grist replied agreeing that the plaintiffs’ application did not concern the third parties and “therefore our clients and our attendance to the hearing returnable on 14^th December 2007 for your client’s intended application to vary the costs order can be excused”.  By letter also dated 12 December 2007, Messrs Wilkinson & Grist wrote to my clerk stating that “the attendance of the Third Parties and their legal representatives ... can therefore be excused” and asked my clerk to place their letter before me for my “review and consideration”.

4. It would appear from the summons that the plaintiffs accepted that they were liable for part of the costs which the defendant was ordered to pay the third parties and asked for a variation so that they would not be required to pay all the costs.

5. Mr Benjamin Chain (who did not appear at the trial) was brought in on the plaintiffs’ variation summons and he argued that:

“	on the facts of this case, it would not be fair to Order the Plaintiffs to bear the Defendant’s costs of the failed negligence claim, or at least the bulk thereof”.

6. I heard the parties on costs at the end of the trial.  The arguments which Mr Chain put forward could and should have been, but were not, canvassed by Ms Jasmine Yu who appeared for the plaintiffs at the trial.

7. Mr Chain submitted that:

“	The question whether a losing plaintiff should also bear the defendant’s costs which the defendant was Ordered to pay the third party depends on whether in the circumstances, those costs ought fairly also to be borne by the plaintiff :- Johnson v Ribbins [1977] 1 WLR 1459 at p. 1464A.
	If third party proceedings are properly instituted, normally the Defendant would have acted reasonably in joining the third party.
	But every case depends on the facts.”

Mr Chain went on to put forward the argument quoted in paragraph 5 above for reasons set out in paragraphs 8 – 12 of their written submission.

8. Johnson v Ribbins was a case in which at the trial of the action judgment was given for the defendant and the third party proceedings were dismissed. The judge ordered the costs of the third party as well as the defendant to be paid by the plaintiff directly, subject to her position as a legally aided party, in order that the plaintiff’s situation in regard to costs should affect the defendant and third party alike.  On appeal by the third party from the order as to costs, the third party contended that the defendant should be ordered to pay the third party’s costs of the third party proceedings.  The Court of Appeal varied the order on costs by ordering the defendants to pay the costs of the third party adding those costs to their costs against the plaintiff.

9. This was precisely what I had done by way of the costs order nisi.

10. In Johnson v Ribbins, Goff JA said at pp. 1463 – 1464 that:

“

In the exercise of that discretion, however, in our judgment, the court should be guided by the principle that normally costs follow the event as is expressly provided by R.S.C., Ord. 62, r. 3 (2) and should, therefore, normally order the defendant, though successful in the action, to pay the costs of the third party if he also be successful. Then if in the circumstances of the case these costs ought fairly to be borne by the plaintiff the court will further order that they be added to the defendants’ costs of the action as against the plaintiff.”

11. In 1998, the 2^nd third party was instructed by the defendant to delineate Lots 325 and 326 (paragraph 16 of my Judgment).  If the 2^nd third party’s delineation (reproduced in paragraph 16 of my Judgment) was correct, there would have been no question of trespass on the plaintiffs’ Lot 329.  In about 2002, the defendant built a house on land delineated by third parties as Lot 325 (paragraph 4 of my Judgment).  The plaintiffs objected.  The defendant instructed the third parties again and by 10 December 2002 the third parties confirmed that the building works were being carried out within the boundaries of the defendants’ lots (paragraph 32 of my Judgment).  The defendant completed the construction of his own house.  On 31 January 2004, the plaintiffs issued the writ in this action against the defendant.  Given the defendant’s undoubted reliance on the expert opinion of the third parties, in my judgment, it was reasonable and proper for him to commence third party proceedings against the third parties.  Mr Chain conceded that the joinder of the third parties were reasonable.

12. Mr Chain also conceded that the plaintiffs’ cause(s) of action against the defendant and the defendant’s cause(s) of action against the third parties need not be the same.

13. Upon joinder, the defendant and the third parties had a common interest and they adopted a common front in trying to defeat the plaintiffs’ action against the defendant. 

14. The primary issue was one of demarcation – the location and boundary of Lot 329.  Correctness of the third parties’ demarcation of the location and boundary of Lot 325 helped the defendant and third parties on the primary issue.  The 2^nd third party gave evidence defending his own demarcation and criticising Mr Ted Chan’s demarcation.  The 2^nd third party retained 2 experts, Mr Gordon Andreassend and Dr Conrad Tang.  The defendant did not retain any expert.  There was no duplication of expenses on experts.  Had the defendant not joined the third parties, he would have to incur costs and expenses in retaining experts which might include the 2^nd third party.  At the trial, I was greatly assisted by Mr Chan Chi Hung SC, counsel for the third parties, and Mr Simon K.M. Lui, counsel for the defendant.  This was a case primarily on demarcation, but the plaintiffs’ written opening was completely silent on demarcation, location or boundary.  

15. In the event, the defendant and the third parties succeeded in defeating the plaintiffs’ action.  In my judgment and following the event and in the exercise of my discretion, the defendant’s costs of defending the plaintiff’s action ought in the circumstances of the case fairly to include the costs which the defendant is ordered to pay the third parties.

16. Mr Chain argued that the defendant’s claim for negligence was dismissed because the defendant did not really pursue the claim and relied on it. 

17. What I said in paragraphs 86 and 87 of my Judgment was that:

“	86.	The third party claims fall away in view of my conclusion that the plaintiffs’ action against the defendant is to be dismissed.
	87.	I shall nevertheless deal briefly with the third party claims in the event of my being held to be wrong in dismissing the main action.”

18. I decided against the plaintiffs in their action.  That is the basis on which costs should be considered and that is the event that costs should follow.  I did not decide in favour of the plaintiffs in their action.  That was not the event for me to follow. 

19. Mr Gordon Andreassend prepared 2 reports.  The first was a short report on methodology and he opined that the 2^nd third party’s approach was better than Mr Ted Chan’s.  In his second report, he commented on the 3 reports by Mr Ted Chan.

20. Dr Conrad Tang prepared 3 reports.  In his first report he opined that the 2^nd third party’s demarcation was correct and reasonable and more professionally competent than that of Mr Ted Chan.  His second and third reports were on methodology and demarcation.

21. Very little time was spent at the trial on the issue of negligence.  All in all, I am not persuaded that the amount of time and costs spent on the issue of negligence was significant enough to vary my costs order nisi.  In the exercise of my discretion, I decline to vary it.

22. I dismiss the plaintiffs’ summons issued on 8 November 2007 with costs to be paid by the plaintiffs to the defendant, to be taxed if not agreed.  I also order that the costs order nisi be made absolute.