THOMAS HONG CHI FAT v. ALEXANDER SUNG WAI YIP

DCCJ 3196/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO.3196 OF 2004

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REASONS FOR DECISION

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1. This is the Plaintiffs’ application by way of summons dated 1^st November 2007 to vary a costs order nisi made by me against them in my written decision handed down on 12^th September 2007 (“my costs Decision”). 

2. At the conclusion of the hearing I dismissed the Plaintiffs’ summons and ordered them to pay the Defendant’s costs of this application, to be taxed if not agreed. I also said to the parties that brief reasons for my decision would be handed down later. The following are my reasons for decision.

Brief Background

3. On 10^th March 2006, following concession by the Defendant on liability in the form of a consent order dated 20^th October 2004, I handed down a written assessment concerning damages suffered by the Plaintiffs (“the Assessment”). The Plaintiffs’ damages arose from an abortive sale to them of a landed property which the Defendant held out to have authority to sell but in fact he had not. After trial I found that the market values of the property remained unchanged on the material dates. The Defendant was only liable to the Plaintiffs for a sum of $3,810 as damage. This head of damage was admitted without any contest on the first day of the trial. The other three heads of claims, namely the price difference of the property between the date of contract and breach, the loss of use of stamp duty and legal fee as well as loss represented by additional rental during the period of renovation of the substitute premises, amounting to a total of $157,926.25, were all dismissed.

4. In the Assessment I grant a costs order nisi in favour of the Plaintiffs with a certificate for counsel (“1^st costs order nisi”). The Defendant applied to have this 1^st costs order nisi varied on 20^th March 2006 (“costs variation application”).

5. The costs variation application was heard before me on 28^th August 2007. Except the 1^st Plaintiff who was appearing in person, the other two parties were represented by counsel. After hearing counsel’s submission and the 1^st Plaintiff who adopted the 2^nd Plaintiff’s argument, I handed down my costs decision on 12^th September 2007 (“costs Decision”) reversing my 1^st costs order nisi. By my costs Decision the Plaintiffs were ordered to pay the Defendant’s costs of the assessment (“the varied costs order”).

6. For the costs variation application I made a usual costs order nisi against the Plaintiffs in favour of the Defendant (“2^nd costs order nisi”). This application is made by the Plaintiffs to vary this 2^nd costs order nisi. By the Plaintiffs’ summons, the Plaintiffs applied for orders that:

i)	the 2nd costs order nisi be varied;
ii)	the 1st costs order nisi be restored; and
iii)	that the Defendant is to pay them the costs of the hearing on 28th September 2007.

7. In relation to this application, the two Plaintiffs filed and served two affirmations respectively dated 1^st November and 19^th December 2007 in support of their applications.

Grounds of the Application

8. As can be seen from the above brief background, the scope of the present application is in fact very narrow. It is a hearing to decide the question of costs of the costs variation application heard on 28^th August 2007. In other words, it is a hearing to decide whether the 2^nd costs order nisi should be confirmed or reversed. It is neither a hearing to vary again the 1^st costs order nisi, which has been reversed and made absolute, nor an application for leave to appeal. In my view, the only issue is whether there is any ground justifying a departure from the usual rule of “costs to follow the event” in considering the costs of the costs variation application.

9. The Plaintiffs relied on the said two affirmations. The 2^nd Plaintiff also supplemented their grounds by oral submission. It is fair to summarize their grounds as follows:

i)	the Defendant had, when holding out to have authority to represent the other owner of the property in question, signed a written declaration with an effect that he would indemnify the Plaintiffs for “…all damages and costs as a result of the authorization.”;
ii)	paragraph 2 of the consent order on liability with quantum to be assessed entered into by parties on 20th October 2004 spelt out that “costs of this action be to the Plaintiffs, to be taxed if not agreed.” As such, the Defendant should be liable for the Plaintiffs’ costs of the assessment regardless of whatever outcome of the assessment would be;
iii)	my understanding of the principles in Anglo-Cyprian Agencies Ltd v Paphos Industries Ltd [1951] All ER 873 was wrong. The 2nd Plaintiff submitted that in Anglo-Cyprian, the defendant offered to pay the amount awarded by the court whereas in the present case, the Defendant refused to pay the awarded amount even if it was contained in one of their Calderbank letters to the Defendant;
iv)	a damage of $3,810 cannot be regarded as trivial. It is one out of the Plaintiffs’ four heads of claims. It follows, the 2nd Plaintiff said, that it amounts to 25% of the Plaintiffs’ total claims;
v)	the Plaintiffs have good reasons to sue the Defendant for completion, contrary to my finding in the Assessment (paragraph 37) handed down on 10th March 2006; and
vi)	the Defendant deposited no money into court. They had even seen fit to withdraw the $10,000 already deposited into court.

10. I note that the first two grounds above in fact relate to costs of the substantive assessment hearing. However, they have neither been raised in the assessment hearing nor the costs variation hearing. The 2^nd Plaintiff offered no explanation as to why these grounds were not argued at the last hearing, which was particularly set down for disposal of the costs of the assessment.  She alleged that she believed their legal advisors had taken care of everything. Miss Ching of the Defendant submitted that the parties then knew well that the said consent order on costs only covered costs of action on liability but not quantum otherwise counsel should have argued that ground before me. That was why counsel for both parties did not consider necessary to deal with their consent order at the last hearing.

11. It is apparent that all the Plaintiffs’ grounds touch upon the merits of the assessment and the costs thereof. Even assuming, and which I do not accept, that they are sound argument, I am afraid that they cannot assist the Plaintiffs in the present application, which only concerns the costs of the costs variation application. The assessment of damages and the costs thereof have been duly argued by the parties who (except the 1^st Plaintiff) were legally represented and appeared by counsel. The Assessment and costs Decision have been handed down. All the orders have been finalized and sealed. It is inappropriate and impossible for me to vary my said orders even if I were wrong. The only way to correct mistakes (if any) in my Assessment and my costs Decision is for them to lodge an appeal. I therefore do not consider it necessary for me to consider the merit of the above arguments, which all relates to merits of the assessment of damages, and the costs thereof, and have all been finalized.

12. Of course, if in the appeal my decisions in the Assessmentare overturned, the varied costs order will fall automatically. Alternatively, if I have also wrongly exercised of my discretion in arriving at the varied costs order, it will also be set aside. However, my decisions on both have not been overturned. As such, the determination of the costs of the costs variation application must be on the premises that my decisions in the Assessment and costs Decision are correctly made. I do not consider the Plaintiffs’ above argument assist them on why the usual rule of costs to follow the event should not be applicable. I do not consider the discretion in making the 2^nd costs order nisi wrongly exercised.

13. I have once thought of considering the present application as one for leave to appeal. However, I understand that the Plaintiffs had lodged an application for leave to appeal shortly after the handing down of the Assessment but for reasons unknown to the court no hearing has been restored. At the present hearing the 2^nd Plaintiff has indicated that they have other considerations on whether to pursue the leave to appeal. I would therefore refrain from expressing my views on whether the above grounds are sufficient grounds for their leave to appeal application. 

14. For reasons above I dismiss with costs the Plaintiffs’ application and confirm the 2^nd order nisi in favour of the Defendant against the Plaintiffs, to be taxed if not agreed.