TOP POINT LTD v. K&L GATES (a firm of solicitors)

HCA 1088/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1088 OF 2011

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BETWEEN

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D E C I S I O N

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1.  The plaintiff applied for summary judgment. The claim is for US$4.5 million with interest. I decided on 8 December 2011 that the defendant should have unconditional leave to defend the claim. I made a costs order nisi that the costs of the application be in the cause. My reason for this order was that the defendant’s arguments in defence only came out in the defence affidavits.

2.  The defendant has applied to vary the costs order nisi.  It seeks an order that the costs of the application be in the cause up to and including 16 September 2011 and the costs thereafter including those for the hearing on 6 December 2011 be paid by the plaintiff to the defendant forthwith.  Alternatively, the date for the costs to be in the cause can be extended up to and including 21 November 2011 and the costs thereafter be paid by the plaintiff to the defendant forthwith.

3.  The defendant’s reason for the first proposed order is that the defendant had filed two affidavits in opposition by 9 September.  Seven days thereafter should be enough for the plaintiff to digest the defendant’s case and appreciate that the defendant had an arguable defence.  The plaintiff should therefore stop proceeding with the application for summary judgment from 16 September onwards.  However, the plaintiff, after being aware of the defendant’s grounds of defence, continued with the application which it did not win.  The plaintiff should therefore pay the defendant the costs of the application after 16 September 2011.

4.  If the first proposed order should not be accepted by the court, the defendant proposed to extend the period for costs in the cause up to 21 November.  The reason being that the defendant had filed two more affidavits on 7 November which revealed further grounds of defence.

5.  On 21 November, the defendant’s solicitors further wrote to the plaintiff’s solicitors saying:

“There can be no doubt that there are a number of triable issues arising from the parties’ respective Affidavits and Affirmations. It is respectfully clear that this Action is not suitable for summary determination. We consider that your client knew or ought to have known (and been advised) from the outset that this Action was not at all suitable for summary determination. Indeed, the Firm raised this issue in Mr Tso’s 2nd Affidavit on 4 August 2011.

We invite you to withdraw the O14 summons (the ‘summons’) and vacate the hearing on 7 December 2011, with directions to be agreed between us for the further conduct of this Action. We are willing to consider any sensible and reasonable proposal in terms of costs of the summons, notwithstanding the fact that prima facie we are entitled to seek costs of and occasioned by the summons from your client.

Please revert to us within the next 7 days to confirm your agreement to withdraw the summons, failing which we shall brief Counsel to attend the hearing on 7 December 2011 and as and when the summons is dismissed, we shall place this letter before the Court and seek costs above the party and party scale against your client.”

6.  The plaintiff disagreed and continued with the application.

7.  In applying to vary the costs order nisi, the defendant also relies on the duty of the parties in O.1A r.3 of the Rules of the High Court to assist the court to further the underlying objectives of the rules.

8.  I think the alternative proposed order appears to be reasonable as the two affidavits filed on 7 November contain material evidence which I have taken into account in arriving at my decision of 8 December 2011 (see paras 27, 40-41 and 55-56 of my decision).  The letter from the defendant’s solicitors dated 21 November was also a clear and timely invitation to the plaintiff to consider whether it should still push ahead with the application.

9.  The plaintiff opposes this application to vary the costs order nisi.

10.  The first argument is that I did not dismiss the plaintiff’s application for summary judgment.  The defendant therefore cannot rely on O.14 r.7(1) of the Rules of the High Court to seek costs against the plaintiff.  That argument is no doubt correct.  However, the defendant is not relying on O.14 r.7(1) to seek costs for the whole application.  It merely says that the plaintiff should pay costs from after 21 November as it was unreasonable for it to have pushed on with the application after receiving the letter of 21 November.  Hence, I do not accept the plaintiff’s first argument.

11.  The plaintiff then argues that the costs order nisi I made is the usual order to accompany unconditional leave to defend.  That is also correct on the basis of the matters known to me as at 8 December.  However, I now understand that there was the invitation not to proceed further in the letter of the defendant’s solicitors dated 21 November.  I would go further and say that the plaintiff should have reconsidered the merits of its application after receiving the further affidavits on 7 November even without the defendant’s invitation to do so.  The second argument therefore has no merit.

12.  The third argument of the plaintiff is that the defendant’s affidavits filed up to 9 September were insufficient to defeat the application for summary judgment.  That is correct.  I have already indicated that it is the alternative proposed order that I find reasonable.

13.  The plaintiff’s fourth argument is that the letter dated 21 November from the defendant’s solicitors did not contain any offer and was not a Calderbank offer.  Hence, the plaintiff was not required to beat any offer and should not be ordered to pay costs for failing to beat any.  However, I take the view that this letter was a clear and timely invitation to the plaintiff to consider a reasonable way to dispose of the application.  It was to open a dialogue for such purpose.  If the plaintiff should have adopted a reasonable attitude, this letter would have resulted in the withdrawal of the application with costs be in the cause.  But the plaintiff did not respond in a reasonable manner.  It counter-proposed payment of security by the defendant in return for leave to defend.  That however was not my decision.

14.  The plaintiff’s final argument is that the application for summary judgment had not been dismissed and it was not unreasonable for the plaintiff to pursue the application after 21 November. This was particularly so when the defendant had made no offer of costs.  Hence, the plaintiff had not breached its duties under O.1A r.3.

15.  I think this is a repetition of the second and fourth arguments put together and I disagree with it.

16.  In the premises, I do vary the costs order nisi. I order that the costs of the plaintiff’s application for summary judgment up to and including 21 November 2011 be in the cause and such costs thereafter and including the hearing on 6 December 2011 and this application to vary be paid by the plaintiff to the defendant forthwith.  I also certify the matter fit for leading and junior counsel.  The amount of costs to be paid forthwith is to be assessed summarily by me at a 9.30 hearing to be fixed by the parties unless the parties can agree on such amount.