CRAFT BAMBOO HOLDINGS LTD v. RICHARD PAUL COLEMAN AND ANOTHER

HCA 2665/2017

[2024] HKCFI 2482

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2665 OF 2017

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BETWEEN

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DECISION
(On Variation of Costs Order Nisi)

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A. INTRODUCTION

1.  This Court handed down a judgement on 6 June 2024, after a 7 day trial, and among other things, gave judgment to P against D1 and D2 jointly and/or severally for a total amount of HKD 19,723,449.80 and dismissed Ds’ counterclaim (“Judgment”). In the present decision, the Court will continue to adopt the nomenclature and abbreviations in the Judgment unless otherwise indicated.

2.  This Court further ordered on nisi basis D1 and D2 to pay P’s costs of this action including the counterclaim and the Amendment Summons and all reserved costs with certificate for two counsel, to be made final after 14 days (“Order Nisi”).

3.  On 18 June 2024, P issued a summons to vary the Order Nisi (“Variation Summons”), which was supported by an affidavit by a Mrs Li Lau Lai Hing Joanna (“Mrs Li”), a partner of P’s solicitors King & Company. P is seeking that the Order Nisi be varied to costs of the action from 21 August 2020, including all costs reserved and costs for the trial be paid by Ds to P on indemnity basis with certificate for two counsel, to be taxed if not agreed.

4.  On 19 June 2024, this Court gave directions to parties’ respective solicitors by letter indicating the Court’s intention for the Variation Summons to be dealt with on paper unless there was written objection from the parties. At that time, Messrs Howse Williams (“HW”) were still solicitors on the court record acting for Ds.

5.  As P indicated no objection to the Variation Summons to be dealt with on paper, and with no response from HW within the stipulated deadline, the Court proceeded to give directions on 11 July 2024 for the Variation Summons to be dealt with on paper, and various directions including leave for Ds to file any affirmation in opposition to Mrs Li’s affirmation, and the time for lodging written submissions (“Directions Order”). On 12 July 2024, the Court received a letter from HW formally informing the Court that Ds had terminated their retainer with HW and had signed notices to act in person on 19 June 2024 but the originals had not yet been filed. It was further confirmed by HW in their letter of 12 July 2024 that they had forwarded a copy of the Directions Order to Ds. As at handing down of this decision, the originals of the notices to act in person had still not yet been filed in court.

6.  HW were solicitors on record for Ds when the Variation Summons was served on HW, and in light of the contents of the letter of 12 July 2024 from HW, this Court is satisfied that the contents of Variation Summons and the Directions Order have been brought to Ds’ attention, and that they are fully aware of this application.

7.  So far, no affidavits and/or written submissions have been received from Ds and/or HW.

B. P’S GROUNDS FOR VARIATION

8.  P relied on two letters produced in Mrs Li’s affirmations, namely:

(a) A letter marked “3^rd Letter” dated 23 July 2020 containing a “sanctioned offer” pursuant to Order 22 of the Rules of the High Court (“Sanctioned Offer”); and

(b) A letter dated 30 August 2023 containing an offer to settle before trial (“Pre-Trial Offer”).

9.  As ultimately P has done better than the proposals in both the above letters, P should be entitled to costs on indemnity basis.

C. RELEVANT LEGAL PRINCIPLES

10.  The relevant provisions regarding sanctioned offers are set out in Order 22, rule 24 of the Rules of High Court (Cap 4A).

11.  Suffice to say, the objective of the sanctioned offer regime has been reiterated by Recorder Wong SC in Qvist Henrik v Clatronic Far East Ltd [2020] 1 HKLRD 703 at §17: -

“17. As summarised by HHJ Mimmie Chan (as she then was) in Maysun Engineering Co Ltd v International Education and Academic Exchanges Foundation Co Ltd:

‘In McPhilemy v Times Newspapers Ltd (No 2) [2002]1 WLR 934, it was made very clear that an order under rule 36.21 of the English rules, which is equivalent to O.22 r.24, carries no implied disapproval of the defendant's conduct, nor any stigma. The orders are aimed to provide a means of achieving a fairer result for a plaintiff, to compensate the plaintiff for having to come to court to bring proceedings and for the incidental inconvenience, anxiety, distress and disruption to its business (Petrotrade Inc v Texaco Ltd [2002] 1 WLR 947), which are not compensated by orders for costs in the proceedings, even when they are made on an indemnity basis. These principles were recognised and accepted by Johnson Lam J in Golden Eagle International (Group) Ltd v GR Investment Holdings Ltd [2010] 3 HKLRD 273…’ ”

(emphasis added)

12.  Thus, a successful plaintiff is entitled to costs on an indemnity basis after the last day in which the defendant could have accepted the sanctioned offer without leave of the court unless it is unjust to do so (see Chan Wai Chung v China Travel Tours Transportation Development (HK) Ltd and Another [2023] HKCFI 1442 at §30).

13.  The onus is on the defendants to demonstrate the circumstances that would render an indemnity costs and enhanced costs order unjust, which includes the factors stated in Order 22 rule 24(4), as held by Deputy High Court Judge William Wong SC in Wah Lun International Development Limited v Lau Chiu Shing, unreported, HCA 1429/2015, 8 July 2021 at §7.

D. DISCUSSION AND CONCLUSION

14.  I am satisfied that the Sanctioned Offer was made in accordance with the requirements as stipulated in Order 22 rule 5. It is also indisputable that P has done better than what was proposed in the Sanctioned Offer. The question is whether it is unjust to make an order under Order 22 rule 24(2) and rule 24(3).

15.  The Sanctioned Offer was made in July 2020 more than three years prior to the commencement of trial in September 2023 and the proposed settlement sum was further lowered closer to the trial date by way of the Pre-Trial Offer.

16.  In accordance with Order 22 rule 5, Ds had until 20 August 2020 to accept the Sanctioned Offer. They had failed to do so and did not provide any reasons for refusing the same.

17.  The parties exchanged the first round of witness statements in around October 2018 and had already filed their respective lists and supplemental list of documents by the time the Sanctioned Offer was made.

18.  As submitted by P, there had been sufficient information and ample time for Ds to review the merits of the parties’ cases and Ds were legally represented throughout the pre-trial and trial stages. After service of the Sanctioned Offer, Ds had not raised any inquiries nor sought for further information from P so as to assist them in a proper assessment in the event that there were any uncertainties. I accept P’s submissions and find there were no reasonable efforts made by Ds to settle the matter as early as possible.

19.  P was clearly the successful party in this action.

20.  Having considered all the circumstances of this case, I am satisfied that the order sought by P is not unjust and I am prepared to vary the Order Nisi and grant an order in the terms sought by P. The costs of the Variation Summons shall be on the same basis.