CHINESE UNITED ESTABLISHMENT LTD. and Another v. NICE GAIN ENTERPRISES LTD. and Another

IN THE COURT OF APPEAL

1995, No. 214
(Civil)

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J U D G M E N T

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Mayo, J.A. (giving the judgment of the Court):

1. This is an appeal against an order made by Rogers J when he ordered that the costs of the Petition should be awarded to the petitioners.

2. The Petition was lodged pursuant to Section 168A of the Companies Ordinance, Cap 32. What is clear from the papers is that there was a substantial issue to be resolved between the two main protagonists in the litigation Mr Cheung Siu Ki one of the petitioners and Mr Pang Tung Choi the 2nd respondent.

3. The original agreement between these gentlemen was that Chinese United Establishments Ltd. (the company) would be used as a vehicle to undertake a joint-venture activity in Wuhan, China and that other parties would be invited to invest in the company with them.

4. In an affirmation dated 10 November 1994 Mr Pang put forward his version of what had occurred and substantially called in question the validity of the complaints referred to in the petition and made a number of counter allegations.

5. In the Reasons which were given by Rogers J for the order he made he refers to the potentially heavy nature of the litigation. He states that there was every prospect that had the parties been unable to reach some form of agreement the hearing might continue for between three to five weeks.

6. Early on the second day of the hearing counsel for the respondents made an open offer to purchase the petitioners' shares at a fair value to be assessed without any discount being included in the valuation to reflect the fact that the petitioners' interest in the company was a minority interest.

7. The hearing was adjourned to enable this offer to be considered. Agreement was eventually agreed in the form which is encapsulated in the Consent Order which was made on 5 October.

8. Various provisions are made in the order which are of relevance to this appeal.

9. The first is that the parties agree that the dismissal of the petition to wind up the company is made on the basis that there is no admission that the allegations made by Mr Pang are well founded.

10. The second is that the agreement is made subject to other litigation which is presently pending between the parties. It is obvious from this that some of the issues between the parties still remain outstanding and that these will only be resolved at the conclusion of all of the litigation between the parties.

11. The third is that the parties clearly envisaged that the issue of costs on the petition still had to be resolved between the parties. Indeed para 5 of the order provides that both parties could seek an order for costs and that any such application would be made on the basis that no admission was made by either party as to who would be entitled to the benefit of the costs order.

12. It is evident from a perusal of the judge's decision on costs that he was mindful of all these matters and in particular of the fact that there had at the time when he made his adjudication been no determination of the issues ventilated in the petition on their merits.

13. The way that the judge approached the problem was to consider what had been achieved by the petitioners. It had been as a consequence of the filing of the petition that the respondents had made the offer they had. It could be said that the action taken by the petitioners had achieved this.

14. The main contention advanced by the appellants is that it is wrong to conclude that the respondents have in fact been successful. There had been no admission as to liability and the whole issue between the parties remained at large. In considering whether it was a case where costs should follow the event it was necessary to consider what is meant by "event". Mr Tang QC called in aid the case of Howell v. Dering and Others [1915]1 KB 54 and in particular a passage at p63 of the judgment of Buckley LJ:

"In the next place, was the answer of the jury to that question an 'event'? In my opinion it was not. An 'event' within the meaning of the rule is an outcome of the presentation to the tribunal of some claim made by the plaintiff against the defendant which results in a finding that the plaintiff is or is not entitled to relief against the defendant."

15. Mr Tang submitted that there had been no determination of the issues between the parties. This is not really germane to the present case. The fact of the matter here is that the petitioner did substantially obtain the relief sought.

16. When the judge made the order he did he was exercising his judicial discretion. We can only interfere with the exercise of this discretion if we are satisfied that the exercise of this discretion was either wrong in principle or manifestly in error.

17. This cannot be said in the present case. Clearly the parties left open the question of costs when they agreed the terms of the consent order. The reasons given by the judge for making the order he did are valid reasons. We are not justified in interfering with this order and accordingly this appeal is dismissed with costs on a common fund basis.