GOLDLION PROPERTIES LTD AND OTHERS v. REGENT NATIONAL ENTERPRISES LTD

HCMP5273/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 5273 OF 2003

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RULING ON COSTS

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1. Two summonses are before the court to vary the order nisi made by me on 29 January 2007 when I ordered that the defendant’s costs of and incidental to the Originating Summons be taxed if not agreed and paid by the plaintiffs.

2. The intervener’s summons seeks a variation to provide that the intervener’s costs as well as those of the defendant are paid by the plaintiffs.

3. The plaintiffs’ summons seek a variation to provide that the plaintiffs’ costs in relation to the issue as to whether there should be a split trial which resulted in my ruling on 2 November 2006 should be paid by the defendant and/or the intervener.

4. The Originating Summons against the defendant was issued in December 2003.  The only issue raised on affirmation over the next two and a half years was the validity of the defendant’s purported exercise of a right of termination under Clause 13.2 of the Sale and Purchase Agreement.  That was an issue appropriate to be dealt with under the procedure of an Originating Summons even though there was to be cross-examination of one of the defendant’s deponents, Mr Joseph Lo.

5. It was on that basis that the hearing dates in November were fixed. 

6. The subsequent application by the intervener in September to become a party to the proceedings, which was ordered by consent, changed that position.  As I stated in my ruling on 2 November 2006, the issue raised by the intervener was primarily one of fact and unsuitable for determination in Originating Summons proceedings.

7. With that background, I consider that the proposal put forward by the plaintiffs’ solicitors (Messrs Johnson, Stokes & Master) in their letter of 28 October 2006 to the other parties a sensible one, namely that the hearing fixed for 1 to 3 November 2006 be confined to the “Clause 13.2 issue” (as had originally been contemplated when the dates were fixed).

8. From the point of view of the defendant, I consider it would have been reasonable to agree with this proposal, and not to have opposed the plaintiffs’ application to the court.  I do not consider that there would have been any significant prejudice to the defendant in Joseph Lo having to give evidence on two occasions, initially in relation to that “Clause 13.2 issue” and then later, after discovery, in relation to the “release issue”. 

9. I have considered Mr Harris’s submission that the issue of whether there should be a separate trial was a discrete issue and that costs should follow the event in relation to that issue and Ms Cheng’s opposing submission that it was essentially a housekeeping or case management decision and that costs should follow those of the trial.  

10. In my view it would not be appropriate to attempt to slot the application into one of those categories for the purpose of deciding the question of costs, but rather to recognize all the circumstances of the application.

11. I recognize that the necessity to decide the issue as to whether there should be a split trial arose from legal proceedings brought by the plaintiffs in which they were ultimately unsuccessful and that it was an issue that had to be determined before the trial commenced.  On the other hand, I also bear in mind that the defendant’s attitude had the effect of prolonging the hearing in relation to this preliminary issue and increasing the legal costs incurred.  In my view as between the plaintiffs and the defendant, it is appropriate to make no order as to costs in relation to the issue of whether there should be a split trial, but to order that, with that exception, the defendant’s costs of and incidental to this Originating Summons be taxed if not agreed and paid by the plaintiffs.

12. In contrast, I consider that the intervener had a justifiable reason to oppose the plaintiffs’ application for a split trial.  Insofar as it was concerned there was an overlap between the issue on the “Clause 13.2 issue”, with which it was not directly concerned, and that on the “release issue” with which it was concerned.  It had not until Mr Huggins’ reply on 2 November 2006 received any assurance from Mr Huggins that during that part of the proceedings relating to the Clause 13.2 issue, he would not cross-examine Mr Lo on the release issue or rely upon the affirmation of Mr Robert Lynn of 31 October 2006.  In my view the intervener’s costs in relation to the issue of whether there should be a split trial should be paid by the plaintiffs.

13. Insofar as the intervener’s costs thereafter during the trial are concerned, I have come to the conclusion that they should be paid by the plaintiffs.  Early questions by Mr Huggins of Mr Lo in cross-examination would have at least raised concerns about whether his submissions on the “Clause 13.2 issue” might impinge on matters relevant to the “release issue”.  The intervener’s solicitors sought reassurance from the plaintiffs’ solicitors during a break in the trial by letter dated 10 November 2006.  The refusal by the plaintiffs’ solicitors in their reply of 16 November 2006 to give an undertaking limited to even part of the intervener’s concerns made it reasonable that it should be represented at the resumed trial thereafter.

14. I order that the intervener’s costs of and incidental to the plaintiffs’ Originating Summons dated 3 December 2006, including its costs of 1 and 2 November 2006, be taxed if not agreed and paid by the plaintiffs.

15. Insofar as the costs of the “costs hearing” on 4 June 2007 are concerned, I make the following order nisi that unless any party applies to be heard on the question of these costs within 14 days, there be no order as to costs between the plaintiffs and the defendant and the plaintiffs should bear the intervener’s costs.