CHEVALIER (E & M CONTRACTING) LTD v. ROTEGEAR DEVELOPMENT LTD AND OTHERS

HCA1717/1990

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.1717 OF 1990

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D E C I S I O N

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1. This is the hearing on the costs nisi upon my decision handed down on 9 June 2005 in striking out the plaintiff’s claim for want of prosecution. 

2. I have made an Order Nisi that subject to any order for costs in favour of the plaintiff, the plaintiff do pay the costs of the 5th defendant in the plaintiff’s action (including the summons herein), to be made absent after 14 days.

3. In the judgment, I stated at paragraph 53 that, in this case, I found it had been demonstrated beyond per adventure that the plaintiff had no real intention of prosecuting to trial the action as presently constituted.  The length of delay was one thing; but the whole course of conduct and attitude of the plaintiff had proved the special evidence for an abuse of process.   I found the conduct of the plaintiff exceptional in the sense that it never intended to comply with the scheme of rules that, after the framing of the issues and preparing for trial on those issues, the plaintiff should have set the costs down for trial.

4. Mr Pierrepont, for the 5th defendant, now applies for the cost of the action to be taxed on an indemnity basis.  Alternatively, he asks for costs on a party and party basis up to the end of 1994, after the last step in the proceedings (being the costs hearing before Barnett J on 1 September 1994) was taken by the plaintiff, and thereafter, costs be on an indemnity basis.

5. On the other hand, Mr Shaw for the plaintiff argues that:

(i)	the costs order should be proportional in that the 5th defendant should only be entitled to 50% of the costs as it did not succeed on all the issues in the summons;
(ii)	the taxation should not be on an indemnity basis because the plaintiff’s conduct in defending the present application was not abusive in itself.

6. The general rule is that costs should follow the event unless there are circumstances suggesting that some other order should be made.      The only fair basis in deciding the part of costs of which a successful party should be deprived is to ask how much time spent was taken up in dealing only with the allegations which it failed (see In re Elgindata Ltd (No. 2) [1992] 1 WLR 1207).

7. And In the Matter of Chor Lau Heung Restaurant Co. Ltd., HCCW 63/1999 (3 May 2000), Madam Le Pichon J (as she then was) summarised the applicable principle as to indemnity costs as set out in the judgment of the Court of Appeal in Sung Foo Kee Ltd. v. Pak Lit Co. [1996] 3 HKC 570C to 576H as follows:

“	(1)	In Hong Kong, judges have a discretionary power to direct the taxation of the receiving party's costs on the basis which they consider to be appropriate to the case, including the indemnity basis.
	(2)	This is not a discretion limited by indications in previous cases as to the sort of special or unusual features (there does have to be some special or unusual features) which could justify an award of indemnity costs. The examples given by Godfrey JA in Overseas Trust Bank Ltd v. Coopers & Lybrand [1991] 1 HKLR 177 at 182J-183C are not to be taken as determinative of the sort of case in which indemnity costs may be ordered.
	(3)	When they consider it appropriate, judges should not be slow to make orders for the receiving party's costs to be taxed on that basis.”

8. I recognise that the discretion is unfettered, but it is helpful to refer to the exercise in like circumstances.

9. In Grovit v. Doctor and ors. [1997] 1 WLR 640, the English House of Lords in dismissing the appeal where an action for want of prosecution of a litigation was struck out on the basis that the plaintiff had no intention to bring to a conclusion as amounting to an abuse of process, ordered the costs of the appeal on an indemnity basis.  

10. In Kingly Commodities Co. Ltd. v. Kang Chong Soo HCCL28/1988, Stone J struck out the actions for abuse of process and awarded costs partly on party and party basis and partly on an indemnity basis, the watershed being the end of the year which the last step in the proceedings was taken by the plaintiff.

11. Mr Shaw argued that the 5th defendant should only get 50% of the costs.  There were three bases on which the application was argued:  First, the Birkett v. James jurisdiction; secondly, failure to set down the action as per the order of the Master; and thirdly, the Grovit v. Doctor jurisdiction.   Mr Shaw said that in the Birkett v. James jurisdiction, the 5th defendant did not succeed to prove prejudice.  And as to the failure to set down as per an order, the court had found that the order was overtaken by events.    Mr Shaw said the plaintiff was, so to speak, successful on two out of three issues, and a 50% costs order would be fair in the circumstances.

12. On the other hand, Mr Pierrepont submitted that the Birkett v. James point and the failure to set down as per the order of the Master were arguments all wrapped up in the Grovit v. Doctor argument, and they were necessary background and natural development of the main argument of abuse of process. 

13. I agree that the Birkett v. James point and the failure to set down as per the order of the Master are not distinct issues.  Hence, I do not find that a proportional costs order should be made. 

14. Mr Shaw pointed out that there were three periods of activities in this action: First, the active period up to 1 September 1994, which Mr Pierrepont could be taken as conceding on the party and party basis;  secondly, the period of inactivities up to January 2005 where there were only correspondence between the parties; and thirdly, the application herein.   Mr Shaw pointed out that it is not actually meaningful to award costs on an indemnity basis for the second period, because it was actually a period, by and large, of inactivities.  And as to the application itself, Mr Shaw submitted that the conduct of the plaintiff in defending the application was not abusive in itself.  The plaintiff has conceded that there were inordinate and inexcusable delays from the start, and the hearing was mostly an argument on the law.  

15. Mr Shaw also referred to Kingly and submitted that the conduct of the plaintiff in the that case was much more abusive.  In Kingly, the plaintiff filed affidavits stating they had the intention to set the case down for trial in support for a prohibition order against the defendant, where, at the end of the day, the judge found there was no such intention.   The judge commented that it was an abuse in interfering with the liberty of the defendant on such application of provisional order.  

16. I am fully cognisant of the special circumstances in Kingly, but I do not intend to scale weight the type of abuse of process in one case with another.  Suffice it to say that, in the present case, the action was struck out for being an abuse of process, and I see fit that the costs should be on an indemnity basis.  I shall to make a split order as in the case of Kingly, and the watershed in the present case being the end of 1994. 

17. As to costs of today, costs be to the 5th defendant on an indemnity basis.