SHOEI CO LTD v. LEROY ORIENT CO LTD AND OTHERS

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO.30 OF 1997

(Formerly ACTION NO. 10367 of 1996)

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Review of Taxation

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1. This is a review of taxation at the instance of the plaintiff, who is the paying party. The taxation arose from a consent order of 28 April 1997, the material terms of which are: "costs of today and the costs thrown away by the adjournment be to the 2nd defendant and to be taxed, if not agreed, and paid forthwith." This order was agreed following the 2nd defendant's summons to strike out the statement of claim and to dismiss the plaintiff's claim against the 2nd defendant. The consent order also gave the plaintiff leave to prepare an amended statement of claim and adjourned the strike out summons, which I understand from the parties has not yet been restored. The original statement of claim was replaced by an entirely new version.

2. The plaintiff's complaint, in general terms, is that the bill drawn by the 2nd defendant includes not merely the costs of the day, but all the 2nd defendant's costs in the proceedings to the date of the order. Mr. Bowers for the plaintiff submitted that the costs order, being a consent order and therefore a contract between the parties, was understood by the plaintiff to reflect only the costs specifically incurred in respect of the day of the adjournment. Mr. Bowers agreed however that this understanding of the plaintiff had found expression neither in the consent order itself nor elsewhere. In the circumstances, the meaning and effect of the costs order must, like any other contract, be construed objectively and without regard to the unexpressed intentions of individual parties.

3. The 2nd defendant contends that the addition of the words "costs thrown away by the adjournment" to the order "costs of today", creates a further category of recoverable costs separate from those directly attributable to the date of the adjournment itself. The plaintiff disagrees and contends that the latter part of the order adds nothing to the former. I accept that the effect of such a costs order is not necessarily confined to the particular costs of the date of the adjournment, and that it can additionally comprehend, depending on the circumstances, costs of work undertaken prior to the order and which the order has rendered redundant.

4. Whilst the Hong Kong Order 62 RHC is in substantially different terms from its English counterpart, the definition of "costs thrown away" appearing in the English Order 62 rule 3, is of assistance. It reads:

5. The "costs thrown away" contemplated by the order of 28 April 1997 are therefore the costs of that part of the proceedings which have been rendered ineffective by the combined effect of the order itself and of the plaintiff's abandonment of its original statement of claim.

6. At the taxation hearing the arguments were substantially resolved in favour of the 2nd defendant as taxing party, however deductions were applied to reflect aspects of the work charged which would continue to be of value after the amendment proposed by the consent order. The issue therefore remains the same on review; namely, what work was thrown away as ineffective following the order of 28 April 1997.

7. Mr. Chan for the taxing party has pointed out that the plaintiff's statement of claim was deleted following the consent order, and an entirely new amendment filed in its place. With the assistance of a detailed breakdown of the respective pleadings in the two versions Mr. Chan has also illustrated that the causes of action relied upon by the plaintiff in the amended version were themselves different from those in the original. Mr. Bowers for the plaintiff agreed this to be the case, but argued that the new causes of action were based on the same set of facts.

8. I am satisfied that by the deletion of the statement of claim, and by its replacement in entirety with an amendment which pleads different causes of action, the proceedings up to the date of the order have been rendered substantially ineffective. Allowance has already been made in the taxation for such part of the work done by the 2nd defendant as would remain of value in the litigation. The remainder, which amounts to the greater part by far of the work done, I find to have been thrown away and to be taxable by the 2nd defendant under the costs order.

9. With their application for review of the taxation the plaintiff's solicitors filed a 35 page list containing 126 individual objections to the results of the taxation. At the review however, submissions were confined to the issue of principle arising from the interpretation of the costs order. The written objections were not individually canvassed, no doubt for the reason that they would largely stand or fall with the overall interpretation of that order. I therefore find it unnecessary to provide individual answers to each objection, the vast majority of which duplicate the objection on interpretation already decided, and others of which have anyway received partial recognition at the taxation by reductions in charges to reflect the continuing value of work done. I have re-considered these latter items and find no reason to change any of my decisions.

10. There is however one particular item of objection which does not fall within the decision on the interpretation of the costs order. This is:

Items 82 & 83 - brief fees for John Bleach Q.C. and for Maurice Chan. This was argued by the plaintiff to be allowable under the order only on a refresher basis, on the ground that a substantial portion of the brief fee would cover work remaining of value in the ensuing proceedings. In principle the plaintiff's argument is correct and a brief fee should not usually be taxable in full at this stage. However the brief was to advise on the merits of the proposed strike out and to attend the hearing of that summons. The consent order, and the deletion of the original statement of claim and its replacement by a version pleading different causes of action, has meant that there is now nothing of senior and junior counsel's work remaining of value to the continuing litigation. I find that the brief fees are taxable at this stage in the circumstances. The issue of the quantum of the respective fees is also challenged, but again is decided in the 2nd defendant's favour as I find neither of them excessive.

11. The submissions of the plaintiff on this review are therefore dismissed and there will be an order for costs in favour of the 2nd defendant.