ALVIERO MARTINI S.P.A. v. BUBBLE RETAIL MANAGEMENT LTD AND ANOTHER

HCA 1937/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1937 OF 2008

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DECISION  ON  COSTS

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1.  This is a decision on costs.  The plaintiff applied for summary judgment.  The application was disposed of by consent.  The parties agreed that the defendants should be given unconditional leave to defend.  The costs of the application up to 7 September 2009 were also agreed to be in the cause.  The costs of the application thereafter are to be determined by the court. 

2.  The plaintiff submits that the costs incurred after 7^th September 2009 should also be in the cause as the plaintiff has offered the defendant unconditional leave to defend on 11 September 2009.  The offer was made after the plaintiff’s consideration of the defendant’s affirmations in opposition.  The defendants however submitted that the costs after 7 September should be to the defendants in any event.

3.  Counsel for the plaintiff has set out the progress of the action for my consideration.  The plaintiff’s solicitors served the writ of summons endorsed with a statement of claim on the defendants’ solicitors on 9 October 2008.  The plaintiff’s claims are for infringement of copyright, infringement of trademark and passing off.

4.  The defendants’ solicitors filed the Acknowledgment of Service on 22 October 2009.  The defence was to be due on 5 November 2009.  The plaintiff’s solicitors notified the defendants’ solicitors on 4 November 2009 that an amended statement of claim would be served.  The parties then agreed that the filing of the defence would be postponed.

5.  On 31 March 2009, the plaintiff’s solicitors served on the defendants’ solicitors an amended writ endorsed with an amended statement of claim, a summons for summary judgment for copyright infringement and passing off and two affirmations in support of the summons.  The summons was issued on 30 March 2009 and returnable on 22 April 2009.

6.  The original deadline for the defendants to file and serve their affirmations in opposition was 14 April 2009.  The defendants on that day sought an extension of 35 days to file these affirmations.  The plaintiff agreed to the extension though the plaintiff’s counsel now submits that the defendants were dilatory.  A consent order was then made by Sakhrani J extending the time for the defendants to file their affirmations in opposition to 20 May 2009.  The plaintiff was allowed to file its reply affidavit within 14 days thereafter.  The application for summary judgment was also set down for hearing with one day reserved.  The parties then appeared before the Listing Officer on 28 April 2009 and fixed the hearing on 24 September 2009.

7.  On 18 May 2009, the defendants sought a further extension to 1 June 2009 for filing their affirmations in opposition.  The plaintiff agreed to it and a consent order was made by Registrar Au Yeung.

8.  On 1 June 2009, the defendants sought a further extension to 15 June 2009.  The plaintiff again consented to it. 

9.  On 15 June, the defendants again asked for an extension to 30 June 2009 and the plaintiff agreed.

10.  So far, the plaintiff has been most accommodating to the defendants’ requests for extension.  But the defendants still could not come up with their affidavits by the extended deadline.

11.  On 26 June 2009, the defendants again asked for an extension to 13 July 2009.  On 30 June 2009, Master de Souza extended the time to 21 July 2009 with an unless order.  Simply by looking at the chronology, I think there was already sufficient justification for an unless order at the beginning of June 2009. 

12.  In the end, a further extension of two days was given because the defendants’ Taiwanese witness was delayed by typhoon in his journey to Hong Kong.  The defendants’ affirmations in opposition were then filed on 23 July 2009.  The time for the plaintiff to file its affidavit in reply was also extended to 7 September 2009.  There were 6 weeks for the plaintiff to prepare its affidavits in reply.

13.  Counsel for the plaintiff submits that the defendants’ affidavits were lengthy and required investigation in various jurisdictions.  These affidavits were made after many extensions of time.  Despite these submissions, the plaintiff did not at any time suggest that the 6 week period was not enough for it to file the affidavit in reply.  It also did not apply for any extension of time.  The plaintiff’s solicitors and counsel also attended the office of the defendants’ solicitors to inspect the defendants’ bulky affidavits on 12 August 2009. 

14.  I am alive to the fact that the hearing was fixed on 24 September 2009 and the deadline for the plaintiff’s affidavit in reply was 7 September 2009 which was only two weeks before the hearing.  But it did not mean that the deadline could not be extended or the hearing date could not be postponed.

15.  Monday, 7 September 2009 came and went.  The plaintiff’s solicitors did not file any affidavit in reply or asked for any extension of time.  It did not tell the defendants whether it would file any affidavit in reply or would just argue the matter out without such affidavit.  Then on Friday, 11 September, the plaintiff’s solicitors wrote to the defendants’ solicitors and proposed to give the defendants unconditional leave to defend. 

16.  On 14 September, the plaintiff’s solicitors enclosed to the defendants’ solicitors a draft consent summons proposing unconditional leave for the defendants to defend with costs of the application for summary judgment be in the cause.

17.  The defendants’ solicitors replied on 16 September 2009 that when they did not receive the plaintiff’s affidavit in reply on 7 September, they just thought that the plaintiff would proceed with the argument of the application without such affidavit.  They had therefore proceeded to prepare for the substantive hearing.  Brief to counsel had also been delivered on 10 September which was two weeks before the hearing. 

18.  They also said that the plaintiff must have decided not to file any affidavit in reply and to give the defendants’ unconditional leave to defend before 7 September as time would have been required for drafting the affidavit if the plaintiff should have decided otherwise and to file the affidavit on 7 September.  Hence, they said that the plaintiff’s solicitors should have advised them earlier and at the latest by the deadline of 7 September of the decision not to pursue summary judgment.  They therefore only agreed that the costs of the application accruing up to 7 September be in the cause and the costs thereafter be to the defendants in any event.  Prima facie, this is a reasonable stance.

19.  Counsel for the plaintiff now submits that the cut-off date of 7 September is chosen by the defendants arbitrarily and without justification.  I disagree.  That was the date when the defendants could expect to receive the plaintiff’s affidavit in reply and to consider the strength of their opposition to the application for summary judgment.  If the plaintiff should have decided on or before that day not to file the affidavit in reply and not to pursue the application, the plaintiff should let them know of the decision at the latest by that day.  If there was no indication from the plaintiff, they could reasonably expect that the plaintiff would continue with the application. 

20.  Counsel for the plaintifffurther submits that if 7 September was a critical date, the defendants had failed to act properly for the purpose of saving time and costs as they had failed to alert the plaintiff that the deadline for the plaintiff’s affidavit in reply had expired.  Counsel further submitted that the defendants should have enquired with the plaintiff whether it would continue with the application as the defendants were going to issue brief to counsel. 

21.  I find this argument difficult to accept.  The deadline of 7 September was for the plaintiff to file the affidavit in reply.  I do not see why the defendants should have any responsibility to alert the plaintiff of its expiry.  The responsibility was instead on the plaintiff to tell the defendants that it was not going to file any affidavit in reply and was prepared to let the defendants have unconditional leave to defend.  The plaintiff had not done that and should bear the consequence of its failure. 

22.  The plaintiff further argues that the defendants were only given unconditional leave to defend and they never argued for dismissal of the Order 14 Summons.  Therefore, the costs order should be the usual one of costs be in the costs when unconditional leave is granted.

23.  This submission reflects a misunderstanding of the defendants’ position.  The defendants accept the usual order of costs to be in the course save and except the costs incurred after 7 September.  They say that those costs were incurred by the default of the plaintiff in not telling them at the latest on 7 September that no more costs need be incurred for the application.  In other words, these costs could have been saved but for the fault of the plaintiff.

24.  Counsel for the plaintiffin fact accepts that as soon as the plaintiff was sufficiently aware of a triable issue based upon the affirmationin opposition, the plaintiff should fairly and properly withdraw its application (see Skink Ltd (In Liquidation) v Comtowell Ltd & Anor, CACV 74 of 1994 per Godfrey JA at page 10).

25.  I am of the view that 7 September was the time for the plaintiff to fairly and properly advise the defendants of its change of position.  If the plaintiff was still considering what to do, it should at least have informed the defendants on a without prejudice save as to costs basis about its consideration and requested the defendants not to incur further costs.  I am not sure if such notification made on or about 7 September could or could not have saved the further costs as the hearing date was approaching and counsel’s availability had to be secured.  However, silence would surely not assist the plaintiff.

26.  One further point raised by counsel for the plaintiff is that even if the matter should have proceeded to argument, the defendants would only have obtained at best unconditional leave to defend with costs to be in the cause.  I think there is a mistaken assumption that the court would invariably order costs to be in the course if unconditional leave to defend is given.  If the defendant’s affidavit in opposition should reveal an entitlement to unconditional leave to defend, but the plaintiff still pursues the application for summary judgment without good reason, then the plaintiff should be ordered to bear all costs incurred from the time when the defendants’ case has been properly revealed.  Such costs would normally include the costs of the hearing.

27.  For the above reasons, I agree with the position taken by the defendants.  The fact that the plaintiff has been most accommodating to the defendants’ repeated requests for indulgence cannot be a factor for consideration of the incidence of these costs.  I order that the costs incurred by the defendants in the Order 14 Summons after 7 September 2009 including the costs for this paper argument be paid by the plaintiff to the defendants in any event.