SUN FOCUS INVESTMENT LTD v. TANG SHING BOR AND ANOTHER

CACV 82/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 82 OF 2011

(ON APPEAL FROM HCA NO. 538 OF 2007)

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BETWEEN

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DECISION ON COSTS

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Hon Fok JA:

1.  On 23 December 2011, this Court handed down judgment in this appeal. We allowed the appeal to the extent of setting aside the Judge’s grant of leave to amend the statement of claim. Rather than exercising the discretion whether to grant leave to amend ourselves, we remitted that question to a Judge of the Court of First Instance. We made an order nisi that the plaintiff pay the defendants the costs of the appeal, to be taxed if not agreed, and that the costs below be costs in the amendment application.

2.  The defendants have applied to vary the costs order nisi in two respects: first, so that the costs of the appeal are taxable and payable forthwith; and secondly, to certify that the appeal was suitable for two counsel.

3.  For its part, the plaintiff resists that variation application and makes a separate application to vary the costs such that the costs of the appeal and the respondent’s notice be costs in the cause of the amendment application.

4.  I do not agree that liability for the payment of the costs of the appeal should be determined by reference to the outcome of the amendment application which has been remitted to the Court of First Instance. Although the Court has a discretion to depart from the normal rule that costs should follow the event, to do so is an exceptional course: Mariner International Hotels Ltd v Atlas Ltd (No. 2) (2007) 10 HKCFAR 246 at §18.

5.  In the present case, the appeal was allowed because this Court held that, by reason of the operation of the relation back rule, the Judge should not have granted leave to amend without determining that the plaintiff could show that the defendants did not have a reasonably arguable case on limitation which would be prejudiced by the new claim or that the plaintiff could bring itself within RHC O.20 r.5.  That was the principal ground on which the defendants brought this appeal, which the plaintiff resisted.  The event, which the costs here should follow, was the Court’s order to allow the appeal and set aside the Judge’s grant of leave to amend.

6.  It is true that we did not accept the defendants’ submissions that leave to amend should be refused on the basis that the plaintiff’s reliance on s. 26 of the Limitation Ordinance, as a means to avoid the limitation defence, was hopeless or that the plaintiff could not show the new claims arose out of the same or substantially the same facts as already pleaded (per RHC O.20 r.5).  Although we left these matters to be determined on the remitted amendment application, we ruled in favour of the defendants on the principal issue of the operation of the relation back rule.

7.  I do not agree that the present case can be likened to an order for a re-trial as in the case of Kee Shing Industrial Products Ltd v Wah Lai Metal Artificial Jewellery Factory (A Firm) CACV 224/2004, unrep., 28.4.05 which was relied upon by the plaintiff. That case, where the Court of Appeal ordered a fresh trial because the trial judge did not make a necessary finding of fact, is distinguishable from the present case in that here, in allowing the appeal, this Court made a specific ruling in favour of the defendants on the issue of the operation of the relation back rule.

8.  In the circumstances, I would decline the invitation of the plaintiff to vary the costs order nisi to provide for the costs of the appeal to be in the cause of the amendment application.

9.  Turning to the defendants’ variation application, I see no reason why the costs of the appeal should not be taxed and paid forthwith.  This was an interlocutory appeal on an amendment application and there is no good reason to delay their taxation or payment.

10.  The plaintiff contends that the costs should not be taxed and paid forthwith since this would in effect make the payment of the appeal costs a condition of the re-hearing of the plaintiff’s amendment application. The plaintiff refers to the fact that an application for security for costs has been made by the defendants, which the parties agreed to adjourn pending the appeal.  It was submitted that to require the plaintiff to pay the costs of the appeal forthwith would be tantamount to ordering it to pay security for costs and that the plaintiff’s amendment application (and therefore its claim) would be stifled.

11.  I do not accept the plaintiff’s contentions in this regard.  It is no part of our costs order that the payment of the costs of the appeal is a necessary pre-condition to the plaintiff’s amendment application.

12.  Nor do I consider that there is any relevant connection between the security for costs application and the appeal or that ordering the payment of the appeal costs forthwith would have the effect of ordering the plaintiff to pay security for costs.  The security for costs application relates to the costs of the action as a whole, assuming it is to proceed.  It will only proceed if the plaintiff is successful in obtaining leave to amend the statement of claim.  If leave is not granted, security for costs will not be required.  The costs of the appeal are separate to those general costs of the action for which security may or may not be ordered in due course.

13.  Finally, I do not accept that the fact that an order for the payment of the costs of the appeal forthwith might have in practice have the effect of stifling the plaintiff’s claim is a proper basis for not making a costs order that is otherwise appropriate in respect of a discrete and concluded interlocutory appeal.  If the plaintiff’s argument were correct, so that these costs should not be made payable forthwith, it would mean that impecunious litigants (assuming, for present purposes, that the plaintiff is such a litigant) would be placed in an advantageous position in respect of adverse interlocutory costs orders.

14.  As to the defendants’ application for a certificate for two counsel, I propose to follow the practice of the Court of Appeal as reflected in the judgment of Le Pichon JA in Dr Chan Hei Ling Helen v The Medical Council of Hong Kong CACV 403/2006, unrep., 21.7.09 at §9, namely that “a party coming to this court is entitled to have leading counsel should they so choose”.  Here, a substantive issue of law was raised and I accept that the defendants were entitled to retain leading counsel for the appeal.

15.  For these reasons, I would therefore vary the costs order to provide that:

“The plaintiff pay the defendants the costs of this appeal, to be taxed forthwith if not agreed, and paid forthwith, with a certificate for two counsel and that the costs below be costs in the amendment application.”

16.  We do not wish to pre-empt the Judge in the exercise of his discretion as to costs upon hearing the remitted application. Depending on the outcome of the application, the parties will no doubt remind him to deal with the costs thrown away or occasioned by the amendments.

17.  The costs of the submissions to vary the costs order nisi will also be to the defendants, to be taxed and paid forthwith.

Hon Lam J:

18.  I agree and have nothing to add.