LAU TSZ HUNG RINGO v. FIRST REFRIGERATION ENGINEERING LTD

HCMP 1166/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1166 OF 2013

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DECISION ON COSTS

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I. BACKGROUND

1.  This is an application by originating summons under section 41 of the High Court Ordinance Cap. 4 (“HCO”) and Order 24 rule 7A of the Rules of the High Court (“RHC”) for pre-action discovery against an intended defendant for various documents.

2.  The plaintiff, a refrigeration technician employed by the defendant, claims that on 25 April 2011 he suffered an accident in the course of his employment.  Whilst working at the construction/decoration site of International by PARKnSHOP in Tai Kok Tsui, Kowloon (“Site”), he fell from a ladder and sustained injuries (“Accident”).  The plaintiff further claims that at the material time the defendant was the contractor responsible for the installation of the refrigeration system at the Site (“Works”), and he was assigned by the defendant to work there.

3.  After the Accident, the plaintiff was admitted to Yan Chai Hospital for treatment.  He underwent surgeries for his left wrist and left heel, and was hospitalised until 11 May 2011.  Thereafter, he received physiotherapy and orthopaedic follow up treatment, and was granted sick leave until 28 August 2012.

4.  The plaintiff intends to claim damages against the tortfeasor(s) for his personal injuries as a result of the Accident.  On 8 March 2013, he was granted legal aid to pursue such claim.  He was advised by his solicitors that his employer (ie defendant) and the principal contractor of the Site at the material time (“Principal Contractor”) are liable to him for negligence and/or breach of statutory duty, so both of them should be joined as defendants in his intended common law claim.  The quantum of such intended claim is estimated to be within High Court jurisdiction at about HK$1.89 million.

5.  The plaintiff says he does not know the identity, name and address of the Principal Contractor, and therefore cannot properly issue his intended claim.  He explains that shortly after the Accident, the defendant submitted a Form 2 dated 20 May 2011 to the Labour Department, but such Form 2 does not identify any principal contractor in that the section on principal contractor in the form has been left blank.  His solicitors made enquiries with the Labour Department, and the department replied on 15 May 2013 saying that they had not received information regarding the Principal Contractor.

6.  On 25 March 2013, the plaintiff’s solicitors sent a letter of claim to the defendant pursuant to the pre-action protocol in Practice Direction 18.1 (“Letter of Claim”).  By such letter, the plaintiff’s solicitors notified the defendant (with copy to their insurer (“Insurer”)) of the plaintiff’s intended claim against them and the reasons therefor, and requested them to disclose (a) the identity of the Principal Contractor, (b) the identity of the person who instructed, engaged or hired the defendant to carry out the Works (“Employer”), and (c) the contract and/or documents between the defendant and the Employer.

7.  The plaintiff’s solicitors noticed a few clerical errors in the Letter of Claim, so the following day (ie 6 March 2013) they sent a revised letter of claim to the defendant with copy to the Insurer (“Revised Letter of Claim”) to which there was no reply.

II.  ORIGINATING SUMMONS

8.  On 23 May 2013, the plaintiff commenced the present proceedings against the defendant for pre-action discovery of the following documents:

(a) document(s) such as tender(s) and/or quotation(s) and/or invoice(s) and/or bill(s) and/or receipt(s) that reveal the identity (including name and address/registered office) of the Principal Contractor;

(b) document(s) such as tender(s) and/or quotation(s) and/or invoice(s) and/or bill(s) and/or receipt(s) that reveal the identity (including name and address/registered office) of the Employer;

(c) the contract and/or document(s) between the defendant and the Employer to the effect of revealing the identity (including name and address/registered office) of the Principal Contractor,

and for an order that if any of the above documents are not available, the defendant do file and serve an affidavit/affirmation to so verify within 14 day from the date of the order to be made.  The plaintiff also seeks costs of the present proceedings to be taxed if not agreed.

9.  The above application is supported by the plaintiff’s affirmation filed on 23 May 2013 (“Affirmation”).  On 7 June 2013, the defendant’s solicitors filed acknowledgment of service giving notice of intention to defend.  On the same day, the defendant’s solicitors also provided the plaintiff with information and documents that identify the Employer together with the relevant invoice and receipt, and urged the plaintiff to withdraw the Originating Summons herein with no order as to costs.  On 10 June 2013, the plaintiff’s solicitors counter-proposed that no order be made on the Originating Summons herein, but costs of the present proceedings be to the plaintiff.  The defendant agreed to the plaintiff’s proposal as to the manner of disposal of the Originating Summons herein, but suggested that the appropriate costs order should be no order as to costs.

10.  At the hearing before me on 19 June 2013 (“Hearing”), upon the parties’ consent, I made no order on the Originating Summons herein.  In the circumstances, the only remaining issue is who should pay the costs of the proceedings.

III.  COSTS ISSUE

(a)  Statutory provisions for pre-action disclosure of documents

11.  The present application is for pre-action discovery of documents under section 41 of the HCO.  The plaintiff must demonstrate that (a) he is likely to be a party to subsequent proceedings in the Court of First Instance in which a claim is likely to be made, and (b) the defendant appears to the court to be likely (i) to be a party to the proceedings and (ii) to have or to have had in his possession, custody or power any documents which are directly relevant to an issue arising or likely to arise out of that claim.

12.  Under Order 24 rule 7A(3) and (3A) of the RHC, the supporting affidavit must (a) state the grounds on which it is alleged that the applicant and the person against whom the order is sought are likely to be parties to subsequent proceedings in the Court of First Instance, (b) specify or describe the documents in respect of which the order is sought, (c) show that the documents are directly relevant to an issue arising or likely to arise in the proceedings, and (d) show that the person against whom the order is sought is likely to have or have had them in his possession, custody or power.

13.  Order 24 rule 8(2) of the RHC provides that no order for the disclosure of documents shall be made under section 41 of the HCO unless the court is of the opinion that the order is necessary either for disposing fairly of the cause or matter or for saving costs.

(b)  Possession, custody or power

14.  Mr Kwong, solicitor for the defendant, submits that if the Originating Summons herein were to proceed, it is questionable whether the plaintiff would have succeeded in the application.  He argues there is nothing in the Affirmation which shows that the documents specified in paragraph 8(a)-(b) above exist or did exist, and are likely to be or to have been in the defendant’s possession, custody or power.  He also says there is also nothing in the Affirmation that demonstrates the plaintiff’s belief that there was a Principal Contractor at the material time.

15.  It is said that in dealing with the description of the documents sought and the likelihood of the defendant having or having had such documents in their possession, custody or power, the Affirmation should bear close affinity to the supporting affidavit on an application for specific discovery under Order 24 rule 7 of the RHC.[1]  Is the Affirmation adequate in this regard?

16.  In my view, the court approaches such matter with a modicum of common sense.  Logically speaking, either the Works were carried out by the defendant (a) directly as principal or (b) indirectly as sub-contractor to the Principal Contractor for PARKnSHOP or the owner/occupier of the Site.  Bearing in mind that the Works were limited to the installation of the refrigeration system at the Site which site was then under construction/decoration, the possible presence of a Principal Contractor being responsible for overall construction/decoration at the Site (of which the Works formed part) cannot be excluded.  Further, the Affirmation discloses the Form 2 which, as explained above, has left the section on the principal contractor in the form blank.  Still further, the letter from the Labour Department dated 15 May 2013 merely says they had no information regarding the Principal Contractor, not that there was no Principal Contractor.  Enquiries with the defendant and/or the Insurer have not elicited any denial either; there is simply no response.  In my view, looking at all the circumstances, the Affirmation has provided adequate basis for concern that there might have been a Principal Contractor.

17.  The fact that it subsequently turns out there was no Principal Contractor (as seen from the documents disclosed by the defendant after the commencement of the present proceedings) is neither here nor there.  Such matter cannot be viewed with hindsight.  Once the Affirmation has demonstrated there might have been a Principal Contractor at the material time, there can be no question that the defendant is the proper party who can identify the Principal Contractor from documents that are likely to be in their possession, custody or power.  Even if there is no Principal Contractor, this too can be easily demonstrated by documents that reveal the identity of the Employer to be either PARKnSHOP or the owner/occupier of the Site, and the defendant being the party in contractual relationship with the Employer must surely be the party who has or has had such documents in their possession, custody or power.

18.  I find that by the Affirmation the plaintiff has satisfied the requirements under Order 24 rule 7A(3) and (3A) of the RHC.  The documents sought in the Originating Summons herein are significant because failure to ascertain the existence of (which may lead to eventual failure to sue) the Principal Contractor, if there is one, within the time limit may bar the plaintiff’s claim against the Principal Contractor. In my view, the plaintiff is also able to cross the hurdle imposed by Order 24 rule 8(2) of the RHC as well.

(c)  Letter of Claim and Revised Letter of Claim

19.  Mr Kwong next argues that the documents sought in the Originating Summons herein and specified in paragraph 8(a)-(c) above are not identical to the requests made in the Letter of Claim and the Revised Letter of Claim.  In the pre-action letters, the plaintiff’s solicitors have asked for the identity of the Principal Contractor, the identity of the Employer and the documents specified in paragraph 8(c) above.  Mr Kwong complains that the requests for the identity of the Principal Contractor and the Employer are requests for information/particulars and not for documents within the scope of section 41 of the HCO, so there is no pre-action request for the documents specified in paragraph 8(a)-(b) above.

20.  However, it is plain that all the plaintiff truly wants from the defendant is clarification as to whether there has been any Principal Contractor and if so, its identity, name and address.  Such basic information will be sufficient for the plaintiff to carry out his own investigations and, where appropriate, to issue a letter of claim against such Principal Contractor.  Had the defendant provided such information, any need for the present proceedings would have been obviated.  However, in the absence of any response from the defendant, in order to seek the above information the plaintiff has to bring his formal application within the parameters of section 41 of the HCO. He therefore has to transform his earlier request for information into a request for pre-action discovery of documents, the ultimate goal of which is to elicit the above relevant information from the documents sought.  I am unable to fault the plaintiff’s approach, especially when the request for information in the Letter of Claim and the Revised Letter of Claim is plainly an attempt to limit the request to the minimum needed for him to properly formulate his claim.

(d)  Principles on costs

21.  Section 43 of the HCO provides that:

“(1) The power to make rules of court under section 54 shall include the power to make rules of court as to the circumstances in which an order under section 41 …… can be made; ……

(2) Without prejudice to the generality of subsection (1), rules of court shall be made for the purpose of ensuring that the costs of and incidental to proceedings for an order under sections 41 …… incurred by the person against whom the order is sought shall be awarded to that person unless the Court of First Instance otherwise directs.” (my emphasis)

22.  Order 62 rule 3(12) of the RHC provides that:

“Where an application is made in accordance with Order 24, rule 7A …… for an order under section 41 …… of the [HCO], the person against whom the order is sought shall be entitled, unless the Court otherwise directs, to his costs of and incidental to the application and of complying with any order made thereon and he may, after giving the applicant 7 days’ notice of his intention to do so, tax such costs and, if they are not paid within 4 days after taxation, sign judgment for them.” (my emphasis)

23.  Mr Kwong has cited Cheung Siu Tak Anthony v Shun Tak-China Travel Ship Management Limited.[2]  In that case, after a contested hearing for pre-action discovery, the learned master granted 2 out of 9 discovery items sought by the plaintiff, and ordered the plaintiff to pay the defendant’s costs to be taxed if not agreed.  The plaintiff appealed against the 2 items.  On appeal, it was held that the plaintiff could not be said to have been substantially successful overall, and the learned judge did not disturb the costs order below.

24.  In Hong Kong Civil Procedure 2013,[3] it is said that where the person against whom an order is sought is at fault (eg where he has been dilatory in replying to a proper request for disclosure of documents), the court may deny him his costs, or, in exceptional cases, order him to pay the applicant’s costs of the application.  Hall & ors v Wandsworth Health Authority[4] has been cited in support of such proposition.

25.  In Hall & ors, before the plaintiffs (who contemplated personal injury litigation against the defendant health authority) commenced proceedings for pre-action disclosure of hospital records and the like, their solicitors had written letters before action requesting disclosure of such hospital notes.  The defendant was dilatory, and it was held that the master was right to deny the defendant their costs.  Had a prompt answer been given to the plaintiffs’ solicitors with a promise of discovery at an early stage, there would have been no need to commence the pre-action disclosure proceedings.  Tudor Price J said as follows:

“ Normally, the defendant’s costs were paid by the plaintiff (see Order 62, rule 3(12)), since it was fair and right that the party put to expense should be reimbursed; moreover, the defendant could not proceed directly to taxation of his costs and require the plaintiff to pay them.

In a few cases the defendant’s conduct would justify the court’s order that he should pay his own costs; but there was nothing, especially in the words of the rule “unless the court otherwise directs”, to prevent the court on rare occasions ordering the defendant to bear the plaintiff’s costs: see further the whole of Order 62, rule 3.

……

         When the defendant did not receive his costs or, exceptionally, was order to pay the plaintiff’s costs it would be because of his misconduct in the disclosure proceedings.”

(e)  Discussion

26.  Mr Tam, solicitor for the plaintiff, asks for costs of the proceedings in favour of the plaintiff to be taxed if not agreed. Mr Kwong suggests there should be no order as to costs.

27.  Mr Tam argues that the plaintiff is justified in commencing the present proceedings due to lack of any reply to the Letter of Claim and/or Revised Letter of Claim which seek information/documents in respect of the identity, name and address of the Principal Contractor if there was one.  Mr Tam further reminds that the defendant has only disclosed the relevant documents after the commencement of the present proceedings.

28.  Mr Kwong concedes that the defendant has been dilatory in their response to the plaintiff’s pre-action request for information/ documents which justifies departure from the normal order for costs such that the defendant is prepared not to claim costs against the plaintiff.  He submits this is consistent with the position in Hall &ors in which the learned judge said:

“ Because of the nature of personal injury and medical negligence cases, delay should be avoided; in the present cases the [defendant] was dilatory and the master was right to deny the defendants their costs; if there had been a prompt answer to the plaintiff’s solicitors and a promise of discovery at an early stage, there would be no need to issue section 33 proceedings.

         In the case of Mrs Hall there was no reasonable excuse for failure to disclose to the solicitors before the master’s hearing, and the failure to disclose after those proceedings showed that the defendants were not approaching the matter with the urgency such litigation demanded.”

29.  However, the plaintiff now asks the court to exercise its residual discretion under section 43(2) of the HCO and Order 63 rule 3(12) of the RHC to go further and award costs of the present proceedings in his favour.  Mr Kwong argues there is no justifiable reason or exceptional circumstance that may persuade the court to grant costs in favour of the plaintiff against the defendant. 

30.  Neither Mr Tam nor Mr Kwong has cited any authority in which the court has gone further to award costs against the party against whom an order for pre-action discovery was made.  However, it may be useful to refer to some of the authorities discussed in Matthews & Malek, Disclosure 4^th ed para. 3.45 at pp. 89-90, which passage I have referred Mr tam and Mr Kwong to at the Hearing.

31.  Matthews & Malek[5] deals with pre-action disclosure under the English provisions,[6] and notes the general rule that the court will award costs in any event to the person against whom an application for pre-action disclosure is made[7] save that the court may make a different order having regard to all the circumstances.[8]  In exercising the discretion to deprive the person ordered to give disclosure of all or some part of his costs (which he is normally entitled),

“the court will take into account all the circumstances, including the reasonableness of the opposition to the application and compliance with the pre-action protocols. In so far as the application is concerned, if it has been unreasonably resisted, those are the very circumstances contemplated where the order for costs may be different. Even where there is an element of unreasonableness in resisting an application the appropriate order may be each party to bear their own costs rather than the respondent being ordered to pay both sides’ costs or the court may order the applicant to pay costs up to the point where the respondent’s resistance to an order became unreasonable, with the respondent bearing both parties’ costs thereafter. ……” (my emphasis)[9]

32.  It is clear from SES Contracting Limited & ors v UK Coal plc & ors[10] that merely opposing unsuccessfully an application for pre-action disclosure does not justify a departure from the general rule.  As Moore-Bick LJ said in that case:

“17.   CPR Rule 48.1 provides that, where a person makes an application for disclosure before proceedings, the general rule is that the court will award the person against whom the order is sought his costs of the application, but that the court may make a different order having regard to all the circumstances, including the extent to which it was reasonable for the person against whom the order was sought to oppose the application.  Although a respondent to an application may incur some costs merely in considering what response to make to an application of this kind, in most cases he will only incur substantial costs if he opposes it.  By laying down a general rule that the respondent will be awarded his costs, therefore, I think that the Rules implicitly recognise that it will not usually be unreasonable for him to require the applicant to satisfy the court that he ought to be granted the relief which he seeks.  The reason for that (if it be necessary to find one) lies, I think, in a recognition that a private person who is not a party to existing litigation which brings with it an obligation of disclosure is entitled to maintain the privacy of his papers unless sufficient grounds can be shown for overriding it and that it is for the person seeking to invade that privacy to justify doing so.  At all events, the rule is clear in its terms and provides the point of departure for a judge dealing with the costs of an application of this kind.

18.    …… The real question which arises in this case, therefore, is whether it was unreasonable for [the defendants/appellants] to oppose the application at all, and if not, whether its conduct in relation to the application was capable of justifying the order the judge made.”

33.  In SES Contracting Limited & ors, the first instance court ordered the defendants/appellants to pay the plaintiffs/respondents their costs of a successful application for disclosure before the commencement of proceedings.  Moore-Bick LJ considered the circumstances which would justify a departure from the general rule in paragraph 24 of the judgment:

“…… The fact is that, short of ordering [the defendants/ appellants] to pay the costs of [the plaintiffs/respondents] on an indemnity basis, the judge’s order was the strongest available to him.  If one is starting from the position set out in rule 48.1(2) one would expect an order of this kind to be made only in a case where it was clearly unreasonable for the respondent to oppose the application or where the manner of his opposition was so unreasonable as to make it appropriate to require him to bear the whole of both parties’ costs.  Although Mr. Moriarty sought to place some reliance on the case of Bermuda International Securities Ltd v KPMG [2001] 1 Lloyd's Rep. PN 392, in which the judge made no order for costs where the respondent had unreasonably resisted the application “root and branch”, I do not find that case very helpful.  This court only had to be satisfied, as it was, that it was open to the judge to make that order; whether he could justifiably have gone further was a question that did not arise.  In any event, each case is different and decisions on costs must reflect the particular facts of the case, taking into account rule 48.1 (2) and the policy behind it.” (my emphasis)

34.  SES Contracting Limited & ors was cited with approval in Alan Kneale v Barclays Bank plc (trading as Barclay Card).[11] In paragraph 62 of the judgment, Flaux J noted that whilst Moore-Bick LJ in SES Contracting Limited & ors was not prepared to limit the possibility of an order that the defendant pay all the costs of an application for pre-action disclosure, “[in] fact, from the material before the Court of Appeal in SES it appears that there had never been a previous case in which a court, however unreasonable the respondent’s conduct, had ever gone further than requiring the respondent to bear its own costs, in other words making no order as to costs”.

35.  In Alan Kneale, Flaux J ordered pre-action disclosure by the bank in favour of the applicant, and ordered the bank to pay all of the applicant’s costs of that application on the basis that it would have been quite simple for the bank, if they had the document to produce it; if they had not to say so; if they had secondary evidence that the document did exist to produce such secondary evidence; and if they needed more time to ask for it.  The first instance court considered the bank’s blanket refusal to produce the document and to do any of the above things unreasonable, and held the entirety of the costs of the application to have been incurred as a result of the unreasonable attitude of the bank.  But Flaux J found such exercise of discretion to be flawed for a number of reasons:[12]

(a) No particular factor which rendered the bank’s opposition to the application unreasonable was identified.  The bank resisted the application on principle and the issue in the case was a difficult one.[13]

(b) Nothing in the manner of the bank’s opposition was so unreasonable as to warrant a departure from the normal order, let alone an order that the bank should pay all the costs, was identified.[14]

36.  Since the bank’s opposition was on a point of principle and not unreasonable, Flaux J in Alan Kneale concluded that departure from the normal rule that the applicant should pay the respondent’s costs was not justified.  Even if he had been prepared to find, which he did not, that the bank’s conduct was unreasonable, in light of the facts of the case as compared with that of SES Contracting Limited & ors, “the very worst sanction that could or should have been visited on the bank was that it should pay its own costs”.[15]

37.  There are also other cases which on their own facts have adopted a different approach, ie the plaintiff has been ordered to pay costs up to the point until the defendant’s resistance to an order has become unreasonable.

38.  In Cattles Ltd & Welcome Financial Services Ltd v Pricewaterhousecoopers LLP,[16] the intended defendant agreed to disclose audit papers from 2007, but disputed the rest of the application for pre-action disclosure.  The initial request for documentation was made on 4 April 2011.  A letter of claim was sent on 18 July 2011 with a holding response on 11 August 2011 saying that a response would be made in the first week of September 2011.  The intended claimants said that was unreasonable, and the intended defendant stated that they intended to comply.  On 23 August 2011, the intended claimants said they planned to issue an application for pre-action disclosure the following week, and this was done on 31 August 2011.  On 8 September 2011, the intended defendant offered to disclose documents from 2007.  On 22 September 2011, the intended claimants offered to drop the application “without prejudice save as to costs” should the audits from 2005-7 be disclosed, but such offer was not accepted.  The court held that the audit papers from 2005-6 should be disclosed, but dismissed the rest of the application.   

39.  The intended claimants accepted that the intended defendant was entitled to their costs, but stated they should also get their costs of requiring the application, or the intended defendant should have their costs reduced, on the grounds that (a) it was unreasonable to refuse to disclose the 2005-7 audits, (b) the request was reasonable, and (c) the intended defendant should have accepted their without prejudice offer.  The court noted that the intended claimants were aggressive in their approach, the claims were very substantial and the application was far from straightforward. The court held that the intended claimants were not entitled to any costs before 21 days after the application was issued, but the intended defendant was so entitled.  The court further held that the intended defendant was not acting unreasonably until the intended claimants’ offer had expired, ie 30 September 2011, but after that date it was unreasonable to refuse to disclose the audits from 2005-6.

40.  In the application for pre-action disclosure against the defendant in Moduleco v Carillion,[17] accommodation was reached between the parties the day before the hearing so that the remaining issue was the question of costs.  The defendant sought an order that costs should be in his favour.  In that case, there was a contractual argument in that the parties agreed in a binding way that certain information should be provided, which is not relevant for the present purpose.  Akenhead J said:

“22. Subject to the contractual argument, Carillion was quite entitled to await an application and then decide what they wanted doing with it. Thus, it would always be the case that the Moduleco’s costs of issuing the application and probably its first witness statement, would have to be borne by it; thereafter, Carillion would be entitled to the reasonable costs of reviewing the application carefully, and then deciding what to do. But it does seem clear that, up until a date towards the end of January when Mr McGowan’s witness statement seems first to have been prepared, although dated 2^nd February 2009, Carillion was quite entitled, pursuant to the rules, to review the application and decide what to do.

23. However, between the service of Mr McGowan’s witness statement and late last night, there seems to have been an unnecessary amount of time and effort incurred by Carillion in working out how they could get the accommodation which they did last night. ……

24. Although it was reasonable for Carillion carefully to consider and to respond to the application, by the end of January 2008, the pragmatic decision should have been made by them to accept in broad terms that the application should be allowed, subject to what were ultimately relatively minor alterations. ……

25.    I have formed the view that there came a point when Carillion ceased to act reasonably.  On an application like this, it is important therefore that I take that into account.  Doing the best that I can, it seems to me that this is a case where in broad terms Carillion should have its costs paid, but there should be a reduction to reflect what I consider to have been their unreasonable stance beyond the service of Mr McGowan’s witness statement on 2^nd February.  Again, doing the best that I can, it seems to be that the appropriate allowance is that Carillion should have half of its assessed costs of the application.”

41.  In light of the principles discussed in above authorities, and subject to the caveat and understanding discussed in paragraphs 43-47 below, I am not persuaded that the plaintiff is entitled to their costs of the Originating Summons herein.  The English authorities suggest that merely opposing unsuccessfully an application for pre-action discovery is not enough to justify departure from the normal rule on costs.  After all, the obligation falls on the applicant to justify and establish that the privacy of a person who is not a party to existing litigation should be overridden.  It is only when it is clearly unreasonable to oppose the application or the manner of the opposition was so unreasonable or there is misconduct on the part of the defendant that it will make him bear costs of both parties.

42.  Mr Tam has not been able to cite any authority in which the court has gone so far as to order the defendant to pay costs of the application to the plaintiff.  This was rejected in both SES Contracting Limited & ors and Alan Kneale.  In the present case, there was no overt opposition or resistance to the application for pre-action discovery.  It is not a case of the opposition being unreasonable or the resistance at some point becoming unreasonable.  Here, the defendant was merely dilatory in their response.  But once they were served with the Originating Summons herein together with the Affirmation, they promptly filed acknowledgment of service and on the same day disclosed the relevant documents sought by the plaintiff.[18] Given that the defendant was fairly entitled to have a reasonable window to consider the application,[19] their proposal of no order as to costs for the present proceedings is the appropriate sanction to be visited on them.[20] It is also in line with Hall & ors in which the court made no order as to costs when the response by the defendant was dilatory.[21]

43.  At the Hearing, I have expressed concern that no order as to costs in respect of the present proceedings may debar the plaintiff from recovering costs in respect of the present proceedings as part of the pre-action costs of any common law proceedings that may be commenced by the plaintiff against the defendant on the basis of issue estoppel between the same parties.

44.  However, this concern appears to be unfounded.  In Hall & ors, Tudor Price J said that “[the] plaintiff, if he eventually succeeded in a claim, whether against the defendant in the originating summons or another defendant, might well be able to recover his costs incurred before the proceedings commenced, in taxation of the successful action: see In re Gibson’s Settlement Trusts ([1981] 1 Ch 179, 187C)” (my emphasis).

45.  Sir Robert Megarry VC said In re Gibson’s Settlement Trusts that:

“(5)   Obviously the test cannot be simply whether the materials in question proved in fact to be of use in the action, for otherwise when a case is settled before trial …… it would often not be possible to say with any certainty which materials had been or would have been of use in the action.  Nor would it be right to penalize the successful litigant for obtaining materials which appeared likely to be of use in the action but which, in the event, were never used because the other party did not contest the point.  Whatever may be the position on a party and party taxation, if the taxation is on the common fund basis I think that one must go back to the words “costs reasonably incurred”; and, as I have said, I think that this must mean the costs of and incidental to the proceedings in question.  Neither the fact that at the time when the costs were incurred no writ or originating summons had been issued, nor the fact that the immediate object of incurring the costs was to ascertain the prospective litigant’s chances of success, will per se suffice to exclude the costs from being regarded as part of the costs of the litigation that ensues.  Of course, if there is no litigation there are no costs of litigation.  But if the dispute ripens into litigation, the question then arises how far the ambit of the costs is affected by the shape that the litigation takes.

(6)     It is obvious that the matters disputed before a writ or originating summons is issued, and the matters raised by the writ or originating summons, and by any pleadings and affidavits, may differ considerably from each other.  A wide-ranging series of disputed matters may be followed by a writ or originating summons which raises only a few of the issues; or a narrow dispute may be followed by proceedings which seek to resolve wider issues as well.  How far does the ambit of the litigation extend or restrict the matters occurring before the issue of the writ or originating summons which may be included in the taxed costs on the common fund basis?

         If the proceedings are framed narrowly, then I cannot see how antecedent disputes which bear no real relation to the subject of the litigation can be regarded as being part of the costs of the proceedings.  On the other hand, if these disputes are in some degree relevant to the proceedings as ultimately constituted, and the other party’s attitude made it reasonable to apprehend that the litigation would include them, then I cannot see why the taxing master should not be able to include these costs among those which he considers to have been “reasonably incurred”.

         The converse case, that of a narrow area of dispute followed by widely-framed proceedings, seems to be somewhat different.  If a prospective litigant goes into a number of matters outside the immediate area of dispute, but he then finds that these matters fall within the widely-framed scope of his adversary’s proceedings, it seems to me that those proceedings will almost of necessity make the costs of these matters part of the costs of the proceedings, subject always, of course, to the taxing master considering the costs to have been reasonably incurred.  Even though the acts, when done, could not fairly be considered to be related in any real way to what was then in dispute, they will have subsequently been made part of the litigation; and if the costs of what was then done were costs reasonably incurred in relation to what subsequently became defined as the matters in dispute, it seems to me that the taxing master may properly allow them.  There is a kind of legitimation by subsequent litigation.  Of course, if it is made clear between the parties, whether by the pleadings or otherwise, that what is widely framed is nevertheless only to be fought on a narrow point, that may, from the time that it is done, have the practical effect of narrowing widely-framed proceedings.”[22]

46.  Of course, In re Gibson’s Settlement Trust is a pre-CPR case, and it does not deal with taxation of costs as between litigants on a party and party basis.  But on the basis that party and party costs are allowable if they are “necessary or proper”, there is authority which suggests that such allowable costs are not necessarily limited to work done only after the proceedings have been commenced.[23]  But such costs must be shown to have been “necessary or proper for the attainment of justice”, which means there must be some real relationship between the work done and the subject matter of litigation after commencement.

47.  Drawing the line between what is and what is not allowable on pre-proceeding party and party costs does not lend itself to easy or precise determination notwithstanding the above principles.  Ultimately, the matter rests with the taxing master and is dependent on the particular facts of the case.  But it suffices for the present purpose to say that no order as to costs in the present proceedings will not of itself debar the plaintiff from seeking to recover costs of the present proceedings (save and except for costs of the Hearing) against the defendant herein or any other defendant in any common law proceedings that may be commenced against them.  It will then be up to the plaintiff to seek an order for costs in his favour in those proceedings by bringing such pre-action costs within the criterion for taxation of costs in those proceedings if he can.

IV.  CONCLUSION

48.  I therefore grant the following order:

(a)     the plaintiff do pay the defendant’s costs of the Hearing to be summarily assessed and paid forthwith;

(b)     subject to (a) above, there be no order as to costs of the present proceedings;

(c)     the plaintiff’s own costs be taxed in accordance with Legal Aid Regulations.

49.  There is no reason why the plaintiff should not pay costs of the Hearing since he has failed to accept the defendant’s offer that costs of the present proceedings be compromised on the basis of no order as to costs.

50.  For the purpose of the summary assessment of costs, I direct that the defendant do within 7 days from the date hereof lodge and serve statement of costs not exceeding half page pursuant to Practice Direction 14.3, and the plaintiff do within 7 days thereafter lodge and serve succinct summary of objections in bullet-point format of not more than half page, and unless otherwise directed the summary assessment of costs will be by paper disposal.