JIM PAK KIN t/a JIM'S TAI KWONG PLASTIC FACTORY v. LACONIC FREIGHT INTERNATIONAL LTD

DCCJ 4755/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4755 OF 2005

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RULING ON COSTS

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The Application

1. By a judgment handed down on 22 August 2006 in respect of the Defendant's O.14A application (“the Application”), I dismissed the Application and made a costs order nisi against it.  The Defendant subsequently applied by way of letter to vary the said costs order.  As the parties were in favour of disposing the variation application by way of written submissions, I directed the said application to be dealt with on paper rather than by holding a hearing.  Directions were then given for the parties to file written submissions.

2. Both parties have, pursuant to my directions, filed their respective submissions and I have duly considered them. 

Relevant considerations

3. It is trite that a court always retains a discretion on issue of costs.  It is true that – as pointed out by the Defendant's solicitors – there is no guiding principle regarding costs in an O.14A application.  The Defendant's solicitors submit that it is however analogous to an O.14 application because if the Defendant were to succeed in the Application, it would have – like a plaintiff in an O.14 application – the effect of disposing the entire action.  They therefore submit that although the Defendant did not succeed in the Application, the court should have either reserved the costs or ordered costs in the cause.

4. I see force in this submission.  The Application – similar to an O.14 application – invited the court to summarily determine the action on issues of law.  In an O.14 application, a plaintiff who has invoked a summary procedure but failed is usually not – but not always - penalized with a costs order.  In such a case, costs in the cause has become a practice – but not necessarily a principle of law- in the way a court deals with costs. This usual costs order – even applicable to the Application by analogy –is not a rigid principle.  The court should, in every case, consider all the circumstances of the case and, in particular, be guided by the considerations of what is fair and just in a case.  I consider the followings are relevant to my exercise of discretion on costs:

(1) Is it reasonable for the Defendant to issue the Application?

(I)  In this regard, I wholly agree with the Defendant's submissions that at the time when the Application was issued, the Defendant was entitled to rely on the following matters to invoke the summary procedure.  They are – as set out in the Defendant's submissions dated 4 September 2006:

a. An express term contained at the back of the bill of lading permitting delivery without production of the original bill of lading;

b. The Plaintiff's claim was time-barred; and

c. There was only the first instance decision of The Brij [2001] Lloyd's LR 431 at the time of the Application.

(II)   The above matters have indeed provided a reasonable ground for the Defendant to mount the Application.  The Application fails not on the ground of lacking reasonable arguments; it is due to the necessity – which I regarded essential- to resolve the factual and legal disputes through the rigour of a trial process. Thus, I am unable to agree with the Plaintiff's counsel that the Defendant was acting unreasonably in bringing the Application. The ensuing conflicting decision of Carewins Development(China)Limited v Bright Fortune Shipping Limited & Hecny Shipping Limited, HCCL 49/2004 (27 July 2006, unreported) does not make the Application more unreasonable – albeit perhaps makes the Application more difficult.

(2) The factual disputes and legal issues are unresolved

(I) Like an O.14 application when a defendant succeeds in resisting the application by showing a defence or a triable issue, the Plaintiff in this case  - by analogy – has succeeded in adducing evidence to show the unsuitability of the summary procedure.  It is apparent from my judgment that the reasons for my declining to accede to the Defendant's application largely stems from my holding the view that the legal issues can best  - or rather impossible - be determined without resolving the factual disputes.  Notwithstanding the successful opposition to the Defendant's application, the Plaintiff  – like a defendant in an O.14 application – cannot be said at this stage to stand a better chance of success.  The outcome of the claim will be largely determined on the strength of the parties' evidence to be adduced at the trial.

(II) Apart from the unresolved factual disputes, I have left open the argument of whether a carrier was entitled to deliver the goods to a buyer without production of an original bill of lading. The legal dispute being remained at large, I do not consider it appropriate to visit a costs order upon the Defendant before the matters in dispute are fully canvassed before and disposed of by a trial judge.

(III) Further, as I have observed during the hearing of the Application, the Plaintiff in opposing the Application, only resort to substantially enlarge the scope of its pleaded case by relying on the defence of extension of time provided in Art.III of rule 6 of the Hague-Visby Rules – which issue was not alluded to in its pleading – in permitting it to bring the action beyond the expiry of the time-limit.   In spite of the fact that I have taken this argument into my consideration when exercising my discretion in declining to accede to the Application, I am however entitled to take this matter into account when exercising my discretion on costs.

(IV) In the circumstances, for the reasons above, I consider that the proper costs order for the Application should be an order that costs be in the cause.

Order

5. The Defendant's application for variation of the costs order nisi made on 22 August 2006 is allowed.  The said costs order is varied and be made absolute that the costs of the Application shall be in the costs (including all the costs previously reserved, if any, and the costs of the Defendant's application for variation of costs) with certificate for counsel, which costs are to be taxed if not agreed.