THE OWNERS OF AND/OR OTHER PERSONS ENTITLED TO SUE IN RESPECT OF THE CARGO LATELY LADEN ON BOARD THE SHIP OR VESSEL "GOLDEN GEORGIA" v. THE OWNERS AND / OR DEMISE CHARTERERS OF THE SHIP OR VESSEL "GOLDEN GEORGIA" AND THE OWNER OF THE SISTER SHIP OR VESSEL "GOLDEN ELIZABETH"

HCAJ 45/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NO.45 OF 2004

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Admiralty action in rem against the ship or vessel “GOLDEN GEORGIA”
and the sister ship or vessel “GOLDEN ELIZABETH”

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D E C I S I O N

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1. I have before me two summonses, one issued by the defendants, dated 21 September 2006, for payment out to the defendants of what they said should be the amount which is undisputable to be due to them pursuant to the allocatur of the Master dated 14 August 2006.  There is a separate summons by the plaintiffs for a Review of the taxation that had been ordered by the Master in favour of the defendants in what the plaintiffs alleged to be in an excessive amount.

2. This matter arose as a result of the action brought in Hong Kong by the plaintiffs against the defendants in relation to a dispute which had now gone to New York arbitration pursuant to the arbitration agreement.  The action here was discontinued.  As a result of the discontinuance, the defendants said they are entitled to substantial costs.

3. What happened before this matter came to me is that there were two rounds of taxation proceedings before the Master.  The first round was a general taxation at which there was objection in principle to certain items which the plaintiffs said were not connected with their liability for costs as a result of the discontinuance. 

4. There was a review to the Master.  As the result of the review of the taxation, there was a decision of the Master dated 21 June 2006.  Mr Stock, counsel for the plaintiffs, appeared at that review.

5. The short dispute that emerged from the arguments that I have heard this morning really comes down to a short point, that is, if the Review to be heard by me is successful by the plaintiffs against the defendants, then there would be substantial costs consequences in favour of the plaintiffs against the defendants and that, therefore, there should be no payment out now of any sum to the defendants, notwithstanding that there has been given by the defendants to the plaintiffs a Club Letter of Undertaking which would also cover costs.  The reason that Mr Stock says there should be no payment out is that the Club undertaking has an upper limit, and that that limit was of course negotiated at the time having regard to the claim rather than the present substantial legal costs consequence of the dispute arising from the taxation.

6. There is in the summons of the plaintiffs a reference in paragraph 3 to a sum of $169,522.10.  This is what is said to be in any event the entitlement of the defendants to taxed costs according to the plaintiffs.  The defendants say, as can be seen from paragraph 15 of Mr Dunlop’s Affidavit, that their in any event entitlement, that is, on assumption that the Review before me will be successful, is $256,004.03.  There is a difference between the two figures.  I am not sure how that can be resolved.

7. I would however proceed on the basis that Mr Dunlop is probably right and that in any event the entitlement of the defendants to the taxed costs would be $256,004.03 and, on that basis, there would of course also be an entitlement to interests for two years added on to that $256,004.03.  I am therefore proceeding on the basis of Mr Dunlop’s point that the defendants should be at least entitled to $300,000 and that they should be paid out today by my order that sum.  The question really for me is if the Review to be heard by me is successful (and obviously the point is arguable), whether the total costs liability of the defendants to the plaintiffs would be around that sum. 

8. The first round of costs was in a modest sum.  I believe Messrs Holman Fenwick & Willan for the defendants were given something like $20,000.  So even if the objections of the plaintiffs are to succeed, there would be little deduction from that. 

9. The work involved in second round of review before the Master which resulted in the defendant’s being successful must have been substantial.  Mr Stock appeared in that review before the Master.  I myself would have thought that if the Review to be heard by me is successful in favour of the plaintiffs, there would be substantial costs consequence connected with that Master’s review, probably in excess of the $50,000 that Mr Dunlop has mentioned today.  Then of course there is the round of today and the round to come on the date to be fixed for the hearing of the Review proper.  It is difficult to anticipate but I myself would have thought that the hearing on these two days, that is, the hearing of the costs today and the costs of the next round, could easily come to $200,000 with counsel appearing.  In my view therefore there is a case to address the plaintiffs’ concern about their recoverability of costs vis-à-vis the defendants.

10. It seems to me that in these circumstances, having regard to the summons of the plaintiffs for the Review, which of course the court must undertake, that the proper order of the court is not to order any amount to be paid out to the defendants.  I therefore believe it is right that there should be an order for the stay on the allocatur.  Therefore the summons of the defendants for payment out dated 21 September 2006 should be dismissed.

11. I will hear the parties as to what order of costs I should make today.

[Submissions on Costs]