JONATHAN LU AND OTHERS v. PAUL CHAN MO PO AND ANOTHER

FACV No. 13 of 2017

[2018] HKCFA 32

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 13 OF 2017 (CIVIL)

(ON APPEAL FROM CACV NO. 252 OF 2015)

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JUDGMENT ON COSTS

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The Court:

1.  On 10 April 2018, the Court handed down judgment (“the Judgment”) allowing the appeal of the Appellants (Plaintiffs), setting aside the orders of the Court of Appeal (which included the judgment in this action in favour of the Respondents (Defendants)) and ordering a retrial on the issue of malice in the Court of First Instance. We also made an order nisi that there be no order as to costs before the Judge, the Court of Appeal or this Court, other than the costs in relation to the issue of qualified privilege before the Court of Appeal which costs should be awarded to the Defendants.

2.  By way of written submissions filed on 2 May 2018, the Plaintiffs apply to vary the order nisi on costs and this is opposed by the Defendants in their written submissions filed on 15 May 2018.

3.  The Plaintiffs’ general contention is that instead of taking a very broad “both sides are to blame” approach, the Court should have regard to the issues at different stages, the parties’ reasonableness in raising them and the final outcome. They seek to vary the order nisi in 3 aspects:

(1) in respect of the costs before this Court, they ask for an order in their favour of the costs of the appeal or at least a substantial proportion of such costs. It is submitted that since the Plaintiffs had succeeded in having the appeal allowed, there is no reason to depart from the usual practice that costs should follow the event;

(2) in respect of the costs before the Court of Appeal, the Plaintiffs accept that there should be no order for costs but oppose an order that they should pay the Defendants the costs on the qualified privilege issue in that court. It is contended that although the costs for taking unsuccessfully the qualified privilege issue should ordinarily be borne by the Plaintiffs, such costs should be set off against the costs which the Defendants should pay to them for arguing the malice issue and the new case on the perversity of the jury’s verdict. They also argue that it was not unreasonable to adopt the course by which qualified privilege and malice were taken at the trial; and

(3) in respect of the costs before the Court of First Instance, the Plaintiffs ask that the costs of the first trial should follow the result “as to the costs of the retrial” save as otherwise ordered.  It is submitted that this is a fair course to take since this Court had formed the view that the responsibility for errors at the first trial falls equally on the parties.

4.  In response, the Defendants argue that the order nisi should be made final, and they also seek the costs of the Plaintiffs’ application to vary it. In relation to the costs of the appeal to this Court, they argue that there is no clear “event” which costs should follow. The Plaintiffs were unsuccessful on the questions whether recklessness was a separate ground for finding malice, and on the question whether there had been a material misdirection by the trial Judge. They succeeded only on the question whether a retrial should be ordered. The Court was right, the Defendants argue, to consider that both parties were responsible for the problems concerning malice which arose at trial, and were equally to blame (or blameless) for the errors in the courts below. In relation to the costs of the appeal to the Court of Appeal, the Defendants had to appeal to overturn the verdict on the ground of misdirection, and their doing so has been vindicated by this Court. There is no reason for the costs of doing so to be set off against the costs of the Plaintiffs’ appeal on qualified privilege, which was correctly decided by the Judge and the Court of Appeal. In relation to the costs before the Court of First Instance, there is not to be a retrial on the issues which have been correctly decided, namely defamatory meaning and qualified privilege. The Plaintiffs having been successful on the former issue, and the Defendants on the latter, there is good sense in making no order as to costs before the Judge.

5.  Having considered the submissions of the Plaintiffs and the Defendants, we are not persuaded that we should vary the order nisi.

6.  There were mainly 3 issues in this case: the defamatory nature of the relevant e-mails; qualified privilege and malice. At the trial, the parties had agreed to adopt a course in relation to the order in which the last two issues were to be dealt with. While this course had been adopted in some previous cases, it may give rise, as it did in the present case, to problems which require more careful directions on these issues in the Judge’s summing up to the jury to avoid unnecessary complications and confused and inconsistent answers by the jury (see paras.35 and 36 of the Judgment). The situation was compounded by an 11 page questionnaire which was put before the jury. The trial Judge’s lack of clear direction on this aspect coupled with the misdirections on the issue of malice justified an appeal to be brought before the Court of Appeal and the setting aside of the jury’s verdict. That court’s conclusion on this aspect of the appeal was upheld by this Court. It was the Court of Appeal’s decision to give judgment for the Defendants instead of ordering a retrial which required interference by this Court. As submitted by the Defendants, both in terms of the outcome of the whole action and the issues raised before the courts, there is no clear “winner” and hence, no “event” to be followed. In the circumstances of this case, we consider it more appropriate to make no order as to costs before the Judge, the Court of Appeal and this Court. On the issue of qualified privilege, the Defendants succeeded and this should not have been taken on appeal before the Court of Appeal. The costs relating to this issue should be borne by the Plaintiffs.

7.  In rejecting the Plaintiffs’ application to vary the order nisi, it is worth repeating what Lord Reed said in para. 56 of the Judgment:

“Both parties bear responsibility for the problems which arose in this case in relation to the issue of malice. Those problems necessitated the defendants’ appeal to the Court of Appeal, and that Court’s treatment of the issue necessitated the plaintiffs’ appeal to this Court. In relation to the other issues in the case, both parties were partially successful before the Judge: the plaintiffs succeeded on the issue of defamatory meaning, and the defendants on the issue of qualified privilege. The only unnecessary element of the proceedings for which only one party bears responsibility is the plaintiffs’ appeal to the Court of Appeal on the issue of qualified privilege. As mentioned earlier, that appeal, CACV 251/2015, is not before this Court.”

8.  For these reasons, we would direct that the order nisi be made absolute and that the Plaintiffs should pay the Defendants’ costs of this application.