LOY THIN LOY AND ANOTHER v. CHRISTIE'S HONG KONG LTD AND ANOTHER

DCCJ 5432/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 5432 OF 2008

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REASONS FOR DECISION

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1.  On 7 May 2012, I handed down the written judgment (“the Judgment”) in the present case whereby I found for the plaintiff and against the 2^nd defendant (“Fan”). I made, among others, a nisi costs order. The plaintiff applied to vary the nisi costs order. Fan applied for leave to appeal. At the end of this hearing, I dismissed both applications. As indicated, I now give my reasons.

BACKGROUND

2.  The plaintiff deposited a painting with the 1^st defendant (“Christie’s”) for auction.  Fan came forward and claimed ownership of the painting.  Caught in the middle, Christie’s refused to release the painting to either party.  The plaintiff commenced the present action against Christie’s.  Fan applied to be joined while Christie’s took out an interpleader summons.

3.  By the order of H H Judge Poon on 16 August 2012, Fan was joined as a defendant while the present action against Christie’s was stayed.  The court directed that the issue of which of the plaintiff and Fan is the true owner of the painting should be tried.  In the meantime, the painting should remain in Christie’s custody subject to its reasonable charges and final determination of the issue or further order.  Christie should have a first charge on the painting for the reasonable custodian charges incurred and its costs of the interpleader summons.

4.  After trial, I found that the plaintiff was and is the rightful owner of the painting.  I made the following order:

(1)  declaration that the plaintiff is the legal and beneficial owner of the painting; and is entitled to its return subject to the first charge of Christie’s as ordered by Judge Poon (above);

(2)  order that the plaintiff is entitled to damages in the sum of the custodian charges incurred and payable to Christie’s as mentioned above;

(3)  in the absence of agreement on the above charges within 14 days, the parties have liberty to apply to be heard; and

(4)  insofar as it is necessary, the counterclaim of Fan is dismissed.

5.  Without prejudice to the costs order made during the course of the trial, I made a nisi order that Fan shall pay:

(1)  the costs of the plaintiff in this action against Christie’s and Fan;

(2)  the costs of Christie’s in defending this action;

(3)  the costs occasioned to the plaintiff and Christie’s by Fan’s summons for joinder application (that had been reserved); and

(4)  any other costs reserved.

6.  All costs shall be taxed, if not agreed, with certificate for counsel.  The parties had 14 days to apply to vary the above nisi costs order or the same would become absolute.

7.  The solicitors for Christie’s have since quantified the custodian charges which are calculated from 30 November 2007 at a daily rate of HK$50.

8.  By letter, the solicitors for the plaintiff sought to vary the nisi costs order. A summons should have been taken out for such purpose.  Further, Fan has since become acting in person; and ruling could not be made on paper.  Hence the parties were directed to attend before this court; and for such purpose, the plaintiff was directed to set out in writing the exact terms of the proposed variation of the nisi costs order.  This the plaintiff’s solicitors did on 4 June 2012.

9.  By summons dated 3 July 2012, Fan applies for leave to appeal against the Judgment.

10.  The hearings of the plaintiff’s application and Fan’s summons have since been adjourned as a result of the Fan’s application for legal aid.  Her appeal against the refusal of legal aid was supposed to be heard on 3 August 2012.  The other parties and the court have not been notified of the outcome.  Presumably the appeal was unsuccessful as, according to the memorandum from the Director of Legal Aid dated 12 September 2012, Fan has taken out another application for legal aid.

11.  The statutory stay upon Fan’s application for legal aid would have put the proceedings herein in further abeyance until just about 2 days after this hearing.  However it was obvious to me that justice required the hearing to proceed without further delay; and hence I exercised my discretion under section 15(4) of the Legal Aid Ordinance, Cap 91 to lift the stay for such purpose.

FAN’S APPLICATION

12.  According to section 63A(2) of the District Court Ordinance, Cap 336, leave to appeal shall not be given unless the intended appeal has a reasonable prospect of success or that in the interest of justice it should be heard by the appellate court.

13.  In her summons, Fan stated a single ground of appeal, namely, that this court erred in finding in favour of the plaintiff on the basis of the Factors Ordinance, Cap 48, which was neither pleaded by the plaintiff nor her.

14.  In the Judgment, I explained why I preferred the evidence of the plaintiff to that of Fan.  I found against Fan on the facts, in particular, that if there was in fact a sale of the painting to Fan (as the document seemed to suggest), she did not purchase the same as her own as she alleged (§§62-63 of the Judgment).

15.  During the hearing, Fan seems to suggest that she would challenge such finding of facts.  As mentioned, it was not mentioned in her summons.  In any event, the appellate court will not interfere with the trial judge’s findings of primary facts unless it takes the view that the conclusion of the court is plainly wrong.  The burden to show that is a heavy one: see Ting Kwok Keung v Tam Dick Yuen & Ors [2002] HKCFAR 336.

16.  As to Cap 48, indeed it was not pleaded by the parties.  Nevertheless it was the evidence already adduced during the trial that caused me to raise the question of the applicability of the ordinance, which was a question of law.  I invited counsel for both parties to make submission on this question and they did.  In other words, this was not a situation where the parties were deprived of the opportunity to adduce evidence that would have been relevant to and necessary for the proper consideration of the question; or where the parties were not offered a fair opportunity to make submission.

17.  Perhaps more importantly, it was wrong for Fan to say that the Judgment was arrived at on the basis of Cap 48.  The applicability of the ordinance was considered only upon the assumption that Fan indeed purchased the painting in question as her own as alleged (which I found to the contrary as mentioned above).  In other words, Cap 48 was an alternative consideration (§§64-70 of the Judgment).

18.  Fan has failed to understand the Judgment properly.  The intended appeal has no reasonable prospect of success.  Nor am I satisfied that leave to appeal should be given on the alternative limb of section 63A(2).  I therefore dismissed Fan’s application at the end of the hearing.

THE PLAINTIFF’S APPLICATION

19.  The plaintiff sought to add to the existing costs order the following term:

“(5) the reasonable charges of Christie’s on the Painting from 30 November 2007 up to the date of delivery of the Painting to the Plaintiff by Christie’s”.

In other words, the plaintiff sought an order that Fan directly pays the custodian charges of the painting to Christie’s.

20.  The plaintiff relies on O.17, r.8 of the Rules of District Court, which says:

“subject to the foregoing rules of this Order, the Court may in or for the purposes of any interpleader proceedings make such order as to costs or any other matter as it thinks just.”

21.  Mr Wong for the plaintiff also referred to De Rothchild Freres v Morrison (1890) 24 QBD 750 and Smith v Darlow (1884) 26 Ch D 605; and submitted that it would be just to order Fan, the unsuccessful claimant to the painting, to pay the custodian charges to Christie’s direct.  Mr Wong drew analogy with the case of a Sanderson costs order.  He cited the case of Goodman v Blake (1887) 19 QBD 77 (which adopted Searle v Matthews (1887) 19 QBD 70); and submitted that costs could well include storage charges.

22.  It should be noted that Searle and Goodman concerned the sheriff’s charges for the storage of goods seized in execution of a judgment, a situation similar to that of a bailiff’s costs that properly include his other expenses. This differs from the situation of interpleader by any other stakeholder such as Christie’s in the present case.

23.  Discretion of the court in making such order as that in De Rothchild Freres is not in dispute.  However, that would be the power of the court to make an order in “any other matter” as opposed to “costs” as in Searle and Goodman under O.17, r.8.  Unlike the author of Hong Kong Civil Procedure 2012 (Vol.1) (who also cited those authorities at 17/8/1 and 17/8/2), the plaintiff apparently mixed up the two.

24.  Further, in the context of O.17, r.8, this court had to exercise the discretion in respect of the incidence of the liability to pay the custodian charges to Christie’s in the circumstances of this case.  The circumstances before me included that there is an existing order by Judge Poon on 16 August 2012 (mentioned in §3 above) whereby Christie’s shall have a first charge on the painting for the reasonable charges incurred for continuing to be its custodian.  This could only mean a charge against whoever that was adjudged to be the true owner of the painting.

25.  Now by the order being proposed, Mr Wong suggested that his client expected to be able to obtain the release of the painting, whilst Christie’s would have to look to Fan for payment of the custodian charges.  In the correspondence, the plaintiff’s solicitors also made clear that they were opposed to the sale of the painting in order to settle the charges.  All those would have rendered the first charge meaningless.

26.  To make sense of the order of Judge Poon, I could only make the order, as I did, that the plaintiff is entitled to damages against Fan in the same amount of the custodian charges that the plaintiff has to pay to obtain the release of the painting subject to Christie’s first charge (as mentioned in §4 above).  By the order proposed as if it were part of the costs order, the plaintiff effectively asked this court to contradict the incidence of liability of the true owner of the painting to pay the custodian charges to Christie’s (as ordered by Judge Poon) that was behind my own order in this respect.  For the plaintiff’s purpose, it would have required an appeal against the order of Judge Poon and this court.

27.  For the above reasons, I dismissed the plaintiff’s application.

COSTS

28.  Following the event in Fan’s application, I ordered that the costs of and occasioned by her application be to the plaintiff in any event to be taxed, if not agreed, with certificate for counsel.

29.  The costs of and occasioned by the plaintiff’s application should be to Christie’s in any event to be taxed, if not agreed, with certificate for counsel. Christie’s asked for such costs to be taxed on an indemnity basis.  The plaintiff opposed.

30.  In view of what is said above, the plaintiff’s application was misconceived. Taking into account the correspondence between the parties’ solicitors, I take the view that that the application in its present form should not have been taken out.  Mr Wong explained by reference to the parties’ difference in respect of the costs of the interpleader summons under the order of Judge Poon (§§ 5 and 12 thereof).  However that could not explain, let alone justify, the plaintiff’s application in its present form.

31.  For the purpose of the application, the plaintiff alleged collusion between Christie’s and Fan. The major complaint was that Christie’s has delayed in interpleading; and that it once put forward a counterclaim in response to the plaintiff’s action.

32.  Pursuant to Judge Poon’s order, the action against Christie’s was stayed and Christie’s counterclaim withdrawn.  In the circumstances, I refrained from going so far as taking into account the alleged collusion between Christie’s and Fan, particularly because it was materially more serious than mere allegation of breach of contractual and reasonable duty owed by Christie’s to the plaintiff on the basis of the delay.  That the plaintiff persisted in such allegation of collusion through counsel during the hearing, I would say, was unfortunate.

33.  Considering all the circumstances, I agree that it is appropriate to order that Christie’s costs of and occasioned by the plaintiff’s application shall be taxed on an indemnity basis.

34.  Between the plaintiff and Fan, I made no order as to costs of the plaintiff’s application.