CHINA CONSTRUCTION REALTY LTD v. LUCKY DRAGON LTD AND OTHERS

HCA 1237/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1237 OF 2012

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DECISION ON COSTS

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The adjourned hearing

1. The written Decision was delivered on 8 July after the hearing, leaving the issue of costs for determination today.

2. The factual background has been set out in the Decisiondelivered on 8 July 2014 at paragraphs 17-23.  It is unnecessary to rehearse it for the present purposes.

3. In the hearing of the summonses, the following issues had been dealt with:

a.  the Hadkinson Order application;

b.  the plaintiff’s summons for specific discovery;

c.  the 4^th defendant’s application for leave to submit its application to the Court for the plaintiff to withdraw its interrogatories out of time, which was granted by the Court and the 4^th defendant agreed to pay the plaintiff’s costs;

d.  the 4^th defendant’s summons for Zhang Xi’s 5^th affirmation to be served out of time for which the 4^th defendant had conceded to pay the costs of and occasioned by it; and

e.  the 4^th defendant’s summons for the plaintiff to withdraw its interrogatories.

4. I consider it would be fair to assess the costs by reference to each of the issues above.

The Court’s discretion on costs

5. It is trite that costs are a matter of discretion of the Court[1] to be exercised judicially by reference to the relevant authorities.  Order 62 rule 5 of the RHC must be the starting point, the relevant parts of which are:

5.   Special matters to be taken into account in exercising discretion

  (O. 62, r. 5)

(1)  The Court in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account- (L.N. 152 of 2008)

(aa) the underlying objectives set out in Order 1A, rule 1; (L.N. 152 of 2008)

(e) the conduct of all the parties; (L.N. 152 of 2008)

(f) whether a party has succeeded on part of his case, even if he has not been wholly successful; and (L.N. 152 of 2008)

 (2) For the purpose of paragraph (1)(e), the conduct of the parties includes-

(a)  whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(b)  the manner in which a party has pursued or defended his case or a particular allegation or issue;

(c)  whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim; and

(d) conduct before, as well as during, the proceedings. (L.N. 152 of 2008)

Parties’ proposals

6. The respective counsel who had appeared before this Court attend this hearing today.

7. The plaintiff proposes that the 4^th defendant should pay 80% of the plaintiff’s costs for the summons of specific discovery; the plaintiff should pay the 4^th defendant’s summons for interrogatories and the 4^th defendant should pay the plaintiff the costs of the summons for leave to file the 5^th affirmation of Zhang Xi and for leave to hear the interrogatories summons out of time, all with certificates for counsel to be assessed and paid forthwith.

8. The 4^th defendant proposes that the costs of the Hadkinson application should be given to the 4^th defendant, same as the costs for the interrogatories withdrawal application taken out by the 4^th defendant.  It agrees to pay 50% of the plaintiff’s costs for the specific discovery summons.

The Court’s approach on assessment of costs

9. The plaintiff complains that the 4^th defendant has failed to provide separate schedules of costs in respect of each of the summonses.  I consider that I am able to deal with the assessment despite no separate schedules are available.  I do not intend to adjourn this assessment for the 4^th defendant to submit the separate schedules of costs.

10. The plaintiff then argues that no separate costs order should be made for the Hadkinson order application because the plaintiff had not taken out a separate summons for it and that even if the plaintiff had not raised the issue, it was incumbent upon this Court to take that issue into account at the hearing since the 4^th defendant is in breach of the Injunction Order.  Ms. Tong refers to the relevant authorities stating that the successful party should have the costs of the application generally even though the court might not accept all the arguments of the successful party unless there are circumstances where the successful party had acted improperly or unreasonably in raising issues which ought not to have been raised[2], in which case the Court may not only deprive the successful party of his costs but may also order him to pay the whole or a part of the unsuccessful party’s costs.  See paragraph 39 of the Judgment of Wang Din Shin’s case.

11. The Court of Appeal in a recent decision in CWG v MH & Others (unreported, CACV80/2013, 30 June 2014) has decided that an application for a Hadkinson Order should be by way of a summons.  The plaintiff asked this Court to deal with this issue saying that it was not necessary to have a separate summons.  The Court had acceded to its request. It will not be fair then for it to say that because there had not been a summons for the order, it should not pay the costs even if it had failed in its application.  In any event, based upon the above authority, this Court does have the power to order the plaintiff to pay the costs of the Hadkinson order application which it had failed if in the circumstances it is fair to do so.  However, for the reasons that follow, I decide that the plaintiff does not have to pay the costs of the Hadkinson Order application to the 4^th defendant.

12. In the assessment of the costs for the Hadkinson Order application, it is not disputed that the 4^th defendant was in breach of the Injunction Order of the Court and up to date, it has not purged the breach. It is analogous to the situation where in an application for striking out of the plaintiff’s claim for inordinate and inexcusable delay on an application by the defendant and the Court, having found that the plaintiff was guilty of inordinate delay, however, refused to exercise its power to strike out the plaintiff’s claim.  In the circumstances, although the defendant had lost its application, the Court might disallow the plaintiff’s costs and ordered that each party should pay its own costs.  This was the decision of Judge G. Lam in Tsang Foo (also known as Fu) Keung and Key Kwong Development Ltd v Chu Jim Mi Jimmy, being sued as the personal representative of the estate of Yu Lai Ying deceased and the personal representative of the estate of Chu Kwok Chung & Others (unreported, HCA7140/1995,  G Lam J. 12 July 2013), in which the learned Judge said at paragraph 122 of his Decision: “Given that the plaintiffs were guilty of very lengthy and inexcusable delay, I would make an order nisi that, despite the dismissal of the defendants’ applications, each party is to bear their own costs.  A similar order was made at first instance in China Nonferrous Metals (Hong Kong) Finance Co Ltd (in liquidation) v South-east Asia Investment Holding Co Ltd [2012] 5 HKC 122.”

13. I shall follow the above example, taking into consideration of Order 62 rule 5(1)(e) RHC.

14. As to the specific discovery summons, I shall order the 4^th defendant to pay 65% of the plaintiff’s costs.  The 4^th defendant does not dispute the amount of $432,023 in the plaintiff’s schedule of costs, I shall order the 4^th defendant to pay a round-off figure of $280,000 to the plaintiff;

15. As to the interrogatory summons, which the plaintiff agrees to pay the 4^th defendant’s costs.  There is no separate costs schedule for this summons.  I have made reference to the plaintiff’s schedule of costs for this summons.  I consider that the costs for this application, taking into account of the overlapping costs in the specific discovery summons, should be $100,000 which I order the plaintiff to pay to the 4^th defendant, subject to set-off.

16. As to the costs for the 4^th defendant’s application for leave to serve the 5^th affirmation of Zhang Xi, the costs of which the 4^th defendant agrees to pay, the costs are assessed at $12,000, subject to set-off.

17. As to the costs for the 4^th defendant’s application to file and serve the summons for interrogatories out of time, the costs assessed are at $4,000, subject to set-off.

The order

18. I shall make an order in terms as follows:

a.  Each party shall bear its own costs for the Hadkinson order application;

b.  In terms of paragraph 14-17;

c.  The costs are to be set-off, the balance is to be paid within 14 days from the date hereof;

d.  The above costs shall cover all costs reserved in the meantime;

e.  Each party shall bear its own costs for today’s hearing.