DYSON TECHNOLOGY LTD AND ANOTHER v. GERMAN POOL GROUP COMPANY LTD AND OTHERS

HCA 838/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 838 OF 2011

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D E C I S I O N

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Introduction

1.  This is the Plaintiffs’ appeal against the decision of Master C Chow granting the Defendants’ application to stay the taxation of the Plaintiffs’ bill of costs.

2.  By a writ of summons filed on 17 May 2011, the Plaintiffs commenced proceedings against the Defendants for (1) infringing the copyright subsisting in the Plaintiffs’ original artistic works relating to the design of the Plaintiffs’ air multiplier bladeless fan product Model AM01 and the component parts thereof; and (2) infringing Hong Kong Standard Patent No HK1143413. 

3.  By a summons filed on 18 May 2011 (the “Injunction Summons”), the Plaintiffs applied for interlocutory injunctive relief (among other interlocutory relief) based on their claim for copyright and patent infringement against the Defendants, by reason, inter alia, of the Defendants’ dealing with bladeless fan products, in particular the Defendants’ model number OF-510, OF-512, OF-513 and OF-613 fan products.  The Plaintiffs’ claim is based on two causes of action, but the alleged infringing acts complained of are the same.

4.  At the first hearing of the Injunction Summons on 20 May 2011, Sakhrani J adjourned the hearing to 3 June 2011 upon the Defendants’ undertaking not to deal with their bladeless fan products, model number OF-510 and OF-512, pending the adjourned hearing of the summons.  After that the Plaintiffs filed their statement of claim.

5.  At the adjourned hearing on 3 June 2011, the Defendants gave certain undertaking in respect of the interlocutory relief sought and Deputy High Court Judge Coleman SC made orders for further interlocutory injunctive and other relief against the Defendants.

6.  By a letter dated 9 June 2011, the Defendants, through their solicitors, indicated that they would admit liability to the Plaintiffs’ claim for copyright infringement. Subsequently, in paragraph 8 of their defence and counterclaim filed on 12 July 2011, the Defendants confirmed their admission of liability to the copyright infringement claim.  Following some unsuccessful attempts to agree on a form of consent order to deal with a judgment to be obtained against the Defendants based on such admission, the Plaintiffs took out a summons dated 16 November 2012 to apply for judgment on admission against the Defendants regarding the copyright infringement claims.

7.  Subsequently, the parties reached agreement regarding the copyright infringement claims, which were made the terms of a consent order before Deputy High Court Judge Lok on 21 November 2012 (the “Consent Order”).  In the Consent Order, the court granted final relief against the Defendants as sought by the Plaintiffs in respect of its copyright infringement claims, including but not limited to the following paragraphs:

(1) a permanent injunction restraining the Defendants from infringing the Plaintiffs’ artistic works relating to the design of the Plaintiffs’ Air Multiplier bladeless fan model AM01 and the component parts thereof;

(2) a mandatory injunction requiring the Defendants to deliver up most of the infringing products;

(3) an order that the Plaintiffs be at liberty to dispose of the infringing products thus delivered up;

(4) an order that the Defendants were required to verify their compliance with the delivery up obligation by way of affirmations;

(5) an order that there be an enquiry as to damages sustained by the Plaintiffs’ by reason of the Defendants’ copyright infringement; and

(6) an order that the Defendants do pay the Plaintiffs’ costs in relation to the copyright infringement claims, such costs are to be taxed, if not agreed.

8.  On 25 July 2013, some eight months later, the Plaintiffs commenced taxation of the Plaintiffs’ costs in respect of the copyright infringement claims by issuing a Notice of Commencement of Taxation and a bill of costs.  The Defendants filed their List of Objections on 4 October 2013 and at the same time issued a summons applying under Order 62 rule 9D of the Rules of the High Court (“RHC”) seeking an order that the taxation of the Plaintiffs’ bill of costs be stayed until the conclusion of the action (the “Summons for Stay”).  On 8 October 2013, the Plaintiffs applied to set their bill of costs down for taxation. 

9.  On 26 March 2014, the Summons for Stay was heard by the master who granted the Defendants’ application to stay the taxation.  Against that order, the Plaintiffs now appeal.

The legal issues in dispute

10.  An appeal from the master’s decision to the judge is dealt with by way of actual rehearing, and the judge should treat the matter as though it came before him for the first time.  He may give such weight to the master’s decision as he considers appropriate, but is not bound by it. 

11.  The Defendants’ application for stay was made pursuant to RHC Order 62 rule 9D.  Their contention is that the rule applies to debar the taxation of both costs of interlocutory and non-interlocutory proceedings until the conclusion of the action.  As the action has not yet been concluded and in the absence of an order for immediate taxation made under rule 9D(2), the Plaintiffs are not entitled to immediate taxation. The master did not agree with the Defendants’ construction of rule 9D.  She took the view that rule 9D only applies to costs of interlocutory proceedings and therefore does not apply to the instant case.  However, she held that the present case is governed by rules 4 and 9, which require an express order for payment of costs before conclusion of the proceedings, if the party awarded costs desired immediate taxation and payment.  As there was no such express provision in the Consent Order, she ordered the taxation of the Plaintiffs’ bill of costs to be stayed.  

12.  The Plaintiffs’ contention is that the proceedings, at least insofar as the copyright infringement claims are concerned, have been concluded and hence they are entitled to immediate taxation and payment under rule 4(1).  They agree with the master’s construction of rule 9D but disagree with her application of rule 4(1) and rule 9(1).

13.  The legal issues raised by this appeal are what is the true construction of the various rules under Order 62, in particular, whether rule 9D(1) applies only to costs of interlocutory proceedings or to costs of both interlocutory and non-interlocutory proceedings; and whether “conclusion of the action” means conclusion of the entire action or includes conclusion of part of the action, such as one of the causes of action pleaded in the action.

The approach in construing Order 62 and the overall scheme under the order

14.  I agree with counsel of both parties that the court should adopt a purposive approach in construing Order 62 instead of a literal approach.  I should add the obvious that the order has to be construed as a whole, bearing in mind the position before the Civil Justice Reform (“CJR”), the undesirable confusion which the new rules seek to correct, the purpose of the CJR and the underlying objectives of the Rules of the High Court, particularly to increase the cost effectiveness of any practice and procedure to be followed in relation to proceedings before the court.

15.  Order 62 was completely revamped to provide a new regime for costs including the parties’ entitlement and taxation.  Most of the principles relating to entitlement to costs have been incorporated under the section, “Entitlement to Costs”.  An understanding of the overall scheme under the order is essential in construing its rules. 

16.  Rule 3 gives the court exclusive authority to award costs to the parties.  Rule 3(1) provides that no parties shall be entitled to costs of and incidental to any proceedings from any other parties to the proceedings except under an order of the court.

17.  Rule 4(1) which is heavily relied upon by the Plaintiffs gives the court wide discretion to deal with the issue of liability to costs at any stage of the proceedings or after the conclusion of the proceedings.  It provides:

“(1) Costs may be dealt with by the Court at any stage of the proceedings or after the conclusion of the proceedings; and any order of the Court for the payment of any costs may, if the Court thinks fit, and the person against whom the order is made is not an assisted person, require the costs to be paid forthwith notwithstanding that the proceedings have not been concluded.”

The phrase, “at any stage of the proceedings or after the conclusion of the proceedings” are wide enough to support the construction that this rule applies to costs of interlocutory as well as non-interlocutory proceedings.  The power to require payment of costs forthwith notwithstanding that the proceedings have not been concluded further supports that construction.  But, it should also be noted that this rule only covers the issue of liability to costs but not quantum or taxation, in respect of which there are more detailed provisions in the other rules.

18.  On quantum, Order 62 makes separate provision for costs of interlocutory and non-interlocutory proceedings.  Rule 9 deals with quantum of costs in non-interlocutory proceedings.  This rule provides as follows:

“(1) Subject to this order, where by or under these rules or any order or direction of the Court costs are to be paid to any person, that person shall be entitled to his taxed costs.

(2) Paragraph (1) shall not apply to costs which by or under any order or direction of the Court-

(a) are to be paid to a receiver appointed by the Court of First Instance under section 21L of the Ordinance in respect of his remuneration, disbursements or expenses; or

(b) are to be assessed or settled by a taxing master, …

(4) The Court in awarding costs to any person may direct that, instead of taxed costs, that person shall be entitled-

(a) to a proportion specified in the direction of the taxed costs or to the taxed costs from or up to a stage of the proceedings so specified; or

(b) to a sum of money summarily assessed in lieu of taxed costs.

(5) This rule does not apply to costs of an interlocutory application.”

19.  Rule 9(5) puts it beyond doubt that the entire rule applies to costs of non-interlocutory proceedings only.  Under rule 9(1), a party is not entitled to any costs or the actual costs he incurred.  Basically, he is entitled only to his taxed costs taxed under rule 9(1), or costs summarily assessed by the court under rule 9(4)(b), or costs settled or assessed by a taxing master under rule 9(2)(b)), pursuant to an order of the court. 

20.  Rule 9A applies solely to summary assessment of costs in interlocutory proceedings, where an order for immediate taxation and payment has been made under rule 4(1).  If no such order has been made, those costs arising from such interlocutory proceedings will only be taxed or summarily assessed in accordance with rule 9 and become payable at the conclusion of the proceedings.  In the absence of such an order, there is no right to summary assessment of costs of interlocutory proceedings.  Rule 9A(1) gives the court discretion to order payment of taxed costs, or costs summarily assessed in lieu of taxation unconditionally, or subject to the parties’ right to have the summarily assessed costs taxed in accordance with this Order.  This rule provides as follows:    

“(1) Where the Court has determined an interlocutory application at any stage of proceedings and orders a party to pay costs in respect of the interlocutory application to any other party, it may, if it considers it appropriate to do so but subject to rule 9C-

(a) make a summary assessment of the costs by ordering payment of a sum of money to that other party in lieu of taxed costs;

(b) make a summary assessment of the costs by ordering payment of a sum of money to that other party in lieu of taxed costs but subject to the right of either party to have the costs taxed pursuant to paragraph (2); or

(c) order that the costs be taxed in accordance with this Order.”

Rule 9A(2), (3) and (4) provide the regime for challenging the summary assessment by way of formal taxation.

21.  Rule 9B requires the parties to comply with a direction or order for payment of costs of non-interlocutory proceedings made under rule 9(4)(b) or costs of interlocutory proceedings made under 9A(1)(a) or (b) within 14 days of the date of the direction or order; or by such date as the court may specify.  This rule clearly applies to costs of interlocutory and non-interlocutory proceedings.

22.  Rule 9C sets out the circumstances when summary assessment of costs is not allowed.  This rule must apply to costs of interlocutory or non-interlocutory proceedings.

23.  Rule 9D stipulates the time when costs are to be taxed.  This rule provides as follows:

“(1) Subject to paragraphs (2) and (4), the costs of any proceedings shall not be taxed until the conclusion of the action.

(2) If it appears to the Court when making a costs order that all or any part of the costs ought to be taxed at an earlier stage it may order accordingly.

(3) No order may be made under paragraph (2) in a case where the person against whom the costs order is made is an aided person.

(4) Where it appears to a taxing master that there is no likelihood of any further order being made in a cause or matter, he may order the person entitled to payment of the costs of any interlocutory proceedings which have taken place to commence taxation proceedings in accordance with rule 21.”

Rule 9D(1) confirms the general rule that costs shall not be taxed until the conclusion of the action. Rule 9D(2) confirms the exception that if the court considers appropriate it may order part of the costs to be taxed before conclusion of the action, ie to be taxed and paid forthwith.  A further exception is created by rule 9D(4) which gives a taxing master discretion to order a party entitled to costs of interlocutory proceedings to commence taxation, notwithstanding that the action has not been concluded, if it appears to him unlikely that the proceedings will progress further.  Rule 9D is a parallel provision to rule 4.  It deals with taxation, while rule 4 deals with the court’s power to determine liability for and order payment of costs.

24.  Putting aside counsel’s disagreement as to the scope of application of rule 9D(1), they are in general agreement with the construction of the above rules.  The overall scheme under Order 62 is as follows.  The court has exclusive power to award costs.  An award of costs involves a two stage process: first, the making of an order for costs which determines the liability and the scale on which that liability is assessed; and second, the quantification of that liability.  A successful party is only entitled to be awarded his taxed costs or costs summarily assessed by the court or settled or assessed by a taxing master.  Costs are quantified or assessed either formally by way of taxation in accordance with the rules under the order or informally by the court by way of summary assessment or settled or assessed by a taxing master.  As for the time when such costs are to be taxed, the general rule is that costs are to be taxed after the conclusion of the action.  Two exceptions are provided by rule 4(1) under which the court may, if it thinks fit, order payment of costs notwithstanding that the proceedings have not been concluded or by rule 4(4) under which a master may order the party entitled to costs to commence taxation.  

Whether rule 9D applies only to costs of interlocutory proceedings

25.  I now turn to parties’ dispute on the construction of rule 9D.  It is common ground that this rule debars the taxation of costs of interlocutory proceedings until conclusion of the action. The dispute is whether this rule applies only to costs of interlocutory proceedings or whether it applies also to costs of non-interlocutory proceedings.  This boils down to what, on the true construction of Order 62, is the meaning of the phrase “any proceedings” and “the conclusion of the action” in rule 9D(1).  

26.  Mr Yan SC argued that rule 9D(1) applies only to costs of interlocutory proceedings. He quoted extensively from Allied Collection Agencies Ltd v Wood & Anor[1] and Big Boss Investment Ltd v So Lai Kei[2] in support of his submission.   In Allied Collection Agencies Ltd, Neill J criticized the confusion in the application of the then Order 62 of the English Rules of Supreme Court (“RSC”) which arose as a result of practice.  The confusion Neill J referred to was the fact that the words ‘Defendant’s costs’ or the words ‘Plaintiff’s costs’ had in course of time acquired a special meaning which created inconsistencies between RSC Order 62 rule 11(1) and other provisions in RSC.  Neill J concluded at 181f-h as follows:

“I can therefore state my conclusion as follows. (1) Where on an interlocutory application the court intends that one party is to have the costs, the usual form of order is ‘costs in any event’. It is only in exceptional circumstances that the words ‘defendant’s costs’ or the words ‘plaintiff’s costs’ are used. (2) If the words ‘plaintiff’s costs’ or ‘defendant’s costs’ are used they are effective to entitle the party concerned to obtain an immediate taxation.

I would only add this.  I have been forced to conclude on the material which has been put before me that the words ‘defendant’s costs’ have the meaning for which counsel for the defendants contends.  One cannot, however, regard the present situation as satisfactory.  There is an apparent inconsistency between RSC Ord 62, r 11(1), on the one hand, and Ord 62, r 4(1), Ord 14, r 7(1) and Ord 86, r 7, on the other hand.  I would hope that the matter can be brought to the attention of the Rule Committee so that the present formula can be replaced and a form of order can be prescribed to cover the exceptional case where immediate taxation is intended.  I regard the present formula as a source of confusion.”

Allied Collection Agencies Ltd was a decision in 1981.  At the time, the law and practice in the United Kingdom was the same as that in Hong Kong.  In other words, Hong Kong experienced the same confusion.

27.  The above sentiments of Neill J were echoed by Registrar Au-Yeung (as she then was) in Big Boss.  In that case, the 1^st defendant commenced taxation proceedings after the parties disposed of an injunction application by consent with “costs to be paid by the Plaintiff to the 1^st defendant on a party and party basis to be taxed if not agreed”.  Registrar Au-Yeung stayed the taxation proceedings until the action had been completed.  She referred to Allied Collection Agencies Ltd and adopted the passage I quoted in the above paragraph as the Hong Kong position before the CJR.  The applicable rules then were Order 62, rule 4(1), rule 9(1) and rule 11(1); and Order 14 rule 7(1) and Order 86 rule 6 (which is in the same terms).  These rules are retained after the CJR.  Registrar Au-Yeung then discussed the Hong Kong position after the CJR.  She said at paragraph 9 to 13:

 “The Position After the Civil Justice Reform (“CJR”) in Hong Kong

9. The rules set out in paragraph 2 above [quoted above] have been retained in Hong Kong but Rule 9D is added to Order 62 since the coming into effect of the Civil Justice Reform on 2 April 2009  :

[She then quoted Order 62 rule 9D. See the rule as quoted in paragraph 21 above]

10. Section 2 of the High Court Ordinance defines “an action” as “a civil proceeding commenced by writ of summons or in such other manner as may be prescribed by any law.”

11. The effect of rule 9D, in my view, is to reverse the “formula” and unsatisfactory position as described by Neill J.  The “default position” under rules 9D(1) and (2) is thus to allow taxation only after conclusion of an action unless the costs order specifies taxation to be “forthwith” or at some designated time.  The adding of the words “to be taxed” without “forthwith” does not entail immediate taxation.  This is because “taxation” is a matter as of right and wrong, whether or not “to be taxed” are specified in the casts order:  see Order 62, rule 9(1)[2] and 9A(1)(c)[3] and 2[4].  By this construction, Order 62, rule 4(1) and Order 14, rule 7(1) will give the Court discretion to determine the incidence of costs.  It will also have the discretion to specify taxation forthwith but in the absence of its exercise, the taxation will be done at the end of the action.

12. Notwithstanding this major change to the time for taxation, no injustice will be created to the party who has a costs order in his favour.  As provided for under Order 62, rule 9 and 9A, it is always open to a party to seek summary assessment of costs.  This is in fact encouraged for interlocutory applications:  see paragraph 6 of PD 14.3, especially for interlocutory applications.  If, for some reason, summary assessment cannot be done, a party can always ask for taxation forthwith to safeguard his position.  Otherwise, taxation can only proceed upon completion of an action.  This will lead to one taxation per party per action.  In the course of the action, where different parties obtain costs orders, there may be discussions on the amount and set off so that taxation may be dispensed with at the end of a case. 

13. Once taxation is done, I can see no problem with payment “forthwith” in the absence of an order for stay of execution.”

In conclusion, she said at paragraph 20:

“Conclusion

20. Where a costs order does not specify the time for taxation, or does not state that a party should have costs “forthwith”, taxation shall be done upon completion of an action under Order 62, rule 9D(1). A party who has won an interlocutory application and wants immediate payment is thus well-advised to seek summary assessment or costs with taxation forthwith.”

Both Mr Yan SC and Mr Liao SC considered the above passages as a correct construction of rule 9D(1).  What divided them is whether the learned registrar was of the view that rule 9D(1) applies only to costs of interlocutory proceedings or to costs of interlocutory and non-interlocutory proceedings. 

28.  Mr Yan SC argued that the rule should be given a purposive construction.  The purpose was to reverse the confusing practice under the old rules.  He submitted that from the passages quoted above, it is clear that Registrar Au-Yeung was referring to costs of interlocutory proceedings only.  He said that this view was echoed in the explanatory note to Order 62 rule 9D in Hong Kong Civil Procedure 2014 at paragraph 62/9D/1, which reads:

 “Unless a costs order specifies the time for taxation or states that a party should have their costs “forthwith”, taxation of costs shall not take place until the conclusion of the action.  Hence, a party who has won an interlocutory payment and seeks immediate payment should thus seek summary assessment or costs with taxation forthwith.”

With respect, I do not think that must necessarily be the only conclusion.   Though Big Boss was about costs of interlocutory proceedings, Registrar Au-Yeung never mentioned that she was talking about costs of interlocutory proceedings only.  Those words were not used in rule 9D(1) either.  On the contrary, the rule refers to “any proceedings”, which are wide enough to include costs of non-interlocutory as well as interlocutory proceedings.  Thus, it is apparent that in the above quoted passages the learned Registrar was discussing the general position that taxation will take place at the conclusion of the action in the absence of any specific order for immediate taxation, leading to one taxation per party per action.  She made specific reference to the impact of rule 9D on rule 4(1). This resonates my observation that rule 4(1) deals with liability for costs whereas rule 9D deals with taxation or when to tax costs and that both rules apply to costs of interlocutory as well as non-interlocutory proceedings.  By any view, the learned Registrar was not restricting her construction of rule 9D to costs of interlocutory applications.  In fact, as submitted by Mr Liao SC, in light of her specific reference to rule 4 and rule 9, this could not possibly have been her intention.  Indeed, it was equally open to the learned Registrar to reach the same conclusion, if she took the view that rule 9D(1) applies to costs of interlocutory and non-interlocutory proceedings. 

29.  A second basis of Mr Yan SC’s submission is that rule 4(1) was not amended under the CJR, while rules 9A, 9B, 9C and 9D were introduced to Order 62 to replace the old rule 9A concerning interim payment of costs of interlocutory applications, as part of the package of provisions introduced to implement the procedure of summary assessment of costs of interlocutory applications.  He further argued that the introduction of a new sub-rule (5) to rule 9 which specifies that rule 9 does not apply to costs of non-interlocutory applications makes it clear that rules 9A, 9B, 9C and 9D relate to costs of interlocutory proceedings only as is made clear by the amended heading of that rule (“Taxed costs, fractional taxed costs or costs summarily assessed for non-interlocutory applications”) and the heading of rule 9A (“Summary assessment of costs of interlocutory applications”). 

30.  Again, with respect, such argument is misconceived.  There is no evidence to support the suggestion that rules 9A, 9B, 9C and 9D were introduced as a package for implementing the procedure of summary assessment of costs of interlocutory proceedings only.  Nor could such inference be drawn from the language of these rules.  Indeed from the general scheme of Order 62 as I outlined in paragraphs 20 to 24 above, it is apparent that rules 9A to 9D were not introduced as a package for implementing the procedure of summary assessment of costs of interlocutory proceedings only. 

31.  In my view, the old rule 9 applied to costs of interlocutory and non-interlocutory proceedings.  The amendment to the heading of the old rule 9 and the introduction of sub-rule (5), limiting the application of the new rule to costs of interlocutory proceedings was obviously intended to make separate rules for costs of interlocutory proceedings and costs of non-interlocutory proceedings.  Thus, the new rule 9, with the exception of sub-rule (1) which is of general application, becomes applicable to summary assessment of costs of non-interlocutory proceedings only.  The new rule 9A replaced the old one dealing with interim payment of costs.  It expressly deals with summary assessment of costs of interlocutory proceedings only.  The new rules 9B and 9C introduced expressly apply to costs of interlocutory applications under rule 9A and non-interlocutory applications under rule 9(4).  As the heading suggests, rule 9D clearly deals with an entirely separate topic of when to tax costs and not about summary assessment of costs, whether of interlocutory or non-interlocutory proceedings.  Rule 9D(1) expressly refers to the costs of any proceedings, interlocutory or otherwise.  There is nothing to suggest that this rule applies only to costs of “any interlocutory proceedings”.   I am unable to agree with the submission that rules 9A, 9B, 9C and 9D were introduced as a package for implementing the procedure of summary assessment of costs of interlocutory proceedings only and that rule 9D applies to summary assessment of such costs only. 

32.  Furthermore, it can be noted that whenever the legislative intent was that a rule is only applicable to costs of either interlocutory or non-interlocutory applications, it expresses its intention unequivocally, for instance, rule 9 for non-interlocutory proceedings and rule 9A for interlocutory applications.  If the intention was not so expressed, the rule must apply to costs of interlocutory and non-interlocutory proceedings.

33.  Mr Yan SC called in aid the Legislative Council Brief – Subsidiary Legislation Relating to Civil Justice Reform in support of his argument that rule 9D applies only to costs of interlocutory applications.  However, as submitted by Mr Liao SC, none of the documents indicate that rule 9D is only applicable to interlocutory matters and there is nothing inconsistent between the Legislative Council Brief and the interpretation of rule 9D as contended by Mr Liao SC.

34.  Next, Mr Yan SC argued that rule 9D was modelled on the English RSC Order 62 rule 8, which was introduced in 1986, as a result of the criticism by Neill J in Allied Collection Agencies Ltd.  He referred to a number of English authorities which construed the English rule 8 as applying only to costs of interlocutory proceedings.  He said that in Big Boss, the learned Registrar was not referred to this true origin of rule 9D.  The relevant part of the English rule 8 reads:

“(1) Subject to paragraph (2), the costs of any proceedings shall not be taxed until the conclusion of the cause or matter in which the proceedings arise.

(2) If it appears to the Court when making an order for costs that all or any part of the costs ought to be taxed at an earlier stage it may, except in a case to which paragraph (3) applies, order accordingly.

(3) No order may be made under paragraph (2) in a case where the person against whom the order for costs is made is an assisted person within the meaning of the statutory provisions relating to legal aid.

…

(9) Where it appears to a taxing officer on application that there is no likelihood of any further order being made in a cause or matter, he may tax forthwith the costs of any interlocutory proceedings which have taken place.”

35.  Mr Liao SC argued that the wordings of the English rule and our rule 9D are different; that there is no evidence showing that rule 9D(1) was in fact modelled on the English rule 8(1); and that there was no reference to the English rule in the legislative documents submitted in the Legislative Council.  Be that as it may, on a fair reading of the two rules, I agree with Mr Yan SC that the four sub-rules of our rule 9D are similar to those sub-rules under the English rule 8, except that the phrase “cause or matter” instead of “action” was used in the English rule 8(1). 

36.  Mr Yan SC argued that the phrase “cause or matter” is no different in effect from the word “action” under our rule 9D(1). His argument is that as set out in section 151 of the English Supreme Court Act 1981, “cause” means any action or any criminal proceedings, and “matter” means any proceedings in court not in a cause.  Hence, he argued that in the context of civil proceedings, the words “cause” and “action” can be used interchangeably, while the word “matter” is not relevant to the instant case. As the definitions of “action”, “cause” and “matter” under section 2 of the High Court Ordinance are the same as those set out in section 151 of the English Supreme Court Act 1981, he submitted rule 9D(1) has the same construction as the English rule 8(1).  He then referred to three English authorities in which the English rule 8(1) was construed.

37.  In David Marcus Small v Simon Emile Cohen & Ors[3], the Plaintiff was a partner of a firm of solicitors.  He sought six heads of relief against the firm, including dissolution of the partnership and appointment of a receiver.  At the hearing, the judge made no order except that an audited profit and loss account of the firm and an audited balance sheet be drawn up.  Thus, the Plaintiff was substantially unsuccessful.  The judge ordered costs against him in any event but refused to order taxation forthwith.  The accounts were submitted to the Plaintiff, but he did not accept them.  Subsequently, the Plaintiff accepted an offer to retire from the partnership which rendered the outstanding relief sought irrelevant.  The Defendants then sought to vary the costs order to allow the costs be taxed and paid forthwith.  The judge adopted a common sense approach in deciding that the action was concluded for the purpose of the English rule 8(1) and ordered the costs to be taxed and paid.  On appeal, the Court of Appeal referred to the statutory definition under section 151 of the Supreme Court Act and held that for the purpose of rule 8(1), “cause” in effect meant “action”.  Applying that definition to the facts of the case, the Court of Appeal held that while the dispute was substantially resolved, the action had not concluded because of the accountancy issue.  The purpose of quoting this authority was to show that the English rule was no different from our rule 9D(1) by reason of the statutory definition of the words, “cause”, “proceedings” and “action”.  Small v Cohen was a case about costs of interlocutory proceedings to which our rule 9D(1) applies.  However, like Big Boss, that case is not directly on the point that the English rule 8(1), which is equivalent to our rule 9D(1), did not apply to costs of non-interlocutory proceedings, particularly in view of the words “any proceedings” in the two rules.

38.  The second case relied on by Mr Yan SC is London Borough of Enfield v P[4]. The case was about costs in wardship proceedings, which were interlocutory.  Holman J held that the English rule 8 was designed to prevent multiplicity of bills and taxations on interlocutory orders for costs, and to save them up until the conclusion of the substantive action, ie one taxation per party per action. Thus, where an order is made for costs of interlocutory proceedings the entitlement to taxation does not arise until the conclusion of the cause or matter.  That does not exclude the operation of the rule to costs of non-interlocutory proceedings, particularly in the light of the words “any proceedings”.  For the same reason, it does not really assist the Plaintiffs. 

39.  The third case is Rafsanjan Pistachio Producers Co-operative v Bank Leumi (UK) plc[5], which was quoted in Enfield v P.  Mr Yan SC relied on the following passage of Saville J:

 “The words in question “the conclusion of the cause or matter” are, in my view, in the general context in which they appear well capable of meaning the end of the cause or matter before the court in question.  It is clear from Order 62, rule 8 and other rules (e.g. Order 62, rule 3) that the underlying scheme is to draw a distinction between the final adjudication by a court of litigation on the one hand and orders (ie interlocutory orders) made on the way to that final adjudication on the other.  In the case of the latter a special order must be made if the costs are to be taxed before a final adjudication.  In the case of the former taxation follows automatically.”

40.  Mr Yan SC submitted that on these dicta, it is clear that the English rule 8 was, and therefore our rule 9D is, intended to debar taxation of interlocutory orders for costs but not otherwise; and that these rules were intended to reverse the previous practice criticised by Neill J in Allied Collection Agencies Ltd and by Registrar Au-Yeung in Big Boss.  He argued that rule 9D should be given a purposive interpretation and it would be wrong to construe the words “any proceedings” literarily. 

41.  I entertain no doubt that one of the purposes of the rule was to debar taxation of costs in interlocutory proceedings.  But giving the rule a purposive interpretation does not exclude the application of the rule to costs of non-interlocutory proceedings.  In construing the rules, one cannot ignore the phrase “any proceedings” and “conclusion of the cause or matter” under the English rule or “conclusion of the action” under our rule. The real distinction made by the rule, as Saville J emphasised, is the final adjudication of an action and orders made on the way to that final adjudication.  In that context and in the light of the phrase “conclusion of the action”, it is difficult to limit the construction of “any proceedings” to mean “any interlocutory proceedings”.  If that were the intention of the legislature, nothing could be simpler than to add the word “interlocutory” in the rule. 

42.  The following observation of Holman J in London Borough of Enfield v P about rule 8 is illuminating. He said at 76:

“I do not find it easy to reconcile rules 8 and 29. Clearly, rule 8 is designed to prevent a multiplicity of bills and taxations on interlocutory orders for costs and, subject to any express order under rule 8(2), to save them up until the conclusion of the substantive action. …

Further, it is quite clear that the purpose of rule 8 was to implement the conclusions of the report dated 25 January 1983 of a working party on Order 62 chaired by Master Horne. Paragraph 30 of that report was headed “Stage of proceedings at which costs to be dealt with”, and reads as follows:

“We feel that it is generally desirable that the court should deal with all questions of costs together and at the conclusion of the proceedings. Even where costs orders are made at different stages in the proceedings, our experience is that it is usually helpful to tax all those costs together at the conclusion of the proceedings. A general rule to this effect would enable the court and the taxing officer to have before them all relevant considerations when reaching their decisions. However, we recognise that there might well be circumstances when it would be appropriate for the court to make an order for costs before the conclusion of the proceedings and rarer circumstances when the immediate taxation of those costs would be desirable. Nevertheless, we recommend that Order 62 should express the general rule which we have shown above subject to the court’s discretion to do otherwise.” ”

The observation of the working party is also relevant to Hong Kong.  It also reflects generally the rationale underlying rule 9D and the goal of one taxation per party per action.  To achieve that end, the rule must apply to all stages in the proceedings, which necessarily include interlocutory as well as non-interlocutory proceedings.  That, in my view, is precisely what the phrase “any proceedings” is intended to mean.

43.  The last case relied on by Mr Yan SC was Molnlycke AB v Procter & Gamble Limited (No 6)[6]. In that case, final judgment was given after trial, granting relief in all material respects identical to the relief set out in the Consent Order in the present case.  The defendants contended, relying on the English rule 8, that the plaintiffs were not entitled to taxation until the conclusion of the enquiry as to damages which was ordered under the final judgment.  Morritt J distinguished Small v Cohen on the basis that the action was concluded by the judgment notwithstanding that under that judgment there were certain enquiries which were reserved to future hearings.  This is a case where the action has been concluded.  In that sense, it does not assist the Plaintiffs in their construction of rule 9D(1).

44.  The most forceful argument of Mr Yan SC is that the rule could not have been intended to apply to final costs orders made upon the conclusion of the proceedings insofar as it relates to a particular cause of action in an action in which a number of causes of action has been pleaded. To hold otherwise would be unjust as the successful party of one of the causes of action would have to wait, possibly for years, before recovering those costs until the conclusion of other wholly separate and distinct causes of action.  This argument raises the question of what is meant by “conclusion of the action”.

45.  On the face, that phrase means the conclusion of the entire action and not parts of it or some of the causes of action pleaded. Under section 2 of the High Court Ordinance, “action” means a civil proceeding commenced by writ of summons or in such other manner as may be prescribed by any law; and “cause” means any action or any criminal proceeding.  These definitions reinforce the proposition that “cause” in rule 9D(4) meant “action” and “conclusion of the action” in rule 9D(1) means conclusion of all the proceedings commenced by the writ of action and nothing less.  “Action” cannot be construed merely to mean an issue, a collection of issues, a set of proceedings, or one or some of the causes of action in a writ of summons.  It means the entire action.  “Conclusion of the action” means conclusion of the entire action, not just some of the causes of action pleaded in the action.

46.  Under this construction, the hardship suggested by Mr Yan SC may well be real, but the observation of Holman J in London Borough of Enfield v P and the views of the working party quoted above provide the complete answer.  The goal is one taxation per party per action. Thus, the general rule is to debar all taxation until the conclusion of the action.  Rule 9D was therefore intended to be applicable to costs of any proceedings, interlocutory or otherwise.  Rule 9D(1) was intended to debar taxation of any proceedings until conclusion of the entire action.  If the circumstances so justify, a party may apply for summary assessment or immediate taxation under rule 9D(2).  The master may in an appropriate case order the party entitled to costs to commence taxation under rule 9D(4). 

47.  In conclusion, I find that on its true construction rule 9D states the general rule that the costs of any proceedings, whether interlocutory or non-interlocutory, are to be taxed after the conclusion of the action.  That rule applies to any proceedings and not solely to costs of interlocutory proceedings.  The deciding factor is whether the action has concluded.

This Appeal

48.  The Plaintiffs’ action is based on two causes of action, copyright infringement and patent infringement.  They obtained judgment with costs against the Defendants in respect of copyright infringement.  That costs order is a final costs order insofar as the copyright infringement claim is concerned.  However, the action, insofar as the patent infringement is concerned is still continuing. 

49.  The Plaintiffs argue that it may take years before the patent infringement claim is concluded and it would be unfair to require them to wait for such a long period of time before being paid their costs on a claim which they have undoubtedly succeeded.  The patent infringement claim is based on the Plaintiff’s patent in Europe, which is now being litigated abroad.  Mr Liao SC said that if the Plaintiffs failed, the Plaintiffs could have no basis to pursue the patent infringement claim in Hong Kong and if they succeed, the Defendants would not contest the patent infringement claim.  That is no comfort to the Plaintiffs as the conclusion is still a long way off.

50.  There is no dispute that both claims are based on the same infringing acts.  There are common issues.  It may not be appropriate to apportion those costs at this stage.  This is a case in which the principle of one taxation per party per action should apply.  It would be cost effective, just and convenient to have all costs taxed after the patent infringement claim is concluded.  On my construction of rule 9D(1), the action has not concluded. No order for immediate taxation had been sought and made under rule 9D(2).  The Plaintiffs are therefore debarred by rule 9D(1) from taxation of those costs until conclusion of the entire action.  Accordingly, this appeal must be dismissed with costs and certificate for two counsel.