SINO FAVOUR DEVELOPMENT LTD AND ANOTHER v. KAN WAI CHUNG AND OTHERS

HCA1517-1521/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1517 OF 2005

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AND

ACTION NO. 1518 OF 2005

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BETWEEN

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AND

ACTION NO. 1519 OF 2005

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BETWEEN

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AND

ACTION NO. 1520 OF 2005

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BETWEEN

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AND

ACTION NO. 1521 OF 2005

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BETWEEN

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(Consolidated by Order of the Honourable Mr Justice Saunders
dated 12 August 2005)

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RULING ON COSTS

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1. On 12 February 2010 I dismissed the 1^st defendants’ application for specific discovery against the non-party and ordered that the costs of the application below be paid by the 1^st defendants to the non-party to be taxed on a common fund basis, if not agreed, and be paid by the 1^st defendants to the plaintiffs to be taxed on a party and party basis, if not agreed.

2. I also made a costs order nisi that the costs of the appeal before me be paid by the 1^st defendants to the non-party to be taxed on a common fund basis, if not agreed, and be paid by the 1^st defendants to the plaintiffs to be taxed on a party and party basis, if not agreed.

3. The 1^st defendants have applied to vary my costs order nisi, and, in his written submission dated 18 March 2010, Mr Simon Lam, counsel for the 1^st defendants, relied on the decision of the Court of Appeal in Thomas Vincent v. South China Morning Post Publishers Limited, CACV253/2002 and submitted that my costs order should reflect the parties’ respective failure and success in the appeal and that there ought to be an appropriate apportionment of the costs according to the time and expenses involved in the hearing of and preparation for the different issues.  He further submitted that it was wrong in principle for an appellant who is partly successful in the appeal to be ordered to pay the entire costs of the other party to the appeal.

4. I can deal with the position of the non-party very quickly.

5. At the hearing before Master de Souza, the non-party only asked for costs on a common fund basis but was awarded costs on an indemnity basis. 

6. On the appeal before me, Mr K.M. Chong, for the non-party, very sensibly did not press the point as to costs and said that he would be content with an order for costs on the common fund basis in favour of his clients.  Mr Lam, for the 1^st defendants, did not object to such an order being made if I dismissed his clients’ appeal.  In the event, I did dismiss the appeal and ordered that the costs of the application below be paid by the 1^st defendants to the non-party to be taxed on a common fund basis, if not agreed, and that the costs of the appeal be paid by the 1^st defendants to the non-party, also to be taxed on a common fund basis, if not agreed. 

7. Mr Lam submitted that the non-party should be made to pay part of the costs of the appeal because they had not expressed any intention to give up the benefit of the Master’s costs order made in their favour for taxation on an indemnity basis and only conceded the point in the course of the hearing of the appeal before me.

8. I am not impressed by this submission and I uphold the costs order nisi I had made with regard to the costs of the non-party.  On the appeal, the time spent on the issues of costs as between the 1^st defendants and the non-party was minimal.  Further, in reality, there is probably very little, if any, difference in the final figure that is obtained after taxation conducted on a common fund basis and after a taxation conducted on an indemnity basis.

9. Mr C.Y. Li, in his written submissions for the plaintiffs dated 25 March 2010, submitted that the question of costs was not a discrete or separate issue of the appeal but was being addressed as part and parcel of the appeal hearing and that, in any event, the matter of costs must be treated as an integral part of the substantive hearing unless the matter came before the court as a costs only appeal. 

10. The award of costs is discretionary.  It is not and should not become the practice of the court to engage upon a detailed analysis of the matter and give detailed reasons for its order on costs, and satellite litigation on the issue of costs is to be discouraged.

11. I am persuaded that I should vary my costs order nisi so far as the award of costs in favour of the plaintiffs is concerned.  The 1^st defendants was partially successful on the appeal against the order of the Master below.  I was persuaded to set aside the order for costs on an indemnity basis and to replace it with an order for costs on a party and party basis in favour of the plaintiffs.  Nevertheless, the substantial part of the costs incurred in the preparation of the appeal and during the hearing of the appeal was incurred on the merits of the substantive appeal.  In these circumstances, I conclude that 80% of the plaintiffs’ costs of the appeal be paid by the 1^st defendants to the plaintiffs, to be taxed on a party and party basis, if not agreed.

12. The costs of this application to vary my costs order nisi can be treated as part of the costs of the appeal.