CALM OCEAN SHIPPING S.A. v. WIN GOAL TRADING LTD AND OTHERS

HCAJ 118/2015

ADMIRALTY ACTION NO 118 OF 2015

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D E C I S I O N
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1.  By a Decision dated 2 November 2015 (“the Decision”), I dismissed the plaintiff’s summons (supported by the intervener) for an injunction against the defendants. On a nisi basis, I ordered the plaintiff and the intervener to pay the costs of the defendants. This is the losing plaintiff’s application to vary the costs order nisi, seeking (i) costs on indemnity basis; or (ii) that each party should bear its own costs.

2.  Although the intervener has not applied for variation of the costs order, in my view, its liability should not exceed that of the plaintiff.

Legal principles

3.  Since the injunction application was interlocutory nature, the starting point is Order 62, rule 3(2A), Rules of the High Court.  The court may order costs to follow the event.

4.  I disagree with Mr Hui, counsel for the defendants, that the injunction application was final in nature.  Though the injunction sought was mandatory in nature, granting it would not have disposed of the action. 

5.  Mr Horton (solicitor for the plaintiff) and Mr Hui have cited several cases on costs after trial, such as Re Elgindata (No.2) [1992] 1 WLR 1027, Wong Kam Tong v Tin Shing Court, Yuen Long (IO) [2012] 2 HKLRD 1128, Hong Kong Kam Lan Koon Limited v Realray Investment Limited (No.4) [2005] 4 HKC 162.  Those cases are not applicable to the present situation.

6.  In exercising its discretion, the court should have regard to various matters set out in Order 62, rule 5, including the conduct of the parties.  Conduct includes those set out in r 5(2):

(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.

The plaintiff’s emphasis is on (b) and (d).

The plaintiff’s case on costs

7.  The plaintiff’s case is that it had made many attempts with the defendants to have open discussion before action but to no avail.  The conduct that the plaintiff relies on is that:

(a) The defendants concealed its knowledge and failed to clarify the position of the Win Goal B/L.

(b) The defendants informed the plaintiff that they had not been paid by the bank within 5 days of presentation of the BADR B/L and that the documents had been rejected. It led the plaintiff to believe that a rejection of the BADR B/L had occurred and the BADR B/L was held to the order of the defendants. 

(c) The defendants assumed inconsistent positions.  Before the hearing on 30 October 2015 (“the Hearing”), they informed the plaintiff that they were negotiating a sale of the cargo to ADO, thereby asserting ownership over the cargo.  At the Hearing the defendants claimed to have no interest in the cargo.  Instead they relied on the right to sue the appropriate bank under the UPC600, a position never taken in the correspondence.

8.  The plaintiff says that it could only have known of the position of the cargo and who was holding the BADR B/L from the defendants.  However, the defendants only filed an affirmation out of time (I think the plaintiff means out of office hour) the day before the Hearing.  According to Mr Horton, it was only at 11:30 am during the Hearing that the defendants claimed to have no ownership in the cargo.

9.  The court found, amongst others, that the owner ADO and pledgee of goods have not been sued (§§64-65 of the Decision).  The plaintiff asserts that it was due to the fault of the defendants that they had to litigate and sued the wrong party.

Analyses

10.  Firstly, it cannot be denied that the defendants were the true winner of the summons.  The plaintiff did not seek orders in relation to the Win Goal B/L.  Their case on the BADR B/L was dismissed.  At the Hearing, the defendants have made good what they have told the plaintiff before action, namely, that (i) they had no knowledge of the existence of the Win Goal B/L and (ii) they had already submitted the BADR B/L and other documents to the banks but they had not been paid. 

11.  Secondly, even accepting the plaintiff’s case in paragraph 7(c) and 8 above, the plaintiff had not abandoned its summons at the start of the Hearing. In fact when I informed the parties of the difficulties in giving a quick judgment due to in my diary position, the plaintiff insisted on proceeding to argue the summons without a call-over. The Hearing had gone on with full arguments after 11:30 am.  The result was that the court ruled in favour of the defendants.

12.  Thirdly, the failure to sue the right parties could not be blamed on the defendants.  The names of ADO (cargo purchaser) and the bank(s) to whom the defendants had presented the BADR B/L (probable pledge) were available to the plaintiff before action.

13.  Fourthly, the plaintiff’s pre-action communication with the defendants lasted about a month.  The defendants were not then legally represented, so no costs would have been awarded to them for that period anyway.

14.  In paragraph 68 of the Decision, I stated as follows:

“Costs should follow the event and be to the defendants.  Counsel have drawn my attention to the correspondence between 25 September through October 2015. The issues of the Win Goal B/L have been discussed which turns out to be otiose.  In the telephone conversation on 23 October 2015 (day after service of the writ), the defendants have already made their position clear to the plaintiff.  The affirmation that the defendants filed verified their position.  Mr Chain’s submission makes the legal position clear.  Any “lateness” in putting forward the defence could not undermine the validity of the defence.”

15.  Having considered Mr Horton’s submission, I maintain my views in paragraph 68 of the Decision.  Cost should follow the event.  There was no basis for saying that the defendants’ conduct or way of defence was such as should deprive them of costs.

16.  Although the Intervener had not filed any submission at the Hearing, they supported the plaintiff’s application.  I see no reason why they should not be jointly and severally liable for costs of the summons.

17.  The above is enough to dismiss the application for variation of the costs order nisi.  I just add that the issues at the Hearing were by no means straightforward and had been well fought out by the defendants.  Even if I were to grant the plaintiff costs, it would not have been appropriate to order indemnity basis. 

Quantum of costs

18.  Given that counsel was engaged at an early stage and the urgency of the Hearing, I allow the costs of only one fee earner at an hourly rate of $4,000. There was only one simple affirmation prepared for the defendants and 2 full affirmations of the plaintiff to peruse.  I summarily assess the amount and order the plaintiff and the intervener to pay the defendants $100,000 for the summons.

19.  As for this hearing on costs, I order the plaintiff to pay $35,000 to the defendants.  The intervener has not applied for variation of the costs order.  They should not be required to bear costs of the hearing on costs, although they attended this hearing.

Conclusion

20.  In conclusion, the order nisi is made absolute and costs are summarily assessed at $100,000 to be borne by the plaintiff and the intervener. The plaintiff shall additionally pay costs of $35,000 for this application to vary the costs order.

21.  I thank Mr Horton and Mr Hui for their assistance.