SUN HUNG KAI INVESTMENT SERVICES LTD. AND ANOTHER v. FUNG TAK SING

1989, No.A1554

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. This is an application for leave to appeal against an order relating to costs which forms part of an order of this Court made on 19th November 1991. The order relating to costs was an order which deprived the successful plaintiffs of the costs of the action. It reads (after making provision for a minor item of costs):-

"This court does not think fit to make any further or other order as to the costs of the action."

2. In the judgment which led to the order of 19th November 1991, to which reference should be made for the background of the case, I said this in relation to costs:-

"It might be of help in this connection if I point out that while, of course, the general rule is that costs follow the event, I do have a discretion to depart from that general rule if I think it appropriate to do so; and that I have not forgotten (1) that neither the broker nor the bank ever issued any form of contract note or confirmation to the customer about this transaction; (2) that it took them over 15 month to make any sort of claim against the customer in relation to it; and (3) that only in the course of the trial were the September/October 1988 arrangements between the broker and the bank revealed for the first time to the customer and to the court."

3. The application for leave to appeal, as I understand it, is based on the view of the successful plaintiffs advisers that the balancing exercise which the court had to perform in deciding whether to depart from the ordinary rule that costs follow the event was carried out here in a way which attached undue weight to the factors to which I referred in my judgment. If the error assigned was an error of principle, it would be open to the successful plaintiffs to appeal against that part of the order which related to costs without seeking leave to appeal at all. So it can only be necessary for this application for leave to appeal to be considered if the successful plaintiffs argument depends, not on the objection that the decision was wrong in principle, but on showing that the court failed properly to perform the balancing exercise which could have justified an exercise of its discretion in favour of an order which deprived the successful plaintiffs of their costs.

4. Ought this Court to give leave to appeal in these circumstances?

5. I derive some help in resolving this problem from Scherer and another v. Counting Instruments Limited and another [1986] 2 All ER 529. The headnote reads as follows:-

"The general rule in relation to costs was that costs normally followed the event. Accordingly, the party who, as it turned out, had unjustifiably brought the other party before the court or had given the other party cause to have recourse to the court to obtain his rights was required to recompense the other party's costs. However, that was subject to the judge's unlimited discretion under s. 50 of the 1925 Act to make what order as to costs he considered the justice of the case required, and consequently a successful party's reasonable expectation of obtaining an order for costs depended on the exercise of the court's discretion. The judge was required to exercise his discretion judicially, i .e. in accordance with established principles and in relation to the facts of the case and on relevant grounds connected with the case, which included any matter relating to the litigation, the parties conduct in it and the circumstances leading to the litigation, but nothing else. If there were no grounds for departing, from the normal, rule or the judge acted on extraneous grounds he had in effect not exercised his discretion at all and a dissatisfied party was entitled to appeal to the Court of Appeal, notwithstanding that the judge had not given leave and his award of costs would otherwise be final. Since the defendants had not succeeded in their applications, and since, on the facts, there was no material before the judge which justified him ordering the plaintiffs to pay the costs, the plaintiff's appeal would be allowed and the costs order would be discharged".

6. The headnote accurately sets out the substance of the judgment of Buckley, LJ who delivered the judgment of the court but I would add a further citation from the judgment itself at p. 537b - c. Buckley, LJ there said this:-

"If there is any relevant ground available to the judge and he exercises, or appears to have exercised, his discretion judicially on it, this court cannot review that exercise of his discretion or interfere with his order, because this court disagrees with the weight he appears to have attributed to any particular ground or because this court would have exercised the discretion n some other way; but if, notwithstanding the availability of that ground, the judge has not in the judgment of this court, exercised his discretion judicially, that is, if his decision is clearly wrong because the available ground could not in principle support the particular order he has made, it is in our judgment open to this court to correct it."

7. I am not satisfied that the plaintiffs here have shown any ground on which it could fairly be argued that the decision to deprive them of their costs was clearly wrong; or that the Court in exercising its discretion in that connection failed properly to balance the considerations which fell to be taken into account. For these reasons, it seems to me it would be wrong to saddle the Court of Appeal with an argument concerned only with the costs of this action and I would have been minded to refuse the plaintiffs leave to appeal the question of costs had this application stood alone. But in fact the defendant has already appealed to the Court of Appeal to set aside the order of 19th November 1991. It seems to me that the right course in these circumstances is to give the plaintiffs conditional leave to appeal against the order as to costs; that is to say that, if the defendant prosecutes his appeal, the plaintiffs should be at liberty to pursue its cross-appeal on the question of costs, the whole matter being then before the Court of Appeal. But, if the defendant does not prosecute his appeal, I would then think it wrong (in the circumstances I have mentioned) to give the plaintiffs leave to appeal.

8. For these reasons I propose to make an order which gives the plaintiffs leave to appeal only in so far as the plaintiffs' appeal is prosecuted at the same time and concurrently with the appeal lodged by the defendant. This seems to me adequately to balance the interests of the parties and to do justice between them. I will ask counsel for the plaintiffs, the defendant being unrepresented, to draw up a minute of the appropriate order and submit it to me for my approval.

9. I will order that the costs of this application be costs in the appeal if it is prosecuted. If it is not prosecuted, there will be no order as to the costs of this application.