SO SAI MING v. THE KOWLOON MOTOR BUS CO (1993) LTD AND ANOTHER

1994,SC No.1

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

SMALL CLAIMS TRIBUNAL APPEAL

(CLAIM NO.722/93)

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J U D G M E N T

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Background

1. This matter arises out of a motor accident which occurred on 14 October 1991. The Claimant's van collided with a KMB bus. The repairs to the van and the loss of its use amounted to $26,159.30. The Claimant commenced proceedings in the Small Claims Tribunal and in so doing he had abandoned all claims in excess of $15,000.00. The case was tried on 17 December 1993 and judgment was given to the Claimant for $15,000.00 with costs in the sum of $1,500.00. KMB's application for review of the order was refused.

2. The case went before the High Court and leave to appeal on a point of law was granted by Deputy Judge Cannon.

3. The appeal was heard in my court on 7 October 1994 and both parties were represented by counsel. The appeal was allowed and the case was remitted to the Small Claims Tribunal for a re-hearing.

4. In respect of costs of the appeal I ordered that :

"The cost of this appeal be to the Appellants if not agreed."

5. On 11 July the matter went for taxation and taxed costs, including legal costs, amounted to $122,610.00. At the hearing the learned Registrar refused to construe my Order as to mean that under the Small Claims Tribunal Ordinance, the costs of an appeal from the Small Claims Tribunal to the High Court was confined to the litigants' cost and expenses only and such costs do not include legal costs.

The Application

6. There are two applications by the Claimant/Respondent both dated 18 October 1994 before this court. The first application is made under Order 20 rule 11, to amend my order to read :

"The costs of this Appeal being costs and expenses other than legal costs be to the Appellants to be taxed if not agreed."

The underlined parts being the amendment and insertion sought.

7. The rationale behind this application, according to counsel for the applicant, is that when I made the order for costs I did not have in mind whether the court had jurisdiction to make the order as I did and that I had not considered the provisions of section 24 of the Small Claims Tribunal Ordinance. It is the applicant's case that I did not have jurisdiction under the Small Claims Tribunal Ordinance to make an order awarding legal costs.

8. The second application is : should my order for costs be amended as suggested, the Master's order in the taxation hearing be reviewed in the light of the amendment.

9. The Applicant focused his argument on the first application, since the second application stands or falls with the first application.

Whether the High Court has power to order legal costs on an appeal?

10. The Claimant's first contention is that on the true interpretation of the Small Claims Tribunal Ordinance, only the costs and the expenses of the litigants other than legal costs could be made the subject matter of the cost order in a hearing before the Tribunal and also on appeal to the High Court. By virtue of section 19 of the Ordinance, no barrister or solicitor may appear before the Tribunal unless he is acting on his own behalf as a claimant or defendant. It follows, by necessary implication, that under section 24(1) :

"the tribunal may award to a party costs and expenses, which may include -

(a) any reasonable expenses necessarily incurred and any loss of salary or wages suffered by that party; and

(b) ..."

The words underlined must refer to costs and expenses which do not include legal costs. I see no reason to differ with this part of the applicant's submission.

11. As to the power to award legal costs on appeal to the High Court, the position is governed by section 29(2) which provides :

" On an appeal for which it has granted leave under section 28, the High Court may -

(a) ...

(b) make such order as to costs and expenses as it thinks fit ..."

Counsel submits that as the same words appear in both sections, the power of the High Court to award costs must also be read subject to sections 19 and 24 and consequently the High Court has no power to award legal costs on an appeal.

12. Section 29B provides for the award of costs by the Court of Appeal and the word "expenses" does not appear. The position with the Court of Appeal on costs appears to be that it can award costs but not expenses after the disposal of an appeal from the High Court on a point of law of general public importance. Assuming for the moment the applicant's submission is correct, we are faced with a somewhat absurd situation that while the High Court could award costs and expenses, the Court of Appeal, the highest court in the land for a claim below $15,000, has a narrower jurisdiction on costs than that of the High Court. This could have hardly been the true intention of the legislature when one books the power to order costs with the provisions in the Ordinance for transfer of cases to the higher courts.

13. Under section 7 of the Ordinance, the Tribunal may at any stage of the proceedings, either on its own motion or upon the application of any of the parties, transfer the proceedings to the District Court or the High Court. Once a case is transferred the practice and procedures of the other court shall apply. For a case conducted in those courts the parties are entitled to legal representation if they so required. The trial judge hearing the case in the High Court or the District Court will no doubt make provisions for costs at the conclusion of the proceedings and such costs will include the legal costs incurred if a party is represented.

14. Compare that with a case on appeal. If the case is heard in the tribunal and if any party is aggrieved by the Tribunal's decision, the matter can be taken on appeal under section 28 of the Ordinance to the High Court at the instance of the aggrieved party. The appeal could, however, only be pursued on a point of law or on the jurisdiction of the tribunal. Unarguable cases are filtered out by the application for leave procedure. At the appeal hearing it would be inconceivable that the parties, being lay persons, could be expected to understand and argue on the legal issues involved. Lawyers must therefore be expected to be present as a matter of course. Had it been the intention of the legislature that no legal costs should be awarded in the appeal, it could have been easily drafted into relevant sections of the Ordinance.

15. The applicant submits that it is absurd and unjust that on appeal, the unsuccessful party would have to bear the costs of the other party when the amount involved was limited below $15,000.00. The unsuccessful party runs the risk of having to pay legal costs which could far exceed the sum claimed.

16. I am of the view that the answer lies in the words "as it thinks fit" which appear in both sections 29(2)(b) and 29 in respect of the powers of the High Court and of the Court of Appeal on costs. This phrase does not appear in section 24(1) which provides :

" Subject to subsection (2), the tribunal may award to a party costs and expenses, which may include -

(a) any reasonable expenses necessarily incurred and any loss of salary or wages suffered by that party; and

(b) ...

(2) In making an award of costs under this section, the tribunal shall include a direction as to the amount to be paid by each party who is liable to pay costs."

The provisions in subsection (2) are clearly intended to achieve some degree of finality in the matters involving costs. Again, as section 19 precludes legal representation, the term "reasonable expenses" could not have included legal fees. The tribunal's discretion to award cost and expenses must therefore be restricted to those heads which are stipulated in sections 24(1)(a) & (2).

17. The applicant's reliance on the rules on interpretation of statues does not assist him in any way. As I have indicated earlier the sections relating to the High Court and Court of Appeal on costs are qualified by the phrase "as it thinks fit". I take these words to mean that the appellate courts have an unfettered discretion to award costs including legal costs, in appropriate circumstances. The appellate courts will of course examine circumstances of each case before any cost order is made.

18. In my view the applicant's concern that the amount of costs to be borne by unsuccessful litigant would be disproportionate to the amounts claimed in the action is more apparent than real. The position is that the court can, as a matter of discretion, refuse to award costs to the successful party in appropriate cases. It would be suffice for me to say that the courts will examine the circumstance of each case closely before a cost order is made.

Amendment of the order under the "slip-rule"

19. Amendments under the slip rule applies to cases where there is a clerical mistake in a judgment or order or an error arising from an accidental slip or omission. The present case is clearly not a case of this nature. Apart from this rule the court also has an inherent power to correct an error or omission in expressing the court's manifest intention. Has there been such an error or omission? The applicant submitted that the question posed must be answered in the affirmative on the basis that the High Court did not have jurisdiction to award legal costs. The proposed amendment is therefore a clarification to reflect the court's manifest intention.

20. For reasons given earlier in this judgment I take the view that the High Court does have power to award legal costs under the provisions of the Ordinance. The order I made was on the basis that cost was awarded to the successful party and such a course is hardly a departure from the normal exercise of the court's discretion on matters involving costs. In the context of the order, the term "costs" should be read as inclusive of the legal costs incurred by the appellant and as such it cannot be said that there was any error or omission in expressing the courts intention.

21. The application under Order 20 rule 11 to amend my order must therefore fail.

Review of the Master's order under Order 65 rule 35/1

22. The applicant had not requested the learned Registrar to state his reasons in writing for refusing the applicant's review and there is nothing before me to indicate what was in the Registrar's mind when he dismissed the applicant's review on 4 October 1995. The present application to review the Registrar's order is, however, rendered academic by my finding that the High Court, on an appeal, has power under theSmall Claims Tribunal Ordinance to make provisions for legal costs. As rightly conceded by counsel for the applicant : if the application under the slip rule fails, the application for review must also fail. This I so rule.

23. For the reasons given both applications taken out by the applicant are dismissed with costs.