BRIO ELECTRONIC COMMENCE LTD v. TRADELINK ELECTRONIC COMMERCE LTD

HCA 1714/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1714 OF 2010

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BETWEEN

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DECISION ON COSTS

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The paper disposal

1.  This is a paper disposal of the dispute between the plaintiff and the defendant over the question of costs for the plaintiff’s application for leave to serve a witness statement out of time.  The plaintiff suggested that the costs should be in the cause, but the defendant said that it should have the costs instead.

2.  At the Case Management Conference on 18 April 2012, the only outstanding matter was the service of the witness statement of one of the plaintiff’s witnesses called Diana, which by then, was already out time.  There was a dispute over whether the court should grant leave to the plaintiff to serve Diana’s witness statement.  I gave leave to the plaintiff to set down for trial and ordered that this issue was to be dealt with by me on a date to be fixed for argument.  However, the parties had reached agreement whereby leave was granted to the plaintiff to serve Diana’s witness statement and the defendant would have leave to serve witness statement in response. The only outstanding matter that the parties were unable to agree was the costs for the plaintiff’s leave to serve Diana’s witness statement.  They agreed that this issue of costs was to be adjourned to a date to be fixed for hearing, with time estimated of one hour.  But before the setting down for the hearing, they should submit their written submissions to me so that I may consider whether an order can be made without hearing.

3.  The parties have duly submitted their written submissions.  Having considered the submissions, I consider that I can make the decision without a hearing.  I shall now give my reasons for my decision.

The plaintiff’s proposed costs order

4.  The plaintiff has proposed that the parties’ costs of and occasioned by the filing of Diana’s witness statement be costs in the cause.[1]  It relied on the reasons that costs are in the discretion of the Court; that costs should follow the event except the Court thinks otherwise; and the Court strongly encourages parties to be reasonable and greatly discourages unreasonable resistance.[2]

The defendant’s propose costs order

5.  The defendant argued that the plaintiff’s proposal is unfair because it means that the plaintiff does not have to pay any price for seeking an indulgence from the court, which will encourage the parties in civil litigation to disobey the provisions under Order 38 RHC to exchange the witness statements simultaneously.[3]

6.  The defendant therefore proposed that it is only fair for the plaintiff to have to bear all the defendant’s costs of and occasioned by the late filing of Diana’s witness statement, and such costs include the costs of the defendant in preparing and filing supplemental witness statements in order to compensate the defendant and to counteract the unfairness arising from the plaintiff’s sequential exchange of Diana’s witness statement in default of compliance with our Rules.[4]

Discussion

7.  True it is that the court encourages the parties to co-operate with one another to agree terms as far as possible in a reasonable manner in order to save costs and time.  What the parties must bear in mind is that they must act reasonably, in particular, that they must accept the liability that the law provides on the one hand, and on the other, they must try to save the costs that are unnecessary for the dispute.

8.  The plaintiff’s submission of “costs following the event” is under Order 62 rule 3.

“3. Order as to entitlement to costs (O.62 r.3)

(L.N. 152 of 2008)

(1) …

(2) If the Court in the exercise of its discretion sees fit to make any order as to the costs of or incidental to any proceedings (other than interlocutory proceedings), the Court shall, subject to this Order, order the costs to follow the event, except when it appears to the Court that in the circumstances of the case some other order should be made as to the whole or any part of the costs. (L.N. 152 of 2008)

(2A) If the Court in the exercise of its discretion sees fit to make any order as to the costs of or incidental to any interlocutory proceedings, it may, subject to this Order, order the costs to follow the event or make such other order as it sees fit. (L.N. 152 of 2008)

(3) …

(4) The costs of and occasioned by any application to extend the time fixed by these rules, or any direction or order thereunder, for serving or filing any document or the doing of any other act (including the costs of any order made on the application) shall be borne by the party making the application, unless the Court otherwise orders.

……”

9.  It can be seen that although rule 3 gives wide discretion to the court in costs, there are provisions that determine the parties’ liabilities on costs on applications such as for extension of time under sub-rule 4.  It will be for the party who considers that the court should not make the usual order under sub-rule 4 to make submission to the court for the order that it considers just in the circumstances.  If there are no special circumstances to justify other order on costs to be made, the court should apply the order as provided under sub-rule 4.

10.  The plaintiff has given the reasons for late service of Diana’s witness statement. She was a senior marketing executive of the defendant and it would be difficult for her to give evidence against her ex-boss.  She needed time to consider the matter.  That sounds reasonable. But it does not absolve the plaintiff from compliance with the rules of the court or the court’s directions.  Nor does it justify it to ask the defendant to bear extra costs or time for responding to her witness statement.  The defendant has no duty to assist the plaintiff in the proceedings.  It only has the obligation to act in a reasonable manner not to make the plaintiff incur more costs than necessary.

11.  The defendant takes the view that it was disadvantaged by not having Diana’s witness statement exchanged simultaneously.  It suspects that Diana has tailored her witness statement with the benefit of the defendant’s witness statements made known to her.  The plaintiff submits that Diana was not shown the defendant’s witness statements when she made her own.[5]

12.  However, it is undeniable that the final version of Diana’s witness statement is much longer than her draft previously produced.

13.  In the circumstances, having considered the plaintiff’s submissions and the reasons for Diana’s late witness statement, I consider that there is no reason that the court should depart from the provisions under Order 62 rule 3(4) that the plaintiff should bear the costs of and occasioned by the application for leave to serve Diana’s witness statement.  Of course, according to the parties’ agreement, the defendant has the option to serve the witness statement in response if so advised. If the defendant opts not to serve the witness statement in response to Diana’s, there will not be further costs occasioned.

The costs order

14.  I shall make an order nisi under Order 42 rule 5B(6), to be absolute 14 days from 24 October 2012 unless application has been made to vary it, in terms as follows:

(a)   The costs of and occasioned by the plaintiff’s application for leave to serve the witness statement of Kwan Yuk Wai Diana be to the defendant, to be taxed if not agreed, in any event; and

(b)   Unless the parties otherwise agree, the costs for this paper disposal of the parties’ dispute are to the defendant, to be summarily assessed by the defendant filing and serving the schedule of costs (in the brief form as provided by the court) by 30 October 2012 on the plaintiff and the plaintiff filing and serving the objections by 7 November 2012; such costs shall be determined by the court on paper unless otherwise directed.