NAM TAI ELECTRONICS, INC. v. PRICEWATERHOUSE COOPERS

FACV No. 1 of 2007

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 1 OF 2007 (Civil)

(ON APPEAL FROM CACV No. 99 of 2005)

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JUDGMENT ON COSTS

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Mr Justice Ribeiro PJ :

1.  This is the Court’s judgment on costs.

2.  On 31 January 2008, Nam Tai’s appeal to this Court was allowed and it was awarded the sum of HK$100.00 by way of nominal damages for breach of a contractual duty of confidentiality.[1]  It was common ground that PWC had disclosed an item of confidential information arising out of a professional engagement by Nam Tai.  What was in issue was whether such disclosure was justified as having properly been made as a defensive response to adverse comments by Nam Tai.  The Court held that the disclosure was not justified.  Written submissions on costs were called for and duly lodged with the Court.

3.  It transpires that on 14 May 2001, well before the trial, but after Nam Tai had provided particulars indicating that it was not alleging any pecuniary loss in consequence of the disclosure, PWC paid HK$101,000.00 into court.  The payment in was not accepted and the matter proceeded to trial before Waung J who delivered judgment in favour of PWC on 3 February 2005, awarding PWC its costs.[2]  Nam Tai’s claim had initially been framed in malicious falsehood, defamation and breach of confidence.  However, in the course of the trial, the malicious falsehood claim was abandoned.  But Nam Tai maintained its claim for aggravated or exemplary damages in respect of both defamation and breach of confidence.

4.  Nam Tai lodged an appeal to the Court of Appeal, continuing to seek aggravated or exemplary damages for defamation and breach of confidence.  In response, PWC wrote without prejudice save as to costs, pointing out that the payment in remained available for acceptance by Nam Tai in satisfaction of its asserted causes of action.  Nam Tai pressed on with the appeal which was heard on 25 May 2006 and dismissed with costs on 7 June 2006. 

5.  Nam Tai then sought leave to appeal from the Appeal Committee in respect of both its defamation and breach of confidence claims.  When asked, leading counsel for Nam Tai informed the Court that it was not being suggested that Nam Tai had suffered any pecuniary loss.  Nam Tai was given leave to appeal only in respect of the breach of confidence claim, raising the legal issue mentioned above.

6.  A party who, even though successful, does not recover more than the amount paid into court is usually ordered to pay the other side’s costs from the date of the payment in.  However, Nam Tai submits that despite the payment in and the award of merely nominal damages, it should be awarded all the costs of the appeal and that the Court should vary the costs orders made below so that each party bears its own costs in the Court of First Instance and the Court of Appeal.  Nam Tai argues that it was entitled to seek, and successfully obtained, vindication of its complaint that PWC had committed an unjustified breach of confidence.  In its written submissions, Nam Tai states: “Certainly from 12^th January 2007 (if not earlier) the Respondent knew that the Appellant’s claim was not about money but about vindication of its rights.”

7.  PWC joins issue with this central contention.  It rightly submits, as the history of the proceedings set out above shows, that it was plainly not the case that Nam Tai’s claim, as prosecuted in the courts below, “was not about money.”  The persistent attempt was to recover aggravated or exemplary damages, not only for malicious falsehood and defamation, but also for breach of confidence.  If leave to appeal had been given in relation to defamation, or if the issue in respect of breach of confidence had not been so narrowly drawn, those claims would no doubt have been persisted in.  Moreover, PWC contends that Nam Tai has never intimated that the claim was not about money but merely for its vindication, so that there was no indication that PWC might be able to protect itself in some manner other than by making a payment into court, such as by offering an appropriate apology.  PWC submits that the proper order is for PWC to have all the costs here and below, or alternatively to have all the costs from the date of the payment in, with Nam Tai bearing two-thirds of PWC’s costs prior to that date.

8.  Taking all the aforesaid matters into account, we consider that the correct order is as follows:

[1]  [2008] 1 HKLRD 666.

[2]  [2005] 2 HKLRD 461.