FRANZ JOSEF ADICK v. GROSVENOR INTERNATIONAL HOLDINGS LTD AND OTHERS

HCA 1347/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1347 OF 2012

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RULING ON COSTS AND INTEREST

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Interest

1.  The parties are agreed that the plaintiff should be awarded interest on £300,000 from 27 September 2010 to the date of the judgment (“the relevant period”).  They disagree as to the rate of such interest.  The normal annual rate awarded is 1% above prime and the 1^st defendant contends that there is no basis for awarding anything above that rate.  On behalf of the plaintiff it is argued, citing the decision of the Hong Kong Court of Appeal in KomalaDeccof&CoetalvPerusahaanPertambanganMinyak Dan Gas Bumi Negara [1984] HKLR 219, that the rate should be prime +3% on account of the fact that the plaintiff would have had to pay at least that rate to borrow the HKD equivalent of £300,000 in Hong Kong over the relevant period, given the great difficulty he had in 2010 in finding the finance necessary to complete the purchases of the 4 units due to his age (64 years as at 27 September 2010) and the effect of the post Lehmann Bros credit crunch.

2.  In my judgment the submission made on behalf of the plaintiff is well‑founded.  I have no doubt that the plaintiff would have had to pay at least prime +3% to borrow the HKD equivalent of £300,000 in Hong Kong or London during the relevant period.  The uncontradicted evidence is that at all material times the Hong Kong prime rate was 5%.  I accordingly award the plaintiff simple interest at the rate of 8% on £300,000 for the relevant period.

Costs

3.  The 1^st defendant submits that the normal costs order following the event, namely, that the plaintiff should have the costs of the proceedings brought against the 1^st defendant, should be adjusted in this case to take account of the fact that: (i) the plaintiff received from the 2^nd, 3^rd and 4^th defendants £10,000 towards his costs as part of a settlement he concluded with those parties; (ii) he abandoned two of the alternative causes of action he pleaded against the 1^st defendant, namely money paid under a mistake of fact and constructive trust; and (iii) he only advanced a construction argument in favour of the proposition that the “deposits” were advanced payments and not forfeitable deposits in the course of closing submissions on the 4^th day of the trial.

4.  I reject these submissions.  The £10,000 paid by the 2^nd – 4^thdefendants was in respect of “agreed legal costs” and was in my judgment a payment in respect only of the costs incurred by the plaintiff in suing those defendants. Those costs very probably exceeded £10,000, but to the extent they might not have done, any excess over the actual costs was solely for the benefit of the plaintiff and not to any extent for the benefit of the 1^st defendant.

5.  As for reasons (ii) and (iii), I do not regard these as justifying a departure from the usual rule that the party who wins should be awarded his costs.  I say this because the costs in respect of (ii) must be very small in comparison with the costs of bringing the successful claim overall; and the time spent at the trial on the true meaning and effect of the Purchase Agreements was time that was going to be spent in any event on that issue given the nature of the overall claim.

6.  In the result therefore I award the plaintiff without deduction his costs of the proceedings brought against the 1^st defendant and I approve the agreement of the parties that there should be a certificate for 2 counsel.