TIN FOO INVESTMENT CO LTD v. PREVIGOR DEVELOPMENT LTD AND ANOTHER

HCA 1675/2014

[2018] HKCFI 2870

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1675 OF 2014

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DECISION ON COSTS

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1.  By a decision handed down on 16 May 2017 (“Decision”), I allowed, to a limited extent, the defendants’ appeal against Master Chow’s order dated 26 January 2017, which (1) allowed the Interrogatories Summons (using the abbreviations adopted in the Decision); (2) dismissed the Discovery Summons; and (3) ordered the defendant to pay the plaintiff’s costs summarily assessed at HK$95,000.

2.  In summary:

(1)  In respect of the Discovery Summons, I ordered the plaintiff to disclose the work programme/schedule and contractor’s debit note(s) relating to the renovation works mentioned in paragraph 8 of Ms Tam’s first witness statement, which would show the date of completion of such works.  I dismissed the defendants’ appeal concerning the other Subject Documents[1].

(2)  In respect of the Interrogatories Summons,I held that the plaintiff should answer on what date the said renovation works were completed under Interrogatory 3.  I dismissed the defendant’s appeal concerning the whole of Interrogatory 4[2] and the rest of Interrogatory 3.[3]

3.  In anticipation of arguments as to the incidence and/or apportionment of costs following the defendants’ very limited success, I directed the parties to file and serve written submissions on costs.

The parties’ respective costs position

4.  The defendants propose that the parties should bear their own costs in relation to both summonses both below and on appeal.  The defendants essentially regard themselves as the successful party in relation to both summonses but also acknowledge that the plaintiff did manage to resist certain aspects of the appeal.  It is suggested on behalf of the defendants that the time and efforts spent by the parties on the arguments in which they had respectively succeeded or failed were more or less the same.

5.  On the other hand, the plaintiff seeks affirmation of the costs order made by the master and asks for 90% of its costs of the appeal.  The plaintiff takes issue with the defendants’ claim to be the successful party.  Much of the appeal hearing was spent on the relevance and necessity of the documents and information sought by the defendants.  The defendants had lost in all their arguments save in the said limited aspect.  Speaking in the overall sense, the defendants had failed to establish their case.

Principles

6.  Costs is in the court’s discretion, to be exercised judicially: see s 52A(1) of the High Court Ordinance (Cap 4) and Order 62 rule 2(4) of the Rules of the High Court (Cap 4A).

7.  Following the Civil Justice Reform, the general rule of costs following the events no longer applies in interlocutory proceedings.  In this regard, Order 62 rule 3(2A) provides:

“(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.”

8.  As summarised by To J in Melvin Waxman v Li Fei Yu, HCA 1972/2012 (unreported), 11 September 2013 at [19] (which I cited in agreement in Daimler AG v Helge Herbert Leiduck, appointed by Order to represent the estate of Herbert Heinz Horst Leiduck, deceased [2018] 1 HKLRD 1188 at [7]):

“Summing up on the post-CJR position, I think the court has much wider discretion as to costs in interlocutory proceedings. Unlike other proceedings, the general rule of costs following the events do not apply. The court is entitled to take into account all the circumstances of the case, including those set out in rule 5, to make such order as it thinks fit. In the exercise of its discretion, the court may take the issue-based approach or may take into account merit of the parties’ case or the possible outcome of the action. The circumstances of interlocutory proceedings are so numerous that it is impossible to make any general rule. Costs to follow the event and costs be to the successful party’s costs in the cause are obvious options.”

9.  Order 62 rule 5(1) sets out the matters that the court shall take into account in exercising the discretion as to costs including the following:

(1)  the underlying objectives set out in Order 1A, rule 1;

(2)  any offers made (unless they were made in circumstances when sanctioned payment or sanctioned offer could have been but was not made);

(3)  conduct of the parties; and

(4)  whether a party has succeeded on part of his case, even if he has not been wholly successful.

10.  With regard to “conduct of the parties”, according to Order 62 rule 5(2)(a), it includes whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue.

Discussion

11.  The defendants may, on one view, be regarded as the successful party in the appeal because it was allowed, albeit to a limited extent. 

12.  However, the plaintiff is right that the appeal hearing was almost entirely concerned with Interrogatory 4 and those aspects of Interrogatory 3 and the Discovery Summons on which I had ruled against the defendants.

13.  In this connection, first, insofar as the period in dispute (i.e. February 2015 to July 2016) is concerned, Interrogatory 4 had no merit whatsoever.  It ignored the fact that the plaintiff has made no claim for loss of rental income after January 2015.  Further, the premises underlying it also went against the evidence that had already surfaced, including the 2^nd defendant’s own witness statement.  See paragraph 32 of the Decision.  The plaintiff acted properly in refusing to answer Interrogatory 4 save to the extent mentioned in paragraph 16 of the Decision, which answer should have been accepted by the defendants as disposing of the interrogatory.  By persisting in the rest of such interrogatory, the defendants rendered it necessary for the plaintiff to come to court by taking out the Interrogatory Summons.

14.  Second, the Discovery Summons and Interrogatory 3, which were couched in unnecessarily wide terms, were essentially aimed at obtaining the same information.  It was a misconceived effort.  They likewise covered a period of time in respect of which the plaintiff makes no claim for any loss of rental income.  In any event, the reasons for which such information was said to be relevant and necessary did not stand up to scrutiny.  See paragraphs 25, 26 and 28 of the Decision.  As in the case of Interrogatory 4, the plaintiff could not be blamed for opposing Interrogatory 4 or the Discovery Summons, as they were drafted.

15.  In the circumstances, a fair costs order should reflect the defendants’ defeat for almost all their requests under the interrogatories and the Discovery Summons.

16.  For these reasons, I order the defendants to pay 90% of the plaintiff’s costs both below and on appeal.  I fail to see any reason to distinguish between the proceedings below and before me.  As Master Chow had already summarily assessed the plaintiff’s costs below at HK$95,000, I will vary the costs order she made by ordering the defendants to pay HK$85,500 (i.e. HK$95,000 x 90%) to the plaintiff for its costs of the Interrogatories Summons and the Discovery Summons before the master.  To facilitate the summary assessment of 90% of the plaintiff’s costs of the appeal, I direct the plaintiff to file and serve a statement of its costs within 14 days from today and the defendants to file and serve their statement of objections (if any) within 14 days thereafter.