WAH SIN ELECTRONICS INDUSTRIAL CO. LTD FUJIAN v. TAN LOK

IN THE COURT OF APPEAL

1995, No. 85

(Civil)

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J U D G M E N T

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Litton, V-P:

1. We dismissed the defendant's appeal earlier this morning, the appeal not having been prosecuted, and we are now left with the question of the proper order for the costs of this appeal.

2. Ms Audrey Eu, QC, counsel for the plaintiff, submits that this is a proper case for an award of costs on an indemnity basis.

3. To determine this issue a brief look at the history of the proceedings is necessary.

4. On 16 November 1992 an arbitrator had made an award in the plaintiff's favour. This was pursuant to an arbitration agreement in a contract entered into between the parties. The award was made by the China International Economic and Trade Arbitration Commission in China.

5. On 17 January 1994 the High Court made an order pursuant to the Arbitration Ordinance to enforce the award as a Hong Kong judgment. This was an amended order, correcting an earlier order made in November 1993 which was formally effective. The defendant, however, took out a summons to set aside the judgment and this unfortunately took over a year to be determined; but on 14 March 1995 this summons was dismissed by Leonard J, he having come to the view, quite rightly, that there were no possible grounds for setting aside the award. The only point taken by the applicant, a highly technical one, was that in the written award the Tribunal had made an error in its recital of the history of those proceedings: The arbitrator had referred to a hearing on 20 June 1992 when in fact the hearing had taken place on 24 April 1992. How this could have affected the validity of that award is difficult to imagine.

6. The defendant's summons having been dismissed by Leonard J, the defendant appealed to this court against that dismissal and in due course the appeal was set down for hearing before this court.

7. On 16 August 1995 the defendant's solicitors wrote to the plaintiff's solicitors to say that they had instructions to withdraw the appeal. This was then followed by a summons taken out in this court for leave to withdraw the appeal: a summons which, as counsel for the defendant accepts, is wholly misconceived. This then led to the dismissal of the appeal this morning.

8. The principles for an award of costs on an indemnity basis are well-known. In essence the court would only award costs on an indemnity basis where there has been something akin to a contempt of court or an abuse of process. The question is whether upon the facts as have been recited the defendant has transgressed that threshold.

9. In my judgment the defendant has come very close to the line. It is difficult to image upon what basis the defendant could have been advised that there were any prospects whatever of success in appealing against Leonard J's order. It has to be recalled that what the judge was concerned with was no longer the merits of the dispute as between the parties: That had been determined by the arbitral award back in November 1992. The only reason why the courts in Hong Kong have been concerned at all is because the defendant is resident within the jurisdiction and the Arbitration Ordinance gives facilities to the successful plaintiff to enforce the award in Hong Kong. What the defendant has done is in effect to have delayed that process, at little cost to himself since the award carries no interest. If this is not an abuse of process it seems to me to come very close to it.

10. However, the principles of law being so well entrenched, where the court cannot be satisfied that the party has in fact over-stepped the line, the court cannot make an award of costs on an indemnity basis. However this is plainly a case where something more than party-and-party costs should be awarded in the plaintiff's favour.

11. In my judgment the proper order for costs in the circumstances of this appeal is that the plaintiff should be awarded costs on a common fund basis and I would so order.

Godfrey J.A.:

12. I agree. As my Lord, the Vice-President has said, this case comes close to the line; a line drawn between the genuine appeal, on the one hand, and the appeal which is not genuine, on the other hand. An appeal may be hopeless, and yet genuine; but where there is a lack of good faith in the prosecution of the appeal, or where the conduct of the appellant about the appeal constitutes an affront to the court, or the appeal is otherwise an abuse of the court's process, then the line has been crossed and an award of costs against the transgressor may properly be made on the indemnity basis.

13. The materials before us suggest that the line has been crossed, but do not clearly establish it. For this reason, I, too, would not make here an award of costs on the indemnity basis. I am satisfied that an award of costs on the common fund basis will sufficiently meet the justice of the case. There is nothing further that I wish to add.

Ching J.A.:

14. For my part, I would be inclined to mark the appellant's behaviour with an award for indemnity costs. However, my views are not so strong that I feel obliged to dissent from the judgments already given in this respect. I, therefore, concur with the judgment given by the learned Vice-President.