XCHRX CABLE & WIRELESS HKT INTERNATIONAL LTD. v. NEW WORLD TELEPHONE LTD.

HCCL 229/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO.229 OF 1999

(formerly High Court Action No.2076 of 1999)

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J U D G M E N T

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1. On 5 April 2000, this court handed down judgment upon an application under Order 14A, rule 1, Rules of the High Court, taken out by the defendant. The result of this judgment, which speaks for itself, is that the defendant's application was dismissed for reasons given therein.

2. Consequent upon this judgment two summonses have been issued, on each occasion by the plaintiff. The first was dated 16 May 2000 and asks for leave to amend the Statement of Claim in terms of the draft annexed. That summons has been adjourned to 9:30 a.m. on Wednesday, 7 June in order to give those acting on behalf of the defendant more of an opportunity to study these amendments. Accordingly, I will deal with that matter at that time.

3. The second summons is, I think it fair to say, currently more contentious. It is dated 18 April 2000. In effect it is in two parts : paragraph 1, to which I will revert in a moment, and paragraphs 2 to 10 which deal with procedural directions which the plaintiff wishes to obtain in order to drive this matter to trial.

4. I deal first with the directions element. In this connection I take the view, and Mr Shieh for the plaintiff does not disagree, that the only directions that can realistically be made at this stage are those encompassed in paragraphs 2, 3 and 4, namely, matters relating to discovery and inspection. After some reflection, I have decided to defer consideration of these directions until the adjourned hearing of the amendment summons. It is of course true that a further 14 days regrettably will have been lost, but in the overall scheme of things I do not think this is of great import. I confidently expect, however, subject always to the arguments put up on the part of the defendant, to be in a position on 7 June to deal both with the amendments and to set discovery in motion. But I will leave it until then. Accordingly, paragraphs 2 to 9 of the summons are adjourned to be heard at the same time as the amendment summons on 7 June.

5. This then leaves the issue which has occupied a considerable part of the argument this morning, that is paragraph 1 of the second summons. At page 20 of its judgment of 5 April, this court made an order nisi that the costs of and occasioned by the application be to the plaintiff in any event, to be taxed if not agreed. It may well be that whichever formulation the court had adopted as an order nisi would have spawned an application by the other party. I confess that in making this particular order my pen hovered somewhat over the page. Be that as it may. Since the order nisi is that the costs be to the plaintiff in any event, it falls to Mr Shieh, on behalf of the plaintiff, pursuant to paragraph 1 of the second summons, to move the court that this nisi order be varied "such that the defendant do pay forthwith to the plaintiff the costs of and occasioned by the defendant's application under Order 14A, rule 1".

6. This matter has been hotly debated. Mr Carolan, for his part, in an admirably moderate address asked that the normal rule be followed, and that these costs not be crystallized until the resolution of the event. He is, of course, correct that this is the normal rule. Mr Shieh, to the contrary, has argued that the circumstances of this application lift this case out of the ordinary and justify the order for which he contends. The question was nicely poised, and I afforded myself the luxury of a short time to consider the competing arguments.

7. After reflecting on all the matters placed before me, I have decided to accede to Mr Shieh's application. I have been particularly impressed in this consideration with two matters. The first is the fact, as Mr Shieh submitted, that the inappropriateness of mounting an Order 14A application was specifically flagged in pre-hearing correspondence. The application itself was taken out under a summons for directions dated 24 August 1999, but by letter dated 23 June 1999 from Messrs Herbert Smith to Messrs Deacons Graham & James, those acting on behalf of the plaintiff, in a carefully argued document, queried first the suitability of the questions at that time raised for determination pursuant to the Order 14A procedure, and then went on, in the second section of that letter, under the heading "Determination of Issues", to observe :

"Given the manner in which your Defence and Counterclaim is pleaded, an in vacuo interpretation of the 1995 Determination could not, in any event, be determinative of all issues raised in the action..."

In my judgment I have agreed with that view. Indeed (at page 18 thereof) I note specifically :

"To jump the gun at this early stage, on the basis of assumed facts and absent discovery is, in my view, a signally unwise course to adopt."

8. The other matter that has particularly attracted my attention in the context of the present argument is Mr Shieh's proposition that the defendant's "shifting of the ground", to use his phrase, is revelatory of the true nature of the Order 14A application. I will not here go into detail. In the judgment I set out in full, at page 2 thereof, the form of the original questions. I remain unsure how such questions could realistically ever have succeeded in a highly complex case such as this via the medium of Order 14A. That observation, however, is by the by because, as the judgment again makes clear, leading counsel for the defendant chose to take two paragraphs of the then existing Statement of Claim, namely paragraphs 17 and 26, as his frame of reference within the application as mounted. In fact, I concluded that out of those two paragraphs, only paragraph 17 could have been a potential runner in terms of an Order 14A application, albeit in the event I declined to allow the application on this basis.

9. In reaching my conclusion that it is appropriate that costs be the subject of taxation forthwith, I have not overlooked what I would call 'the amendments argument' which was put forward by Mr Carolan. Indeed, I understand that such amendments loom large in the appeal which I have been told is forthcoming against the judgment of 5 April. However, after having had the opportunity to review the history of these proceedings, I am presently unpersuaded by the argument that had such amendments earlier been in place, no Order 14A application in fact would have been mounted or persisted in. But I am disinclined to attempt to speculate. The plain fact, as Mr Shieh pointed out, is that the way the application developed had an effect on the amendments which have now been formulated, and I think he is right when he says first, that such amendments essentially arose out of the reformulated questions which were put to the court for determination (in lieu of the original questions); and second, that the amendments, such as they be, are in part also a product of the revelations in the affidavits which had been filed on behalf of the defendant in support its application.

10. This has not been a straightforward decision, and it has attracted a certain amount of reflection. At the end of the day, however, in my judgment this is the proper order to make, and accordingly, this amended order as to costs in terms of the summons is to replace the order nisi that was included in the original judgment. If and in so far as leave be necessary to appeal against this costs order, such leave is of course granted, albeit I think it is not necessary because the defendant's appeal will simply be mounted against the revised order in its totality.

11. This is all that I think can usefully be achieved today. Some matters will, of course, reappear for the court's further consideration at the adjourned hearing on 7 June.

[Submissions from counsel]

12. Counsel have now had the opportunity to address the court consequent upon this brief judgment. The only issue which causes further concern is how the costs of today's hearing should be carved up. On reflection, both counsel having had their say, I will reserve that matter to the hearing on 7 June. As to that hearing, I should indicate, for the convenience of the parties, that I intend to start at 9:30, and I have postponed the commencement of a trial in another case to 11 a.m. I do not wish the parties to think that there will be a need for undue haste in the half hour that is otherwise available prior to the usual 10 o'clock start.