NEWOCEAN PETROLEUM CO LTD v. O.W. BUNKER CHINA LTD (in provisional liquidation) AND ANOTHER

HCA 381/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 381 of 2015

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RULING ON COSTS

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1.  These are applications by both parties to vary a costs order nisi made on 18 March 2016 that the 2^nd defendant (“D2”) pay the costs of its application to set aside the Master’s order granting the plaintiff (“P”) leave to issue and serve the concurrent writ on D2 out of the jurisdiction.

2.  D2 applies for an order that the costs of its application be paid by P up to and including 11 February 2016, such costs to be taxed if not agreed, and there be no order as to costs on or after 12 February 2016.  As I understand it, D2 seeks an order in the alternative that there be no order as to costs on or after 12 February 2016.  D2 also asks for the costs of the application to vary to be paid by P.

3.  P, for its part, applies for an order that the costs in its favour ordered under the costs order nisi as well as the costs of the application to vary the order nisi be paid to P forthwith and to be taxed if not agreed.

D2’s application

4.  D2’s grounds are essentially the following:

(1)  Its application to set aside the Master’s order dated 27 April 2015 was based on the evidence filed for the ex parte leave application.

(2)  P’s case as ultimately presented to the court resulting in a decision in its favour was first identified only on 5 February 2016 when its skeleton argument for the hearing on 19 February 2016 was served.

(3)  The merits of P’s ‘shifted’ case could not be assessed until receipt of P’s skeleton argument.

(4)  Because of the intervening holidays for Chinese New Year the first working day thereafter was 11 February 2016.

(5)  It would be wholly unfair for D2 to be visited with costs prior to 12 February 2016.

(6)  Further, the court (at §§67 – 69) was critical of the correctness of P’s assertion/statement.

5.  It is clear that P succeeded because the court accepted the Res Cogitans’ analysis of the contractual obligations between the parties that founded the claims in conversion and in contract for which leave to serve out was granted.  But Males J’s judgment dated 14 July 2015 was issued well before D2’s application to set aside made on 9 September 2015.

6.  The fact that D2 did not know until the receipt of P’s skeleton on 5 February 2016 that an argument would be based on Males J’s analysis is not to the point.  It is not the case that D2 was prepared to accept Males J’s judgment as dispositive of its setting aside application: to the contrary, D2 deployed every conceivable argument in support of its setting aside application such that the case overran and had to go part-heard, requiring an adjourned hearing.

7.  I do not consider that the first five matters D2 relies on are valid reasons for varying the costs order nisi.  The only matter that I find a little troubling is the point concerning P’s seemingly unfounded assertion and/or representation mentioned at §§67 – 69 of the decision.  No explanation of the basis of the assertion has been given.

8.  D2 referred to Defond Electrical Industries Ltd v Partminer Worldwide Inc, HCA 760/2010, unreported, 13 May 2011 a case where there had been material non‑disclosure on an ex parte service out application, the court ordered the plaintiff to pay the costs of the setting aside application with certificate for counsel in order to reflect the serious consequence upon infringement of the duty of full and frank disclosure.

9.  I do not consider that the judge in Defond was laying down any rule of general application.  Each case must depend on its particular facts.

10.  Looking at the matter broadly, the court’s criticisms would justify an order awarding the plaintiff part only of its costs incurred.  In all the circumstances, I consider that the court’s disapproval is adequately reflected if the plaintiff is awarded only 60% of its costs.

11.  P seeks an order that the costs be taxed and paid by D2 forthwith.  D2’s setting aside application is clearly severable and independent from the main action which concerns P’s claim against D2 for the outstanding price of the bunkers supplied.  That D2’s application has given rise to a considerable amount of legal costs is clear.  I note that both sides have instructed senior counsel and, as earlier noted, a further hearing was necessitated.  It is also a fact that had D2’s application been successful it would have the effect of determining in a summary manner the substantive rights of the parties.

12.  In light of those matters, I consider that it would be appropriate to order that 60% of the costs of the setting aside application (including the costs of the variation application) be paid forthwith by D2 to P and to be taxed if not agreed.