ISLAMIC REPUBLIC OF IRAN SHIPPING LINES v. PHINIQIA INTERNATIONAL SHIPPING LLC AND OTHERS

HCMP 2034/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 2034OF 2014

(ON AN INTENDED APPEAL FROM HCA NO. 2368 of 2012)

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DECISION ON COSTS

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Hon Lam VP (giving the Decision on Costs of the Court):

1.  In our judgment of 24 September 2014, we ordered the Plaintiff to pay the costs of the 4^th and 6^th Defendants and we provisionally fixed the costs at $30,000. On 3 October, the 4^th and 6^th Defendants submitted a claim for costs in the sum of $69,152 and attached a statement of costs to support the claim.

2.  The Plaintiff opposed such revision.  Solicitors for the Plaintiff took the objection that the 4^th and 6^th Defendants had not submitted a statement of costs in accordance with the direction of the court in the letter of 18 August 2014.  In that letter, the Registrar referred to directions set out by the Chief Judge in a letter of 10 August 2012 which had been sent to the Bar Association and the Law Society.  One of the direction was as follows,

“Represented parties must submit to the Registry at the same time they lodge their skeleton submissions a statement of costs for the purposes of summary assessment of costs irrespective of whether they intend to seek summary assessment.”

3.  It is unfortunate that some solicitors did not pay sufficient heed to this direction.  In the present case, solicitor for the 4^th and 6^th Defendants did not provide any explanation for the default.  In most cases where parties seek leave to appeal, the Court of Appeal will try to deal with the question of costs by way of summary assessment.  The purpose of the direction is to facilitate the court to make a final decision on costs at the same time when it decides on leave.  Failure to comply with such direction inevitably prolongs the process and the court will have to revisit the case (for considering the quantum on costs) at a later stage.  This is not conducive to the efficient disposal of leave applications.

4.  The non-compliance with the direction is a breach of the duty under Order 1A Rule 3 and it is a matter that the court can take into account under Order 62 Rule 5.  However, we do not think it is appropriate in the present case to bar the 4^th and 6^th Defendants entirely from asking the court to revise the quantum due to the non-compliance with that direction.  That would not be a proportionate sanction to the default.  As the English experience from Mitchell v New Group Newspapers [2014] 1 WLR 795 to Denton v TH White [2014] 4 Costs LR 752 illustrates, it would not be right to adopt a too mechanistic approach in case management.

5.  But it does not mean that there should not be any consequence for such default.  The direct consequence is that the court has to entertain a further round of submissions which the direction is designed to avoid in light of the objective of efficient disposal of leave applications.  More costs are therefore incurred in the process and the 4^th and 6^th Defendants should be responsible for the same.  It would however be disproportionate and an invitation to unjustified satellite litigation if one were to inquire into the details as to how much has been incurred by way of additional costs.  This would wholly defeat the purpose of summary assessment.  In our judgment, a fair approach is that the court should do a global assessment of the situation taking this default into account.          

6.  The Plaintiff also made some comments on certain items in the 4^th and 6^th Defendants’ statement of costs.

7.  Taking all circumstances into account, we would revise our award of costs in favour of the 4^th and 6^th Defendant to $50,000.  In coming to that assessment, we have taken into account the default in the compliance with the direction.  There will not be any additional costs order for the submissions on quantum of costs as we have already taken that factor into account in our award of $50,000.