CHEN TE KUANG MIKE v. PALADIN LTD

HCA 2163/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 2163 OF 2014

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DECISION ON COSTS

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1.  The defendant’s (“D’s”) application for leave to serve supplemental witness statements has been agreed by the plaintiff (“P”). The argument between P and D this morning is on costs.

2.  Though D makes the application for indulgence from the Court, which P now agrees, D submits that, nevertheless, because of P’s conduct in the course of correspondence with D in relation to consent to D’s application, P had demonstrated obstruction, let alone uncooperativeness, and is therefore liable for indemnity costs.

3.  P’s objection to this proposed costs is that this is D’s application for indulgence and under O.62, r.3(4), D should bear the costs unless otherwise ordered by the court.  There is simply no reason to ask for indemnity costs against P.

4.  D’s answer to this submission is that it is purely P’s conduct that P should be ordered by the court to pay the indemnity costs, citing the Court of Final Appeal’s decision in Town Planning Board v Society for Protection of the Harbour Ltd (No.2) (2004) 7 HKCFAR 114.  D relies upon the finding that an award of indemnity costs is not confined to case brought with an ulterior motive, for an improper purpose, or where there was some deception or underhand conduct on the part of the losing party.  It is undesirable to attempt to define the circumstances in which such order would be made other than that the order must be appropriate. See 124A-E.

5.  Under O.62, r.5, the law prescribes the factors that the Court must take into consideration in exercising its discretion, the award of costs on indemnity basis being one of such exercise of discretion.  In relation to conduct, rule 5 provides:

(1)  The Court in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account— (L.N. 152 of 2008)

(aa)  the underlying objectives set out in Order 1A, rule 1; (L.N. 152 of 2008)

(e)   the conduct of all the parties; (L.N. 152 of 2008)

(2)  For the purpose of paragraph (1)(e), the conduct of the parties includes—

(a)  whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(b)  the manner in which a party has pursued or defended his case or a particular allegation or issue;

(c)  whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim; and

(d)  conduct before, as well as during, the proceedings. (L.N. 152 of 2008)

6.  D accuses P’s conducts as follows:

(a)  D’s solicitors wrote to P’s solicitors on 1 February 2017 and 20 February 2017 to inquire about whether P was still opposing the application.  But P did not respond until two hours before close of business on the day before D’s skeleton submissions were due;

(b)  D attached a draft consent summons for P’s consideration in a letter dated 27 April 2017 with the proposed costs on indemnity basis.  Yet P did not reply.

7.  To the above accusations, P replies:

(a)  There is no reason for no response to D’s respective letters on 1 February 2017 and 20 February 2017;

(b)  As to the letter of 27 April 2017, it was unreasonable for D to make such a proposal for indemnity costs and yet asked for a reply within two hours during the lunch break;

(c)  Under the court’s order, D should file and serve an affidavit in support of its application, which it had failed to do.

8.  Having considered the submissions and the referrals to the letters, it is quite obvious that the following conducts of the parties’ solicitors had given rise to this hearing, costing time and costs for their clients and time which can otherwise be saved by this Court.  These conducts should be deprecated and discouraged.  I shall set them out here as a strong message to the legal profession that this Court will take a serious view against such conducts and may refer the matters to the relevant professional bodies for actions to be taken, if necessary in future:

(a)  P’s solicitors did not reply to D’s letters for agreement to the supplemental witness statements in February 2017, without any reasons at all.  Such conduct, in my view, amounts to misconduct of a competent solicitor because it will not be conducive to the cooperation between the parties but will cause animosity between themselves.  It will also damage the relationship between the parties, reducing the chance of successful mediation of clients’ disputes.  It will also waste the costs ultimately, like this case today.

(b)  Where there is a court order that D should serve an affidavit in support of its application, it does not lie in D’s mouth to tell the court that it is in its own discretion not to comply with the court’s order because it may not be absolutely necessary for it to do so for its application.  Once the court has made the order, the question becomes a strict compliance with the court’s order and if not, there must be good reasons for non-compliance, with notice to the court and the other party as early as possible.  Non-compliance with the court’s order is a serious matter for the court because this is an important component of our judicial system.

9.  D asks this Court to order indemnity costs against P on P’s conduct.  This must be under O.62, rule 5 RHC.  The Court must take all factors into consideration, including those factors above.

10.  In the circumstances, taking a broad brush approach, the appropriate costs order for the application should be costs in the cause.  The costs for today can be regarded as wasted costs, given rise by no response of P’s solicitors to D’s letters in February this year.  I was told by counsel for D that she only received instructions to act for D in April.  If P had responded positively, there is simply no need to have the hearing today.  Although I accept that even if the hearing proceeds today, the costs that D will obtain should be costs in the cause on a party to party basis, I will not award costs to P because this was caused by P’s solicitors’ conduct. D’s conduct of non-compliance with the court’s order for failing to serve the supporting affidavit, though not directly relevant to the hearing today because P had not raised it as the reason for no response to D’s letters, such misconduct has to be taken into account as well under O.62, r.5.  I therefore order that there should be no order as to costs for today’s hearing.  As such, it is not necessary for me to consider whether there should be counsel’s certificate for this hearing.

11.  As to the case management of this case, I shall make an order in terms as follows:

(a)  Leave to D to serve the supplemental witness statements as set out in the summons;

(b)  P be at liberty to serve any supplemental witness statement in response to D’s supplemental witness statements only;

(c)  By consent, leave be granted to the plaintiff to set down within 42 days for a 5-day trial before a judge alone in the fixture list. There be a pre-trial review before the trial judge for 30 minutes on a date 12 weeks before trial.  Parties shall raise the issue of recusal of the trial judge, if any, and shall confirm the length of the trial by counsel in charge at the pre-trial review. At the setting down parties shall produce a letter to the Listing Clerk confirming the length of trial estimated by counsel in charge.  Upon setting down, all interlocutory applications shall be listed to be heard by the Registrar or a Master.

(d)  Costs of this Case Management Conference (15 minutes) be in the cause.