UNISON PROJECTS CO LTD v. AHL DESIGN WORKSHOP LTD

HCCT 37/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 37 OF 2010

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JUDGMENT ON COSTS

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The application

1.  On 13 April 2002 this Court handed down judgment in the construction dispute between these parties.

2.  This judgment speaks for itself.

3.  The result was that judgment was awarded to the plaintiff against the defendant in the sum of HK$3,636,246.00, together with an Employer's Compensation indemnity and interest and costs.

4.  As to costs, the court made an order nisi (at paragraph 194 of the judgment) in the following terms:

save that (i) there is to be no order as to costs of the experts' reports on the ‘programming' issues; and

save that (ii) the plaintiff is to pay the defendant's costs of the expert evidence as to the quantity surveying quantum issues,

the defendant is to pay the plaintiff the costs of this action, such costs, if not agreed, to be taxed and paid upon the High Court scale.

5.  The plaintiff wished to be heard in its application to vary the aforesaid costs' order nisi, and now seeks an order that the initial costs' order be varied to an order that the plaintiff be entitled to the entirety of its costs.

6.  This application was opposed by the defendant, which itself mounted no cross-application to vary the costs' order nisi.

7.  This therefore is the decision of this court upon the plaintiff's application.

The argument

8.  Mr Jonathan Wong appeared for the plaintiff on this application, just as he had appeared for the plaintiff at trial.

9.  He drew the court's attention to the usual principles relevant to an award of costs, and advanced his application to vary on the following premises:

 first, that it cannot be gainsaid that his client, Unison, turned out to be the clear overall ‘net winner', given that the claim as pleaded was for HK$8.4 million plus EC indemnity, whilst AHL's pleaded counterclaim was for the net amount of HK$5.5 million plus a denial of the indemnity; and

 second, by reason of the parties' respective stances pre-trial and the judgment content, there is nothing to suggest that the manner in which Unison advanced its expert evidence could be criticized as being either unreasonable or improper.

10.  Mr Wong pointed out that in terms of the so-called ‘programming issues' the parties had been content to allow the reports to speak for themselves (which in the event turned out to be justified, since the court did not find the programming reports to be of assistance), whilst in terms of the quantity surveying issues, the fundamental area of contention was that of the competing approaches or ‘methodologies', on which point the court was persuaded that “the approach of AHL's expert is to be preferred”.

11.  However, counsel continued, although the court preferred the approach of the defendant's Q/S expert, the fact was that his valuation was a negative HK$4.3 million, (or, in the alternative, a negative HK$1.5 million), as opposed to the plaintiff's Q/S, whose methodology was rejected but whose conclusion was that Unison was entitled to HK$8.4 million, so that in the event the plaintiff's opinion was closer to the court's actual award of HK$3.6 million.

12.  Hence, Mr Wong concluded, there was no material to suggest that the court's decision, based on the available expert evidence, was not an outcome consistent with the normal ‘vicissitudes of litigation', nor that there had been any unreasonableness or oppressiveness on the part of the plaintiff in the manner in which it had dealt with its expert Q/S report – and thus, if this be correct, should it not have been the case that costs should follow the event over the board and absent the exceptions now present in the order nisi?

13.  Mr Yan Kwok Hing, who also had appeared at trial as counsel for the defendant, opposed the application to vary the existing order nisi.

14.  He drew the court's attention to the provisions of RHC Order 62, rule 3(2), which emphasizes the fact that the court has a wide discretion to make any order it sees fit, and that as a general rule costs should follow the event “except when it appears to the Court that in the circumstances of the case some other order should be made as to the whole or any part of the costs.”

15.  Mr Yan quoted the celebrated dictum of Nourse LJ in Re Elgindata (No 2), (1993) 1 All ER 232 at 237, and also the observation of Ormrod LJ in The Aghios Nicolaos [1980] 1 Lloyd's Rep 17, at 21 in emphasizing that whilst there often may be a ‘single event' as an outcome to a dispute, this is not invariably the case and that each case must depend on its own facts.

16.  He pointed out that in regard to the plaintiff's claim, which was for outstanding payment for work done under the sub-contract, the dispute was largely as to quantum, and the short point was that when it came to evaluation of that dispute, the court had adopted the approach (but not the figures) adumbrated by the defendant's expert; Mr Yan further observed that the plaintiff had seen fit to deny each and every head of the  loss and expense claimed by the defendant in its Counterclaim, and that the plaintiff's expert did not provide any assessment in this regard, although, as matters transpired, a sum in loss and damage was allowed to the defendant.

17.  In making his submission, Mr Yan provided in his skeleton argument a helpful tabular summary of the findings of the court upon the seven quantum issues which were in play, amply demonstrating, he said, that the plaintiff's quantum expert evidence was unhelpful to the court.  In fact, Mr Yan noted, whilst it was open to the plaintiff to make a concession or even to admit any of the outstanding quantum issues without affecting its main stance in the case, it chose not to do so and instead hotly contested quantum – and in the process disputed the methodology of the defendant's Q/S in favour of its own Q/S, whose approach the court found to be of little assistance.

18.  He also argued – perhaps with a degree of justification – that already the court had been generous to the plaintiff in ‘netting down' the respective amounts found due, and thus in not making any costs' order in relation to the defendant's counterclaim, upon which it had enjoyed a measure of success, and that in deciding costs the court was perfectly entitled (as it had done) to make a discrete costs' order in relation to the expert evidence.

19.  Thus Mr Yan – whom himself had mounted no application to vary the costs' order nisi on behalf of his client – moved to dismiss the plaintiff's application.

Decision

20.  I did not find this an easy case fairly to decide in substance, and prior to handing down judgment the court had reflected at some length on the costs' order nisi and its overall appropriateness in all the circumstances of the case.

21.  In the event I have been unconvinced by Mr Wong that the order nisi was wrong in principle or that it proceeded on the basis of an error of law or of fact.  In short, it was just another difficult costs' decision, which was made in the exercise of the court's unfettered discretion in light of the evidence and the overall result.

22.  There may indeed be an element of rough justice within the existing costs' decision, which perhaps is slightly unusual in its form, but costs cannot be decided as if by micrometer, and the court has to take what it perceives as a principled and broad view in light of the conclusions it has drawn after hearing the case.

23.  Accordingly I can discern no good reason for altering the order nisi as made.

Order

24.  The plaintiff's application to vary the costs' order nisi is dismissed.

25.  Costs of the application are to follow the event, to be paid by the plaintiff to the defendant, such costs to be taxed if not agreed.