SECRETARY FOR JUSTICE v. WEMBLEY INTERNATIONAL (HK) LTD AND ANOTHER

HCA 8518/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.8518 OF 1998

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JUDGMENT ON COSTS

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Introduction

1. On 19 March 2004 this court handed down its judgment in this case, which was a dispute between the Secretary for Justice, acting on behalf of then Urban Council, and the defendants, Wembley International (HK) Limited and its English parent, Wembley Plc. This case had arisen consequent upon the dismissal, on 26 May 1998, of Wembley as manager of the new Hong Kong Stadium in So Kun Po.

2. The judgment speaks for itself. The result of the case was that the plaintiff's claim against the defendants was dismissed, and there was judgment for the 1st defendant on its counterclaim in the amount of some HK$21.85 million.

3. The issue of costs was not then the subject of decision, this court indicating that, absent agreement thereon, it was intended to hear counsel upon that issue.

4. This, then, is the judgment of this court on the costs of this action.

The argument

5. On behalf of Wembley Mr Huggins SC, who (together with Mr Stock) appeared at the trial, submitted that this was a case meriting the award of indemnity costs against the unsuccessful plaintiff.

6. In this connection the court has had the advantage of lengthy and detailed written submissions in support of his position. For immediate purposes, suffice it to say that Mr Huggins characterized the treatment of his client as a cynical and politically expedient dismissal, absent good cause, and the consequent litigation as an equally cynical attempt to "get in first", wherein all but two of the myriad of pleaded reasons justifying the dismissal had been ignominiously dropped, leaving the battleground (at least by the second day of trial) to be the main issue of the upkeep and maintenance of the stadium pitch, together with a lesser issue relating to certain 'non-contractual payments' allegedly wrongfully paid by Wembley to the Hong Kong Rugby Football Union.

7. Against this background, said Mr Huggins, the oppressive conduct of this litigation, as recognized in the judgment, was sufficient to justify an award in his client's favour of indemnity costs, alternatively costs on a common fund basis.

8. Appearing for the plaintiff, Mr Griffiths SC (who, together with his junior, Mr Cooney, did not appear at trial) strongly resisted the defendant's claim for indemnity costs, although in light of the judgment he made it clear that the plaintiff accepted that the appropriate order for the costs of the claim and the counterclaim should be costs in favour of the defendants upon a party and party basis, to be taxed if not agreed.

9. This, said Mr Griffiths, was the usual rule. It was evident from the terms of Order 62, rule 28(2) that such a basis is considered appropriate so as to allow the recovery of all costs necessary, properly and reasonably incurred for the attainment of justice in any particular case, and indeed an award on this basis represented the general practice of the Hong Kong courts in hostile litigation.

10. Whilst the court clearly had a discretion to order costs upon an higher scale, he argued, there should be some special and unusual feature within the case which justified such departure from the general rule. And there was none in this case, Mr Griffiths submitted, which would justify an order for costs departing from the norm.

11. Whatever else the court may have said in the course of its judgment about the conduct of the case, he said, there had been recognition that the pitch claim was worth "powder and shot", and if this be the case it could not be condemned in indemnity costs, not least because in this regard the case turned in large measure upon a contest between the respective experts on each side; nor in this regard could there be any suggestion of mala fides.

12. Mr Griffiths stressed that the present case undoubtedly had been hard fought, some grounds for dismissal having been raised and abandoned, and equally documents and evidence had been prepared but not used. None of which, he said, was special or unusual, and in fact the plaintiff's abandonment of all but two of the grounds had enabled the court to "focus its attention" upon the most important issue, that of the pitch, an approach which undoubtedly had shortened the hearing time, as had the sensible decision to agree quantum.

13. In summary, therefore, the plaintiff's position was that this was not a case which reliably generated the 'sense of indignation' required before the court, in the exercise of its discretion, should be moved to make an award of indemnity costs.

Decision

14. I confess that I have found this to be a difficult decision, and one that has occasioned extensive reflection.

15. I have had opportunity to revisit the judgment, and further to review the history of this litigation, with particular reference to the manner in which it developed in terms of the assertion, and staged abandonment, of all but two of the grounds allegedly justifying the termination, at the end of May 1998, of Wembley's management contract.

16. The time that has elapsed between the compilation of the judgment and the present has not caused any substantial revision of the views earlier expressed by this court about the conduct of this litigation.

17. Notwithstanding Mr Griffith's soothing words, the hard fact remains that in this case these defendants effectively had the kitchen sink thrown at them in terms of the indiscriminate variety of grounds asserted to justify termination, and thereafter these many and various complaints were whittled down to the specific two upon which the court ultimately was required to rule. In this regard Mr Griffiths is of course correct to say that the trial court found that this distillation proved of assistance - how could it not? - but this is to overlook the fact of the very considerable cost and effort to which Wembley must have been put in order to meet such an extensive variety of allegations.

18. The ambit of the witness statements filed in court bears testimony to the hours of detailed work required to meet the allegations pleaded, only for such allegations to be dropped at various times at what appears to be no more than the plaintiff's convenience.

19. This was to have a dramatic effect upon the shape of the evidence. Mr Simon Hill, for example, whom when this case was prepared for trial was slated to be a major witness for the defendant, and whose extensive statement reflected the multiplicity of heads of complaint upon which he was to testify, in the event played but a marginal part at trial consequent upon the abandonment of the allegations earlier made, an abandonment which, with regard to a number of issues, was made only at the eleventh hour; in this connection the pre-trial letter written by the defendants which made a plea for common sense, and a rationalization of the 'real' issues for debate, had met with peremptory rebuff, only for precisely that which had been requested to occur on the second morning of the trial.

20. In my view this case cannot simply be dismissed as the normal rough and tumble of hostile litigation between two "big boys" who "know the score and can take care of themselves", which represented the gist of one of Mr Griffith's lines of argument. The answer to this, it seems to me, is that if Wembley had not been the "big boy" that it was, then in all probability it would have been economically squashed by the level of resources required to mount a proper defence to the litany of complaints asserted by the plaintiff; in any event "big boys" are as entitled under the law to the like protection against unfairness as are those who are obviously vulnerable.

21. Looked at in the round, therefore, and with the benefit of the perspective that further lapse of time affords, it is difficult for the objective observer not to encounter at least some 'sense of indignation', to adopt the hallowed phrase, about the course of events. In this connection I note that within his submission Mr Huggins included not just the allegations of cynicism and oppression, but also made criticism of the fairly obvious political agenda that lay behind the ending of Wembley's tenure.

22. There is of course no doubt that the issue of the care and maintenance of the pitch constituted the main battleground - whilst also pursued at trial, I do not consider that the 'non-contractual payments' issue amounted to anything of substance - and looked at in the round it seems to me that a significant consideration is the extent to which this central aspect of the case justifies an order for costs upon an higher level than is recognized as usual.

23. In effect Mr Huggins' argument is that the answer to this is 'yes', that at the date of termination the issue of the pitch provided but one of the fifteen heads of complaint cited within the letters of termination, and that as at that date there was no cogent basis for believing that in this regard Wembley were in breach of contract; certainly there had been no question of expert reports by that stage, and in so far as the question of the pitch represented a genuine factor in the making of the decision (which he disputed) such decision was made in the absence of the relevant documentation, as belatedly discovered, and flew in the face of the history of events, wherein the necessity to rebuild the pitch previously had been canvassed, and indeed approved by the Urban Council on two occasions, the Council well knowing throughout that there was a real question about whether the problem was a structural or a maintenance issue. To the contrary, Mr Griffiths' response was that this main element within the case clearly was worth the detailed judicial consideration accorded to it, and indeed had been thus characterized within the judgment. It followed, he submitted, that party and party costs were appropriate.

24. There is something to be said for each argument, although I bear in mind that in terms of the pitch the case as eventually mounted by the plaintiff almost certainly bore little relation to the manner in which the issue was perceived at the date of termination, and at a time when the condition of the pitch was invoked as but one of many alleged reasons for termination. Moreover, it seems to me that the plaintiff's case regarding the allegedly defective 'cultural practices' adopted with regard to this pitch appeared to be in a state of flux even during the trial itself. So that whilst consideration of the pitch, and its admittedly poor state at various periods, indeed may have provoked questions attracting serious scrutiny, in these circumstances it does not seem to me to follow that the costs of this exercise necessarily fall within the 'party and party' category.

25. In considering the costs issue at large I have borne in mind, also, if the unfortunate history of this case is any guide, that inevitably the taxation process will be lengthy and contested, and that any order attempting to provide for differing bases of taxation for disparate parts of this case is likely to produce a recipe for confusion, further controversy, and additional needless expense.

26. At the end of the day the court has to take a view in light of the material available to it. After weighing all the matters urged upon me, in my judgment the broad justice of this case will be met if the plaintiff is required to pay the defendants' costs of these proceedings, that is, upon both claim and counterclaim, and that such costs are to be taxed and paid upon a common fund basis. I so order.

27. The final matter is the issue of whom is to pay the costs for the argument about the costs.

28. The plaintiff has firmly and resolutely maintained its position that an order for party and party costs should be ordered, and in the event it has lost this argument. True it is that the defendants argued for indemnity costs, an argument which also has been unsuccessful, albeit an order upon the common fund basis was canvassed in the alternative.

29. In my view the costs of this application must also be to the defendants, to be taxed and paid upon a common fund basis. I make an order nisi to this effect.