SIU SHU CHING AND OTHERS v. SIU KWOK CHEUNG AND ANOTHER

HCA 1641/2013

[2022] HKCFI 1986

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1641 OF 2013

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DECISION ON COSTS

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APPLICATION

1.  I handed down my judgment in this case on 10 March 2022 (the “Judgment”)  with a costs order nisi as set out in §79 of the Judgment.

2.  The 1^st and 2^nd Defendants now apply to vary the said costs order nisi to the effect that they should only pay half of the costs incurred by the Plaintiffs. The 1^st and 2^nd Defendants submitted that despite the fact that the Plaintiff’s case prevailed at the end of the day, the Plaintiffs’ conduct, both before and during the trial, were unreasonable. As such, it led to unnecessary costs to which it will be unfair for the 1^st and 2^nd Defendants to bear the same.

3.  The Plaintiffs submitted that though they made certain procedural mistakes, such mistakes did not prolong or escalate the costs of the trial. As such, costs should simply follow the event and the costs order nisi should be made absolute.

APPLICABLE LEGAL PRINCIPLES

4.  The law in this area is quite settled. In Hung Fung Enterprises Holdings Ltd v Agricultural Bank of China [2012] 3 HKLRD 679, Kwan JA (as she then was)  at §§100 said:

“100. Although the principles in Re Elgindata (No.2) [1992] 1 WLR 1207, 1214A-C continue to apply after the Civil Justice Reform, the approach these days is to regard the proposition that costs should follow the event not as a general rule but only operates to shift to the unsuccessful party the burden of showing why some different approach should be adopted on the facts of a particular case (Chan Mei Yiu Paddy v Secretary for Justice (unrep., HCAL 16/2007, [2010] HKEC 1910), para.5 (Saunders J)), the rationale being that a mechanistic adoption of follow the event principle may result in parties incurring unnecessary costs in civil litigation (Wong Kam Tong v Tin Shing Court, Yuen Long (IO)  (No.2) [2012] 2 HKLRD 1128, paras.10-13).” (Emphasis added.)

5.  In Lui Ming Lok v Ng Im Fong Loretta, the executrix of the estate of Lui Kwan Cheung, Deceased under the Grant of Probate No.HCAG016896/2015, HCAP28/2019, unrep., 22 September 2020, Coleman J., at §§10-13 said:

“10. Costs are in the unfettered discretion of the court. However, the discretion must be exercised judicially, seeking to achieve practical justice in the particular circumstances of the case. Therefore, although costs normally follow the event, the court may make some other orders as to the whole or any part of the costs, depending on the circumstances of the case.

11. Order 62 rule 5(1)  identifies the matters which the Court will take into account in exercising its discretion as including the underlying objectives set out in Order 1A rule 1 and the conduct of all the parties. For the purposes of the rule conduct 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 will be during, the proceedings.

12. The well-known Elgindata principles relating to costs have been considered by the Court of Appeal, for example, Zhuhai International Container Terminals (Jiuzhou)  Ltd v Lo Tong Hoi (unreported, CACV 181/2011, 31 July 2012)  at 33. There, Kwan JA considered the principles after the amendment to Order 62 rule 5 and held that it is not necessary to establish that a successful party has acted unreasonably or improperly in raising an issue for it to be deprived of the whole or part of its costs. The rule as amended requires litigants to bear in mind the possible cost implications, and there is incentive to conduct litigation in a responsible way and be selective as to the issues raised.

13. It is also now settled that there is a broader or wider discretion in the court on matters relating to the costs of interlocutory arguments. Issue-based costs order are now more common than prior to the CJR.” (Emphasis added)

(See also CS Credit Limited v Marspan Limited and Chiu Margaret [2022] HKCFI 276, 25 January 2022 at §5 per Recorder Sit SC)

ANALYSIS

6.  I have directed the parties to file written submissions and to deal with this application by way of paper disposal. The parties have since filed detailed written submissions. I have to say that in general, this Court do have sympathy with the 1^st and 2^nd Defendants’ submissions. This Court also struggled with the Plaintiffs’ pleaded case.

7.  This Court time and again reminds itself that the paramount duty of the Court is to find the correct answer to the issues it has to determine and to do justice to the case. The Court has to try its very best to understand the parties’ respective cases and to carefully consider the evidence and legal principles in order to come out with a just determination. This is what this Court had done in this trial.

8.  However, this Court did spend extra time and effort to understand the Plaintiffs’ pleaded case. What should have been a very simple and straightforward case has been pleaded in, with no disrespect, somewhat convoluted ways.

9.  First, parties disagreed on whether implied license needed to be pleaded and considerable time in oral submissions, both in opening and closing, was spent on that very issue.

10.  Secondly, if my memory serves me right, on day one of the trial, I did make an inquiry with Mr Chong for the Plaintiffs as to whether he liked to tidy up the Plaintiffs’ pleadings. Mr Chong submitted that it was not necessary. In fact, it is still a puzzle to this Court as to why the Plaintiffs’ pleadings were not tidied up given that this trial was adjourned from the last GAP. The Plaintiffs have ample time to attend to their pleadings. This is particularly so given that many of the pleading issues had been raised in the 1^st and 2^nd Defendants’ opening submissions more than one year before the trial before this Court. This approach did lead to extra time spent by the 1^st and 2^nd Defendants to put to each and every Plaintiff of the “mistakes” between their pleaded case and their witness statements. The Defendants’ counsel team is perfectly entitled to do so.

11.  Although the Court is able to identify the main issue and to determine it according to the evidence available to the Court (as set out in the Judgment), it is fair to say that the way the Plaintiffs pleaded their cases did contribute to unnecessary expenses being incurred. At the end of the day, the Plaintiffs’ counsel team fairly admitted that they made the mistake of not rectifying certain mistakes in the pleadings. This is avoidable.

12.  As I note above Mr Chong for the Plaintiffs did spend quite some time, during his opening, on arguments in relation to the implied license which is not pleaded. As stated in the Judgment, the Plaintiffs are not allowed to run an unpleaded point.

13.  Further, I also agree that pleadings are to assist the parties so that they know each other’s case. There is no good reason not to provide particulars in support of the grant of a license. The 1^st and 2^nd Defendants complain that subsequently, the Plaintiffs, in their witness statements, relied on an alleged custom of the members of the San Hing Tsuen which is not pleaded. I can understand the frustration.

14.  At the end of the day, the Court must ask itself whether the way the Plaintiffs pleaded their case and the way they chose to run certain discrete issues which were dismissed by this Court have unnecessarily increased costs and expenses. On the facts of the present case, my view is that it did contribute to unnecessary costs and expenses. It certainly increased the time this Court spent both in preparing for the hearing and in rendering the Judgment.

15.  Having said that, as the 1^st and 2^nd Defendants were represented by a team of competent counsel, I do not think that the increased cost is as much as 50%. The central issue is still clear from the parties’ agreed list of issues and substantial evidence were presented for this Court to assess the credibility of each parties’ case. 

DISPOSITION

16.  Applying the legal principles to the facts of the present case and in order to achieve fairness between the Plaintiffs and the 1^st and 2^nd Defendants, I am of the view that the right course is to vary my costs order nisi to an order that the 1^st and 2^nd Defendants are to pay 80% of the costs of and occasioned by the Plaintiffs, to be taxed if not agreed, on a party to party basis.

17.  Finally, I thank counsel for their helpful written submissions.