LEE WOON LAN v. CHENG HING PUN AND OTHERS

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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DECISION

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1. On 19th February 1997 I gave judgment in these proceedings in favour of the 1st to 4th Defendants against the Plaintiff, and dismissed the notices of contribution between the Defendants and the Third Party Notice against the 5th Defendant. At the same time I adjourned the matter of costs between the parties for further argument which I have now had the benefit of hearing.

2. It is not in dispute that the 1st to 4th Defendants should have their costs against the Plaintiff to be taxed, and it is agreed between these same Defendants that there should be no order as to the costs of the notices of contribution between themselves. The only issue now is as to the matter of the costs of the 5th Defendant.

3. On the first day of trial I was informed by Miss Pinto for the Plaintiff that there was a settlement of the proceedings with the 5th Defendant and she sought leave to discontinue against him, which was granted. However, notices of contribution having been served affecting the 5th Defendant, these were ordered to stand as Third Party Notices and the 5th Defendant remained in the proceedings as a third party, his notice of contribution standing as a counterclaim against the other defendants. In the event, no liability having been found on the part of any of the Defendants, the Third Party Notice fell away as well.

4. The 5th Defendant now claims his costs against the other Defendants, and in support of this, Mr. Ho makes three main points. First, he says that the 5th Defendant should not be in a worse position than if he had remained as a defendant with the others throughout; second, costs should follow the event, particularly as the other defendants had insisted that there was an issue between them and the 5th Defendant; and third, he had made efforts to settle the matter between himself and the other defendants with reasonable offers which were refused.

5. I accept that the 5th Defendant should not be in a worse position than the other defendants merely because he came to terms with the Plaintiff, and it must therefore follow that one or more of the other parties should pay his costs. As a result of the settlement reached between him and the Plaintiff it would be wrong, in my view, to make a direct order for his costs to be paid by the Plaintiff. I also accept that there is a general principle that costs follow the event, so that a successful third party is normally entitled to an order for costs against the defendant, even where the defendant is also successful, subject to any order that these be added to the defendant's costs against the plaintiff if the circumstances of the case so require. Consequently, there must be an order for costs against the other defendants, the only issue being as to whether they should be entitled to add them to their own costs against the Plaintiff, or whether they should be penalised in costs themselves for keeping the 5th Defendant in the proceedings up to and including the trial when he might have been allowed to walk away with no further liability than he had agreed with the Plaintiff, and was prepared to agree with the other defendants.

6. The 5th Defendant first proposed an overall settlement in a letter dated 5th September 1996, but this was rejected on the basis that it was unlikely, as in fact transpired, that the defendants would be found liable at all, or if they were, the 5th Defendant would be more than 40% liable. However, the 5th Defendant proceeded to negotiate with the Plaintiff to avoid the expense of trial, and in January 1997 settled for payment of the sum of $50000 and 40% of the Plaintiff's costs, apparently assuming that the 5th Defendant would be found not more than 40% liable.

7. By a letter dated 25th January 1997 the 5th Defendant's solicitors made a further offer to the other defendants to the effect that they would accept liability for up to 50% of any damages found to be payable by them, less the $50000 they had already paid. I assume that this again was rejected. It was certainly not accepted, but I do not know whether the two other firms consulted with each other about it.

8. Until the letter of 25th January it was inevitable that the 5th Defendant should be still a party to the proceedings. The only previous offer was before he had settled with the Plaintiff, and involved a settlement of all parties, which the other defendants were not obliged to accept. The letter of 25th January, however, contains a specific proposal for a settlement between the defendants which on the face of it is in my view eminently reasonable, and indeed, had any liability been found against the other defendants, very generous.

9. Under Order 16, rule 10, I can and should take into account offers of contribution made by a party to proceedings when considering costs. Mr. Hingorani, on behalf of the 1st and 2nd Defendants, submits that the offer was unreal as it was so late and would have required consultation between the defendants and between them and the Plaintiff. I do not accept the latter contention, as the proposed apportionment between them and the 5th Defendant need not have concerned the Plaintiff who was proceeding against them in any event. As to consultation between themselves, there were only two firms of solicitors and I doubt that this offer came as a surprise. It was also over a week before the date fixed for trial. This was a realistic offer which I believe should have been accepted by the other defendants, and their failure to do so is the only reason that the 5th Defendant had to take part in the trial as a party, although I have no doubt that he would still have been called as a witness.

10. In the exercise of my discretion I accordingly order that the 5th Defendant is entitled to his costs of the Third Party proceedings against the 1st to 4th Defendants, but that they may add those costs incurred by the 5th Defendant up to 25th January 1997 to their costs against the Plaintiff, including counsel's brief fee, if the brief had been delivered by then, but not the refreshers. I do not propose to attempt to apportion the extra costs incurred in the trial itself by the presence of the Third Party, as I do not consider them to be significant in the circumstances of this case.

11. As this further hearing for argument as to costs would not have been necessary either had the offer been accepted, I order that the 5th Defendant's costs of this hearing also be taxed and paid by the 1st to 4th Defendants, but that there be no order as to the costs of the Plaintiff and the other Defendants.