XCHRX HO KIN CHUNG v. TSANG HIU SANG AND ANOTHER

DCCJ12513/2000

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 12513 OF 2000

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DECISION

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The facts of this case are not in dispute. On 30 November 1997, a vehicle driven by the 2nd Defendant rammed into the rear of the vehicle driven by the Plaintiff. The 1st Defendant was the registered owner of the vehicle driven by the 2nd Defendant. The 2nd Defendant was subsequently convicted of careless driving. On 3 July 2000, solicitors for the Plaintiff sent a letter before action to the Defendants' insurers claiming $47,404.50 being repair charges for the Plaintiff's vehicle and $780 being survey fee. On 7 August 2000, solicitors for the Plaintiff issued writ claiming:-

(i) repair costs	$47,404.50
(ii) survey fee	780.00
(iii) taxi fare	9,000.00
(iv) loss of no claim bonus	2,710.50
	$59,895.00

2. The writ was served on 8 August 2000. Without filing any defence, on 25 August 2000 solicitors for the Defendants paid into court $20,000 for full and final settlement. On 9 September 2000 solicitors for the Plaintiff filed notice of acceptance of payment into court. In due course, the Plaintiff's solicitors tendered their bill of costs of the action for provisional taxation. The bill amounted to $33,228 including disbursements.

3. On 20 September 2000, the Defendants took out a summons, marked pursuant to Section 37A of the District Court Ordinance, Cap. 336 seeking an order in the following terms:-

"(1) the Plaintiff having accepted the payment into court made by the Defendant on 9 September 2000 at HK$20,000 and the present action falls below the jurisdiction of District Court, the Plaintiff should pay costs of this action to the Defendant to be taxed if not agreed.

(2) the Defendant do have costs of this action." (sic)

The summons, heard on 4 October 2000, was dismissed by Master C.K. Chan. On 15 October 2000, a taxing master issued notice under Order 62 r. 10 (2) of the Rules of the District Court, Cap. 336 indicating that the Plaintiff's party and party costs would be allowed at $24,251.50 inclusive unless the parties seek formal taxation. The Defendants have since applied for taxation. Meanwhile, on 10 October 2000 the Defendants filed notice of appeal against the decision of Master C.K. Chan made on 4 October 2000. I am seized with this appeal. The appeal was heard on 16 November, 2000. Thereafter, supplemental written submissions flowed back and forth. I believe I now have all the arguments.

4. As the summons before the learned master and the notice of appeal before me say, the Defendants take the view that because the Plaintiff accepted $20,000 payment into court this action is within the jurisdiction of the Small Claims Tribunal and hence the Defendants are entitled to the costs of the action. The Plaintiff contends that the acceptance of payment into court was a commercial decision; once the Plaintiff accepts payment into court, pursuant to Order 62 r. 10, the Plaintiff is entitled to costs of the action as of right.

Statutory Provisions relied on by the Parties

5. Section 37A of the District Court Ordinance Cap. 336 says that the District Court has no jurisdiction over claims for or below $50,000.

6. Order 62 of r. 10 of the Rules of the District Court Cap. 336 provides that:-

"(2) Where a plaintiff by notice in writing in accordance with Order 22, rule 3 (1) accepts money paid into court in satisfaction of the cause of action or of all the causes of action in respect of which he claims, or accepts money paid in satisfaction of one or more specified causes of action and gives notice that he abandons the others, he shall be entitled to his costs of the action incurred up to the time of giving notice of acceptance.

............

(5) In each of the circumstances mentioned in this rule an order for costs shall be deemed to have been made to the effect respectively described and, for the purposes of section 50 of the Ordinance, the order shall be deemed to have been entered up on the date on which the event which gave rise to the entitlement to costs occurred."

Jurisdiction over the action

7. Miss Kwan for the Defendants contends that since the Plaintiff accepted $20,000 payment into court, the amount being less than half the maximum within the jurisdiction of the Small Claims Tribunal, the action is outside the jurisdiction of the District Court.

8. In my view, it is too late now to argue that the action is outside the jurisdiction of the District Court. By effecting payment into court, the Defendants must be deemed to have accepted jurisdiction of the District Court. Besides, as Miss Kwan indicated, until the Plaintiff elected to accept the payment into court, it was difficult if not impossible for the Defendants to argue that the action was wrongly commenced in the District Court.

9. I do not think Miss Kwan is really contesting the jurisdiction of the District Court to deal with case. Her main concern is the amount of costs that should be allowed to the Plaintiff. If I am correct in this belief, then a proper and simpler approach, as the Defendants are entitled to take, is to argue before the taxing master the scale and amount of costs that may be allowed. In case the Defendants are dissatisfied with the decision of the taxing master, there is procedure for appeal against the decision of the taxing master. Instead, the Defendants took out a summons before a master (not taxing master) seeking an order for costs to the Defendants.

10. Prima facie, the Defendants' summons implies that the mandatory order for costs under Order 60 r. 10 (5) in favour of the Plaintiff would have to be purged. But, at the hearing of the appeal before me, Miss Kwan for the Defendants seemed to think that a cross order for costs in favour of the Defendants ought to be made. This stance has now been confirmed by a supplementary written submission dated 24th November 2000. Obviously, the effect of a cross order in favour of the Defendants would nullify or reduce the benefit of the order for costs to the Plaintiff deemed under Order 60 r. 10(5). The case, therefore, also raises the question of whether the court has power to make a cross order for costs in these circumstances.

11. In further support of her client's case, Miss Kwan relies on Order 62 r. 7 of the Rules of the District Court, Cap. 336 which provides that:-

7. Costs arising from misconduct or neglect (O. 62, r. 7)

(1) Where in any cause or matter any thing is done or omission is made improperly or unnecessarily by or on behalf of a party, the Court may direct that any costs to that party in respect of it shall not be allowed to him and that any costs occasioned by it to other parties shall be paid by him to them.

(2) Without prejudice to the generality of paragraph (1), the Court shall for the purpose of that paragraph have regard in particular to the following matters, that is to say-

(a) the omission to do any thing the doing of which would have been calculated to save costs;

(b) the doing of any thing calculated to occasion, or in a manner or at a time calculated to occasion, unnecessary costs;

(c) any unnecessary delay in the proceedings.

(3) The Court may, instead of giving a direction under paragraph (1) in relation to any thing done or omission made, direct the taxing master to inquire into it and, if it appears to him that such a direction as aforesaid should have been given in relation to it, to act as if the appropriate direction had been given.

(4) The taxing master shall, in relation to any thing done or omission made in the course of taxation and in relation to any failure to procure taxation, have the same power to disallow or to award costs as the Court has under paragraph (1) to direct that costs shall be disallowed to or paid by any party.

(5) Where a party entitled to costs fails to procure or fails to proceed with taxation, the taxing master in order to prevent any other parties being prejudiced by that failure, may allow the party so entitled a nominal or other sum for costs or may certify the failure and the costs of the other parties.

Mr. Chiu protests that this rule was brought up for the first time by Miss Kwan in supplemental written submission after the hearing of the appeal. I do not think a technical point on formality really assists the Plaintiff. Mr. Chiu has had adequate opportunity and time to make submissions in response. I believe the court is entitled to take into consideration Order 62 r. 7 if appropriate.

Deemed Order for Costs

12. Mr. Chiu for the Plaintiff argues that Order 62 r. 10 (5) of the Rules of the District Court, Cap. 336 leaves no discretion to a judge at all. The Plaintiff per force is entitled to costs at the District Court scale. For support, Mr. Chiu relies on the English Court of Appeal decision in Hudson v. Elmbridge Borough Council [1991] 1 W.L.R. 880.

Validity of Order 62 r.10

13. I became concerned about the validity of Order 62 r.10 after the hearing of the appeal. I have duly invited the parties to look into this issue and make supplemental submissions.

14. The District Court Ordinance was amended by the District Court (Amendment) Ordinance No. 28 of 2000. By Gazette Notice No. 247 of 2000 pursuant to section 1 (2) of the District Court (Amendment) Ordinance, the amendments took effect from 1 September 2000. As a result, the new Section 53 of the District Court Ordinance, Cap. 336 reads:-

"53. Costs

(1) The costs of and incidental to all proceedings in the Court, including the administration of estates and trusts, are in the discretion of the Court, and the Court has full power to determine by whom and to what extent the costs are to be paid.

(2) Subject to specific provision made in this or any other Ordinance (other than subsidiary legislation made under this or any other Ordinance), subsection (1) does not authorize an award of costs against a person who is not a party to the relevant proceedings.".

15. Mr. Chiu for the Plaintiff submits that this new section 53 does not apply because the action herein was commenced before the new section came into effect. However, Mr. Chiu forgets that he relies on Order 62 r. 10 for the deemed order for costs and both the new Section 53 and the Rules of the District Court, Cap. 336 became operative as from 1st September 2000. If the new Section 53 of the District Court Ordinance, Cap. 336 should not apply because it came into force after the commencement of the action herein then by the same token the Plaintiff cannot rely on any provision (including Order 60) in the Rules of the District Court, Cap. 336. In the premises, I have little doubt that the new Section 53 of the District Court Ordinance, Cap. 336 applies to this case.

16. It is elementary principle of constitutional law that no subsidiary legislation may over-ride a principal legislation. See Irving v. Askew (1870) LR5 Q.B. 208. This principle is reinforced by Section 28(1)(b) of the Interpretation and General Clauses Ordinance, Cap. 1:-

"28(1)(b) no subsidiary legislation shall be inconsistent with the provision of any Ordinance."

17. Thus there is a fundamental weakness in the Plaintiff's case: Order 62 r. 10(5), as subsidiary legislation, takes away the "full power to determine by whom and to what extent costs are to be paid" extended to judges of the District Court by the new Section 53 of the District Court Ordinance, Cap. 336. More specifically, the rule in question removes the power conferred by principal legislation on the court to determine by whom costs are to be paid even though the rule in my view does not affect the discretion of the court on to what extent costs are to be paid.

18. Mr. Chiu, however, contends that the principal legislation, e.g. the new Section 53 of the District Court Ordinance, Cap. 336 is subject to Order 62 r. 2(4) which expressly provides that:-

"The powers and discretion of the Court as to costs under section 53 of the Ordinance (which provides that the costs of and incidental to any proceedings in the Court shall be in the discretion of the court and that the Court shall have full power to determine by whom and to what extent the costs are to be paid) and under the enactments relating to the costs of criminal proceedings to which this Order applies shall be exercised subject to and in accordance with this Order." (Emphasis added)

19. In Hudson v. Elmbridge Borough Council [1991] 1 W.L.R. 880, relied upon by Mr. Chiu, the English Court of Appeal had occasion to consider the effect of (a slightly older version but practically the same) Order 62 r. 5 of the Rules of Supreme Court. Stuart-Smith L.J. observed that,

"What is surprising and undoubtedly involves injustice in this case to the defendants, is that the defendant's right to apply to the court for a different order has now been removed from Ord. 62 r. 5(4) ......

I acknowledge that this is an unsatisfactory and unjust result in this case. The solution is the reintroduction into Ord. 62 r.5(4) of the words, 'unless the court or a judge otherwise order.' " (pp.888-889)

Parker and Purchas, LJJ both concurred with Stuart-Smith LJ. Purchas LJ in particular said,

"I would only wish to add that I also consider that in the circumstances of this case, which are by no means unique, the omission of the words 'unless the court or a judge otherwise order' from the current version of R.S.C. Ord. 62 r. 5(4) has prevented the court from achieving a fair result as between parties. I too hope that those responsible will consider an appropriate amendment to the rules." P.889

20. As can be seen, their Lordships in Hudson v. Elmbridge Borough Council were not concerned with the question of conflict or inconsistency between the rules (as subsidiary legislation) and their parent principal legislation. In the premises, that decision does not assist the Plaintiff at all. Instead, I find Aiden Shipping Ltd. v. Interbulk Ltd. [1986] A.C. 965 most instructive. There, Lord Goff delivered the unanimous decision of the House of Lords. His Lordship had this to say about Section 51 of the Supreme Court Act 1981:-

"As I have already stated, the main issue in the case is whether there is to be implied into section 51(1) of the Act of 1981 a limitation restricting orders as to costs to orders made against parties to the relevant proceedings. Section 51(1) is (for all material purpose) identical to section 50(1) of the Supreme Court of Judicature (Consolidation) Act 1925, which itself is (for all material purposes) identical to section 5 of the Supreme Court of Judicature Act 1890 (an Act passed to amend the Supreme Court of Judicature Acts 1873-1875). In the rules of court contained in Schedule 1 to the Supreme Court of Judicature Act (1873) Amendment Act 1875, Order 55, which related to costs, opened with the words: "Subject to the provisions of the Act, the costs of and incident to all proceedings in the High Court shall be in the discretion of the court; ..." The words: "and the court or judge shall have full power to determine by whom and to what extent such costs are to be paid" (now to be found in almost identical terms in section 51(1) of the Act of 1981) were introduced by section 5 of the Act of 1890. It is of some interest to observe that these words were not added to the relevant rule to the Supreme Court (now Order 62, formerly Order 65) until 1959, after the decisions in both the authorities by which the Court of Appeal felt bound to reach its conclusion in the present case. The present rule of court, Ord. 62, r.2(4) simply provides:

"The powers and discretion of the court as to costs under section 51 of the Act (which provides that the costs of and incidental to proceedings in the Supreme Court shall be in the discretion of the court and that the court shall have full power to determine by whom and to what extent the costs are to be paid) ...... shall be exercised subject to and in accordance with this Order."

It is, I consider, important to remember that section 51(1) of the Act of 1981 is concerned with the jurisdiction of the court to make orders as to costs. Furthermore, it is not to be forgotten that the jurisdiction conferred by the subsection is expressed to be subject to rules of court, as was the power conferred by section 5 of the Act of 1980. It is therefore open to the rule-making authority (now the Supreme Court Rule Committee) to make rules which control the exercise of the court's jurisdiction under section 51(1). In these circumstances, it is not surprising to find the jurisdiction conferred under section 51(1), like its predecessors, to be expressed in wide terms. The subsection simply provides that "the court shall have full power to determine by whom ... the costs are to be paid." Such a provision is consistent with a policy under which jurisdiction to exercise the relevant discretionary power is expressed in wide terms, thus ensuring that the court has, so far as possible, freedom of action, leaving it to the rule-making authority to control the exercise of discretion (if it thinks it right to do so) by the making of rules of court, and to the appellate courts to establish principles upon which the discretionary power may, within the framework of the statute and the applicable rules of court, be exercised. Such a policy appears to me, I must confess, to be entirely sensible. It comes therefore as something of a surprise to discover that it has been suggested that any limitation should be held to be implied into the statutory provision which confers the relevant jurisdiction." (PP.974-975).

21. At p.982 of the report, Lord Goff went on to observe that,

"Since preparing this opinion, Your Lordships' attention has been drawn to the new rule 9(2) of Order 4 of the Rules of the Supreme Court, which has very recently been introduced by paragraph 3 of the Rules of the Supreme Court (Amendment) 1986 (S.I. 1986 No. 632 (L.2)). It prescribes as follows:

"Where the court makes an order under paragraph (1) that two or more causes or matters are to be tried at the same time but no order is made for those causes or matters to be consolidated, then, a party to one of those causes or matters may be treated as if he were a party to any other of those causes or matters for the purpose of making an order for costs against him or in his favour."

This amendment has no doubt been made as a result of the suggestion of the Master of the Rolls in his judgment in the case under appeal. It is evident that it has been tailored to take account of the supposed limitation upon the jurisdiction under section 51(1) of the Act of 1981. Since, in my opinion, there is no such limitation, I am able to stifle such doubts as I might have had whether an amendment in this form might have been ultra vires because it was inconsistent with section 51(1) of the Act of 1981 read with the limitation that the court only has power to order that costs shall be paid by those who are parties to proceedings. For the future, the new rule 9(2) can, if the Supreme Court Committee thinks fit, be remoulded in a less convoluted form."

Order 4 r. 9 (2) of the English Rules of Supreme Court and its equivalent in our Rules of the District Court Cap., 336 do not affect the case before me. However, by pointing out that there is no limitation on Section 51 (1) of the Supreme Court Act 1981 after adverting to Order 62 r. 2 (4), Lord Goff obviously took the view that Order 62 r. 2 (4) does not curtail power and discretion under Section 51(1) of the 1981 Act. If I understand his Lordship correctly, Order 62 r. 2 (4) per se is not objectionable because it acknowledges that the court still has power and discretion to exercise and that the rules may control only the manner in which power or discretion may be exercised. However, rules such as Order 4 r. 9 (2) premised on limitation of the power or discretion of the court conferred by principal legislation are questionable.

22. In The Queen v. Bird [1898] 2 Q.B. 340, at 346-347, it was decided that,

"The only question for us is whether these rules are good under the last part of s. 43. I do not think that any of the cases cited materially assist us, and I therefore refrain from mentioning them. I desire to deal only with the general question whether these rules are ultra vires as being in excess of the powers granted to quarter sessions by statutory enactment. Now, to make an absolute rule which has the effect debarring a man from the exercise of an absolute statutory right unless he complies with a number of requirements is, in my opinion, clearly ultra vires. If rules 30 and 34 had said in substance that unless the notices required by rule 30 were given the case would be entered in the unopposed list subject to transfer to the opposed list for good cause shewn, it would have been a very different question; perhaps, too, the question of costs in such a case might have been dealt with. But that is not like the present case, where an absolute bar has been imposed upon the exercise of a statutory right in the form of a requirement, non-compliance with which will wholly prevent the objector from being heard. These rules not only require a notice of intention to oppose to be given within seven days, but also require the name and address of the objector to appear in the notice - a requirement which certainly cannot be imposed as a condition precedent to the exercise of a right to perform a public duty in the public interest. It is obviously convenient that notice of opposition should be given, and an unobjectionable rule might easily be framed. But to refuse a hearing even to shew cause why the notice was given a day too late, or the address omitted, is adding something to the statute which has laid down only one absolute condition to the exercise of the statutory right."

Thus, to paraphrase, the test of ultra vires subsidiary legislation is "an absolute rule which has the effect of debarring a [judge] from the exercise of an absolute statutory [power or discretion]". It should also be noted that an ultra vires rule should not be upheld just because it is a convenient device when "an unobjectionable rule might easily be framed."

23. In the premises, Order 62 r.10(5) of the Rules of the District Court, Cap. 336 is objectionable. By providing for a deemed costs order in favour of the Plaintiff, that rule takes away the power and the discretion of the court to decide by whom costs are to be paid. Order 62 r.10(5) cannot be justified by Order 62 r.2(4) because, by the clear wording of the latter, the latter only covers cases in which the "power and discretion of the Court ..... shall be exercised". By arguing that the court has no discretion at all to exercise due to the force of Order 62 r.10(5), Mr. Chiu has destroyed his own case based on Order 62 r. 2 (4).

24. Even if, for argument's sake, Order 65 r.10(5) is supported by Order 65 r.2(4), the latter itself is still subsidiary legislation which cannot be inconsistent with any ordinance, much less its own parent principal legislation.

25. It must be emphasized that, unlike Section 52A of the High Court Ordinance, Cap. 4, Section 53 of the District Court Ordinance, Cap. 336 does not begin with the words "subject to the provisions of rules of court". The modifying clause, of course, elevates the Rules of the High Court to paramount status. However, by not inserting a similar modifying clause into Section 53 of the District Court Ordinance, Cap. 336, our legislature must be taken to mean that that section is not subject to the Rules of the District Court, Cap. 336.

26. For the reasons given, I hold that Order 62 r. 10(5) of the Rules of the District Court, Cap. 336 is null and void and of no effect. It follows that there is no valid deemed order for costs in favour of the Plaintiff upon acceptance of payment into court. In other words, I hold that a judge of the District Court under principal legislation in force after 1st September 2000 has full power and discretion to determine by whom and to what extent costs are to be paid in any case of acceptance of payment into court.

27. Even if Order 62 r. 10(5) remains valid, despite its clear inconsistency with paramount principal legislation, so that there is a deemed order for costs in favour of the Plaintiff, I believe there are at least two ways whereby the court may in the interest of justice intervene on the matter of costs.

28. First, Order 62 r. 10(5) stops short of prescribing the scale of costs. I have not come across any reasoned judgment wherein it has been held that taxation of costs under Order 62 r. 10(5) must be on the standard scale. Instead in Q.B.E. Insurance (U.K.) Ltd. v. Mediterranean Insurance and Reinsurance Co. Ltd. [1992] 1 W.L.R. 573, Webster J. held that:-

"In order to avoid injustice, therefore, in the application of r. 5 (3) and (4) the words "his costs of the action" need to be construed as meaning, in paragraph (3) "his costs of the action as against that party" and, in paragraph (4), "his costs of the action as against that defendant." I do not see how this construction can do injustice to anyone. It is convenient to note that the provisions of rule 5 create an automatic right to costs without any order; in those in circumstances the order should, in my view, be strictly construed so as to avoid any possible injustice, not in any particular case, but in any particular category of cases. I therefore construe the words "his costs of the action" in paragraph (4) in the way I have just described. Construed in that way, the rule is much less likely to cause injustice than the wider and more literal construction and, if it can cause any injustice than the wider and more literal construction and, if it can cause any injustice at all, it would be open to a plaintiff, who could reasonably claim to be entitled to recover from a defendant who had paid in his costs against the other defendants, to apply for such an order which the court would, in my view, have jurisdiction to make.

I do not regard the Court of Appeal's decision in Hudson v. Elmbridge Borough Council [1991] 1 W.L.R. 880 as in any way inconsistent with the construction that I have put upon r. 5 (4), because in that case the court was not concerned with the problem that arises in the present case." (p. 576) (Emphasis added)

Whilst I wholeheartedly agree with Webster J that a restrictive interpretation is in order, I do not see the reason for differential treatment for individual cases and category of cases. Adopting restrictive interpretation, I hold that Order 62 r. 10 (5) does not take away the discretion of the court in appropriate cases to determine to what extent the costs are to be paid and direct taxation on a particular basis.

29. Secondly, Order 62 r. 10(5) clearly envisages that there be taxation if the parties cannot agree on the amount of costs. Even in the absence of direction from a judge on the basis of taxation, a taxing master has wide discretion under Schedule 1 to the Rules of the District Court, Cap. 336 to disallow part or portions of costs in view of all factors and circumstances of a peculiar case. See Order 62 r. 7 (4) of the Rules of the District Court, Cap. 336.

30. Alternatively, the new Section 48 of the District Court Ordinance, Cap. 336 which came into effect on 1st September 2000 provides that:-

"48. General ancillary jurisdiction

(1) The Court has the same power as the Court of First Instance in any proceedings before it -

(a) to grant the relief, redress, or remedy or combination of remedies, either absolute or conditional; and

(b) subject to section 46, to give effect to every ground of defence or counterclaim, equitable or legal,

which ought to be granted or given.

(2) The Court has to administer law and equity so that, if there is a conflict or variance between the rules of equity and the rules of the common law referring to the same matter, the rules of equity prevail.

(3) The Court has to give the same effect as in the past -

(a) to equitable estates, titles, rights, relieves, defences and counterclaims, and to equitable duties and liabilities; and

(b) subject to paragraph (a), to legal claims and demands and estates, tiles, rights, duties, obligations, and liabilities existing by the common law or by any custom or created by an Ordinance.

(4) The Court has to exercise its jurisdiction to secure that, as far as possible, all matters in dispute between the parties are completely and finally determined, and multiplicity of legal proceedings on any of those matters is avoided.

(5) The Court may stay any proceedings before it, where it thinks fit to do so, either of its own motion or on the application of any person, whether or not a party to the proceedings."

In my view, should the parties be lumbered with an inflexible deemed order for costs under Order 62 r. 10(5), and when the interests of justice so require, the court is now empowered under Section 48(1)(a) of the District Court Ordinance, Cap. 336 to make a cross order for costs in favour of the Defendants although such order would very rarely be made where the court can do justice by an appropriate direction for taxation of the Plaintiff's costs.

Exercise of Discretion

31. Whether taking the approach that Order 62 r. 10(5) is invalid so that a specific order for costs is required or that the court has power in any case to make an order on the basis of taxation, I must in the exercise of my discretion bear in mind that the Plaintiff has recovered a relatively substantial amount by accepting payment in whilst at the same time abandoned a larger portion of the claim.

32. Miss Kwan does argue that the Plaintiff well knew that his claim was in fact within the jurisdiction of the Small Claims Tribunal and that the claim had been inflated to bring it to the District Court. Mr. Chiu counters that the payment into court was accepted for commercial reasons. In this respect, this action may be one of those marginal cases in which the estimate of amount of damages that brings the case just above the entry threshold for the District Court may be viewed by some judges as justified but not so by other judges. On the other hand, the fact that the Plaintiff jumped to accept payment into court of less than half the amount claimed without even waiting to see the defence pleadings tends to reflect how little confidence the Plaintiff had about the strength of his case.

33. It is ironic that had the Defendants by acknowledgement of service admitted liability for the full amount claimed, his liability for costs would be fixed by procedural rules at $1,120 inclusive. The Defendants could have done so on or before 22 August 2000. In fact the Defendants paid into court approximately one-third of the amount claimed on 25 August 2000 which was accepted in full and final settlement. If the Defendants are then saddled by the procedural rules with costs which, according to provisional taxation, amount to $24,251.50, I think the court imbued with a proper sense of proportionality would adjust the scales of justice.

34. Whether it was a commercial decision or not, by accepting payment into court the Plaintiff cannot deny that its claim has been satisfied. The claim was satisfied at almost the earliest stage of the action. Had the Plaintiff put its claim at $20,000 right from the beginning conceivably the Defendant would have admitted liability by acknowledgement of service whereupon the Plaintiff would obtain only $1,120 as fixed costs. Had the Plaintiff filed claim for $20,000 at the Small Claims Tribunal instead of the District Court, the Plaintiff would have been awarded costs but the amount of such costs could not be anywhere near the quantum recovered. In the particular circumstances of this case, I think costs should reflect the proportion of quantum recovered to the quantum claimed.

35. The Defendants' summons and appeal seek an order for costs in their favour. Such remedy would be seriously considered if the parties were indeed lumbered with a deemed order for costs in favour of the Plaintiff. Now that I have held that the deemed order for costs is invalid and the Plaintiff is only entitled to much reduced costs, neither party can be said to have succeeded on this appeal over costs of the action.

36. Accordingly, pursuant to Section 48(4) of the District Court Ordinance, Cap. 336, I make the following order:

(1) the Defendants' appeal is dismissed;

(2) the Plaintiff is awarded one-third party and party costs of the action to be taxed on the District Court scale if not agreed in addition to other costs already ordered in interlocutory proceedings; and

(3) each party bears its own costs of and occasioned by the Defendants' summons dated 20th September 2000 and this appeal.