MAK KUM KOK JAMES v. MICHAEL MONAGHAN JOHNSON

DCCJ 3852/2016

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3852 OF 2016

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DECISION

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1.  On 29 June 2017, I dismissed the plaintiff’s Order 14 Application and, pursuant to Order 14 rule 7, made an order nisi that costs of the application be to the defendant in any event to be taxed if not agreed. The defendant now applies to vary the costs order nisi in these terms: (1) Certificate for Counsel be granted, (2) costs be paid by plaintiff to defendant forthwith to be summarily assessed and (3) defendant’s costs of this application to vary the costs order nisi be included in the costs order to be made. The plaintiff objects to the defendant’s proposed orders in (2) and (3) but not (1).

2.  First of all, I am prepared to grant the Certificate for Counsel as sought in view of the complexity of the issues involved and the assistance of counsel rendered in the Order 14 Application.

3.  Now I shall deal with the time of payment of the costs under the Order 14 Application – whether it should be paid “in any event” or “forthwith” – as well as the costs of the application for variation of the costs order nisi.

4.  It is provided under Order 14 rule 7(1) that if it appears to the court that the plaintiff knew that the defendant relied on a contention which would entitle him to unconditional leave to defend, the court may dismiss the application with costs and may require the costs to be paid by him forthwith. It is also provided under Order 62 rule 5 that the court in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account, inter alia, the conduct of the parties including whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue and the manner in which a party has pursued or defended a particular allegation or issue.  It is beyond dispute that the issue of costs is a matter at the court’s discretion which must be exercised judicially in accordance with reason and justice.

5.  In summary, the defendant’s contention is that the Defence and Counterclaim was filed about a month before the Order 14 Application was issued.  It was stressed that the defences including misrepresentation, plaintiff’s failure to mitigate his loss, as well as the disputes as to the area and boundary of the garden in question, had all been set out and particularized in the Defence and Counterclaim.  All those were ruled to be triable issues by this court.  The plaintiff knew or ought to have known the existence of those triable issues in the first place and should not have taken out the Order 14 Application which is bound to fail.  It is also submitted that this Order 14 Application is a “self-contained application” and that there should be an order for payment of costs “forthwith” rather than “in any event”.  The defendant submitted a detailed “Bill of Costs” of over $150,000 and applied for summary assessment.

6.  The plaintiff contends that the “true implications” of the alleged misrepresentation was not pleaded in the Defence and Counterclaim.  It is argued that the defendant’s pleaded case only focused on how and when the alleged misrepresentation was said by the Preceding Owner of the property in question but not specifying the factual basis upon which the liability arising from the alleged misrepresentation could have imputed to the plaintiff who only subsequently acquired the property.  Similarly, the defence affirmations in opposition to the Order 14 Application were again “too vague” to substantiate how and why the plaintiff should be liable to the alleged misrepresentation. It was, as argued, only in the course of the hearing of the Order 14 Application that the defence counsel had extensively developed the arguments to the effect that the plaintiff should have actual or constructive knowledge of the alleged misrepresentation and was liable accordingly.  It is also argued that the defendant had suddenly left the property in question in December 2015 without payment of the rent due for that month on the ground that certain scaffolding erected in the area in dispute adversely affected his family, such conduct was unacceptable and should be reflected in the costs consideration. It is for the above reasons that the plaintiff asks for the costs order nisi be made absolute and the costs of this application for variation of the costs order nisi be to the plaintiff.  Lastly, it is argued that the defence “Bill of Costs” deviates from the standard “Statement of Costs” by including various particulars which are outside the ambit and not permitted by summary assessment and, in any event, the costs claimed are grossly excessive.

7.  I do not agree with the plaintiff’s argument that the “true implications” of the alleged misrepresentation were not pleaded in the Defence and Counterclaim, even if one may argue that the issue could have been set out with greater clarity.  Not only that it was pleaded in the Defence that the alleged misrepresentation (originated from the Preceding Owner and its agent) was “confirmed” by the plaintiff to the defendant (paragraph 10) but it was also pleaded in the Defence that the alleged misrepresentation was “also carried through” by the plaintiff (paragraph 14).  Further, the subsequent affirmations respectively filed by the defendant and his wife provided more details on, according to the defence case, how the plaintiff had confirmed the alleged misrepresentation by emails.  More importantly, the issue of the plaintiff’s duty to mitigate as well as the defence allegation of the plaintiff’s failure to reasonably comply with such duty were all clearly pleaded in the Defence (paragraph 22).  On this issue, I do not lose sight of the undisputed facts that the plaintiff had taken 5 months to find a replacement tenant, the new rent ($75,000) was more than 37% less than the original rent paid by the defendant ($120,000) and the new tenancy had two rent-free-periods each of one month.  Also, the plaintiff is having $240,000 equivalent to two-month-rent as security which is bound to be set off from any successful claim.  I am also unable to accept the plaintiff’s argument that the defendant’s abandonment of the property should be reflected in the costs consideration here.  The reasonableness or otherwise of that conduct would probably be argued and decided at the full trial and in any event should not be a relevant consideration for this self-contained interlocutory application as far as costs are concerned.  In the circumstances, I agree with the defence argument that, on the pleadings, this is not an appropriate case for summary judgment and the Order 14 Application should not have been taken out.  I am also in agreement with the authorities[1] relied upon by the defendant which stressed on the principle that post-Civil Justice Reform parties should be discouraged from unnecessarily maintaining or resisting interlocutory applications by orders for immediate payment of costs.  As this Order 14 Application was a self-contained interlocutory application which was decided at an early stage of the proceedings, the defendant would be deprived of the benefit of the costs for a substantial period of time in the absence of an order for immediate payment.  Nevertheless, in view of the number of items and particulars as well as the substantial amount claimed under the defence “Bill of Costs”, I agree with the plaintiff that this is not an appropriate case for summary assessment.

8.  I will accordingly vary my costs order nisi by ordering that the costs of the Order 14 Application together with the costs of the application for variation of the costs order nisi, with Certificate for Counsel, be paid by the plaintiff to the defendant forthwith, to be taxed if not agreed.