ORIENTAL DAILY PUBLISHER LTD AND ANOTHER v. MING PAO HOLDINGS LTD AND OTHERS

HCA 607/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 607 OF 2008

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BETWEEN

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DECISION ON COSTS

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1.  In a judgment handed down on 28 May 2010, I found for the plaintiffs. It is not disputed the plaintiffs should be entitled to the costs of the action with certificate for 2 counsel, to be taxed if not agreed.

2.  The parties’ only dispute is whether those costs be taxed on a party-and-party basis (according to the defendants) or on indemnity or common fund basis (according to the plaintiffs).

3.  Alternatively, the plaintiffs contend that those costs should be taxed on either of such bases from 4 February 2010 onwards (that is, the date when the defendants amended their defence to plead what is commonly called “Reynolds privilege” (also known as the “responsible journalism”) defence).

4.  The applicable legal principles are undisputed (Town Planning Board v. Society for Protection of the Harbour Ltd. (No. 2) (2004) 7 HKCFAR 114, 123-4):-

“Indeed, the courts in this jurisdiction have repeatedly emphasised, correctly in our view, that the successful party should show, in order to obtain an order for costs on an indemnity basis, that the case has some ‘special or unusual feature’” (para. 15);

“The courts have rejected the proposition that an award of indemnity costs will only be made where a case has been brought with an ulterior motive or for an improper purpose or where there is some deception or underhand conduct on the part of the losing party … In these and other cases, courts have emphasised the undesirability of attempting to define the circumstances in which orders for indemnity costs are to be made. It has been said that:

… the discretion is not to be fettered or circumscribed beyond the requirement that taxation on an indemnity basis must be ‘appropriate’” (para. 17)

(emphasis supplied).

5.  The plaintiffs’ case is that the defendants’ pursuit of a hopeless defence until the end is the “special or unusual feature” justifying indemnity costs.  Reliance is placed on cases where such costs have been awarded: Po Hio Chua v. Hang Seng Bank Ltd., CACV 146/2008 (23 September 2008) (appeal was “entirely without merit”; Leung Ho Sing and Others v. Shum Yiu Tung and Others, CACV 108/2006 (18 May 2007) (application was in any event “hopeless”).

6.  One thing should be clear: it is not the law an unsuccessful litigant is always liable to pay costs taxable on a more generous basis (be it indemnity or common fund basis) only because his claim or defence has been found to have no merits.  There is often a difference between such a claim or defence and one which is “hopeless” (in the sense that the “hopeless” claim or defence should attract a taxation of costs on a more generous basis).

7.  An example which can illustrate the above point is this.  A more generous basis of taxation of costs is not invariably ordered even in cases where the courts have struck out a claim or defence in exercise of its discretion conferred by RHC Ord. 18 r. 19 or its inherent jurisdiction (that is, striking out for want of a reasonable cause of action or defence, or the claim or defence being scandalous, frivolous or vexatious, or it may prejudice, embarrass or delay the fair trial, or it is otherwise an abuse of process).

8.  A closer examination of the authorities relied on by the plaintiffs can shed light on when a more generous taxation of costs is appropriate.

9.  Po Hio Chua was a plaintiff’s appeal to the court of appeal against the judge’s order to provide security for the costs of a pending action.  The court of appeal observed that, during the hearing before the judge, the plaintiff’s case was initially that his claim was strong and he has the means.  But towards the end of that hearing, the plaintiff suddenly changed that stance and claimed he had financial difficulties.  On appeal, the plaintiff advanced a case that his claim would be stifled by an order for security and sought to adduce fresh evidence for such purpose.  Both the last-mentioned application and the appeal were dismissed, and indemnity costs were awarded.

10.  Leung Ho Sing was an application to the court of appeal for leave to extend the time to seek leave to appeal to the Court of Final Appeal against an earlier dismissal of appeal by the court of appeal.  The court of appeal observed:-

(a)	the application was more than 5 months beyond the prescribed time period;
(b)	the reasons given for the delay were “unacceptable”;
(c)	the proposed grounds of appeal were insufficient and have to be “reformulated”.  The “reformulated” grounds (there is no rule of law or statute that the court of appeal is bound by its earlier decisions, and all statutory interpretation should be considered by the Court of Final Appeal) were plainly wrong in law;
(d)	a stricter line as to the costs of unsuccessful applications for leave to appeal to the (then) Privy Council (now replaced by the Court of Final Appeal) is likely to be taken if the applications are merely to seek a “third bite of the cherry” (citing Lo Shiu Chun v. Law Ying Chee Fogg, CACV 130/1993 (14 April 1994)).

11.  The gist of the defence relating to liability has been summarised in para. 14(2) and 33, judgment handed down on 28 May 2010.  While the judgment found the denial of liability to have no merits, it also said:-

“… the trial has been conducted in an efficient and sensible manner. There is no vigorously conducted defence as regards liability, nor trial conduct which shows bad faith” (para. 65).

12.  The plaintiffs also rely on Overseas Trust Bank Ltd. v. Coopers & Lybrand (a firm) and Others [1991] 1 HKLR 177, a judgment which dealt with the costs between the defendants and third parties.  In dismissing the third party proceedings, the court observed:-

“It is a case without any foundation in law or fact, intended to pass on to [the third parties] a liability, out of all proportion to [their] peripheral involvement in the matter … it is oppressive” (p. 179).

But the court still refused an application for indemnity costs, and gave examples as to instances where such costs would be appropriate:-

“… either that the case is one of a type already recognised in the practice of the court as warranting a taxation on that basis (such as, … the contempt cases to which I have already referred) or that there is some feature … even more special or unusual than one which would justify … common fund [costs] … ” (p. 183).

Proceedings initiated or prosecuted in a manner which constitutes an abuse of process might well be a candidate for indemnity costs; litigation conduct which causes “a proper sense of indignation” is another example.

13.  None of the matters set out in para. 9 to 10 or 12 above can be found in this action; nor do I consider the giving up of the “Reynolds privilege” (or “responsible journalism”) defence to constitute those matters.

14.  I come to the same conclusion as regards the application for common fund costs.  In other words, there is nothing to justify a departure from the usual taxation basis (that is, the party-and-party basis).

15.  Accordingly, the application for a more generous taxation of costs is refused with costs to the defendants.  I propose summary assessment of those costs.  For such purpose:-

(1)	the defendants are at liberty to lodge with court and serve a statement of costs within 3 days;
(2)	the plaintiffs are at liberty to lodge with court and serve a statement of objections within 3 days thereafter.