LAU MAN LOON v. EXCELIKO ENTERPRISES LTD. AND ANOTHER

H.C.A No. 9320/1996

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 9320 OF 1996

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JUDGMENT ON COSTS

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Introduction

1. On 5th February 2001 judgment was handed down. I indicated then that I would like to hear parties before making an order for costs. The hearing on costs was originally scheduled on 28th February 2001. As the 2nd Defendant applied for Legal aid on 12th February, I ordered the hearing date to be vacated due to the statutory stay of proceeding so as to allow the 2nd Defendant the opportunity to pursue her application. The hearing was re-scheduled to take place on 27th April 2001. The 2nd Defendant was not successful in getting legal aid.

Plaintiff's costs

2. I have already ruled that the Plaintiff, being the successful party is entitled to costs. The question I have to decide is to what extent the 1st and 2nd Defendant has to bear such costs.

3. Mr. Chong, counsel for the Plaintiff is taking a neutral stance on the matter. However, Mr. Chong submitted that this is not appropriate case to make a gross sum order in respect of the Plaintiff's costs. Ms Fung, counsel for the 1st Defendant, echoed Mr. Chong's view. Ms. Fung submitted that the conduct of the 1st Defendant in the present case was not such that a gross sum order should be made. Ms. Fung expressed her concern that the 1st Defendant's interest would be prejudiced as the costs fixed on 'broad principles' would be more generous than those fixed after taxation. When I informed all parties that I would consider making a gross sum order, I had in mind the savings of time and costs if such a course is adopted, particularly when the 2nd Defendant is not legally represented. Upon reflection, however, I agree with both Mr. Chong and Ms. Fung that this is not an appropriate case for a gross sum order. I will make an order for the costs to be taxed if not agreed.

4. Before doing so, I have to decide if the 2nd Defendant has to bear the costs of the Plaintiff, and if so, to what extent.

5. I have already indicated that the stance taken by the 2nd Defendant was most peculiar. In my judgment I have indicated that there was a strong case for ordering the 2nd Defendant to bear a substantial part of the Plaintiff's costs of the actual hearing. Ms. Fung submitted that but for the stance taken by the 2nd Defendant, she was instructed that the 1st Defendant would have settled with the Plaintiff. She suggested the 2nd Defendant to bear all the costs of the 1st Defendant, failing which, 80 % of the costs of the whole action.

6. The 2nd Defendant of course opposed to such a suggestion. In her written submission she claimed that she had acted as 'middleman', asking the 1st Defendant to settle the matter by agreeing to return $400,000 to the Plaintiff. It was the 1st Defendant who had refused to return the sum and no settlement was reached. She claimed that the 1st Defendant had made a wrong decision in not having the matter settled so she could not be asked to bear the costs. She also claimed that because she did not have enough money to employ the service of solicitors, resulting in her not being able to amend the legal document expeditiously, she should not be penalized by an order to pay costs. If she is ordered to pay costs, such costs should be of a moderate amount.

7. It is all very well to say that the 1st Defendant would have settled the Plaintiff's claim had the 2nd Defendant not taken the stance she had initially and then changing in mid-trial, there is a certain degree of speculations. I do bear in mind that the 1st Defendant did not ask for an adjournment to reassess its position after I allowed the 2nd Defendant to retract part of her Defence and Counterclaim, the 1st Defendant still vigorously contested the Plaintiff's claim to the very end.

8. The stance taken by the 2nd Defendant obviously affected the way the 1st Defendant dealt with this case. The question is to what extent I should order the 2nd Defendant to bear the costs of the Plaintiff. Bearing in mind that K & K forwarded the letters between K & K and AC&P to JKTH by a letter dated 3rd June 1996, well before the Plaintiff started the legal action against both Defendants (the Writ of Summons was issued on 15th August 1996), I have come to the conclusion that the 2nd Defendant should bear a proportion of the costs of the Plaintiff's action, not just the costs of the actual hearing as I have originally minded.

9. I recognize it is an unusual step to order the 2nd Defendant, to whom the Plaintiff had failed in his claim, to bear part of the costs of the 1st Defendant. I am of the view that it is just and fair to order the 2nd Defendant to bear 40% of the Plaintiff's costs.

10. The 1st Defendant asked for an order that the 1st and 2nd Defendant to be severally liable to their portion of the Plaintiff's costs. There is no objection from Mr. Chong for the Plaintiff. I will so order.

1st Defendant's cost

11. Ms. Fung submitted that in the circumstances, unlike the Plaintiff's costs, it would be appropriate to make a gross sum order in respect of the 1st Defendant's costs. I agree. The costs resulted from the 2nd Defendant's application to retract the allegation in her Defence and Counterclaim and to counterclaim the Plaintiff for damages instead of the half of the deposit and stamp duty; and a new claim against the 1st Defendant for the return of her half of the deposit. I heard the application at the time so I was in a good position to make the assessment.

12. For the purpose of assisting me to make such an order, the 1st Defendant had in fact filed a schedule which was, in all respect, the same as a bill of costs. Any costs incurred during the trial proper as opposed to the time spent on the said application should be under the Plaintiff's costs. After all, I have already ruled that the 2nd Defendant has to bear 40% of the Plaintiff's costs.

13. Much time was spent on 'educating' the 2nd Defendant when she made her application. She did not understand the procedure and the significance of the Defence and Counterclaim filed on her behalf by her then solicitors. I have to arrange for the court interpreter to read over all the pleadings to her and explain the procedures to her before she could make an application rather than re-hashing her evidence. Understandably Mr. Chan strenuously opposed to the application, both to the retraction and the new claim against the 1st Defendant. Nevertheless, the time spent on the argument was not long (about one hour on 30th November 2000). I don't think Mr. Chan would have spent any substantial amount of time on the preparation either.

14. The 2nd Defendant asked for time to seek professional advice as to the amount set out in the 1st Defendant's schedule. I adjourned the hearing pending written submissions from 2nd Defendant. The 2nd Defendant in her written submission merely reiterated that she should not be ordered to pay costs and that she did not have the ability to pay costs either. There was no written response from the 1st Defendant.

15. I am of the view that a sum of $50,000 would adequately compensate the 1st Defendant for the time and effort spent on resisting the 2nd Defendant's said application. Such amount is inclusive of the appearance of Ms. Fung on 27th April 2001.

Order:

1. Judgment for the Plaintiff against the 1st Defendant as follows:

a. A declaration that the Plaintiff has effectively rescinded the Agreement.

b. The 1st Defendant has to return the sum of $490,000, being the Plaintiff's half-share of deposits paid.

c. In respect of the Plaintiff's half share of stamp duty paid, there will be an assessment of damages if no agreement is reached between the parties, to be conducted by a Master of the High Court.

d. Interest on the sum of $490,000 under paragraph 2 and the sum to be agreed or assessed under paragraph 3 at judgment rate from date of Writ to date of full payment.

e. A declaration that the Plaintiff was and is entitled to a lien on the Property for the deposits, damages and interest.

2. The Plaintiff to have costs of his claim, to be taxed if not agreed. The 1st and 2nd Defendant is severally liable to such costs; the 1st Defendant to the extent of 60% and the 2nd Defendant 40%.

As against the 2nd Defendant:

1. The Plaintiff's claim against the 2nd Defendant be dismissed with no order as to costs.

2. The 2nd Defendant's counterclaim against the Plaintiff be dismissed with costs to the Plaintiff, to be taxed if not agreed, such costs to include the 2nd Defendant's failed application to have the Counterclaim against the Plaintiff amended.

Gross sum costs order between the 1st and 2nd Defendants:

16. In respect of the costs of and occasioned by the 2nd Defendant's application to retract part of her Defence and Counterclaim and to add a new claim against the 1st Defendant, the 2nd Defendant is ordered to pay a gross sum of $50,000 to the 1st Defendant.