SING SING ENGINEERING CO LTD v. SWEE KHENG BUILDING MATERIAL CO LTD

HCA 1694/2017

[2019] HKCFI 706

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1694 OF 2017

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DECISION ON COSTS
(To vary costs order nisi)

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The plaintiff’s application

1.  This is the plaintiff’s application by summons dated 5 December 2018 to vary this court’s costs order nisi dated 21 November 2018 which provided for costs in the cause.  The plaintiff’s application is that the costs of the appeal should be paid by the defendant to the plaintiff forthwith.

2.  For the avoidance of doubt, the costs order nisi I made on 21 November 2018 was for costs in the cause of the action and related to both the costs of the appeal before me and the hearing below.

3.  The plaintiff submits that the court was too generous to the defendant in making the order it did because it failed to properly to take into account the defendant’s delay in seeking indulgence from the court, its failure to adduce clear evidence of the reasons for the delay, and its failure to apologize to the court for its breach of the Unless Order.

4.  The plaintiff also points to counsel for the defendant having argued that any prejudice consequent of its breach of the Unless Order could be compensated by an appropriate award of costs and says that an order for costs in the cause does not amount to such an award.

5.  In the circumstances the plaintiff says that it would be unfair to have it pay the costs of the defendant’s application for relief if in due course it were to lose the Order 14 application.

6.  It cites in support of its position the decision of Deputy High Court Judge Sakhrani in Far East Sourcing Limited v Man Bond International Limited & Anor (unreported, HCA 1463/2012, 29 April 2015) and the decision of the District Court in Au Shui Lam v Wong Cheung Tai [2018] HKDC 275 (DCCJ 4734/2015, 14 March 2018).  In this latter case the delay was minimal but given the fact that the fault was entirely down to the plaintiff’s solicitors it was held that the plaintiff should pay the defendant’s costs.

The defendant’s case

7.  The defendant’s case is that as it had ultimately been successful in its application it should be entitled to the costs as the default position is that costs follow the event.  Having said that, it was clear from their submissions at the substantive hearing that they accepted that some element of the costs should be for their account, but in their submission much of the delay and expense was the result of the plaintiff’s resistance to their application and therefore the costs order nisi ruling was entirely appropriate.

8.  I accept that in the exercise of my discretion I need to have regard to the underlying objectives of the CPR set out in Order 1A, rule 1 and in particular the need to promote a sense of reasonable proportion and procedural economy in the conduct of proceedings.

9.  The defendant seeks to distinguish the authorities on which the plaintiff relies by pointing to the fact that both involve, in its submission, extreme aggravating features, which caused the courts to make the orders they did in those cases.

The court’s decision

10.  I am persuaded that there is merit in the plaintiff’s application.For whatever reason the defendant did not accept that its affirmation was served late until very late in the day, it did not respond appropriately to the plaintiff’s solicitor’s letter of 16 March and it did not provide a fully cogent explanation of how that situation arose but rather left it to the court’s inference.  I therefore order the defendant to pay the plaintiff’s costs of the appeal before me and the hearing below with a certificate for counsel.  I further order that the costs of this application, to be taxed if not agreed, be paid by the defendant to the plaintiff.

11.  I am not prepared to make an order that the costs be paid forthwith.  The principles on which the court should approach this are set out in Order 62, rule 9D(1) – (2):

“ (1) Subject to paragraphs (2) and (4), the costs of any proceedings shall not be taxed until the conclusion of the action.

(2) If it appears to the court on making a costs order that all or any part of the costs ought to be taxed at an earlier stage it may order accordingly.”

12.  The principle behind this power is to discourage unnecessary and disproportionate interlocutory applications since the lack of immediacy of orders to pay costs weakens costs as a sanction in such circumstances.

13.  The non-exhaustive factors relevant to the court’s considerations include whether the interlocutory proceedings in question are from a taxation point of view severable and self-contained from the rest of the action, the justice of making an order having regard to the effecton the cash flow of the respective parties, whether the amount at stake was sufficient to justify the expense of a separate taxation and the underlying objectives to which I have already referred.

14.  I am not satisfied that it is appropriate to make an order for payment forthwith, not least because I do not think the amount at stake is sufficient to justify the expense of a separate application, pending the hearing of the delayed Order 14 application.

15.  In the circumstances I order that the costs of this application, to be taxed if not agreed, be paid by the defendant to the plaintiff.