BRUCE PORTER BARON v. HARTFORD FIRE INSURANCE CO AND OTHERS

CACV 166/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 166 OF 1998

(On appeal from HCA No. A9031 of 1993)

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J U D G M E N T

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Rogers, J.A. :

1. The 2nd and 3rd Defendants appeal in respect of costs in this matter.

2. The argument starts on the basis that no objection is raised to the order made by the Judge below whereby he deprived the 2nd and 3rd Defendants of their costs. Complaint however is made that the Judge ordered the 2nd and 3rd Defendants to pay the costs of both the 1st and 4th Defendants and the Plaintiff's costs. The Judge in dealing with the question of costs had first dealt with the 2nd and 3rd Defendants' costs and he started at page 41 by saying that :-

"They were responsible for this action being brought and for the delays since 1973. It would not have been necessary had Mr. Fredricks done what was required of him. It is a great regret that I have had to make the findings I have, in respect of a 70 year old businessman, who is a qualified lawyer with considerable experience in the insurance world, and has spent nearly 30 years in business in Hong Kong. It has taken this expensive action to enable the Plaintiff to ascertain what he was entitled to know, and could so easily have been told within a few days, all that long time ago. It has brought him no tangible benefit but it is small wonder that over that period of time notions of fraud and conspiracy have loomed in his mind. That delay has deprived him of a contemporaneous judgment as to whether the estate was entitled to a return of premiums."

3. The Judge then concluded that under Order 62 rule 3(3), it was proper to make an order for costs depriving the 2nd and 3rd Defendants of their costs.

4. In dealing with the 1st and 4th Defendants, the Judge said :-

"It was the acts and omissions of the 2nd/3rd Defendants which effectively brought these Defendants into this action. They contended that they acted as agents for the 1st/4th Defendants. That also kept them in the action. Had the 2nd/3rd Defendants wished, they could have pleaded a case and/or come to an agreement which would have released the 1st/4th Defendants from the action. The proposal form was at the heart of the question of liability under the policy. Its existence would have the release the insurance company from any involvement. The 2nd/3rd Defendants unarguable breach of duty had prevented that from being the case. The 1st/4th Defendants are entitled to have their costs. They have succeeded in this action. Their involvement is entirely attributable to the failures of the 2nd/3rd Defendants and to the case pleaded by the 2nd/3rd Defendants. It would be unjust for the Plaintiff to have to bear their costs. It is just in my view that the 2nd/3rd Defendants should pay the costs of the 1st/4th Defendants."

5. Our attention, in this respect, is drawn to the case of Knight v Clifton and others reported, amongst other places, in 1971 2 All ER 378. At p.389 of the Report, Sachs, L.J. said :-

"It is inevitable that from time to time there must arise instances in which the justice of the case demands that a successful defendant should pay the costs, by which I refer to the full costs, of the proceedings despite his success. Obviously this will only rarely happen, but it would be a defect in our system if in those rare cases the courts could not do what was just."

Later on, on the following page, the Judge cited from a judgment of Evershed M.R. in Ottoway v. Jones, [1955] 1 W.L.R. 706, where he said at p. 713 :-

"..... to make the defendant, who, in the end, succeeds in the sense that no relief is ordered against him, pay the costs of the plaintiff, who fails in the sense that no relief is obtained at his suit, requires a strong and exception case."

Further down, Sachs, L.J. continued :-

"It is, of course, impossible as well as undesirable to attempt to define what constitutes a strong or exceptional case, but to my mind it can include occasional rare cases in which the conduct of the defendant has brought about the proceeding or in which his conduct causes its continuance or in which he escapes the normal consequences of his blameworthy conduct by reason of some unexpected matter which he knew but which the plaintiff could not know."

6. In my judgment, the Judge below fully appreciated that the order that he was making was an exceptional order. He appreciated the effect of his order but he took into account the exceptional circumstances of the case and appreciated the rareness of the situation which had arisen and having set out these facts made the order which he did. I also observe that it was a lengthy trial in which much no doubt took place which has not been aired in this Court.

7. In all those circumstances, I cannot see that it would be right to interfere with the exercise of the Judge's discretion as to costs.

8. Turning then to the Plaintiff's costs in the Court below, the Judge said :-

"Although the Plaintiff has not established any loss, his action was eventually necessitated by the breach of duty of the 2nd/3rd Defendants. The loss and/or destination of vital documents was not his fault. It was the fault of the 2nd/3rd Defendants in that they created the environment in which that occurred. He was deliberately misled in that the 2nd Defendant made a positive decision not to give correct information. He has had to pursue his action in order to ascertain whether the estate had a valid claim under the policy. He had a duty in that regard. He certainly was not able to achieve this without this litigation. Although it has not brought him a judgment for damages, it has called the 2nd and 3rd Defendants to account. Once again I have to state that had the 2nd and 3rd Defendants acted properly in 1973, no litigation would have been necessary. It is just and fair that the 2nd and 3rd Defendants should pay the Plaintiff's costs."

9. Finally, the Judge alludes to the unusual nature of the case and the discretion which is vested in the Court. Again, I can see no grounds on which to interfere with the exercise of the Judge's discretion in this regard.

10. I would accordingly dismiss the appeal.

Godfrey, J.A. :

11. I agree; but in deference to the excellent argument addressed to us by Mr. Egan on behalf of the 2nd and 3rd defendants, I will add a few words of my own.

12. Mr. Egan pointed out (correctly, as it seems to me) that the position in 1990, and thereafter while this action was being commenced and prosecuted, was very different from what it had been in 1973. By 1990, the plaintiff had much more information available to him than he had in 1973. He ought, therefore, to have taken another look, by 1990, as to the good sense or otherwise of this litigation.

13. That is a fair point; but nevertheless the judge came to the conclusion that the justice of the case required that the 2nd and 3rd defendants here, although successful, should pay the costs both of the 1st and 4th defendants and of the plaintiff. I would be prepared to support an order such as that only in a strong and exceptional case. But the judge felt that this was such a strong and exceptional case, and I can see no sufficient reason to disagree with him.

14. There is no judgment which cannot be criticised on some point, because not everybody attaches the same weight for all the reasons which may be given for the conclusion reached, as Du Parcq, L.J. pointed out in Collett v. National Fur Co. Ltd. (1945) 78 Lloyd's List Law Reports 1 at p.3. This is a case in which different minds might attach different weight to different factors, but the judge, at the end of it all, weighing up, as he was bound to do, the merits and demerits of the claims for costs advanced against the 2nd and 3rd defendants, came to the clear view that the justice of the case required the order which he made and I am not prepared to disagree with him.

15. For these reasons, I, too, would dismiss this appeal.

Mortimer, V.-P.:

16. It is most unusual for a judge to order a successful litigant to pay the costs of an unsuccessful litigant. It can only happen in the most exceptional case. Here the judge below fully appreciated that he was making such an unusual order. He came to the conclusion that the exercise of his discretion to make such an order was necessary in order that justice should be done. He set out his reasons which have been referred to by Rogers JA in his judgment. Those reasons were amply supported by his findings in his judgment. It is only in exceptional cases, also, that this Court will interfere with a judge's discretion. There are no grounds upon which we should interfere with the judge's discretion in this case.

17. In those circumstances I also would dismiss this appeal.

18. We see no exceptional grounds for making other than the usual orders in the two appeals that have been in front of us. In each case, the costs will follow the event. That means in each case the successful respondent will receive the costs of the appeal.