CHEUNG SHING YUK TONG CO. LTD. v. HIP HING COUSTRUCTION CO. LTD.

1991, No.A6793

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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R U L I N G

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1. Judgment in this action was handed down on 23 January 1997 in which I made an order nisi that the plaintiff do have costs on the District Court scale at a level applicable to the judgment amount, i.e., $50,750 that I awarded to it, with a certificate for counsel. The present hearing was sought by the defendant who wished me to alter the order nisi for costs.

2. On behalf of the defendant, Mr Beaumont readily accepted that the normal rule was that costs follow the event. However, he argued that there were exceptional circumstances by reason of which I should alter the order nisi either to make no order as to costs, or to award costs to the defendant after its payment into court, which was made on 21 May 1997.

3. As I understand it, Mr Beaumont based his arguments mainly on the following matters:

(a) the defendant made a payment into court in the sum of $50,000, and the judgment sum in favour of the plaintiff is only $50,750, a trifle of $750 over the sum paid in, and to be exact, only 1.5% of the amount paid in;

(b) during the course of the hearing which took ten days, most of the time was used for the plaintiff's case and I had on occasions warned Mr Y Y Chan of the plaintiff not to go on with irrelevant matters but to answer questions put, including those put by the plaintiff's counsel;

(c) there were offers up to $88,000 inclusive of costs, as borne out by the correspondence, which should have been accepted by the plaintiff in order to save the costs incurred for the lengthy hearing of the action; and

(d) the award of $50,750 was based on the plaintiff's amended claim of $144,900, and not the original claim of $112,056, and the payment in was made on 21 May 1991 whereas the amendment took place on 31 May 1991 and was served on 6 June 1991.

4. The sum paid in does not exceed and is not equal to the sum awarded to the plaintiff, albeit close. Although in a High Court action, such an award can be considered to involve a small sum, the proper perspective in which to view it is to compare it with the amount claimed in the pleadings. The claim was for $144,900 and the amount recovered is over 35 per cent of it. It cannot therefore be said that the plaintiff has not succeeded, in any sense of that word. Nor can the award be properly considered as trifling.

5. The plaintiff may also be said to have fought over a very small sum, but the context of the negotiations under cover of without prejudice correspondence, save as to costs, should be looked at. The defendant had always been offering no more than $50,000, without interest, culminating in the payment in on 21 May 1991. Despite efforts apparently made by solicitors for both sides, the final amount that the plaintiff wished to settle was $50,000, inclusive of interest, but with an addition of 90% of the taxed costs on the High Court scale. That was in December 1996, after seven days had been spent before me. No settlement resulted. Had the defendant thought that the plaintiff was acting unreasonably, or if it felt uncomfortable about the size of the amount paid into court, it could have increased the amount. But it did not. It cannot now turn to blame anyone but itself for not increasing the amount.

6. The time required by the plaintiff in putting forward its case is increased by the time used by the defendant's counsel in cross-examination. I do not think that it was wrong of the plaintiff to take such a long time, nor the defendant's counsel in asking many questions. It is just one of those cases where lengthy examination and cross-examination were required. While I warned Mr Y. Y. Chan of the possibility that the plaintiff might be penalised in costs if he continued not to provide direct answers, I do not consider that he had wasted a sufficient amount of court time to make a real difference in the days required to hear the case. I had also intimated to the parties that they were not considering their own interest in fighting over such a small amount, but despite efforts made during the course of the hearing, no compromise could be reached. In the event, the plaintiff has succeeded in the amount I have awarded, and it has been penalised to receive a lower scale of costs for bringing the claim in the wrong court. On the other hand, the defendant had not taken sufficient measure to protect itself on the question of costs, and did not pay in an adequate amount to cover what the plaintiff might reasonably be expected to recover. I hasten to add that I attach no blame to the defendant's legal advisers. So, both parties are mulcted in a way by the order for costs, and much worse off than when they started.

7. The sum of $32,844, being the difference between the original claim of $112,056 and the amended claim amount of $144,900, was stated in the Particulars of Claim as "amount to be negotiated" ("the added amount"). This is a strange term, obviously used by a layman. While it was a way employed by the plaintiff itself, who took out the writ in the District Court in person, to bring the claim within the jurisdictional limit of that court, on the other hand, in the context of the payment in, if the plaintiff had accepted the sum paid in, the action would have been stayed and the plaintiff would not be entitled, save with the leave of the court to remove the stay, to raise the added amount thereafter. If it did not apply for the removal of the stay, it would also be estopped from claiming the added amount in a separate action under the wider principle of cause of action estoppel enunciated in Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581.

8. After the amendment to include the added amount was made, the parties were still negotiating on a similar basis as the situation obtained when the payment in was carried out. Any increased offer made by the defendant was merely to take into account some of the costs that had been incurred by the plaintiff. To put it simply, the sum paid in did take into consideration the added amount. Had it not been the case, it would have been easy for the defendant to increase the amount paid in. I am of the view that there was no or no material difference made by the amendment to the parties' stance, and therefore the amendment should not feature in swaying me from the normal order for costs.

9. Further, the amendment to reinstate the added sum did not raise any different cause of action which was for unpaid balance of price of goods sold and delivered. The payment in was in respect of the same cause of action. During the hearing proper, no evidence was adduced by the defendant regarding the added amount, although there was intimation from the correspondence that the plaintiff had agreed to abandon it. As apparent from the first page of my judgment herein, $144,900 was used as a starting point, being the unpaid balance of price, and the defendant's attempt was to reduce or diminish that amount by way of set-off and counterclaim.

10. In the circumstances, I have come to the conclusion that there is no or no sufficient ground for me to depart from the normal rule that costs should follow the event.

11. Counsel agreed that the costs of this hearing should follow the event. The defendant has failed to persuade me that I should exercise my discretion on costs in its favour. The costs of this hearing must be to the plaintiff, and I so order. The order nisi for costs was made for expediency and saving costs and time, without first hearing counsel's arguments on costs. As the defendant did not agree with the order nisi and came before me again to argue costs, the exercise must be treated as part and partial of the hearing proper. The same District Court scale of costs that relates to the judgment sum must therefore apply to this order for costs. By the same token and by reason of the fact that both sides' counsel appeared and that there was no challenge to the certificate for counsel granted by me in the order nisi, the certificate for counsel equally applies.